An Evaluation of the Impact of the South African Public Transport Policy on the Restructuring of the Commuter Bus Industry

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An Evaluation of the Impact of the South African Public Transport Policy on the Restructuring of the Commuter Bus Industry AN EVALUATION OF THE IMPACT OF THE SOUTH AFRICAN PUBLIC TRANSPORT POLICY ON THE RESTRUCTURING OF THE COMMUTER BUS INDUSTRY BY LOUIS JOHANNES NAUDE THESIS SUBMITTED IN FULFILMENT OF THE REQUIREMENTS OF THE DEGREE DOCTOR PHILOSOPHIAE IN TRANSPORT ECONOMICS IN THE FACULTY OF ECONOMIC AND MANAGEMENT SCIENCES AT THE RAND AFRIKAANS UNIVERSITY PROMOTER: PROF J WALTERS CO-PROMOTER: DR C W V MOSTERT MAY 1999 ACKNOWLEDGEMENTS No project of this magnitude is possible without the help and assistance of others. The author is therefore greatly indebted to the following persons and institutions: Prof J Walters, for his vision in initiating, and in-depth knowledge in guiding this study. Without his expert advice and constructive criticism as promoter, this study would not have been possible. As international player in public transport, Prof Walters also played a key role in unlocking the industry to obtain the necessary information; • My wife Mariette for her support and encouragement. In times of distress her inspiring words were extremely valuable; My two sons, JP and Deklerk, for fuelling my primary driving forces in life; My late father, JP, for forwarding three precious gifts to the next generation: hastiness, punctuality and the need to achieve; The bus operators for their interest, encouragement and support. It is indeed an honour to have been part of this special breed of people since 1977; Eric Cornelius and SABOA staff for their support, information and access to the industry; • The national Department of Transport for creating challenging policy and strategy required for fundamental change; O The UITP for access to their comprehensive database in Brussels, which I was privileged to visit in November 1997 and April 1999, and their friendly assistance; O Dirk Van der Merwe for his insight and advice in staying on the pragmatic road. After all, a piece of pure theory is worthless to an industry which is driven by practical realities; Finally, to those I might have overlooked in the rush to complete yet another deadline, please accept my apologies and sincere appreciation. Walking the steep road twice calls for, among other things, intense frustration and mental seclusion from time to time. To those near to me, thank you for your patience, understanding and encouragement during the past two years. Louis Naude May 1999 AN EVALUATION OF IMPACT OF THE SOUTH AFRICAN PUBLIC TRANSPORT POLICY ON THE RESTRUCTURING OF THE COMMUTER BUS INDUSTRY INDEX SUBJECT PAGE SUMMARY vi OPSOMMING ix CHAPTER 1: INTRODUCTION PURPOSE AND AIMS 1.1 PROLOGUE 1 1.2 BACKGROUND PERSPECTIVE AND PROBLEM STATEMENT 2 1.3 PAST, PRESENT AND FUTURE: CHALLENGES FOR ITHE BUS INDUSTRY 4 1.4 RESEARCH NEEDS AND STUDY OBJECTIVES 7 1.5 RESEARCH METHODOLOGY 9 1.6 STRUCTURING OF STUDY 11 1.7 SUMMARY AND CONCLUSIONS 12 CHAPTER 2: TRANSPORT POLICY AND DEVELOPMENT IN A CHANGING ENVIRONMENT 2.1 INTRODUCTION AND OVERVIEW 13 2.2 MEGATRENDS THAT INFLUENCE THE FUTURE 14 2.3 GLOBALISATION 17 2.4 SUSTAINABILITY 19 2.5 URBANISATION 20 2.6 INCREASING SPRAWL 22 2.7 INCREASING PRIVATE VEHICLE USE WORLDWIDE 25 2.8 RENEWED FOCUS ON PUBLIC TRANSPORT 26 2.9 INCREASED FOCUS ON ENVIRONMENTAL ISSUES 28 2.10 LOWER FUEL CONSUMPTION AND DECREASED IN FOSSIL FUEL USE 28 2.11 A GROWING CONCERN FOR THE NEEDS OF DISABLED AND OTHER 29 MINORITY GROUPS 2.12 CHANGED PATTERNS OF PUBLIC TRANSPORT USE 29 2.13 DEVOLUTION OF AUTHORITY 30 2.14 PRIVATISATION, DEREGULATION AND COMMERCIALISATION 31 2.15 COMPETITIVE TENDERING 33 2.16 IMPLICATIONS OF ENVIRONMENTAL TRENDS AND CHANGES ON POLICY 38 DEVELOPMENT 2.17 SUMMARY AND CONCLUSIONS 41 CHAPTER 3: POLICY REFORMS IN THE UNITED KINGDOM: NEW DIRECTION FOR BUS PASSENGER TRANSPORT 3.1 INTRODUCTION AND OVERVIEW 42 3.2 OVERVIEW OF THE TRANSFORMATION PROCESS 45 3.3 OVERVIEW AND SALIENT PRE-REFORM ISSUES 47 3.4 KEY ISSUES UNDERLYING THE NEED FOR POLICY RENEWAL AND CHANGE 49 3.5 POLICY MEASURES IMPLEMENTED 51 3.6 EFFECTS OF THE 1985 POLICY CHANGES 54 3.7 RAIL FRANCHISING 64 3.9 LATEST POLICY INITIATIVES: THE GOVERNMENT'S WHITE PAPER ON 67 THE FUTURE OF TRANSPORT, 1998 3.10 CONCLUSIONS 72 CHAPTER 4: THE EFFECT OF PUBLIC TRANSPORT REFORMS IN POLICY IN SOUTH AMERICAN COUNTRIES 4.1 INTRODUCTION AND PURPOSE 76 4.2 THE SOUTH AMERICAN REFORMS IN PERSPECTIVE 77 4.3 BACKGROUND TO THE TRANSPORT POLICY REFORMS IN BRAZIL 80 4.4 THE POLICY REFORMS IN CURITIBA 81 4.5 RESULTS OF THE BRAZILIAN TRANSPORT REFORMS IN CONTEXT 95 4.6 POLICY REFORMS IN SANTIAGO, CHILE 96 4.7 RAIL TRANSFORMATION IN ARGENTINA 102 4.8 SUMMARY AND CONCLUSIONS 107 CHAPTER 5: THE EFFECT OF TRANSPORT POLICY REFORMS IN AUSTRALL4 , NEW ZEALAND AND OTHER COUNTRIES 5.1 INTRODUCTION AND PURPOSE 110 5.2 AUSTRALIA 111 5.3 NEW ZEALAND 132 ii 5.4 COMPETITION: OTHER INTERNATIONAL BEST PRACTICES 145 5.5 A PARADIGM SHIFT IN PUBLIC TRANSPORT POLICY 147 5.6 SUMMARY AND CONCLUSIONS 152 CHAPTER 6: THE ROLE OF GOVERNMENT POLICY IN THE DEVELOPMENT OF THE SOUTH AFRICAN BUS INDUSTRY 6.1 INTRODUCTION AND OVERVIEW 157 6.2 SOCIO-POLITICAL INFLUENCES ON THE DEVELOPMENT 159 OF THE BUS INDUSTRY 6.3 TRANSPORT POLICY AND THE DEVELOPMENT OF THE BUS INDUSTRY 165 6.4 DISTORTIONS AT METROPOLITAN LEVEL 171 6.5 THE SUBSIDISED SYSTEM IN PERSPECTIVE 172 6.6 TOWARDS A NEW DISPENSATION 175 6.7 THE TENDER FOR CONTRACT SYSTEM: PROGRESS AND EXPERIENCES 177 6.8 PROFILE OF THE SOUTH AFRICAN BUS INDUSTRY 182 6.9 ROLE OF THE TAXI IN THE DEVELOPMENT 186 OF THE BUS INDUSTRY 6.10 RESULTS OF THE POLICY ON THE URBAN CUSTOMER 187 6.11 SUMMARY AND CONCLUSIONS 188 CHAPTER 7: ASSESSMENT OF PRESENT AND PROPOSED TRANSPORT POLICY AND LEGISLATION 7.1 INTRODUCTION AND OVERVIEW 190 7.2 SOUTH AFRICAN POLICY ENVIRONMENT 191 7.3 KEY VARIABLES IN THE EVOLUTION OF THE NEW LEGISLATION 193 7.4 THE WHITE PAPER ON NATIONAL TRANSPORT POLICY 197 7.5 NATIONAL LAND TRANSPORT TRANSITION BILL, 1999 208 7.6 MOVING SOUTH AFRICA 212 7.7 PROPOSED LEGISLATION IN PERSPECTIVE 215 7.8 LABOUR LEGISLATION 221 7.9 WHITE PAPER ON THE NATIONAL STRATEGY FOR THE DEVELOPMENT 224 AND PROMOTION OF SMALL BUSINESS IN SOUTH AFRICA IN SOUTH AFRICA 7.10 SUMMARY AND CONCLUSIONS 225 iii CHAPTER 8: THE STRATEGIC GAP 8.1 INTRODUCTION AND OVERVIEW 227 8.2 ASSESSMENT OF CHANGE REQUIRED 228 8.3 STRATEGIC GAP ANALYSIS 230 8.4 METHODOLOGICAL CONSIDERATIONS 235 8.5 GAPS: INTERNATIONAL LITERATURE STUDY 236 8.6 GAPS: SOUTH AFRICAN PUBLIC TRANSPORT SYSTEM 238 8.7 GAPS: WHITE PAPER ON NATIONAL TRANSPORT POLICY 240 8.8 GAPS: MOVING SOUTH AFRICA PROJECT 246 8.9 GAPS: INDUSTRY ANALYSES 252 8.10 SUMMARY OF GAPS THAT NEED TO BE ADDRESSED IN THE CHANGE 262 STRATEGY 8.11 CONCLUSIONS 267 CHAPTER 9: CHANGE STRATEGY FOR THE BUS INDUSTRY 9.1 INTRODUCTION AND OVERVIEW 268 9.2 CHARACTERISTICS OF A GOOD STRATEGY 271 9.3 KEY STRATEGIC ISSUES FACING THE INDUSTRY 278 9.4 ANALYSIS AND CHOICE 281 9.5 EVALUATION OF THE INDUSTRY AGAINST 292 SPECIFIC RELEVANT STRATEGIES 9.6 NEW BUSINESS MINDSET 298 9.7 CURRENT FOCUS OF THE ORGANISED BUS INDUSTRY 299 9.8 ELEMENTS OF THE CHANGE STRATEGY 301 9.9 FORMULATION OF LONG TERM OBJECTIVES 302 9.10 GENERIC STRATEGIES: GUIDELINES 308 AND IMPLICATIONS 9.11 GRAND STRATEGIES: GUIDELINES 309 AND IMPLICATIONS 9.12 ACTION PLANS AND SHORT TERM OBJECTIVES 368 9.13 FUNCTIONAL TACTICS 317 9.14 RESTRUCTURING, RE-ENGINEERING AND REFOCUSING 319 THE ORGANISATION 9.15 STRATEGIC CONTROL AND CONTINUOUS IMPROVEMENT 325 9.16 IMPLEMENTATION CONSIDERATIONS 326 9.17 SUMMARY AND CONCLUSIONS 333 iv CHAPTER 10: CONCLUSIONS AND RECOMMENDATIONS 10.1 INTRODUCTION AND PURPOSE 336 10.2 SUMMARY AND MAJOR CONCLUSIONS 338 10.3 OVERARCHING RECOMMENDATION 343 10.4 RECOMMENDATIONS: INDUSTRY LEVEL 343 10.5 THE ROLE OF INSTITUTIONAL STRUCTURES IN THE TRANSFORMATION 347 OF THE BUS INDUSTRY 10.6 RECOMMENDATIONS FOR FURTHER RESEARCH 355 10.7 EPILOGUE 356 REFERENCES 358 AN EVALUATION OF THE IMPACT OF THE SOUTH AFRICAN PUBLIC TRANSPORT POLICY ON THE RESTRUCTURING OF THE COMMUTER BUS INDUSTRY SUMMARY The purpose of this thesis was to assess the impact of the new public transport policy direction, with specific reference to competitive tendering, on the transformation and restructuring of the South African commuter bus industry. The main objective of this study was to develop a methodology to guide the transformation and restructuring of the bus industry. This main objective was achieved through the following secondary objectives: A comparison between international transforrnation experiences and the South African bus industry in an effort to develop a methodological basis for the change process; An assessment of the strategic gap in an effort to determine the 'focus of the change process; and The development of a detailed change strategy to guide the transformation process. A comprehensive literature study revealed that certain megatrends in the business environment such as the dynamic nature of the information age, globalisation, urbanisation, decentralisation and privatisation have an important impact on the strategies and goals of companies. The public transport industry is characterised by the following broad trends worldwide that are particularly relevant to the transformation of the South African bus industry: Replacement of monopolies with the competitive market; Separation of policy from operations; Increased efforts to attract passengers to public transport; and Increased involvement of the private sector in the rendering of public transport services. vi The literature study also revealed the following positive lessons for South Africa from a policy perspective: Competitive tendering, if properly implemented, can lead to increased resource efficiency; Competitive tendering as such does not necessarily increase passenger volumes; Transport and land use planning should be integrated; Integrated transport networks have distinct advantages over fragmented service supply; The commuter bus can play an immensely important role in the effective rendering of public transport services; and Institutional structures play an important role in effective service delivery.
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