Wednesday, August 12, 2009

TransLink is inefficient and must reform

It's time to elevate the discussion on public transit in the Lower Mainland from who pays - transit riders or taxpayers, to who is the transit system supposed to serve - transit riders or a bloated government bureaucracy.

Ever wondered why airline fares have fallen dramatically over the past few decades but public transit fares have gone nowhere but up? It's because the airline industry has gone through dramatic reforms while public transit providers, such as the Lower Mainland's TransLink, have not. Until TransLink is reformed, transit riders and taxpayers can expect to continue to pay more for less.

The single most important reform in the airline industry - increased competition - helped bring down fares for consumers. Falling airline fares meant airlines had to bring down costs, which improved productivity - airlines got more from less.

TransLink has no such cost discipline. This means management caves in to any excess salary demand because any cost increase is just passed along to bus riders as higher fares or to taxpayers as higher taxes. Productivity falls because we get the same or less for more.

But is the airline industry special? Can the same reforms happen with public transit? Reforms in Europe show how public transit can be improved for the benefit of both taxpayers and transit riders.

In England, the City of London tendered-out the operation of its bus service. Between 1984 and 1999 productivity of the bus service increased by 3.7 per cent -- meaning it cost less to transport passengers for every dollar of capital and operating expense -- and ridership increased by 11.7 per cent. Thanks to this success, London continues to tender-out bus services.

For TransLink, between 2005 and 2008 the cost to transport one passenger one kilometer increased by 19.1 per cent. TransLink's own ten-year plan shows ridership is estimated to increase by only 2.3 per cent per year to 2012 and 1.5 per cent annually thereafter.

As both the Canadian airline industry the European transit experience show, transportation is a service that can achieve higher productivity with the right type of reform. Instead of continuing to be a high cost supplier of transit services, TransLink needs to tender competitively to reduce both its costs and its fares to boost unsubsidized ridership.

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