About hiring public transport

Image: Kseniya Kopna


The system is wrongly remunerated as if passengers were a cost

The issue of urban public transport is a subject that presents several interesting aspects. Because we live in a capitalist country, at least in theory and principles, many think that public transport should also be subject to free competition. Margareth Thatcher and Pinochet did this in their time and the result was that in areas with a large number of users there was fierce competition for passengers and in suburban areas of low demand, there were no service providers.

Of course, everything went back to the areas where only one provider provides the service. This is called a monopsony market, let's say the inverse of monopoly. The number of passengers does not increase, nor are fares lower in general, due to competition. The service where there are few passengers in relation to others with a large number of them simply disappears.

In summary, the monopsony market only allows the operation of a single concessionary company per area in which the city is divided. Each area should have even low-yield lines. This is why a very widespread indicator emerged, the IPK, passenger-kilometre index, a way of classifying the so-called most efficient lines from the point of view of transported passengers. So the concessionaire sets up its garage in the operation area and seeks to have the highest number of high-IPK lines and the fewest possible low-IPK lines. And for that reason, there are areas of the city that are more coveted than others, which are the ones with the highest user density.

Furthermore, as the system is wrongly remunerated as if passengers were a cost, when they are revenues, in addition to areas with higher IPK, more crowded buses mean greater gains and lower expenses. Incredible, but even the Covid virus knew that passenger is revenue, so much so that with the pandemic, the revenue of the providing companies collapsed and not, their costs.

It's not for nothing that, with the issue of the garage included, companies dominate certain areas for years on end, with cases going back almost a hundred years and so on.

Everything seems to be established this way, with the classic concessions with remuneration per passenger carried since 1817, when D. João VI made the first concession to the sergeant-major of the imperial palace.

Even with the contracting system by charter, that is, paying the operating costs and leaving the rate disconnected from the contractor's remuneration, the system was maintained and remains in general, by exclusive areas and garages of the operators.

Suddenly, no more than suddenly, it becomes clear that garages play a strategic role, making it much easier for operators who already have them to those who will need to install them. For no other reason, tenders require the existence of a garage by the competitor. Yet another obstacle to the entry of new competitors.

Therefore, if the garages belonged to the municipality and were rented to the winners, the number of competing companies could be greatly increased, as it is in the bidding that it can be given, given the monopsony market.

We can go further. With the municipal garages and making competition only for charter, exclusive areas are done away with, being able to hire several charterers, regardless of the area of ​​operation, of course maintaining a good level of efficiency of the system.

This is how companies “specialized” in passenger transport are put to an end and a huge competitive market of vehicle charterers can be created.

In Rio de Janeiro, recently in competition with the BRT, municipal garages were established, leaving competition in terms of the cost of chartering and additionally separating the system designer and charter contractor, the controller of service provision and of course, the chartered .

There lies the true way to increase competition in contracting service providers within a monopsony market system.

And readers forgive me, with zero fare at the other end, you will, in fact, have the conditions for a public transport system as a social right, as written in Article Six of the Federal Constitution. That simple.

*Lucio Gregory, engineer from USP, he was municipal secretary of transport in the government of Luiza Erundina.


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