Spatial Alliances of Public Transit Operators: Establishing operator preferences for area management contracts with Government

Abstract

Scheduled transit services in many countries are provided by operators within geographical jurisdictions protected from competition with other public transit operators, although unprotected from competition by other modes, especially the car. This increased competition in many developed economies has led to a loss of market share of urban transit and contributed to the growing crisis in escalating costs of service provision (leading to pressure for increasing subsidy support). The response to this throughout the 1990s has seen governments progressively introducing market reforms centred on competitive tendering and economic deregulation. In more recent years, performance-based contracts have become popular variants, with an increasing number of incentive payment criteria introduced to not only promote cost efficiency but also aimed at growing patronage. Where such reform has involved area wide contracts, the boundaries of the contract areas have been essentially preserved. In recognition of the growing support for bus-based transit systems (variously referred to as bus rapid transit, busways and transitways), which offer increasing promise in growing public transit patronage, the NSW government in Australia has introduced reforms that require existing operators in the Sydney metropolitan area each currently holding an area contract (87 contracts) to work together under fifteen new spatial contracts. These new contracts overlay the existing contract areas and give incumbent operators the first option to participate. In this paper we assess ways in which operators might coalesce to deliver ongoing and new ‘regional’ services within these new trusting partnerships. Operator business preferences and potential barriers to cooperation are identified through stated preference experiments.