Privatising bus routes 'would cost more and damage service'

A new transport authority which would auction off bus routes outside Dublin would cost more to run than the current subvention to Bus Éireann, and would result in higher fares and a poorer service, a new report has predicted.

The report also found that the main objective would not be achieved - a shift from private car use to public transport.

The report examines the effect of competitive tendering in Britain and Continental Europe and claims the cost of running a tendering authority would amount to €24 million a year - €2 million more than the current subsidy to Bus Éireann.

The Department of Transport is considering plans for a new transport regulator or authority which would oversee the introduction of competition and allocate routes to potential private operators. The Minister for Transport, Mr Brennan, is in favour of private sector competition on all bus services.

But Bus Éireann, which commissioned the report, has now been told by its authors that diverting the €22 million annual subsidy, while taking from that company's services, would not improve services generally and would simply be swallowed up by the administration costs of a new authority/regulator.

The report also claims the private sector would "cherry pick" the most profitable routes. Getting buses at off peak times might also prove difficult.

The report states that competitive tendering could lead to a situation where a small number of companies controlled all available routes with remarkable similarity in fare prices, in effect replacing a public sector monopoly with a cartel or a private sector monopoly.

It points out that in Copenhagen in 2003, 90 per cent of the market was in the hands of just three operators. In Helsinki in 2002, some 75 per cent of the market was in the hands of three operators. In France in 2002, 78 per cent of urban transport (excluding Isle de France where services are State owned) was in the hands of three operators. In London in 2002, where the market is worth a billion pounds a year, 87 per cent of the market is in the hands of six operators while in the UK generally 53 per cent of the market is in the hands of three operators.

In Stockholm three operators control 100 per cent of the market.

In addition to creating new additional costs, the report says the new transport authority could "rip an integrated transport network apart and significantly worsen the level of service" and that it "inevitably results in the formation of a cartel/oligopoly (a private monopoly) which cannot be reasonably considered as an improvement on what exists at present".

It says international experience shows that worsening the public network and increasing costs does not support a shift from private to public transport.

"The levels of competitive tension that presently exist in the Irish bus market would be lost under competitive tendering, to be replaced by cartel-type activity. The outcome instead would be the establishment of route/geographic monopolies preventing competition and offering no choice to the consumer," it concludes.