Long-term development of express coach services in Britain

Express coach services compete for longer distance market with car and rail, and largely cater for the leisure, tourism, and visiting friends and relatives. markets. Britain deregulated its express coach system in 1980, and it is now opportune to examine long-term impacts of that change. The initial impacts were reviewed by the authors in 1986 (Robbins & White, 1986) but such impacts do not necessarily match long-term outcomes. Monitoring of the British system has been conducted by examining service changes and data on ridership, together with financial performance of the main operator groups and technical press coverage. It can be shown that a dominant position has been retained by the major operator (National Express), with a continued decline in the role of smaller independent operators in the all-year-round daily network. However, new competition has emerged from other large groups (most notably Stagecoach ‘Megabus’ in 2003). The paper analyses the operating and marketing strategies of the new operator and contrasts these strategies with those adopted in the 1980s. Implications for the future development of the network in Britain are outlined.     

Passenger railway reform in the last 20 years - European experience reconsidered

It is about 20 years since the rail reform process in Europe began with the separation of infrastructure from operations in Sweden. This paper reviews the entire process, examining the objectives of reform, the different models adopted, and the key elements of separation of infrastructure from operations, competition both through open access and franchising and regulation and infrastructure charging. It is concluded that separation of infrastructure from operations involves costs, but is the most effective way of achieving within mode competition. Where operations do not greatly overlap and open access passenger and freight are unimportant, leasing infrastructure to passenger franchisees may be effective, but the model of vertical integration as separate subsidiaries within a holding company structure makes it difficult to ensure a level playing field for new entrants and is only effective where the vertically integrated operator remains dominant.     

Evaluating the long term impacts of transport policy: The case of passenger rail privatisation

Britain's national rail system was ‘privatised’ as a result of the 1993 Railways Act, with most of the organisational and ownership changes implemented by 1997. This paper examines the long term impacts of these changes. A key issue when examining long term changes is that of the counterfactual – what would have happened if the changes had not occurred? A simple econometric model of the demand for passenger rail services was developed and used in conjunction with extrapolative methods for key variables such as fares and train km to determine demand-side counterfactuals. Extrapolative methods were also used to determine counterfactual infrastructure and train operation costs. Although our results are sensitive to the assumptions we have made concerning the counterfactual they suggest a number of impacts. Since privatisation, rail demand has grown strongly but our analysis indicates that transitional disruptions suppressed demand by around 9% over a prolonged period (1992/3 to 2005/6), whilst the Hatfield accident reduced demand by about 5%, albeit over a shorter period (2000/1 to 2006/7). A welfare analysis suggests that although consumers seem to have gained as a result of privatisation, for most years this has been offset by increases in costs. An exception is provided by the two years immediately before the Hatfield accident. Overall the loss in welfare since the reforms were introduced far exceeds the net receipts from the sale of rail businesses. Thus although the reforms have had advantages in terms of lower fares and better service levels than otherwise would have been the case, this appears to have been offset by increased infrastructure and train operations costs. The source of these high costs remains an area of speculation but appear to be related to aspects of both market and regulatory failure.     

Exploring the effects of passenger rail franchising in Britain: Evidence from the first two rounds of franchising (1997-2008)

This paper provides an up-to-date review of the previous literature concerning the impact of passenger rail franchising on productivity and costs in Britain, and also presents important new evidence. In particular, the extension in time of previously-used datasets offers the first opportunity to study the impacts of re-franchising. The previous literature emphasised the failure of franchising to produce sustained productivity gains, with a sharp deterioration in productivity after 2000. The new evidence presented offers a somewhat more positive view of the British experience. It suggests that part of what was previously considered to be falling productivity may in fact be due to exogenous changes in diesel prices. Further, new data suggests that the recent increases in costs have resulted in higher quality of service. Finally, competitive re-franchising, and the associated unwinding of short-term management and re-negotiated contracts, seems to have led to improvements in productivity between 2006 and 2008. Nevertheless, it remains the case that passenger rail franchising in Britain has failed to reduce costs in the way experienced in many other industries and in rail in other European countries. The evidence is that somewhat larger franchises, avoiding overlapping and optimising train density and length, should reduce costs. We also speculate that the major increase in wages and conditions of staff might be moderated by longer franchises, although that remains to be proved. This re-appraisal of the British case is important in the context of the wider international interest in the use of franchising in passenger rail, and its relevance to the current review of ways of introducing competition into the domestic rail passenger market in Europe.     

European rail reform and passenger services - the next steps

Whilst the emphasis of European Union rail legislation to date has been on freight, measures such as separation of infrastructure from operations, infrastructure charging regimes and regulation have major implications for the passenger sector. But implementation of these measures in many countries has been inadequate. Crucial to overcoming these problems is the establishment of strong independent regulators in all member states. There is currently no requirement for competition in the passenger sector except for international services, but there is experience both of open access for commercial services and of competitive franchising. However, even where permitted open access competition has been very limited and there is evidence that undesirable cream skimming may be a problem. Experience of franchising has generally been positive, but in some cases it has failed to drive down costs. It is concluded that a combination of more sensible risk sharing, a determination not to renegotiate, longer franchises and limited open access competition where justified by benefits is likely to be the best way forward.     

Impacts of increased rail infrastructure charges in Sweden

The impacts of the already decided increase in rail infrastructure charges in Sweden are described for various market segments within the rail transport system and on the aggregate level for society as a whole. The need for complementary measures in the road transport system is also discussed. Likewise, the paper also mentions the impact of increased rail infrastructure charges on certain significant industrial sectors. An increase in rail charges may reduce social welfare even though the reduction in rail transport mileage is small. This is mainly due to large non-internalised absolute externalities for road freight. For commuter trains, the infrastructure charges' share of the costs of rail transport is expected to rise to 13 percent, which in an international perspective still will be small.     

Changes in transaction costs over time - The case of franchised train operating firms in Britain

The significant effects of competition, franchising and vertical separation of rail infrastructure from train operation on the level of transaction costs are often anecdotally described in the literature. Although it has been shown that franchising has an effect on total costs, there is very little empirical evidence on whether franchising has an impact on the level of transaction costs over time. One reason for this is, of course, the limited systematic work on the measurement of transaction costs in railways. This paper builds on recent work that applied a top-down approach to transaction cost measurement to identify the size of the transaction sector within rail firms in different EU countries. In cross-country comparison particularly, British train operators turned out to be associated with high levels of transaction costs. However, since the previous work focused on a single fiscal year it did not show any longitudinal effects within one institutional environment or country. Therefore, this paper focuses on British franchised passenger train operating firms and aims to reveal how the transaction sector within those firms has changed over the period 1996/1997-2007/2008 and whether the franchise contract details, such as contract length or the franchising regime, matter. It also aims to estimate the resulting changes in the level of transaction costs and their share in total operating costs for the first time.     

A transaction cost analysis of Finnish, Swedish and Norwegian shipping

The purpose of the article is to analyse the operation of shipping companies in Finland, Sweden and Norway cross-sectionwise in 1989-1991. These represent three different types of shipping operations in three neighbouring countries in Northern Europe. In the analysis, an apllication of the transaction cosr approach (TCA) is employed. It is shown that finnish shipping is usually very concentrated both in terms of geographical coverage, cargo composition and ownership. In cargo shipping, Finnish shipping firms mainly operate on the 'domestic' routes connecting Finland to the main European markets. Few Finnish firms are operating in highly competitive operations such as cruise shipping and liquid and dry bulk trades. Ownership in shipping is also often institutionalized rather than being in private, independent hands. In Sweden, the hierarchial governance of shipping is less than it is Finland. In certain worldwide trades, such as reefer and car carrier trades, the governance structure could be defined as hierarchial due to high asset specificity and high degree of specialization. In Norway, the shipping industry seems to be strongly market-oriented. The industry is composed of shipping companies, whose existence depends on their cost competitiveness on the shipping market, and is usually not backed up by exclusive hierarchial arrangements. Notable exceptions are the LNG/LPG and car carrier trades. The classification presented principle can easily be extended to other shipping countries, or companywise comparisions, as well.     

Competition in transit markets

Despite regulatory reforms in a number of countries, competition in transit markets is still relatively rare. Moreover, where it does occur it tends to be small group in nature and the outcomes are difficult to predict. In this paper, simulation models of competition in inter-urban rail markets and urban bus markets are developed and applied in studies of Great Britain and Sweden. It is found that on busy routes head-on competition is commercially feasible (although for rail this assumes low access charges) but is not socially desirable. For routes with thin demand (or high access costs), competition may be limited to cream skimming. In most competed cases, there appears to be a tendency for the provision of too much service, at too high price and (at least for bus) at too low quality. Rather than classical Bertrand-Cournot oligopoly models, transit markets may be best described by models of oligopolistic competition based on horizontal product differentiation.     

Some current aspects of marketing in the near-sea ferry and liner trades with particular reference to the lrish Sea

The marketing of ferry services has almost unique characteristics but little literature exists in this field. This paper is the result of a preliminary investigation, based on a series of interviews, into some current aspects of marketing on the Irish Sea. The study considers three services types: container; freight only; ro-ro and multi-purpose ro-ro.

The complementarity, or otherwise, of carrying passengers and freight together is debated, as is the organizational conflict or confusion that may arise from this type of operation. The need to adopt different marketing strategies in the freight and passenger markets is derived from consumers' different buying behaviours. The sometimes contentious relationship between product differentiation and market segmentation strategies is explored and definitions provided. Both market coverage and specialization strategies are found in the ro-ro industries and the more competitive segments are identified. Using 'purpose of travel' as the basis for segmentation, potential growth segments of the passenger market are identified. The marketing strategies employed by the freight industry are less apparent, although segmentation does seem to play a major role in the identification of target markets.

The study indicates the extent to which shipping companies on the Irish Sea have adopted the marketing concept and that scope still exists for them to make greater use of this fundamental business philosophy.     

Eastern/Western European shipping companies and multimodal transport operations

The purpose of this article is to discuss the current developments in multimodal cargo flows in North European freight transports from Eastern and Western European shipping companies' point of view. Four types of options were identified for shipping companies in multimodal transport operations, namely: (i) the full service operator option, (ii) the feeder operator option in container trades, (iii) the ro-ro operator option, and (iv) the ferry operator option. Option (i) requires a global transport network together with efficient information handling capabilities. This option can be reached by a limited number of mega-carriers. The scope of investment and know-how in this option is such that Eastern European operators are unlikely to achieve this level. In (ii), fleets from (or registered in) the former socialist countries have an advantage as low cost operators, provided that the quality of the operation conforms to principals' requirements. However, the supply side in the intra-European container feeder trades seems to be quite saturated, and new market shares will be very difficult to acquire in the 1990s. In ro-ro shortsea trades the major freight transport operators are well integrated into either freight forwarder driven arrangements (Sweden, Germany), or into major shippers (Finland). As providers of port-to-port transports for road-based cargoes, ferry operators continue to play an important part in international transports. However, the major incentive (and revenue) for passenger/car ferry operations is usually derived from consumers' vacational or travelling needs. Along with the ongoing transition process and a higher level of economic stability that is hopefully achieved in these countries, mergers and acquisitions by Western partners are likely to follow.     

Workshop report - Beyond competitive tendering

Most countries contemplating the introduction of competition-based organizational forms did not perceive the British deregulated bus regime to be the way forward. A deeper analysis of facts and an international coverage of the local successes of that regime remained marginal and, as a result, the reputation of deregulated regimes remained bad or - at best - a contentious issue. The rush for competitive tendering was further stimulated by the European Commission’s endeavour to enact a Regulation that put forward competitive tendering of exclusive contracts as the preferred way to organise local public transport markets. Yet, as discussed in this workshop, deregulation in various guises may well play a growing role in local and regional transport. This is already visible in long-distance coach transport and in (international) European railway markets as from 2010. The workshop paper discusses whether such competition-based institutional alternatives to competitive tendering can provide efficiency and service improvements, how such competition-based alternatives should be ‘regulated’ and, alternatively, how a non-competitive direct award could perhaps still guarantee good performance.     

Engaging paratransit on public transport reform initiatives in South Africa: A critique of policy and an investigation of appropriate engagement approaches

A number of South African cities are planning integrated public transport networks that rely on the introduction of Bus Rapid Transit (BRT), in line with similar trends to expand or upgrade public transport services in emerging and industrialised urban transport markets around the globe. In addition, BRT in South Africa is being used as a mechanism to drive reform in the dominant yet highly fragmented paratransit sector, inspired by similar processes particularly in Latin American cities such as Bogotá, Mexico City, and Santiago de Chile. Thousands of paratransit operators would have to formalise their businesses, or merge into new or existing operator entities in order to participate in the new systems. There is, however, an absence of accessible business plans and regulatory regime proposals around which paratransit can be engaged to convince it to alter its current modus operandi. A large number of national, regional and local paratransit groupings have furthermore indicated their resistance to the planned networks on the grounds of insufficient consultation, an unclear future role in the system and employee redundancies. Should this deadlock not be resolved, it seems unlikely that the planned networks will be realised in the proposed timeframes, if indeed at all. This paper investigates the South African passenger transport policy framework that has contributed to the current deadlock, and explores appropriate approaches to engaging paratransit operators on a system of contracting, competition and ownership that recognises the sector’s aspirations and fragmented nature, yet contributes towards improved passenger transport services. It is the authors’ view that paratransit reform is a highly context-specific process, even at the sub-city level, and that this could prevent transferring paratransit regulatory and integration approaches across countries, and even cities in the same country, without adaptation to local conditions.     

Rail infrastructure charging EU-directive,Swedish concerns and theory

The first railway package is being recast by the legislative bodies of the European Union. One point of departure in this paper is how Swedish agencies treat issues concerning marginal cost based charges, financing charges and allocation of scarce capacity and it discusses these issues from a welfare point of view, partly by use of theoretical modelling. It is seen here that the Swedish infrastructure manager (the Swedish Transport Administration) so far has no method for calculation of marginal costs as a base for charging, especially for costs of scarce capacity, and that the infrastructure manager is applying or discussing various methods for allocations of scarce track capacity. The EU-recast gives no guidance on principles for calculation of charges for scarce capacity, so we recommend the Swedish Transport Administration to develop such charges. The Administration seems to ignore important externalities that should be taken into consideration from a welfare point of view, with respect both to efficient charging and to allocation of scarce capacity. The analytical modelling part of the paper aims to derive these charges in principle, taking these externalities into account. If financing charges exceeding social marginal costs are applied, the model shows how to minimise the welfare loss of these increases. It also shows that financing charges should primarily be applied to market segments that cause large external costs from the operation of the train, where its customers have low valuation of wait time and delay time, where customers of other segments have high valuations of delay and where increased profits for other operators are induced.     

The impact of transitional changes of maritime passenger transport on Croatian tourism development

At the beginning of the nineties, Croatia witnessed the collapse of communism, arrival of democracy, a war of national survival and the launch of the transition. Extraordinarily under these circumstances, tourism has become one of the most propulsive economic activities in Croatia. To preserve this prosperous industry, one must consider the variables that affect Croatian tourism. Research shows that maritime passenger transport has a substantial influence upon seashore tourism improvement. This mode not only represents a sizable share of international tourism transport, but often provides the only access to island tourism destinations. This paper provides an analysis of the impact of the transitional changes of maritime passenger transport on Croatian tourism development. Following a brief examination of the functions of maritime transport within tourism, the paper focuses on: composition of Croatian fleets, potential opportunities in local and international markets, and structural reforms required to increase the quality of Croatian maritime passenger services. Commercialization programmes are significantly important as Croatia prepares to enter the EU, and open up its markets to free competition.     

The impact of transitional changes of maritime passenger transport on Croatian tourism development

At the beginning of the nineties, Croatia witnessed the collapse of communism, arrival of democracy, a war of national survival and the launch of the transition. Extraordinarily under these circumstances, tourism has become one of the most propulsive economic activities in Croatia. To preserve this prosperous industry, one must consider the variables that affect Croatian tourism. Research shows that maritime passenger transport has a substantial influence upon seashore tourism improvement. This mode not only represents a sizable share of international tourism transport, but often provides the only access to island tourism destinations. This paper provides an analysis of the impact of the transitional changes of maritime passenger transport on Croatian tourism development. Following a brief examination of the functions of maritime transport within tourism, the paper focuses on: composition of Croatian fleets, potential opportunities in local and international markets, and structural reforms required to increase the quality of Croatian maritime passenger services. Commercialization programmes are significantly important as Croatia prepares to enter the EU, and open up its markets to free competition.     

Competition in Brazilian bus and coach services - The results of recent competitive tendering processes

This paper analyses the terms and the results of a sample of some recent Brazilian bidding processes for the concession of public passenger transport services: namely, urban and metropolitan bus or regional coach services. The analysis is based on selected issues relating to competitiveness and upon the legal framework that applies in this sector. It was concluded that, given the lack of bidding processes for concessions in the bus and coach sector in Brazil, the fact that some bidding processes have been carried out should be considered a sign of progress. However, these auctions have not necessarily prioritised competitiveness, since many barriers to entry into the systems were imposed by the bidding terms. Future competitive tendering processes should seek to abide by stricter principles of competitiveness, if they wish to avoid the entire effort expended on conducting such processes serving only to mask nothing more than formal obedience to the law and to discredit the bidding process in the eyes of Brazilian citizens.     

The competitive environment of a service industry: the examples of the U.K.-Continent passenger sea ferry services

The paper examines an international service sector (passenger sea ferry services between the U.K. and continental Europe) from the perspective of its competitive environment. Porter's five forces model forms the basis of the analysis of the market illustrated by recent develoments. Within this context the barriers to entry into and exit from the market are considered in detail. Recently, there have been many changes in market structure, and with increased competition, including that from the Channel Tunnel, it may be necessary to pool services. This will improve ferry competition with other forms of transport, but will require the brand awareness of ferries to shift from the ferry company to the ferry service offer. The service offer will need to be more clearly defined.     

Results so far and prospects of Kazakhstan passenger rail franchising

From 1991 till 2004 passenger rail transportation in Kazakhstan was organized by a public company without financial contribution from the state budget. As in any post-Soviet country losses from passenger sector in the integrated rail company were covered at the expense of the freight transportations. From 2005 the Government is trying to introduce competition in passenger rail industry by competitive tendering rights to operate on particular route and providing subsidies.This paper reviews the Kazakhstan passenger rail franchising policy from statement and implementation with analysis of results so far. To get sense about the current policy’s perception survey among managers of the government bodies and railway companies had been performed. It indicates respondents’ opinion about main concerns and suggestions for improvement in passenger rail industry. According to provided analysis there are opportunities for improvements in operation of public and private companies as well as in the Government policy.     

Workshop 3B: Governance,ownership and competition issues in deregulated (free market) public transport: Lessons that can be learnt from developed and developing economies

The past emphasis in this conference series has been on the best ways to deregulate regulated public transport markets. This workshop reverses this process by examining the best ways to regulate deregulated public transport markets. A hierarchy of regulatory needs is identified and three hybrid models examined, based loosely on experience from Great Britain, New Zealand and Sweden. It is argued that deregulated public transport markets are a global phenomenon but regulatory measures should reflect local requirements. The resultant process of glocalisation might result in regulatory measures that focus on the rules of law and their enforcement in emerging public transport markets (such as urban transport in Sub Saharan Africa and for the soon to be competitive inter urban market in Germany) but that focus on guidance for network integration and incentivisation for welfare maximisation in more mature public transport markets (as in Great Britain, New Zealand and Sweden).