Area Contract (Net Cost) / Infrastructure Requirements / Infrastructure Ownership

Infrastructure Ownership
Bus station ownership
Bus stations may be owned by individual bus operators, or by operators’ associations, local authorities or other organizations. They may be managed by their owners, or under contract or franchise to independent companies or associations of transport operators. For example, bus terminals may be owned by a city council, but managed by a bus owners’ association.

In a competitive situation, where a bus station is used by several operators, it’s normally desirable that it’s owned and managed on a commercial basis by an organization independent of the bus operators. This makes the station available to all operators on equal terms.

It’s usually unsatisfactory for a single bus operator to control a bus station that is required for his own and competing services. This may inhibit competition by giving the station owner an unfair advantage, through imposing excessive charges on other operators or excluding them altogether. Where there is co-operation between bus operators, however, it’s common for several operators to share bus station facilities owned by one of them.

It is normally most appropriate for bus station and terminal facilities to be owned by the authorities, and made available to all operators of bus routes which use these facilities.

Authority ownership focused on service, not revenue extraction
Where bus stations are provided and operated by local authorities, provision of these facilities is sometimes regarded more as a means of raising general revenue for the authorities than as a service to travelers. This can lead to the construction of large bus stations in locations where they are not required. These stations are, in effect, extremely expensive and inefficient toll collection facilities, extracting revenue from buses but not from other vehicles.

Alternatively, bus stations may be owned and/or operated by private sector organizations on a commercial basis. A station may be owned by the authority, and operated under contract by a private sector undertaking. It may be owned and operated by a private sector undertaking, but under some form of license that would provide the authority with the necessary control over its location, size and configuration, and its availability to bus operators.

Bus depot ownership
Most large bus operators own their own depots and workshops, or hold long-term leases on these facilities. An established operator will have an advantage over a new operator setting up in business, whether to enter the market where entry is unregulated, or to bid for a route or area contract.

Where there is an established bus industry with several large operators, each with their own depot facilities, each will be able to compete in or for the market on equal terms in this respect. However, in many developing countries there are few such operators, and the number of potential bidders is severely limited.

Separating depot ownership from bus services removes barriers to entry
As with bus stations, there is a case for separating ownership of depot facilities from the operation of bus services in order to remove this barrier to entry to the market.

The number, size and location of depot facilities required is determined by the layout of the city, the route network, and the numbers and types of buses. It’s largely unaffected by the way that the routes are allocated between operators. Although for practical operational reasons it’s normally unsatisfactory for one depot to be used by more than one operator.

There is a strong case for the authority to provide the necessary depot facilities, and to make these available to selected bus operators on a leasehold basis, consistent with any area or route contracts which may apply. If there are already some suitable facilities owned by existing operators, these should be taken into account in determining the total requirement — any unnecessary duplication of facilities will be wasteful.

In some developing countries there are state-owned public transport undertakings which are in very run-down condition, both physically and financially. While the physical assets may be in poor condition, typically with only a small proportion of vehicles available for service, these organizations often have valuable assets in terms of depot and workshop facilities.

Even if the public sector operator ceases to trade, these resources are usually worth preserving or restoring for use by private sector transport operators.

Bus stops and shelters
Bus stops and shelters are part of the street furniture, and may be used by several different operators. It’s appropriate that these are owned by the local authorities and not by the bus operators.