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PUBLIC TRANSPORT ORGANIZATIONAL MODELS: ROLES FOR THE PUBLIC and PRIVATE SECTORSOrganizational ModelsSix Organizational ModelsUK Experience with Bus RestructuringBackgroundBus Deregulation Outside London (1986)Basic Elements of UK Bus DeregulationBasic Elements of UK Bus DeregulationPublic Transport Authority ReorganizationLondon StrategyLondon Buses ReorganizationTable 1: Key bus operating statistics, GB and London, 1985/86 to 1999/2000Table 2: Percentage change in key bus operating statistics with 1985/86 as baseResults of Bus Deregulation (1)Results of Bus Deregulation (2)Typical Trajectory Following DeregulationLondon ResultsUS Transit IndustryA. "Classical" Regional Transit Authority (RTA)A. "Classical" Regional Transit Authority (RTA)B. Expanded RTA ModelB. Expanded RTA ModelC. Split Policy/Operations Responsibilities: Single Service ProvidersC. Split Policy/Operations Responsibilities: Single Service ProvidersD. Split Policy/Operations Responsibilities: Multiple Service ProvidersD. Split Policy/Operations Responsibilities: Multiple Service ProvidersTransit Industry StructurePurchased Transit Service in US Transit Industry (2004): Operating Expense Use of Purchased Transit ServicesPercent of Transit Systems that Contract for Bus Services Percent of Transit Systems that Contract for Demand-Responsive Transit Services Percent of Transit Systems that Contract for All, Some, and No Bus and Demand-Responsive Transit Services Fixed Route Bus ServicesBUSES OPERATING EXPENSE (2004: $ million) (All agencies with Operating Cost > $100 million)BUSES OPERATING EXPENSE (2004: $ million) (All agencies with Operating Cost > $100 million)Largest 28 Bus OperatorsAgencies Using Purchased Services Extensively Fall Into Three GroupsRail ExperiencesJapanArgentinaArgentina (cont'd)British RailLondon Underground PPPPuerto Rico - Tren UrbanoProspects for the FuturePossible StrategiesNigel H.M. Wilson 1.201, Lecture 20 Fall 20061PUBLIC TRANSPORT ORGANIZATIONAL MODELS: ROLES FOR THE PUBLIC and PRIVATE SECTORSOutline• Organizational Models• UK Bus Experience• US Transit Industry• Rail Examples• Prospects for the futureNigel H.M. Wilson 1.201, Lecture 20 Fall 20062Organizational Models• Unregulated/Deregulated• Regulated Competition• Threatened Competition• Private Monopoly• Public Monopoly• Contracting OutNigel H.M. Wilson 1.201, Lecture 20 Fall 20063Six Organizational ModelsMODELSUnregulatedRegulated CompetitionThreatened CompetitionPrivate MonopolyPublic MonopolyContracting OutRegulation Minimum Yes Yes* Yes Yes Yes*Financing PR PR PR PR PU PRPlanning PR PU & PR PU & PR PR & PU PU PUOwnership PR PR PR PR PU PR (or PU)Operation PR PR PR PR PU PRMaintenance PR PR PR PR PU PR* The model is regulated in the form of contracts.PU: Public Sector; PR: Private SectorFUNCTIONSNigel H.M. Wilson 1.201, Lecture 20 Fall 20064UK Experience with Bus Restructuring• Background• Bus Deregulation outside London• London strategy• Results to dateNigel H.M. Wilson 1.201, Lecture 20 Fall 20065Background• Prior to mid-1980s, UK local bus industry broadly comparable to US transit industry:• public ownership at local level• heavily subsidized• slowly declining ridership• little innovation in technology, service, or management• little responsiveness to public needs or concerns• Buses played a larger role than in US because of lower car ownership levels and higher operating costsNigel H.M. Wilson 1.201, Lecture 20 Fall 20066Bus Deregulation Outside London (1986)Basic premises behind bus deregulation:• deregulation would produce a competitive market• competition would substantially reduce costs• a competitive market would improve resource allocation• there would be no significant negative side effectsNigel H.M. Wilson 1.201, Lecture 20 Fall 20067Basic Elements of UK Bus Deregulation• Bus markets were divided between commercial and non-commercial, with the following definitions and rules for each:Commercial• Defined as any service that an operator is prepared to offer with the only government support being:-- concessionary fares reimbursement-- fuel taxes rebateNigel H.M. Wilson 1.201, Lecture 20 Fall 20068Basic Elements of UK Bus DeregulationCommercial (cont’d)• Services are registered including the route and timetable, and changes become effective after 6 weeks notice• Fares can be changed with no prior notice• Unrestricted entry and exit from the market• Known as "Competition In the Market”Non-Commercial•Services which are not registered as commercial, but needed for social reasons as identified by local authorities• Awarded to a private sector operator after a competitive bidding process for a period of (typically) three yearsNigel H.M. Wilson 1.201, Lecture 20 Fall 20069Public Transport Authority Reorganization• As a transitional strategy, public transport authorities were to be "corporatized," i.e., held at arm's length from government• Could receive subsidy only as a result of success in a competitive bidding process• Eventually they were expected to be privatizedNigel H.M. Wilson 1.201, Lecture 20 Fall 200610London Strategy• Deregulation not introduced in London because of concerns about:• the effects of free entry on congestion• rail system effects• London Transport (now Transport for London) opted to retain control over all planning functions but to move to privatization through competition for incremental pieces of the London bus network• Known as "Competition For the Market"Nigel H.M. Wilson 1.201, Lecture 20 Fall 200611London Buses Reorganization• Decentralization of London Buses Limited (LBL) operations, giving progressively more independence to LBL depots• Awarding approximately 50% of competitive tenders to LBL subsidiaries with the remainder to independent private bus operators• Used competitive pressure to induce LBL subsidiaries to restructure labor contracts and management strategy• In 1994 all LBL subsidiaries were privatizedNigel H.M. Wilson 1.201, Lecture 20 Fall 200612Table 1: Key bus operating statistics, GB and London, 1985/86 to 1999/2000Nigel H.M. Wilson 1.201, Lecture 20 Fall 200613Table 2: Percentage change in key bus operating statistics with 1985/86 as baseNigel H.M. Wilson 1.201, Lecture 20 Fall 200614Results of Bus Deregulation (1)• Operating costs dropped significantly -- by about 50%, most of impact immediately after deregulation• Bus kilometers of service


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MIT 1 201J - PUBLIC TRANSPORT ORGANIZATIONAL MODELS

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