Excessive Operating Costs
Excessive operating costs will lead to excessive fares, low profitability, excessive subsidy requirement or a combination of all three.
Excessive costs may be incurred through inefficient operating practices, excessive numbers of staff, and poor vehicle maintenance. All of these are within the control of the bus operator.
However, there may be excessive costs that are caused by factors beyond the bus operator’s control. Often these factors are controlled by government.
These factors include regulations which inhibit bus operators from operating efficiently. For example, a licence for a bus may specify the route on which it may be operated, thus preventing it from being used to maximum efficiency by being inter-worked between different routes. Or there may be unreasonable restriction on vehicle size, preventing the use of maximum-capacity buses with lower costs per passenger.
Bus operators may also face taxes and import duties on inputs such as vehicles, vehicle parts and fuel that may be excessive. In fact, they may even be higher than taxes on alternative forms of transport such as private cars.
Operating costs are also increased when buses are delayed by traffic congestion. The authorities can reduce the effects of congestion, which in turn tends to reduce unit operating costs for the bus operator. Traffic management plans that give priority to buses, or road user charges to discourage the use of private transport, are two examples of ways the authorities can help bus operators.