Public Transport can not be sustainable without the government support. In Europe, Bus Transport is highly subsidized. However, India is still trying to find out the best solution for the bus transport in the cities. There is need to identify alternative revenue sources for the bus transport. The presentation highlights the existing contracting options in India.
Outsourcing Bus Operations - How to make it Financially Sustainable
1. Talking Transit Workshop
July 2-3, 2015, Gurgaon
UITP
OUTSOURCING BUS
OPERATIONS - HOW TO MAKE IT
FINANCIALLY SUSTAINABLE
Jaspal Singh
Consultant
UITP India Office
2. Talking Transit Workshop
July 2-3, 2015, Gurgaon
SHOULD CITIES PROMOTE
BUSES??
Delhi London
Singapore Hong Kong
AverageDailyRidershipby
DifferentModes(InMillion)
2.4
3.9
1.0
Metro Bus
DTC
Cluster
2.8
3.6
MRT/LRT Buses
4.2
6.5
Tubes Buses
4.50
4.56
MRT Buses
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3. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Commuters in Indian cities were
earlier totally dependent on
Informal mode of public transport
OrganizedBusTransport
OthermodesofPublicTransport
PUBLIC TRANSPORT SYSTEM IN
INDIA TILL 2008
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4. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Sr. No. City
No. of
Buses
1 Panaji 8
2 Shimla 16
3 Agra 20
4 Bhuvaneshwar 32
5 Pondicherry 49
6 Guwahati 62
7 Surat 106
8 Hubli-Dharwad 170
9 Kanpur 176
10 Chandigarh 209
11 Bhopal 240
12 Nagpur 241
Source: Study on Traffic and Transportation Policies and Strategies in Urban Areas in India, Wilbur Smith Associates, May 2008
Sr. No. City
No. of
Buses
13 Trivandrum 242
14 Jaipur 327
15 Kochi 350
16 Madurai 609
17 Pune 824
18 Ahmedabad 886
19 Hyderabad 2546
20 Chennai 2816
21 Mumbai 3430
22 Bangalore 4182
23 Kolkata 4256
24 Delhi 6906
In 2007, organized bus transport was available in only 24 cities.
ORGANIZED CITY BUS SERVICE
IN INDIA
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5. Talking Transit Workshop
July 2-3, 2015, Gurgaon
In 2009, MoUD launched JnNURM-I to provide one time
assistance to States for the purchase of buses to 60 mission
cities. The scheme helped to induct 14,500 buses and
launched organized bus service in 31 new cities
In 2013, the ministry launched JnNURM-II with a focus on
bring more standard specification and On Bus Intelligent
Transport System (OBITS). The ministry sanctioned around
9,500 buses
In 2015, MoUD has launched AMRUT (Atal Mission for
Rejuvenation and Urban Transformation) to provide support
to 500 cities across India. As part of Urban Transport, the
government is putting focus on Bus, NMT, Multi-level Parking
and BRTS
BUS SYSTEM REFORMS
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7. Talking Transit Workshop
July 2-3, 2015, Gurgaon7
Serving residential and employment centre,
shops, hospitals, schools and transport
interchanges
Passengers should be confident
of an acceptable wait time
In CBD and commercial areas
frequency shall be sufficiently
high.
Sufficient capacity on all routes
so that passengers can normally
board the first bus and high
frequency services at busy
times
Specifications and schedules
On busy routes 5-10 minutes
frequency, ensuring that
buses are available at
regular intervals.
On new routes 15 minutes
frequency, ensuring high
standard of services and
punctuality.
The structure of individual routes should be
as simple as possible with common
standards across the network
KEY COMPONENTS OF IDEAL
BUS SYSTEM
UITP
8. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Production (Cost) risk borne by
Authority Operator
Revenueriskborneby
Authority
Operator
Gross Cost
Net Cost
Management
Contract
(cost plus)
Gross Cost
with passenger
volume/revenue
incentive
Net Cost
with shared
revenue risk
CONTRACT TYPES
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Source: Delhi Integrated Multi-modal Transit System Limited
9. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Net Cost
Full transfer of revenue risk?
or Shared risk?
Or Minimum revenue guarantee?
9
Gross Cost
Resource contract
No transfer of revenue risk
Revenue paid to Government
Cost
Revenue
Profit
Funding Support
Govt Operator
Cost
Revenue
Profit
Funding
Support
Govt Operator
Source: Delhi Integrated Multi-modal Transit System Limited
CONTRACT TYPES
UITP
10. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Potentially attractive from the point of view of
the tendering authority, as all risks are transferred
to operators
Operators require access to detailed information
on revenues in order to make a realistic bid
Generally there are 3 variants of Net Cost Model
Premium Given to Authority: The operator
pay monthly premium on per bus or route
Minimum Revenue Guarantee: The govt. will
compensate minimum revenue shortfall
Shared Revenue Risk: Any shortfall in revenue
would be partially compensated by
Government
10
Indore City Buses
Bhopal BRT Buses
NET COST – KEY FEATURES
UITP
11. Talking Transit Workshop
July 2-3, 2015, Gurgaon
+ Incentive to maximise patronage
+ Incentive to enforce revenue collection
Cost
Revenue
Profit
Funding Support
Govt Operator
- No data on actual patronage revenue
- No service on some routes so not possible to
survey
- Potential for high risk premium and/or few bids
- Disincentive to offer/accept concession fares
- Potentially unrealistic expectations of growth
(high or low)
- Potential for competition with other operators
- Potential windfall gain if public operators
underperforms
AdvantagesDisadvantages
NET COST – FULL REVENUE RISK
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12. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Resource contract with fare collection on
behalf of Government
Tender for defined package of service
schedules and functional specifications
Define costs by type of bus for base bid
Defined rates for marginal service increments
Fare collection and revenue protection
separately outsourced
12
Delhi Cluster Scheme
Jaipur City Buses
GROSS COST – KEY FEATURES
UITP
13. Talking Transit Workshop
July 2-3, 2015, Gurgaon
+ Flexibility to add routes, change frequency,
redeploy resources
+ Fares and ticketing policy revised at will
+ Full acceptance of all ticket types including
concession fares/passes
+ Payments related to type of bus (quality of
service) provided
+ Reduced cost of finance due to secure income
stream (from Government)
DisadvantagesAdvantages
- No incentive to maximise patronage (or pick up)
- No incentive for revenue protection
Cost
Revenue
Profit
Funding
Support
Govt Operator
GROSS COST – NO REVENUE RISK
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14. Talking Transit Workshop
July 2-3, 2015, Gurgaon
City Contract Type
London UK Quality Incentive Route based
Copenhagen DK Gross cost Area based
Stockholm SE Gross cost Area based
Adelaide AU Gross cost Area based
Bogota CO Gross cost Corridor based
Santiago CL Gross cost Area based
Delhi IN Modified Gross Cost Route based
Hong Kong Net Cost Route based
APPROACHES IN OTHER CITIES
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Source: SDG / DIMTS
15. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Authority Operator
Bus routes are assets
Lack of financial resources
Lack of resources to monitor /
manage the operation
Compliance levels are more
stringent
Net / Gross
BUS CONTRACTING IS LIKE TUG
OF WAR IN INDIA
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Ticketed revenue is insufficient
Competition from informal
transport
No regulatory power for Fare
revision and penalizing
ticketless travellers
16. Talking Transit Workshop
July 2-3, 2015, Gurgaon
BUS CONTRACTS IN INDIA
Number of Contracts
Gross Cost Contract – 16
Net Cost Contract – 16
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Number of Buses on Road
Gross Cost Contract – 2,114
Net Cost Contract – 1,676
Upcoming Projects
Gross Cost Contract - Noida, Kalyan,
Thane, Mira-Bhayander and Virar
Net Cost Contract – Jaipur and
Indore
Rajasthan
Gujarat Madhya Pradesh
Maharashtra
Bihar
Punjab
Delhi
Orissa
17. Talking Transit Workshop
July 2-3, 2015, Gurgaon
BUS CONTRACTS IN INDIA
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Company Name City State
Number of Buses –
Contracted
Number of Buses
- Operational
Business
Model
Star Bus Services Pvt. Ltd. New Delhi Delhi 231 118 Gross Cost
Indraprastha Logistics Limited New Delhi Delhi 290 232 Gross Cost
AB Grains Spirit Pvt. Ltd. (Including Great Value Fuels) New Delhi Delhi 911 572 Gross Cost
Goverdhan Transport Company Pvt. Ltd New Delhi Delhi 233 106 Gross Cost
Antony Road Transport Solutions Pvt. Ltd. New Delhi Delhi 298 103 Gross Cost
Metro Transit Pvt. Ltd. New Delhi Delhi 415 275 Gross Cost
Prasana Purple Mobility Pvt. Ltd. New Delhi Delhi 79 79 Net Cost
Prasana Purple Mobility Pvt. Ltd. Surat Gujarat 40 20 Gross Cost
Prasana Purple Mobility Pvt. Ltd. Ahmedabad Gujarat 50 40 Gross Cost
Chartered Automotive Pvt. Ltd. Ahmedabad Gujarat 160 160 Gross Cost
Shyama Shyam Services Centre Ahmedabad Gujarat 80 80 Gross Cost
Shree Maruti Travel Pvt. Ltd. Ahmedabad Gujarat 50 50 Gross Cost
Mateshwari Transport Pvt. Ltd. Ahmedabad Gujarat 150 150 Gross Cost
Vitcos Transportation Pvt. Ltd. Vadodara Gujarat 250 110 Net Cost
Prasana Purple Mobility Pvt. Ltd. Pune Maharashtra 222 222 Net Cost
Kestrel Infrastructure Pvt. Ltd. Mira Bhyander Maharashtra 52 52 Net Cost
Vansh Nimay Infraprojects Limited (VNIL) Nagpur Maharashtra 470 210 Net Cost
Prasana Purple Mobility Pvt. Ltd. Ahmednagar Maharashtra 23 23 Gross Cost
Pune-based Company Navi Mumbai Maharashtra 185 40 Gross Cost
Prasana Purple Mobility Pvt. Ltd. Bhopal Madhya Pradesh 225 225 Net Cost
Prasana Purple Mobility Pvt. Ltd. Indore Madhya Pradesh 98 98 Net Cost
Time Travel Pvt. Ltd. (Serco Global Services) Indore Madhya Pradesh 50 25 Gross Cost
Mahendra Travels Pvt. Ltd. Bhopal Madhya Pradesh 50 15 Net Cost
City Bus Service Pvt. Ltd. Jalandhar Punjab 15 15 Net Cost
Anantha Padmanabha Transit Pvt. Ltd. Amritsar Punjab 150 40 Net Cost
Horizon Connect Transways Pvt. Ltd. Ludhiana Punjab 220 105 Net Cost
Mateshwari Transport Pvt. Ltd. Jaipur Rajasthan 120 120 Gross Cost
Harish Transprot Pvt. Ltd. Jaipur Rajasthan 280 280 Net Cost
Dream Team Sahara Bhubaneswar Orissa 110 110 Net Cost
Dream Team Sahara Puri Orissa 25 25 Net Cost
Sri Durgamba Transit Pvt. Ltd. Raipur Chhattisgarh 50 50 Net Cost
AB Grain Sprits Pvt. Ltd. Patna Bihar 260 40 Net Cost
18. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Monitor compliance of the Service Level
Agreement (SLA) by bus operators
Process and impose deductions on bus operators
for non-performance
Enforcement and monitoring of Schedules and
Time Tables
Monitoring aspects that impact customer service
Data collection, analysis and monitoring of
cluster-wise operation, along with route
rationalization
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ROLE OF AUTHORITY
UITP
19. Talking Transit Workshop
July 2-3, 2015, Gurgaon
UITP
WHO SHOULD BEAR THE
COST OF RUNNING
BUSES OR PUBLIC
TRANSPORT??
21. Talking Transit Workshop
July 2-3, 2015, Gurgaon
USERS AND NON-USERS OF
PUBLIC TRANSPORT SHOULD
EQUALLY BEAR THE COST
Also levy on those whose mobility habits are
most harmful to society. These charges can
include congestion charges, parking charges
and fuel taxes.
Levy a charge on those who benefit most from
public transport supply, such as employers,
retailers and real-estate owners.
Beneficiary
pays
Polluter
pays
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Source: UITP – Public Transport Financing Toolkit
22. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Government of Rajasthan created a Dedicated
Urban Transport Fund, known as Rajasthan
Transport Infrastructure Development Fund(RTIDF)
GoR allocates 75% of total collection to LSG. The
funds received in LSG are being utilized for:
For construction of ROB’s/underpass/flyovers/parking
To develop by pass roads for better transportation
To provide funds as subsidy and as loan on low
interest rate to JCTSL, ACTSL and other SPVs
To provide fund to meet operational losses to RSRTC,
JMRC, JCTSL & ACTSL
To provide assistance in procurement of pollution free
fuel such as CNG, LPG, etc
RAJASTHAN TRANSPORT
INFRASTRUCTURE DEVELOPMENT
FUND (RTIDF)
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1,719.1
2,200.0
3,500.0
4,000.0
2011-12 2012-13 2013-14 2014-15
RTIDF Collection, 2012-15
(Figures in INR Million)
23. Talking Transit Workshop
July 2-3, 2015, Gurgaon
Cess on one time tax being levied on motorized
vehicles under Rajasthan Motor Vehicles Act, 1951
Cess in the form of Green Tax has been imposed on
registration of old and new vehicles
Cess on Stamp duty under Rajasthan Stamps Act.
The funds from Central or State Govt.
The funds received from industries to carry out social
responsibilities
RTIDF - SOURCES OF FUND
23 UITP
24. Talking Transit Workshop
July 2-3, 2015, Gurgaon
EMPLOYER TAX - FRANCE
In France, the versement transport (abbreviated VT) is a
hypothecated local tax levied on the total gross
salaries of all employees of companies of more than
nine employees
Originally intended to raise capital for investment in
local public transport infrastructure, but more and more
used to cover its operating expenses
The tax is levied on the employer, not the employee
directly. The money is directed to the autorité
organisatrice de transport urbain (AOT, "Urban Regional
Transport Authority"), which allocates the fund to
different operators
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25. Talking Transit Workshop
July 2-3, 2015, Gurgaon
A passionate champion of sustainable urban
mobility, Internationally recognised in the
development of this critical policy agenda
A long history since 1885, only worldwide network
to bring together all public transport stakeholders
and all sustainable transport modes
1,400 member companies giving access to
over 16,000 contacts from 92 countries
Our members are public transport authorities and
operators, policy decision-makers, research
institutes and the public transport supply and
service industry
25
ABOUT UITP?
UITP
27. Talking Transit Workshop
July 2-3, 2015, Gurgaon
ABOUT UITP?
We engage with decision-makers, international
organisation and other key stakeholders to promote
and mainstream public transport and sustainable
mobility solutions
27
Advocacy &
Outreach
We inspire excellence and innovation by generating
and sharing cutting-edge knowledge and expertise
Knowledge
We bring people together to exchange ideas, find
solutions and forge mutually beneficial business
partnerships
Network &
Business
UITP
28. Talking Transit Workshop
July 2-3, 2015, Gurgaon
UITP FULL MEMBERS
OPERATING BUS LINES
452 members
66 different countries
From all UITP Regional Divisions
Europe
Latin America
MENA
Asia Pacific
Africa
EurAsia
North America
the UITP regions
the UITP regions
28 UITP
29. Talking Transit Workshop
July 2-3, 2015, Gurgaon
OVERVIEW ON THE UITP BUS
COMMITTEE ACTIVITIES
1.Working Groups
2.Recently achieved studies
3.Regular Topics in the Agenda
4.Research projects
5.Technical Visits
6.Publications
7.New IssuesBusstation – Vehicle
Transfer
29 UITP