Competition

[kettal]

I'm with waterloo warrior.

Unfortunately, I can't see this getting done without a really nasty fight, labour disruptions, spilled blood, etc.

 

[GTS]

If some of the bus routes were private would the TTC still set the schedule that the privte operators would have to adhere to? What about fare collection as well, someone paying by tokens would be easy enough to collect the revenue from but I have a monthly pass, how would the private operator be able to bill the TTC as I already paid my fair for the month in advance?

I am sure some of the TTC routes could be privatised, the 85 Sheppard, soon to be LRT, is a pretty busy route all day even outside of peak times, I am sure that route would run a profit, I read that the 29 Dufferin bus is one of the TTC's busier routes as well, I bet it could turn a profit.

Their are a lot of really busy routes here in Toronto, I am fairly new hear, moved here indirectly from Vancouver, and I am really getting to know my new city via the TTC and I am pretty amazed at the ridership levels even at off peak hours on a lot of routes are fairly heavy.

 

[kettal]

If some of the bus routes were private would the TTC still set the schedule that the privte operators would have to adhere to? What about fare collection as well, someone paying by tokens would be easy enough to collect the revenue from but I have a monthly pass, how would the private operator be able to bill the TTC as I already paid my fair for the month in advance?

It works on a term contract basis.

City of Toronto says: we will pay X million dollars to the private company who will operate the buses on this schedule for the next 2 years. You will lose X hundred dollars every time your bus is not on time. Then the private company does all the rest. They don't get any of the ticket sales money, they just get the agreed upon money in the contract. Tickets, tokens, and metropasses continue as usual.

 

[Second_in_pie]

And yet the various companies that contract to operate YRT's operations - ALL of them - manage to do it. So does Trentway-Wagar, which operates DRT's Whitby operations.

Those cases are a fair bit different than the OP, but the conversation seems to have become convoluted

When you're talking about private companies operating busses or whatever like YRT's got, that's one thing. It's a completely other to have people buying their own busses and running it on routes that the government says will exist.

 

[waterloowarrior]

I was responding to comments about privatization. Private-Public Partnerships are different but I still remain skeptical that private companies can provide better and cheaper service and that governments and tax payers are getting a fair deal from these agreements. That the public is required to take on most of the risk while private companies are able to take advantage of most of the potential benefits is far from ideal.

Regardless, there is no such thing as free transit. We will be paying for it through taxes or through fares rapid transit, like roads, will always involve billions of dollars to build and maintain as well as extensive government involvement and management. Outsourcing may reduce some costs over time but its not a panacea. We still need long term funding commitments from federal and provincial governments no matter how much competition we introduce.

Many of the situations where the operator takes on the risk (i.e. they keep fare money and get subsidies for additional service on unprofitable routes) have ended badly... if the ridership projections are less than expected the company could go bankrupt, try to get a better deal/cut service hours, or if the losses are too great may simply leave the contract. The systems where the private operators bid based on total cost (calculated per hour or per KM) for routes and the city pays for the lowest cost (subject to incentives/penalties for service) are a better way of delivering transit IMO, as the city has much more control over the level of service and the amount of subsidies it provides per route. I agree that we shouldn't expect free transit, but there are many ways we can reduce the impact on the municipal budget and improve service (based on the examples I've seen). There are plenty of other options out there, like giving out franchises for different areas, setting the routes and leaving the level of service up to the market and allowing a "free for all" with minimal regulation... but I prefer the competitive tendering system that London and some of the Scandinavian countries have. I'm more optimistic about privatizing operation of transit, private involvement in capital projects can be a lot trickier and there is a lot more potential to be ripped off.

 

[drum118]

If some of the bus routes were private would the TTC still set the schedule that the privte operators would have to adhere to? What about fare collection as well, someone paying by tokens would be easy enough to collect the revenue from but I have a monthly pass, how would the private operator be able to bill the TTC as I already paid my fair for the month in advance?

I am sure some of the TTC routes could be privatised, the 85 Sheppard, soon to be LRT, is a pretty busy route all day even outside of peak times, I am sure that route would run a profit, I read that the 29 Dufferin bus is one of the TTC's busier routes as well, I bet it could turn a profit.

Their are a lot of really busy routes here in Toronto, I am fairly new hear, moved here indirectly from Vancouver, and I am really getting to know my new city via the TTC and I am pretty amazed at the ridership levels even at off peak hours on a lot of routes are fairly heavy.

The only way 29 can make a profit let alone any TTC route is to remove all traffic off it.

If you look at the 29 you can find them running in packs up to 5 at a time with the last few buses been empty.

TTC has removed their cost ratio off the website and going from memory, the ratio of somewhere in the 70%.

Another way TTC could get a higher ratio is to use artic's buses, but that still years off.

Another way is having LRT in place of buses and that means removing on street parking. Then there are 2 major issue points for LRT now the Jog is gone (June-July 2010) and that the hill from Dupont to St Clair and the section between Rogers Rd and Eglinton Ave. They can be over come at big $$.

Asking a P3 to provide bus service to match TTC requirement will be hard to do if TTC cannot do it now and make a profit. 80% of operation cost is labour using union personal. Even going to non union, it will be well over 65%.

A P3 will say I can provide x minute headway and if you want it to be lower you will have to pay me more. They may even say I will use x type of vehicle to carry those riders. In fact, lowfloor haft cuts is all you need for some route and that 1/2 to 3/4 the cost of a full bus. Capital cost is another area where a P3 can save cost compare to TTC way of thinking.

I'm already on record saying that sometime either before the 2011 election or come by 2013, parts of TTC will not exist as we know it as the government is going to make that call. At this time they prefer to wait until after reelection, but will do it if push comes to shrub.

Metrolinx floated a trail balloon in Hamilton a few years ago during the RTP process and it had some very strong point for doing it.

It is easier to replace a small company than a large union one to keep cost under control.

As for back charging a P3 because it not on time, you better make sure there is no traffic causing delays like there is to day as well a lot of excess built in time.

All fare media is under TTC control or who every is running it.

The bottom line, what every take place, riders cannot be the cash cow for either the P3 or TTC.

 

[sjc]

A small change that I would like to see would be the removal of restrictions on alternate providers of transit within Toronto. If someone wants to buy a bus and charge people to move them express from North York to downtown during rush hour, they should be allowed to do so, using their own schedule and fare structure. Right now, you get an express bus in the morning only if the TTC decides that you are worthy.

 

[DavidH]

Those cases are a fair bit different than the OP, but the conversation seems to have become convoluted

When you're talking about private companies operating busses or whatever like YRT's got, that's one thing. It's a completely other to have people buying their own busses and running it on routes that the government says will exist.

Agreed, and I think I got mixed up a bit.

I don't think that true competion in services will ever exist in Toronto. We may get competition for companies to operate chunks of the system under the TTC's overall control, but virtually all of our routes are money-losers.

 

[AlvinofDiaspar]

From the Star:

How the Swedes are making it work
Stockholm saves $240 million a year by hiring eight private companies to run its transit system

Published On Thu Mar 4 2010
Adrian Lightstone

Several mayoral candidates have been dropping hints lately that they'd consider putting some TTC operations in private hands to save money. For Torontonians perhaps bewildered by just how a privatized transit system might work here, Stockholm could provide some clues.

The Swedish capital, with a metro population of 2 million, has been relying on a collective of private companies to run Stockholm Public Transit since 1993, when it shifted away from a public management model in hopes of reducing operating costs and improving the quality and reliability of service.

The transit system includes subways, commuter trains and buses. Under the privatized system, the municipality remains responsible for the funding (through fare revenues and tax dollars) and organization of the transit service. This includes setting routes, train and bus schedules, frequencies and fare prices.

But day-to-day operations, including keeping vehicles and stations maintained, and ensuring buses and subways run on schedule, rest in the hands of private management firms.

Through competitive tendering, whereby companies compete for the right to operate the transit service, the city has brought operating costs down by 25 per cent, for an annual savings of $240 million for the municipality.

In contrast, the TTC had an operating budget shortfall in 2008 of $370 million, which represented roughly 30 per cent of the TTC's total operating costs.

Service levels have risen more than 10 per cent and ridership increased by 15 per cent between 1993 and 2002 in Stockholm, where fares – roughly $3.25 per ride – are comparable to Toronto's $3, given the higher cost of living in Stockholm.

Stockholm recovers 44 per cent of its operating costs through fares, while the remainder comes in the form of government subsidies. In comparison, Toronto recovers 74 per cent of the total TTC operating costs through fares and subsidizes the rest.

The fact that Stockholm provides a much larger subsidy isn't a reflection of the operation or quality of the private firms, but rather due to the magnitude of services the municipality feels it must provide.

Stockholm currently has contracts with eight private transit providers, with no overlap in services. The most recent contract is with MTR, the same transit company that manages Hong Kong's subway.

The cost to the municipality is roughly $2.5 billion over eight years of operation. The system is efficient and clean, trains are new, they run on schedule and frequently, and stations are well maintained.

Furthermore, MTR periodically hands out customer satisfaction surveys to ensure it stays competitive in the hopes of renewing its contract.

Adrian Lightstone is from Toronto and is studying toward a master of science degree in economics at the Royal Institute of Technology in Stockholm.

http://www.thestar.com/news/gta/transportation/article/774755

AoD

 

[AlvinofDiaspar]

From the Star:

Private transit less rare than you’d think
Contracting-out works in some cities, but London’s troubles show it can also be risky

Published On Wed Mar 3 2010

Tess Kalinowski
Transportation Reporter

It’s the conversation some say Toronto’s council has been afraid to have — whether contracting out could lead to a better, more affordable TTC.

Until the mayoral race and budget deliberations suddenly brought the issue to the surface, “There’s been an absolute refusal to even consider it,†said Councillor Peter Milczyn, who sits on the Toronto Transit Commission. “There may have been people in the civil service who’ve seen the value of this, but they wouldn’t be allowed to pursue it.â€

Privatized transit might be a radical notion in downtown Toronto. But at least two major regional transit operators already contract their operations.

GO Transit is about halfway through a five-year contract with Montreal-based Bombardier Inc. to crew its trains. Worth about $23.9 million annually, the contract was designed to ensure a higher level of service than the previous supplier, CN. It was also expected to save GO $1 million to $2 million per year.

York Region Transit’s regular bus service and its premium VIVA bus rapid transit are based on the system of contracted providers inherited from communities such as Markham that were amalgamated into the regional system a decade ago.

“It’s good value for our citizens and we have very substantive contracts,†said York Region chair Bill Fisch. “We have a process. If they do badly they lose money; if they do well they get bonuses.â€

York, which has four private bus providers, also contracts some routes to the TTC. Each supplier is allowed to operate in only two of the four regional service zones so the system is unlikely ever to shut down entirely because of labour or operational issues. When VIVA drivers employed by Veolia Transportation went on strike two years ago, riders still had the option of using the YRT routes.

The flip-side is that the employer, not elected officials, are responsible for how long a labour dispute drags on.

Phoenix, Ariz., has a similarly contracted-out transit system that uses three major suppliers, including Veolia, that provide service on a price per route-mile basis. The companies can’t come after the city if the route is a money-loser.

Like many U.S. cities, however, Phoenix is struggling financially right now and is in the process of cutting back its bus service, according to Marie Chapple of the Phoenix Public Transit Department.

“As we reduce service, we will reduce employees. Through the private contractor, it’s easier to expand and reduce staff,†she said.

But customer service rather than labour relations could be the motivation for contracting out parts of the TTC, suggested Ben Dachis, a policy analyst at the right-leaning CD Howe Institute.

The TTC would be able to dictate its service parameters in its supplier contract, specifying performance measures such as adherence to bus schedules that could be monitored by GPS, he said. “What you can do to create buy-in from the unions is to allow them to bid alongside the private organizations.â€

If you divied up the bus service into geographic zones, you could have various bidders vying with the union for that piece of business. That’s something Dachis believes will be more important in the future as regional transit agencies are increasingly integrated.

But nobody thinks wholesale privatization of the TTC is a good idea, said Dachis. “We’re talking about incremental change here. You can’t just start operating a subway. It’s not a turn-key operation,†he said.

London, England, is proof of that, says a veteran of that city’s experiment in privatized transit, which has resulted in a hybrid of public-private operations on the London Underground and bus services.

One of two companies contracted to maintain the London subway, Metronet, went bankrupt, leaving taxpayers on the hook for what some have estimated to be more than a billion pounds.

“That risk, in reality, always remains with the taxpayer. It was a silly model,†said Mike Challis, who lived in Toronto in 2008 and spent lots of time studying the TTC.

“Government had lulled themselves into the belief that the private sector is far more efficient than it is. Taking the huge amount of investment off the government books — it’s just creative accounting, and in the long run it costs the taxpayer more,†he said.

“I think the TTC is quite efficient and accountable to its public. It’s actually pretty good, certainly for North America: high levels of service; frequent service, integration of subway is very good. It would be crazy to throw all that away.â€

With files by Paul Moloney

http://www.thestar.com/news/gta/you...4--private-transit-less-rare-than-you-d-think

AoD

 

[Hank]

I think that this is a very interesting idea and should be studied further. It also definitely doesn't require disbanding the TTC; the TTC operators could be spun off into a separate company that would bid against other private corporations for the right to run the routes. If the TTC is actually the most efficient operator then it will win the bids.

 

[Yoshimura]

Nice discussion going on!

What's cool is that most of the buses are owned by bus drivers themselves. There are basically no two exact bus models in Malta, but they're all painted the same color and use the same fare system: A ticket is 0.47 euros (about 65 cents).

Since the buses are operated and owned by the drivers, you encounter a lot of old buses from the 50s and 60s. However; more buses are newer and drivers of older buses are also able to get energy companies to sponsor their bus to retrofit them smog reducing technology.

It'd be cool to see the TTC compete as the high-end transportation bus for $3.00 a fare versus the option to ride an old clunker for $0.65.

 

[AlvinofDiaspar]

Now that would be an undesirable outcome - private sector delivery of services is one thing - uneven quality of services for what one can afford/willing to pay is another entirely, and I am not sure if one should strive towards the latter as a public organization.

AoD

 

[waterloowarrior]

Thanks for posting the articles AlvinofDiaspar, the first article had a good summary of the competitive tendering system/model.

In general I think when evaluating forms of private involvement we just have to avoid automatic responses and generalizations like privatization=giveaway or government= inefficient/bloated etc, and really focus on what things could be done better through the private sector (while being appropriately regulated) and what should stay under government control

 

[GraphicMatt]

I really think there's a ton of smoke and mirrors going on with this issue. This isn't really about privatization. That word doesn't factor in. This is about outsourcing labour costs to private businesses to circumvent the existing union. Any lame econ 101 talk about market competition or private sector efficiency is empty rhetoric.

That said, I'd love it if we could outsource operations to private companies - labour costs need to come down -, but I'm not sure how legal it would be. Seems like it would be the equivalent of GM announcing tomorrow that they're laying off all their current workers and bringing in XYZ company to run their factories for half the wages.

But, hey, I also wouldn't be surprised if we see some incremental change. I'd lay decent odds on Metrolinx announcing that they're opening up for bidding operation of the TC lines.