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Image courtesy of Transit Systems CASE STUDY TRANSPERTH (PERTH): FRANCHISING THE BUS SYSTEM Following a 1993 review that identified major inefficiencies in the monopoly public bus authority, the Perth bus system was put out to competitive tender in two stages. Approximately half of the system was franchised in 1996, and the remainder in 1998. 3 Figure 4: Decline in government subsidy per service km following privatisation of Perth buses (FY1993-01) 4 Cost/Service per km (1999 $ AUD) 3 2 1 0 FY1993 FY1994 FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 Note: Figures for FY2000 and FY2001 are estimated. Source: Bus reform: further down the road; a follow on examination into competition reform of Transperth bus services, Auditor General of Western Australia. 2000 3 Bus Reform: Further down the road, Auditor General (WA) 2000 ON THE BUSES:THE BENEFITS OF PRIVATE SECTOR INVOLVEMENT IN THE DELIVERY OF BUS SERVICES | 12
The aim of the reforms was to reverse long-term trends of increasing costs and decreasing patronage. The franchising model adopted saw the ownership of buses and infrastructure remain with the state (along with route, fare and service controls), while private companies were responsible for the operation of services. This franchising program delivered substantial cost reductions while total service kilometres increased. One of the key gains was an improvement in staff productivity. The level of government subsidy per service kilometre reduced by 29 per cent, from $3.58/km in 1992-93 to $2.55/km by 1998-99 (Figure 4) demonstrating the significant saving franchising was able to achieve. This equated to savings of more than $30m per annum or more than 20% of the historical cost of bus services. Strong patronage growth and continued operational efficiencies over the last ten years have been driven in large part by a range of initiatives led by the private sector. These include: • Innovations in route planning and optimising frequency: This involved cutting some routes, introducing new routes and changing frequencies. This has resulted in improved asset utilisation and closer alignment of services to customer needs. • New depot management strategy: This involved the strategic placement of smaller depots closer to areas of operation. This has reduced dead running time and has also resulted in a more empowered and dynamic culture within each depot. Competition between operators has given the industry a renewed focus on high customer service levels. Customer satisfaction levels have been consistently higher under franchising than government operation. The Transperth model has remained largely unchanged in the last 15 years and is widely regarded as a success in franchising. Figure 5: Perth bus patronage (FY1991-09) 75 Number of passenger boardings (millions) 60 45 30 15 Bus reform program commences Remainder of system contracted out c. 50% of system contracted out CAGR% (FY1991-FY09) (FY99-FY09) 1.8 5.1 0 FY1991 FY1993 FY1995 FY1997 FY1999 FY2001 FY2003 FY2005 FY2007 FY2009 Source: WA Public Transport Authority Transperth Annual Report 2008/09 ON THE BUSES:THE BENEFITS OF PRIVATE SECTOR INVOLVEMENT IN THE DELIVERY OF BUS SERVICES | 13
Page 1 and 2: ON THE BUSES THE BENEFITS OF PRIVAT
Page 3 and 4: CONTENTS EXECUTIVE SUMMARY 3 1. OVE
Page 5 and 6: EXECUTIVE SUMMARY BUS SERVICES PLAY
Page 7 and 8: 1. OVERVIEW OF METROPOLITAN BUS OPE
Page 9 and 10: Figure 2: Estimated international p
Page 11 and 12: 2. CONTRACTING MODELS
Page 13: Franchising is the most common form
Page 18 and 19: Figure 6: Transport for NSW bus con
Page 20 and 21: 3. BENEFITS
Page 22 and 23: Figure 7 summarises the range of sa
Page 24 and 25: Figure 8: Canning Contract Performa
Page 26 and 27: 4. BEST PRACTICES IN BUS CONTRACTIN
Page 28 and 29: CONTRACT TERM There is general cons
Page 30 and 31: PERFORMANCE REGIME Penalties and in
Page 32 and 33: 5. OPPORTUNITIES FOR REFORM
Page 34: TOURISM & TRANSPORT FORUM LEVEL 6 7

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