Transport Economics

University Degree Business and Administrative studies

Geoffrey Wilson

(13505606)

Transport Economics Assignment 2

a) Decline in Bus Use

Since the 1950’s there has been a rapid decline in bus journeys. In the whole of Britain in 1950 there was a peak of 16,445 million traveling by bus, but this has fallen to 5,641 million in 1985/86. This was the last year before deregulation of buses. Since the bus service was deregulated in Great Britain outside London there has been a major decline by 37 percent, and fares have risen by 45 percent. In the bigger cities this is even worse with a decline of 38 percent and fares rising by 86 percent. The Passenger Transport Executives and local authorities invest £500 million each year through concessionary fares, support for subsidised services and improvements such as new and sometimes expensive bus shelters. The table below shows the how the trends have changed in different areas over the last twenty years.

The figures show a very serious decline in bus usage in Great Britain. This can not be blamed on the bus service as it has improved since these the 1950’s. The bus service is the only mode of transport available for some people especially those without access to a car, but there is less people without cars so the situation is getting worse because of increased car ownership.

Car ownership and bus use

This is the main cause for the declining bus use. Traveling by bus is something that people no longer want to do, and people will work longer hours so they can afford there dream car. The car driver is not the only person that stops using the bus, but also the people living in the same households that are carried as passengers. Recent trends show that car ownership is always on the rise, and it’s highest in rural areas and in the large urban centers it’s lowest. This is because of the lack of public transport in rural areas. Car ownership is also highest among higher income groups. This is clearly because the costs of running a car dose not affect this group of people. Since 1985/86, the number of bus trips per person in the non car owning households has remained stable, but has decreased in those with cars, and therefore the bus industry has grown to be relatively more reliant on the ever diminishing number of non car owning households. If this trend continuous then the bus service will not be able to afford to improve the service.

Bus fares

The trend shows that bus fares have risen significantly since the 1980’s. Since deregulation in 1986 the fares have risen above inflation levels. The rising of bus fares is compared to rail fares and motoring costs in the table below.

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Bus fares

In the United Kingdom a typical public transport journey is 15 percent more than in Germany, 60 per cent more than in France and three times as much as in the Netherlands. The department relies on the competition between bus companies to keep fares down. Although the government is trying to bring these fares down there is still drastic measures required to break this trend and bring the public transport fares down to the same level as the rest of Europe.

The solution to this trend

The solution is obviously to get more people on to buses but to do this it has to be proved that the car is worth leaving behind. The government is trying a lot of different methods of getting people back onto buses. One of these methods is using television and radio advertisements. This has not been a success, and it has just wasted more of the tax payer’s money. The government has to make the bus quicker and cheaper than the private car and with increased road congestion this task is becoming a lot easier. One of the methods considered is to introduce a bus priority scheme. This means that buses will get priority at all traffic lights. This would speed the service up a great deal and would also slow down the private car owner. This would cost a lot to introduce but in my opinion it would be well worth it. Another solution that has been thought of is congestion charges. This means that you will get charged more if you’re driving on the busy roads during peak hours. This will mean that the people living in rural areas will be treated farer because they are not causing any congestion and there roads are not near the standard of the urban areas. This is a good solution as well and it to would require a lot of investment and a lot of time to introduce. These solutions will cost a lot to introduce but if the investment was put into them then the trend could change because the cost of running a private car would become to expensive within the urban areas.

b) Bus Deregulation

The conservative Government proposed a bus deregulation policy in 1984, and this was known as the White Paper. After a lot of heavy debating about the consequences and benefits it was decided that the bus industry in Great Britain except for the London area would be privatised. This would open a more competitive market in the bus industry. London was excluded because of the reorganisation of public transport market by the London Regional Transport Act a few years before. They introduced a franchising regime with the intention that deregulation would follow in a few years.

Disadvantages of Deregulation

The first thought for a private owner is to get a good return on there investment and this is the biggest disadvantage of bus deregulation in Great Britain. This will have to come and someone’s loss. The private investors want to invest in the routes with most users, and this will leave the routes that are not as frequently used getting worse. The private owners have started to cut out routes that are important to some people’s daily living because they are not making a profit. The rural areas have suffered even more as there is very little if any money invested in them because the investment is going into the urban areas. Disabled people also suffer because there is lack of investment in easy accessible buses as there is a minority of disabled people using the buses and it costs a lot of money to invest in easy accessible vehicles and this leaves the service becoming limited to a certain group of people. The service has also become further run down because the standard of buses has got worse as people will choose an old cheap bus over a new expensive bus that has a lot of money invested in it to make it more accessible. The Government was expecting to raise a competitive market when they agreed to privities the bus industry. Twenty years on and it hasn’t happened as much as they were expecting. In Bristol there is a company operating 95 percent of all runs in and around the city this allows them to raise there fares without having to worry about competition fares from other company’s. The private owners have increased the prices above inflation levels since the service was privatised back in 1985. This is leaving it that people don’t want to pay for a run down service that’s expensive.

Advantages of Deregulation

The biggest advantage of bus deregulation in Great Britain is the competition between the private companies’s. This has lead to the timetables being updated more often because people waiting at the bus stop will take the first bus that comes along so the private company’s have to be there before there competition. This has left the service a lot more reliable. The private owners also introduced new life into service because they were all trying to think of new to get one step ahead of competition. One method used was the introduction of travel cards this increased bus usage another could be the introduction of bus lanes, and this too would influence people onto the bus as this would make the service quicker because your cutting out the congestion.

Conclusion

In my opinion the privatising of buses in Great Britain was not a good idea and it has not worked because the facts show that the process of competition has acted against passengers interests by creating uneven and volatile service patterns, poorer information, more fragmented ticketing arrangements, inferior quality of vehicles and staff and reduced integration. The lack of people using the service can not be entirely blamed on the private owners because the current trend is to have your own private car and people are now becoming rich enough to afford these luxuries. This is the main reason for the loss of bus passengers but a better, cheaper and quicker service could help bring back a few passengers as cars become more expensive to maintain and as congestion problems get worse.

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