Changes in Industry Structure
Area contracts require up to 10 bus operators, depending on the size of the city. In most cities with populations of between 1 million and 10 million, it’s unlikely that there would be more than six area contracts.
Route contracts may require a greater number of operators, unless each operator has several route contracts. The maximum number of operators in a city with a route contract system will be equal to the number of different bus routes.
A single operator and a potential monopoly situation
If there is a single operator, and therefore only one area contract, this constitutes a monopoly. An area or route contract system may be introduced to replace a public or private monopoly, in which case the number of bus operators in the city will increase.
Alternatively, it may replace a situation where there are many small operators; in this case there must be a reduction in the number of bus operators. This will raise social and political issues.
Rationalizing operations to give exclusive rights to specific areas
Finally, the number of operators may remain unchanged. But the routes operated by each may be rationalized so that each is given an exclusive right to one area of the city, instead of operating throughout the city in parallel with other operators.
Other key issues to consider
Increasing the number of operators
Consolidating small operators
Forming operators’ associations
Creating a level playing field