Operating Structures and Company Size
The structure of the transport system is an important factor in determining the nature and cost of the service provided and the types of vehicles operated.
If small operators predominate, small buses are likely to predominate because small vehicles are easier for small businesses to buy and operate. There is also less likely to be a coordinated network of routes than might be expected if the system is dominated by large operators.
Each operating structure has its own characteristics, and is appropriate in different circumstances. There is no ideal form that is universally applicable.
The size of an organization can have a significant influence on its operating costs. There are both economies and diseconomies of scale. The size of a road transport operating unit is usually measured in terms of the number of vehicles operated, sometimes weighted to take into account variations in vehicle size.
To facilitate service provision that can be regulated in tune with demand at different times of the day or week, in different directions, and on different sections of route, it’s normally desirable for the operator to be sufficiently large, in terms of number of buses, to provide the entire service on a single route.
The size of an operator providing an urban bus route would typically be about 20 to 50 buses, including spare vehicles. Although this number may be very much higher in the case of a long, high-frequency route in a major city — there may be over 100 buses on a single route. Where small vehicles are operated there may be several hundred vehicles.
An operator may be responsible for several routes, and may control up to several thousand vehicles.
Larger operators deliver better coordination
In urban areas, large operating units are usually more appropriate than small ones. Coordination and route planning, unless this is the responsibility of a separate planning or regulatory authority, is best carried out by a large operator. In a regulated situation routes with low demand can be served at a similar quality of service through cross-subsidy.
Small operators wish to maximize their incomes, so they tend to be unwilling to take their vehicles out of service at times when demand is low, or to operate with less than a full load of passengers. If small operators dominate a system, it can lead to excess supply, and to congestion or chaos at terminals because vehicles must wait much longer to assemble a full load.
If all buses on a route are run by a single operator, it’s much easier to implement schedules that are in line with demand. At off-peak times some buses can be taken out of service. This can also have the beneficial effect of enabling the operator to schedule preventive maintenance.
There is a minimum size of operator below which the service becomes erratic, inefficient and unreliable. On the other hand, in developing countries in particular, there appears to be little advantage in very large size, and there are frequently significant disadvantages. There are few very large bus operations, with 1,000 vehicles or more, which operate efficiently in developing countries.
Operators’ associations and co-operatives
When the system is based on small operators, creating larger units through operators’ cooperatives (also referred to as associations or unions) can enable better service to be provided than would be possible if operators worked independently.
Most transport cooperatives or associations are formed by a number of vehicle owners. They pool their resources by putting their vehicles into a common fleet, under the control of officers appointed by the cooperative members. The members usually retain ownership of their vehicles, and usually continue to employ the crews.