Route Marker 4- IPT Business Development: How can the business case and professionalisation of the IPT industry be supported?
The IPT industry tends to be organised in Unions and/or Route Associations that operate from specific terminals. These often have a formal status, undertaking negotiations with public authorities on behalf of their membership, and sometimes taking on roles relating to the licensing and inspection of vehicles. Some well-organised unions also seek to provide for the long-term welfare of vehicle crews, such as purchasing land for them to construct houses. Growth of cities, combined with lack of regulatory enforcement, has resulted in the formation of large numbers of unions and associations. A wide range of organisational competency levels can therefore be assumed.
Unions and ‘businesses’ are not the same and this can complicate the situation when we consider means to encourage professionalisation within the sector. IPT operators, who carry the primary financial risk, are typically the individual drivers who pay rent to a ‘passive’ owner. The first commercial priority is to pay the vehicle rent, fuel costs, taxes and fees, as well as essential maintenance. Surplus cash generated then constitutes the income of the driver and crew members. Taking into account that IPT operators generally pay license fees to public authorities (and do not benefit from public subsidies), and also face increasing fuel prices, the business case for operating can be tenuous.
The union may charge a fee for membership, but its role is to represent its members and help manage operations at a terminal, not run a profitable business. It may, however, provide a valuable role in organising collective activities such as training and vehicle maintenance.
Professionalisation and support for unions or associations may be initiated by a ‘top-down’ initiative, such as the potential for a union or association to operate a new formalised PT system (as sometimes forms an objective of schemes funded by international lenders); or through a more organic, ‘bottom-up’ approach, that would complement the pilot scheme approach proposed here. If it is found that defined roles and professional capabilities of the union and route association are not suitably well developed and aligned, then proposing a large and fast ‘leap’ to formal public transport operators (as advocated in the top-down approach) is very ambitious and negotiations may be strained due to different stakeholders (vehicle owners, drivers, unions and associations) having competing expectations. Equally, the success of fleet renewal initiatives may be compromised are likely to be compromised where professional development has not occurred. The following self-appraisal questions seek to highlight some key competencies and capacities to consider.
The points presented in this question, together with those relating to fleet maintenance below will help to build key information to support improved understanding of IPT business case: supply of vehicles in relation to demand; fair salaries and welfare provision; vehicle fuel consumption.
Further background information and cross-city comparison can be found at:
You can also download the questionnaire template below and work on the answers with your colleagues!