Sustainable transport: the role of the bus in the post‐competitive market

Abstract

The bus is the most viable form of urban public transport and has to play a major role in the delivery of sustainable transport objectives. It cannot do so under current models of operation and legislation outside London. Quality Partnerships are not the answer. This paper looks at and contributes to the debate about alternative models. It analyses the attributes needed for such models but does not recommend the final model form. It starts from the premise that the bus market is rapidly consolidating, with attendant effect on competition. Indirect or push variables are more effective than direct or pull variables in mode switch from car to bus. Central government has a crucial role in delivering Marginal Cost Equalization. Fuel duty increases have applied to bus and car, so there is no equalization at the margin. Comparison of the models in and out of London shows that both have had similar effect on unit cost, extra mileage and reduced subsidy but are different in terms of changes to passengers and passenger revenue and how the net effect is shared between society and bus operators. It is argued that, as maximizing profit and passengers is different, fare and service level need control and public investment in bus priority should not leak into higher profits. Positive feedback is needed between higher bus use and revenue and investment in further measures to increase use. Demand management measures, such as increasing car‐park charges, have a political cost; this political price may be willingly paid to achieve transport objectives but not to boost operators’ profit. Comparison is made with rail where Marginal Cost Equalization is delivered and fares and service are regulated. The role of central government as a third partner with bus operators and local government is emphasized. If profits are judged to be excessive, such as Railtrack in the July 1997 budget, windfall taxes may be justified, but regulation to keep the money in the transport industry may be a better way forward. This paper was prepared whilst the White Paper was being consulted on, but is published between the White Paper and the parliamentary Bill. If the White Paper has not addressed all the issues raised here, it is hoped that readers persuaded of their validity may try to influence the drafting of the Bill and amendments during its progress through Parliament.