Transit privatization

I’ve seen some talk around the Internet regarding privatizing OC Transpo, with the thinking being that it would be better able to handle the current dispute. That may very well be so, but overall, privatizing transit in Ottawa would likely be a disastrous move.

For starters, any private company has one basic, overarching goal: to turn a profit. And OC Transpo is anything but profitable. One of the current goals of the City is to recover 50% of OC Tranpo’s operating costs from the farebox. Naturally, that means that the other 50% must come from two sources; advertising and the City budget. I don’t know exactly how much revenue comes from advertising, but I can promise you that it isn’t enough to make up the difference.

So if you’re a company that’s purchased OC Transpo, what do you see? Massive losses, and the need to cut expenses and raise profits. So how do you do that? Well first, you’d probably raise fares, because $3 per ride is practically letting people on for free. Next, you’d probably want to maximize your profit per bus (consquently cutting expenses, as well), so you’d probably cut back on trip frequencies so that buses are full more of the time. It’s at this point that you’d also begin to eliminate non-profitable routes, so say goodbye to local buses during non-peak hours and buses running with any kind of reliable frequency during the evening. You’d probably cap it all off by liquidating your assets, selling off dozens of now-uneeded buses in the fleet.

In short, we’d end up with higher fares and reduced service, overall. Take a look at almost any example of privatized bus transit in the UK, and you’ll see a similar patterm emerge. Intraurban bus transit simply is not a good business proposition, as buses have a high overhead operating cost and a very slim profit margin. Private bus transit simply will not work in Ottawa, and a solution needs to be found within the confines of the system, instead.

EDIT: I just wanted to add in a quick link to Transit Ottawa’s look at media coverage of the strike. As a journalist, it’s pretty interesting to see how the coverage has changed and evolved over the short period that the strike has lasted so far, as well as the contrast between the Sun’s somewhat sensationalist coverage and the Citizen’s more measured coverage.

7 Responses to “Transit privatization”

  1. 1 David
    December 15, 2008 at 12:29 pm

    What you are saying is that bus service in Ottawa isn’t going to pay for itself – even if it is a private company. That might be true (or not) – but for sake of argument could a private system run at a lower cost (thus lower subsity from our taxes).

    A private system would have many features that the current one does not. For example there could be “vans” on smaller routes (like in Hong Kong) to Transit stations. There could be rural service (sure it might cost $10) – but I’d have the option.

    There could be premium service. For example a $8 bus that offers nicer seats (hey even a seat) could be nice. Of course the nicer bus thing might not work – if not – it would go out of business – but if it did – great!

  2. December 16, 2008 at 11:05 am

    Privatization of transit makes me think of GO Transit in Toronto. I feel like its service improved after it became a private enterprise and trains are more often punctual than in the old days. Maybe I’m remembering incorrectly.

  3. 3 David McClelland
    December 16, 2008 at 1:11 pm

    GO isn’t private, Nick. It’s currently operated as a provincial crown corporation, and it will eventually be transfered to the control of Metrolinx.

    GO could conceivably be privatized without problems, though. Trains are pretty economical, compared to buses, so the same slash and burn strategy wouldn’t be needed.

  4. December 16, 2008 at 7:18 pm

    I think I’d prefer to see GO remain in Crown hands, and expanded to cover as much of Ontario as VIA Rail is unwilling or unable to serve.

  5. 5 David McClelland
    December 16, 2008 at 8:22 pm

    I doubt we’ll ever see GO expand much outside of the GTA if Metrolinx is taking control. Their mandate is only for the inner ring of the Greater Golden Horshoe, basically.

  6. 6 Tiamo
    January 2, 2009 at 9:58 pm

    I’m a strong supporter of private Transit. However, I’d not support the privatization of OC Transpo. Rather, I’d want to see any enterprise that meet certain regulations to be able to run bus routes in Ottawa on their own schedule and flexibility. The reason behind this is in the core of Capitalism. If you’re going to allow privatization, it has to be available for any company that meets minimum standards of safety and reliability to operate.

    The benefits will lead to reduced cost for riders, better offerings and service. For the businesses, it will allow more competition and creativity. The business with the proper business plan will succeed. Furthermore, if Union members strike under one business, another business can fill the gap.

  7. 7 John Harker
    April 2, 2009 at 10:39 am

    People who believe public transit will be much more efficient if it were in private hands is a fallacy. Private corporations only believe in one thing, profit. Greyhound is a perfect example. Back when I was in school and only able to afford to ride this service there were many times in which I would be stranded at bus terminals because there were not enough seats and that I would have to wait for the next bus. Just because a transport service is private doesn’t necessarily mean you are guaranteed a seat. Hong Kong is the only place where a private transport service works mainly because of Hong Kong’s compact city center in relativity to its suburbs, it doesn’t suffer from urban sprawl and more live in the city center compared to its environs.

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