A proposal for expanding the franchise system (long) (52428)

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Posted by ar on Sun Aug 4 19:40:26 2002

Many private bus operators would like to operate bus services on an unsubsidized basis in New York City. However, city laws only allow private commuter vans to provide service to our communities, and they are severely restricted because of the perceived threat to existing MTA and NYCDOT services. This is counter to any rules of industrial common sense. Industrial common sense tells you that the stronger competition is in an industry, the more options you have. The more options you have, the more likely that a person will pick at least one of them. In the auto industry, automakers such as Volkswagen are expanding their product offerings because a wider range of products attracts more people.
Likewise, our current mass transit system has seen increased ridership due to the new travel options that the elimination of two-fare zones and unlimited ride MetroCards provided to New Yorkers. The MTA, projecting a deficit of over $150 million from the new options, had two years of budget surpluses totaling over $400 million. Gee, how did that happen? If I just had to pay once for running all over the city, Iíd take it. Likewise, fierce competition on Staten Island forced the MTA to purchase more comfortable motorcoaches for their Staten Island express routes. Implemented on the routes with the most competition first (X1, X17), these buses have now become the MTA express bus standard on all express routes except the X90 and X92. The same competitors forced the MTA to start chasing them through New Jersey, speeding up the commute by up to a half-hour for some commuters. Express bus ridership citywide has increased by 50% in THREE years, from about 8,000,000 to 12,000,000 riders. Gee, how did that happen?
A public/private transit system is the last hope for New York City. We recognized since the 1940s that private operators canít do it alone. What we have failed to realize is that public operators canít do it alone either. This is a concept that our City Council does not understand. The unions donít understand this either. Since both are key players in the decision-making process for our cityís transport needs, is it a wonder that we are now crying about money problems?
Contrary to popular belief, public operators do not have access to an infinite supply of resources, manpower, and money. This is why public operators demand exclusivity: they donít want anyone doing ďtheirĒ jobs for them, even if they canít do it themselves. We have anti-trust laws in the private sector to deal with this; in the public sector, this is called destructive competition, and can result in the freezing of subsidies or other financial penalties until it is dealt with properly.
Therefore, I propose the following solution to this problem. Private operators should be allowed to provide unsubsidized services if they directly operate or subsidize an unprofitable franchise route. For example, Azumah Transport would operate bus service from Staten Island to Downtown Brooklyn, Brooklyn to the Bronx, and Bronx to JFK Airport. In exchange, Azumah Transport would subsidize the BxM11 by subsidizing Liberty Lines Express for part or the whole cost of the service, depending on my earnings from my services. When their contract ends, Azumah Transport would then take over the BxM11 or ask Liberty Lines or another carrier to continue its operation. To me, this is a small price to pay for the privilege of operating service in the city.
Maybe three or four carriers would fight over access to the cityís airports. If Azumah Transport wanted to beat Bloomberg Buses LLC, I would simply contribute more money to offset the costs of NYCDOTís franchise buses in order to operate more routes. A win-win situation. The city would not necessarily keep all that money: the saved money would be reinvested in bus lanes, reduced tolls, MetroCard fareboxes, and absorbing MetroCard processing costs. All bus companies would be exempt from income taxes on their mass transit operations in the city, but would be required to use a minimum of 4% of their earnings on those operations to subsidize city routes. If the MTA wanted similar benefits, they could be included.
The key to this would be profit. If Azumah Transport and Bloomberg Buses are allowed to make lots of money, they will contribute a lot to the system. The main requirement is that no current dollars could be taken out of the system. It would then allow the cityís dollars to be stretched farther each year, giving us more bang for the buck. It allows private carriers to attempt to make money and would make it easier if they are successful to prepare for major projects and budget for future years. While many worry about the potential poaching of municipal routes, strong routes will co-exist with private competition. Poaching is also not the place for big money to be made, as poachers have never made as much money as innovators. The truly skilled companies that would dominate the field would probably have more brand-new lines than lines to poach because thatís where the money is located.
In conclusion, I believe that this proposal could be implemented immediately. We have the budget crunch now, so letís start a pilot program. Government has a bad habit of doing too many conceptual studies. Mayor Bloomberg and the City Council should pass a local law that would allow a two-year trial period to see what issues come up during this time. After that, long-term policies and legislation could be developed to more effectively run this program. Besides, the city needs the money nowÖhow long should we wait to generate more tax revenue for the city and conserve existing dollars?


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