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The Paratransit Light Vehicle

A Report to London Transport and the Secretary of Statefor Transport

by the Adam Smith Institute

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TABLE OF CONTENTS

Public Transport 1Deficiencies in the Present Configuration 1The Light Vehicle 4Advantages of the Paratransit Light Vehicle 5The Effect of the Light Vehicle on Existing Traffic 6The Assumptions Behind Paratransit Operation 8Successful Light Vehicle Operations 9

(i) Hong Kong 9(ii) Manila 9(iii) Cairo 10(iv) Buenos Aires 10(v) Kuala Lumpur 11(vi) Nairobi 11(vii) Puerto Rico 11(viii) Singapore 11(ix) Calcutta 121

(x) Istanbul 12(xi) Los Angeles 12(xii) Other Cities 12

Light Vehicle Operation 13Conclusion 14

Adam Smith Institute reports are the work of individual scholars presented as acontribution to public policy debate, and do not necessarily reflect the views of theInstitute.

The Adam Smith Institute,50 Westminster Mansions,Little Smith Street,London SWIP 3DQTel: (01)-222 4995 1

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PUBLIC TRANSPORT

Public transport in London, as in most British cities, operates on the basis of fivemajor assumptions concerning supply. These are that it shall involve.

(i) Public sector provision and subsidy(ii) Co-ordinated central planning(iii) Large vehicles(iv) Fixed stops(v) Relatively fixed routes.

Its purpose is taken to be that of supplying a city-wide transport system during theday, with a commuter mass transit system superimposed in the mornings andevenings.

Each of the five major assumptions contributes in some ways to gaps anddeficiencies in the service which results from their application, leading to theconc1usion that a new and additional class of service is required, a service derivedfrom totally different assumptions.

DEFICIENCIES IN THE PRESENT CONFIGURATION

The current mixture of surface rail traffic, underground trains and large buses hasthe function of moving large numbers from point to point.

(a) Inflexibility: One weakness of the present configuration is that point to point nolonger means door to door. The system was created in the past when both needs anddwelling patterns were different. The large scale operations have not been able torelocate routes and stops to the new areas of demand, and are thus no longer in themost suitable locations.

(b) Inconvenience: The potential passenger has to contend with travel to and fromthe pick-up points, and changes en route. The evidence shows that door-to-doortime is of crucial importance to passengers, to be weighed against price, reliabilityand comfort.

(c) Standardised supply: The use of large vehicles necessarily involves conveyinglarge numbers along a set route. The pattern of travel has people arriving at thepick-up point from scattered locations, and dispersing to different destinations atthe other end. The large-scale supply has to treat as identical people whose traveldemands are dissimilar.

(d) Expense: Public sector supply is expensive to both consumer and taxpayer.Public services tend to be characterised by more restrictive working agreements and

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less efficient use of manpower than their private equivalents, and to be slow tointroduce cost-saving capital equipment. The result leads to high costs, which aresplit between prices which inhibit demand, and taxes which create politicalproblems. The debate concerning the balance between price and subsidy misses thepoint that the overall cost of public supply is always higher than for a privateequivalent.

Even though many individual motorists have to bear the capital cost of the vehicle,the annual car tax, the fuel bill, including fuel tax and the high cost of parking, themajor rush hour congestion each morning and evening shows how many still preferto be independent of public transport.

(e) Under-capitalised: Transport, like other public sector operations, finds itselfunder continual current account pressure. Savings made at the expense of the capitalside result in an ever-decreasing proportion spent on capital. This means out-of date,shabby and costly equipment. For passengers it explains their poor rolling-stock andlack of modern services.

(f) Producer-orientation: lack of alternative choices for consumers gives theproducers a greater claim on service output. It is geared more to the accommodationof the convenience of the workforce than any competitive system would be. Theresult is an indifferent level of service in which the consumer is treated in an offhandmanner instead of being courted by high standards of attention. This in turn affectsreliability levels, resulting in delays without explanation, cancellations when stafffail to appear, lack of cleaning and catering facilities. All of this takes place despitehigh manpower levels; overmanned, but understaffed.

(g) Loss-making: The present transport system runs services at a loss. It has to seeksupport from funding authorities, local and national, for support, and is unable toprovide new services as required, or to maintain an adequate level of investment.

(h) Political arena: Because transport in London operates as a public service, manydecisions relating to it become political ones, which ignore service needs. There ispolitical pressure to keep fares low, and to reduce simultaneously the rate burden.Even detailed decisions concerning routes and service density can be influenced bythe electoral implications, rather than by the requirements of the service or the needsof consumers.

THE LIGHT VEHICLE

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Many of the deficiencies of the present configuration could be resolved by theaddition of a new class of service based on light paratransit vehicles operating in theprivate sector. The light vehicle, carrying anywhere from 8 to 16 passengers, makes amajor contribution to overall transport needs in many of the world's leading cities,and could undoubtedly add a great deal to the quality of service available inLondon.

The light vehicle is flexible and fast, making up in total numbers what it lacks inindividual capacity. Each one can convey a small number of passengers on a moresuitable, more individual route than can the large vehicles. It can cut down the door-to-door travel time, tempting travellers to leave their cars at home.

Operation from the private sector brings with it efficiencies which keep down bothcost of operation and price of ticket. Comparisons from cities overseas show that thelight vehicle is cheaper to maintain, spends less time out of service, and is moreenthusiastic about picking up passengers and collecting fares from them than is itslarger public sector counterpart.

ADVANTAGES OF THE PARATRANSIT LIGHT VEHICLE

(i) Cost: The light vehicle overturns conventional ideas on the economies of scale.Although smaller, it is more cost-effective to run. There are several reasons for this.The large vehicle might carry more passengers for fuel or driver costs on atheoretical journey, but the small vehicle scores in practice. Its capital costs per seatare very much less. Very often the light vehicle is converted from an off-the-shelfmass production vehicle, instead of needing to be custom made.

Secondly, the small vehicle fits more passenger journeys into its working day. Itslower waiting time at pick-up points, its greater manoeuvrability in traffic and itsneed to stop only when passengers require it give it a faster journey time and aquicker turnaround.

(ii) Fares: Fares charged by light vehicles abroad are often lower than those chargedon the public system. Even where they are the same or higher, there is no difficultyin making a profit, or any shortage in applications for licences to operate. Passengersare prepared to pay for the more flexible service which they provide.

(iii) Viability: The paratransit light vehicle has an established record in many cities(see below). It maintains lower garage costs, and lower network costs. It normallyoperates with a lower loan proportion than public sector operation, and thereforedoes not carry the same burden of debt repayment. It uses its staff more efficientlyand more flexibly, making use of part time work where demand patterns make thisan obvious economy.

(iv) Service: The typical light vehicle service is a flexible one, serving a planned routewithout fixed stops. Passengers will generally board them at well-known points, or

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will hail them at convenient stopping points. Passengers similarly tell the driverwhen they wish to alight. This gives a much more personal service, more tailored toindividual needs. Large numbers counter the small capacity of each vehicle. Thefewer stops to set down and pick up, together with the manoeuvrability, make itsservice faster.

THE EFFECT OF THE LIGHT VEHICLE ON EXISTING TRAFFIC

(a) Creaming off: It is sometimes alleged that paratransit vehicles take awaycustomers on profitable rush-hour routes, and leave other areas unprovided. This isalleged to increase the losses of the established service.

It is the rush hour peaks which cause the public service to employ more people thanthey need to operate a day through service. Because the public sector rarely employspart-timers, it finds itself paying for a full day those whose real function is to carrythe morning and evening peak loads. By lightening the rush-hour loads, the lightvehicle service can enable the established service to operate more efficiently byrationalising both its manpower and fleet size requirements.

(b) Unprofitable services: Private service provided for profit might give insufficientcover on "weak" routes, for night or Sunday services. The problem is that cross-subsidy has been assumed, with "profitable" services helping to fund the others,although it is by no means clear that the overall subsidy can be ascribed to fringeservices.

Less demand naturally means less supply, as the provision of night taxis in Londonshows: but there are night taxis. Similarly the paratransit services abroad do coverthe fringe services, albeit with lighter density. There are some cities where lightvehicles cover only the poor areas, with the conventional system serving the betterparts. The shared cab contributes to this coverage, and it may be that considerationshould be given to licensing multiple use of vehicles for passengers going todifferent destinations.

The need of some persons for a subsidised service is best met by subsidy providedfor the person rather than for the service. The provision of tokens for thehandicapped or the elderly would meet the problems of subsidy within a privateservice. Weak routes not susceptible to sufficient cover even by informal transitcould be catered for by a contract service.

(c) Driving quality and safety: The quality of drivers, and the safety standard ofvehicles could both be assured by published standards appropriate to the vehiclesand their load. There is no reason to suppose that picking up and setting down atpoints of convenience causes more congestion than the obligation to pull in at fixedstops. Indeed, it allows the driver more flexibility to meet on-the-spot conditions.

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(d) Regularity and Reliability: Since the light vehicle follows no set timetable andhas no fixed stops, the traveller depends on there being one coming along soon withavailable seats. The answer lies with numbers; sufficient licences must be awardedto ensure a regular supply.

(e) Feeder services: As the paratransit vehicles become established, they have animportant role to play in feeding scattered passengers to and from the fixed pointsof the conventional system. Thus outlying and difficult areas at the tail end ofroutes, which contribute substantially to, public sector losses, could be chopped offand replaced by light vehicle feeder services.

THE ASSUMPTIONS BEHIND PARATRANSIT OPERATION

Paratransit challenges all of the five assumptions of the conventional service. Firstly,it operates more efficiently from the private sector, where the need for profit keepscosts down and efficiency up. Secondly, it works best where it is allowed to meetlocal demands. Where drivers apply for licences to operate which routes they wishto cover, transport demands are met more effectively than where a central authoritytries to allocate supply and to determine time and frequency of cover.

The point is that the spontaneous order which emerges when light vehicles can meetlocal demand contains far more information than does the bare plan of a centraladministration. It is also more flexible and more responsive to changing conditions.Paratransit small vehicles challenge the large-vehicle assumption by deliveringversatility and speed in place of bulk.

Fixed stops are a hindrance for small vehicles, and a nuisance to passengers. The factthat the vehicle stops only when the passenger wants it to, and where the passengerwants it to, gives a considerably improved service. Even the assumption of relativelyfixed routes can be challenged by paratransit, and replaced by general predictabilityabout where they operate and where one stands a good chance of catching one.

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The experience of many important cities shows that the paratransit light vehicle isno mere theory. It has an established record of major contribution to transportservice stretching over many years. Theoretical discussion of its likely consequencesshould be supplemented by practical knowledge of its performance where it hasoperated.

SUCCESSFUL LIGHT VEHICLE OPERATIONS

(i) Hong Kong: Public Light Buses, legalised in 1969, were carrying a quarter of allpublic transport trips within 3 years, and one third within 6 years. At that point thegovernment fixed their numbers at 4,350. They are profitable, recovering two-thirdsof purchase cost within a year, and popular. There are no fixed routes, stops or fares.More is often charged for peak and nighttime services. Widely available, they arepreferred to conventional services. The government has supplemented them with a"Maxicab" service to act as a feeder to major routes, and the private taxis havecontinued to flourish.

(ii) Manila: Manila is famous for its Jeepneys, the brightly painted vehicles originallybased on US army surplus jeeps after the Second World War. Jeepneys account forhalf of all public transport trips, and official figures put their number at 28,000,though it may be twice that.

The jeepneys seat about 14 passengers, charge the same as the ordinary buses, andadd considerably to the colour and character of the city. Whereas the conventionalbus services are struggling, the Jeepney numbers are kept down by policy,illustrating their success

The jeepneys foster a large domestic industry estimated at 500,000. This figureincludes 100,000 directly employed as drivers, operators, builders and services; anda further 400,000 dependent subsidiary workers making equipment and accessoriesor working at terminals.

(iii) Cairo: In the late 1970s a jitney service was permitted on fixed routes. Vehicles,now up to 15 passenger capacity, leave well-known departure points when full.Seats vacated en route may be filled. Jitneys leave every few minutes, charging morethan the conventional buses do.

Despite this they are profitable. One in five is owner-driven, many are owned byoutsiders and leased to drivers. A union determines routes and fares, and charges a5% surcharge on tickets to cover terminal facilities. The normal transport system,although it charges less, runs up huge losses.(iv) Buenos Aires: The collectivo has grown from the 7 seats of its inception to 23seats today. It carries three-quarters of all public transport trips. Urban transportwas privatised in 1962, since when collectivos have grown in numbers to 13,000,about 4 per route mile. They are organised into associations for each route, called"Empresas," which set rules, schedules and fares under government supervision.Collectivos are owned individually (one third by drivers) or by partnerships. They

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are profitable, and are the mainstay of a city of 9 million people spread over 1,500square miles.

(v) Kuala Lumpur: Minibus numbers were fixed at 400, the number they had risen toby 1978. At that time they were carrying over half the peak passenger miles, with atotal capacity of less than one fifth of that of the conventional buses. They are veryprofitable, returning more than one-third of capital outlay each year to licensedoperators.

The limitation on numbers, while it makes them more profitable, causesovercrowding for passengers. In Kuala Lumpur, as often elsewhere, it is done in thename of protecting an existing bus service. The more sensible alternative would beto allow the one the public prefers to use and to pay for to expand at the expense ofthe loss-making operation.

(vi) Nairobi: The matatu are a range of vehicles in the 12-25 passenger seating range,and represent a service which developed informally. They were carrying 66,000passengers daily in 1979. Two, in five are owner driven, and many have drivers paidby the owner. They are profitable, paying off vehicle capital at 50% per year, buthave been criticised for poor upkeep and safety features. The government is tryingto bring them within the ambit of a formally regulated system.

(vii) Puerto Rico: The publicos are limited to 14 seats, and charge twice the fares ofconventional buses. They are publicly regulated, and are reckoned clean, reliableand fast. A 1980 study in Caguas found them making five-sixths of all publictransport trips. They carry double the load factor of the big buses, and are profitablewhere the others are not. Most are owner driven.

(viii) Singapore: School buses and certain other vehicles were allowed to carrypeople to and from work, paid by monthly contract at whatever rates can be agreedupon. Since work starts at different times from school opening, this leads to efficientbus use. The buses cannot stop to pick up on public roads, however.

(ix) Calcutta: Despite having 10 million people compressed into a small area, theCalcutta State Transport Corporation makes huge losses. Private buses, permittedsince i966, had grown to 2,000 by the late 1970s, 500 of these being minibuses Todaythey are responsible for two-thirds of all Calcutta bus trips, and operatewithout subsidy. Private route associations regulate services and schedules. Faresare roughly the same as on the loss-making services run by the state body.

(x) Istanbul: Istanbul's paratransit is based on 4,000 minibuses, 12-seaters mostcommonly, and 16,000 of the famous Dolmus vehicles. The Dolmus is basically ashared cab, mostly 5-seaters, but with some which take 7. Between them theyaccount for over a half of Istanbul's public transport trips. They are very profitable,but often overcrowded because of limitation on numbers. More minibus licenceswould undoubtedly solve most of Istanbul's current traffic problems.

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(xi) Los Angeles: The Rapid Transit District (RTD) service was given competition in1982 when 15-seat jitney vehicles were authorised. Numbers were up to 56 by theend of the year, with 6,500 passengers per day being carried. The RTD fares,subsid1sed down to 40% of the projected charge give fierce competition. The jitneys,charging the same fares, seem to be holding their own without public subsidy. Evenif forced to increase fares, they expect to stay in business by providing a quicker,more personalised trip. Other US cities with Jitney services include San Diego,Indianapolis, Atlantic City, and several cities in Florida.

(xii)Other Cities: Shared taxicabs operate as paratransit light vehicles in severalcities, including Belfast, where they have been estimated to account for half of allpublic transport on the routes they serve. They are called Por Puestos in Caracas,and Sheruts in Israel, where they serve inter-city traffic. They used to operate inLondon, taking passengers from Green Park to Victoria before the Victoria lineopened: five passengers at 6d would pay the 2/6 charge.

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LIGHT VEHICLE OPERATION

Although there seems to be an enormous variety of different types of servicethroughout the world, the reality is that the paratransit has many similar operatingcharacteristics wherever it is found. The apparent differences stem from the vehicleswith their exotic names; the principles behind the service remain surprisinglyconstant.

The vehicles are small, as are the operating units. Hundreds, rather than tens ofthousands of vehicles, form the larger fleets. Many are owner operated; many haveowners linked to drivers by profit sharing schemes.All of them use the lower capital costs and easier maintenance of the light vehicle, tomake it an effective and low-cost piece of transport equipment. They use its size togive a more individually tailored journey, and to give a faster trip for passengers.

They use its private sector operation to keep its operating and staffing practicesefficient, and to keep it responsive to service needs as they develop and change. Thecompetitive market keeps them alive to the need to court customers and to provide aservice they actually want at a price they are willing to pay.

The light vehicle has an impressive record of turning public sector loss-makingservices into ones which are soundly-based private business ventures, and ofproviding a popular service while it does so.

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CONCLUSION

The paratransit light vehicle, or minibus, or jitney, or by whatever name it is known,could play a major role in reshaping London's transport to the needs of itsinhabitants. It could provide an important supplement to the fixed routes and fixedstops of large vehicle public sector operations.

The arguments for it are soundly-based, and the economics of it are excellent.Examples of its operation abroad show an impressive record of service and success.

The time has come to give London some experience of this vehicle and its method ofoperation. It is suggested that sample services be initiated, and that furtherapplications for routes be sought

(The Institute is much indebted to research papers made available by Prof.GabrielRoth and George Wynne. and to papers presented at the World Bank Seminar onUrban Transport. Bangkok, 1980).14