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expected of them will be protected by the regulatory, licensing and enforcement process, from the
impact of unauthorised competition.
All transport providers will look for certainty in terms of costs and revenues. This will enable them
to plan effectively and respond competitively to any invitations to participate in bidding processes.
In pricing their proposals all transport operators will benefit from the greater certainty that arises
from effective regulation and enforcement and specifically from the assurance that they will be
protected from the impacts of unauthorised competitive actions.
By ensuring that these factors are managed effectively, and that appropriate enforcement within
the industry takes place, this is likely to also result in and support positive increases in demand and
ridership.
In order to deliver the network, a model for moving forward would need to address the regulatory
environment, and identifying the most appropriate model for the region and the industry.
5.5) The Regulatory Framework – „Mapping the Options‟
The diagram shown in Figure 5.2 identifies the models of Regulatory Regime which can be applied
to a bus industry environment. Taken as a whole, the diagram encapsulates all of the regulatory,
contracting and operating regimes found worldwide. This presents a series of alternative
approaches within which each model exhibits varying degrees of public or private sector control,
management and intervention, as well as varying degrees of risks and costs associated with
operating a bus network and integrating it with the wider hierarchy of LPT provision in a city or
region.
There are four basic models of operation:
Open Market– this is typically a competitive market where operators are free to select
their own services and fares. There is little influence by the regulatory body on the
network being operated unless it chooses to plan and provide a subsidy for social routes.
The variation within this model is the quantity licensing approach as adopted in GKL/KV at
present in which there is a process of route licensing but full procedures are not followed,
resulting, in effect, in a free market on the road;
Area Service Contracts- these can be operated as concessions or franchises. In both cases
an operator provides a service in an area defined by the public body responsible for
network planning. With a concession the operator is free to select the routes and service
levels it wants against broad specifications set by the public authority. With a franchise,
the public body defines the provision in greater detail including routes, standards and
fares. Operators are given an area in which to provide these. In both cases competition
takes place off the road to secure a concession or franchise and authorised operations are
protected by effective regulation and enforcement;
Net or Gross Cost Contracts – concessions or franchises can operate either as net cost
contracts in which the operator assumes the revenue risk or gross cost contracts where the
operator simply requires a stated sum for service provision and revenue is vested with the
public body. It is also possible to have “hybrid” contracts involving both elements;
Public Monopoly- where the public sector delivers all aspects of the bus service.
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