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131 . David A. Hensher.Pdf BUS TRANSPORT: ECONOMICS, POLICY AND PLANNING RESEARCH IN TRANSPORTATION ECONOMICS Series Editor: Martin Dresner Volumes 1–6: Research in Transportation Economics – B. Starr McMullen Volume 7: Railroad Bankruptcies and Mergers from Chicago West 1975–2001: Financial Analysis and Regulatory Critique – Michael Conant Volume 8: Economic Impacts of Intelligent Transportation Systems: Innovations and Case Studies – Evangelos Bekiaris and Yuko Nakanishi Volume 9: Road Pricing: Theory and Evidence – Georgina Santos Volume 10: Transportation Labor Issues and Regulatory Reform – James Peoples and Wayne K. Talley Volume 11: Interurban Road Charging for Trucks in Europe – Jose´Manuel Viegas Volume 12: Shipping Economics – Kevin Cullinane Volume 13: Global Competition in Transportation Markets: Analysis and Policy Making – Katsuhiko Kuroda and Adib Kanafani Volume 14: Measuring the Marginal Social Cost of Transport – Christopher Nash and Bryan Matthews Volume 15: Procurement and Financing of Motorways in Europe – Giorgio Ragazzi and Werner Rothengatter Volume 16: Port Economics – Kevin Cullinane and Wayne K. Talley Volume 17: Devolution, Port Governance and Port Performance – Mary R. Books and Kevin Cullinane RESEARCH IN TRANSPORTATION ECONOMICS VOLUME 18 BUS TRANSPORT: ECONOMICS, POLICY AND PLANNING BY DAVID A. HENSHER Institute of Transport and Logistics Studies, Faculty of Economics and Business, University of Sydney, Sydney, NSW, 2006, Australia Amsterdam – Boston – Heidelberg – London – New York – Oxford Paris – San Diego – San Francisco – Singapore – Sydney – Tokyo JAI Press is an imprint of Elsevier JAI Press is an imprint of Elsevier The Boulevard, Langford Lane, Kidlington, Oxford OX5 1GB, UK Radarweg 29, PO Box 211, 1000 AE Amsterdam, The Netherlands 525 B Street, Suite 1900, San Diego, CA 92101-4495, USA First edition 2007 Copyright r 2007 Elsevier Ltd. All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone (+44) (0) 1865 843830; fax (+44) (0) 1865 853333; email: [email protected]. Alternatively you can submit your request online by visiting the Elsevier web site at http://elsevier.com/locate/permissions, and selecting Obtaining permission to use Elsevier material Notice No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. Because of rapid advances in the medical sciences, in particular, independent verification of diagnoses and drug dosages should be made British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN-13: 978-0-7623-1408-9 ISBN-10: 0-7623-1408-7 ISSN: 0739-8859 (Series) For information on all JAI Press publications visit our website at books.elsevier.com Printed and bound in The Netherlands 070809101110987654321 Dedicated to the Bus and Coach Association of New South Wales This page intentionally left blank CONTENTS ABOUT THE AUTHOR xix LIST OF CHAPTERS AND PREVIOUS xxi SOURCES OF PUBLICATION LIST OF FIGURES xxiii LIST OF TABLES xxv CHAPTER 1 INTRODUCTION 1 CHAPTER 2 ORGANISATION AND OWNERSHIP OF PUBLIC TRANSPORT SERVICES 2.1 Introduction 5 2.2 Organisational Reform Developments 6 2.3 Other Issues 11 2.3.1 Market Concentration 11 2.3.2 Cross-Modal Ownership 12 2.3.3 Monitoring of Performance 13 2.3.4 Growing the Human Skill Base 13 2.4 Recommendations for Ongoing Consideration 14 CHAPTER 3 USER NEEDS AND IMPACT ON PUBLIC TRANSPORT 3.1 Introduction 15 3.2 Service Effectiveness in Diversified Markets 16 3.3 Quality Partnerships 17 vii viii CONTENTS 3.4 Service Effectiveness and Contracts 18 3.4.1 Monitoring and Responses 20 3.5 Recommendations 21 CHAPTER 4 CONTRACTING OPTIONS 4.1 Introduction 25 4.2 Definitional Issues for Performance-Based Contracts 27 (PBCs) 4.3 Procuring Services through Competitively Tendered or 30 Negotiated Contracts – The Issues 4.3.1 Cost and Subsidy Impacts 31 4.3.2 Administration and Regulatory Costs 32 4.3.3 Establishment of Appropriate Benchmarks 32 4.3.4 Accountability and Transparency 32 4.3.5 Optimising Networks and Funding 33 Allocation 4.3.6 Some Development, Performance Incentives 33 and Monitoring 4.3.7 Government-Funding Risks 34 4.3.8 Encouragement of a Strong, Diverse Supplier 34 Market 4.4 Payment Models 35 4.5 Other Issues 39 4.6 Conclusions and Recommendations for Ongoing 41 Inquiry CHAPTER 5 CONTRACT AREAS AND SERVICE QUALITY ISSUES IN PUBLIC TRANSIT PROVISION: SOME THOUGHTS ON THE EUROPEAN AND AUSTRALIAN CONTEXT 5.1 Introduction 47 5.2 Contract Area Size and Number 48 5.2.1 The Theoretical Argument 53 5.2.2 The Evidence on Cost Savings from Scale of 54 Operations 5.2.3 Summary of the Main Argument 55 Contents ix 5.3 Integrated Fares: Regulatory Control and/or Genuine 57 Benefit to Passengers? 5.3.1 What is the Broader Evidence on Patronage 60 Benefits? 5.4 Conclusions 61 CHAPTER 6 PERFORMANCE-BASED QUALITY CONTRACTS IN BUS SERVICE PROVISION 6.1 Introduction 67 6.2 The Appeal of PBC 68 6.3 The Hordaland (Norway) and New Zealand Models: 72 A Healthy Starting Position 6.3.1 Hordaland 72 6.3.2 New Zealand 74 6.3.3 Assessment 76 6.4 A Proposed Performance-Based Quality Contract 76 Regime for Australia 6.5 Conclusion 79 CHAPTER 7 PERFORMANCE-BASED QUALITY CONTRACTS FOR THE BUS SECTOR: DELIVERING SOCIAL AND COMMERCIAL VALUE FOR MONEY 7.1 Introduction 81 7.2 Incentive-Based Performance Contracts 84 7.3 The Australian PBC Proposition 86 7.3.1 Defining Annual Passenger Demand 87 7.3.2 Defining Annual Total Cost 88 7.3.3 Defining the Constraints 89 7.3.4 Defining the Objective Function 93 7.3.5 Defining the Benefit Sources 93 7.4 A Case Study for the Outer Metropolitan Area 97 of Sydney 7.4.1 The Budget and %MSL in Scenario I 97 7.4.2 Fleet Size under Scenario I 100 x CONTENTS 7.5 Conclusions and Future Research 103 Directions CHAPTER 8 DELIVERING VALUE FOR MONEY TO GOVERNMENT THROUGH EFFICIENT AND EFFECTIVE PUBLIC TRANSIT SERVICE CONTINUITY: SOME THOUGHTS 8.1 Introduction 105 8.2 The Indisputable Strategic Objective of Government on 106 behalf of Society 8.3 Trust, Cooperation and Collaboration 106 8.4 Supporting Efficiency and Effectiveness through the Life 107 of a Contract (and not at the Time of Tendering) 8.5 Asset Ownership – a Key Issue Linked to the Boundaries 109 of a Transit Operator’s Business 8.6 Conclusions 113 CHAPTER 9 MELBOURNE’S PUBLIC TRANSPORT FRANCHISING: LESSONS FOR PPPS 9.1 Scope 123 9.2 Train and Tram Franchising in Victoria, 124 Australia 9.2.1 Context 124 9.2.2 Objectives 125 9.2.3 Remuneration Components 126 9.2.4 Expected Outcomes from Franchising 127 9.3 Antecedents 128 9.4 Outcomes from Franchising 129 9.4.1 The High Profile Outcome 129 9.4.2 Financial Outcomes to the State 130 9.4.3 Service Quality 132 9.4.4 New Vehicles 133 9.4.5 Increases in Services 133 9.4.6 Patronage 134 9.4.7 Risk Transfer 134 9.4.8 Safety Outcomes 135 9.4.9 Customer Satisfaction 135 9.5 Overview 135 Contents xi 9.6 Why has the Process Failed to Deliver? 136 9.6.1 Operator Motivations and Governmental 136 Reform Ideology 9.6.2 Competitive Tendering versus Negotiated 138 (Performance-Based) Contracts 9.6.3 Area Agreements/Quality Partnerships 140 9.6.4 Risk Sharing 142 9.7 Melbourne’s Emerging New Arrangements 143 9.8 Concluding Comments 143 CHAPTER 10 ESTABLISHING A FARE ELASTICITY REGIME FOR URBAN PASSENGER TRANSPORT 10.1 Introduction 145 10.2 Microeconomic Specification of the Indirect Utility 147 Function for Choice Alternatives 10.3 Specifying a Choice Model 151 10.3.1 The Inseparability of Taste and Scale 152 10.3.2 Random Effects Heteroscedastic Extreme 154 Value Model 10.4 The Empirical Context 156 10.4.1 Sourcing Revealed and Stated Preference 157 Data 10.4.2 Developing the Stated Choice Experiment 158 10.5 Empirical Results 160 10.5.1 Response Rates 160 10.5.2 Empirical Models 161 10.5.3 Fare Type and Car Cost Direct and Cross 167 Share Elasticities 10.6 Conclusions 171 CHAPTER 11 PRESERVING THE SYMMETRY OF ESTIMATED COMMUTER TRAVEL ELASTICITIES 11.1 Introduction 173 11.2 Choice and Ordinary Elasticities 174 11.3 Aggregate Demand and HEV Properties 176 11.3.1 Symmetry 176 11.3.2 Share Weighted Column Sum 180 xii CONTENTS 11.3.3 Gross Substitutes 182 11.4 The Model 182 11.5 The Empirical Context 184 11.6 Results 185 11.7 Indicative Comparisons with Other 187 Estimates 11.8 Conclusions 189 CHAPTER 12 TRESIS (TRANSPORT AND ENVIRONMENTAL STRATEGY IMPACT SIMULATOR): A CASE STUDY 12.1 Introduction 195 12.2 Detailed Background to TRESIS 196 12.3 Application Issues 202 12.4 Warringah Case Study 204 12.4.1 Detailed Results 205 12.5 Conclusions 211 CHAPTER 13 PRODUCTIVITY MEASUREMENT IN THE URBAN BUS SECTOR 13.1 Introduction 221 13.2 Measuring performance – Total Factor 223 Productivity 13.3 Data Requirements and the Sourcing of Data 225 13.3.1 Sourcing the Data 226 13.3.2 State Differences in Private Bus 226 Operations 13.3.3 Subsidies 227 13.3.4 Use of Coaches and Buses 227 13.3.5 Costs 228 13.3.6 Specifying the Outputs and Inputs 228 13.4 Descriptive Profile of the Urban Bus Sector 232 1991/1992 13.5 Gross Total Factor Productivity 236 13.5.1 Gross TFP 236 13.5.2 Decomposing GTFP to Identify Sources
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