FARES POLICY FOR BUS TRANSPORT IN SRI LANKA
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1 FARES POLICY FOR BUS TRANSPORT IN SRI LANKA South Asian Forum for Infrastructure Regulation, Agra India October 2001 Amal S Kumarage, University of Moratuwa. Sri Lanka
2 Introduction & Historical Background Under Regulated System (pre-1978) Present System (post deregulation) Problems Quality not Considered Discrepancies Created No Stability to Industry Regular Disruptions to Service
3 Bus Operating Costs & Fares and Load Factors Operating Cost per place km Bus Fare Load Factor Cost (in ce ents) Load Fac ctor Year 0.00
4 Table 1: Revisions in Bus Fares ( ) Y e a r F a re p e r k m (a v e ra g e fa r e ) F a r e p e r 5 k m jo u r n e y - w ith o u t tra n s fe r In c r e a s e A s P e r c e n t o f F o rm e r F a r e ( A fte r I n c r e a s e ) in C u r re n t P r ic e s -C e n ts ( A fte r I n c r e a s e ) in Y e a r P ric e s -C e n ts I n C u r re n t P r ic e s ( R s.) I n y e a r P r ic e s ( R s.) In ( U S C e n ts )
5 Figure 2: Bus Fare per km and 5 km trip in Current Prices Fare per km Fare per 5 km journey 4 ter Increase) [in cents] Bus Fare per Km (Aft Journey [in Rs.) Bus Fare per 5 km Year 0
6 Figure 3: Proportion of Households with Regular Spending on Transport 0.8 Proportion of Households /86 90/91 95/96 Ship/Air Train Para-transit Bus Postal/Communication Private Vehicle
7 Table 2: Distribution of HH Income Groups by Expenditure on Public Transport (2000) In com e group E xpen ditu re on P ublic T ransport as a P ercentage o f E x penditure on T ransp ort 0-2 0% % % % 70-80% % L ess than R s 3,500/= 100% R s 3,500- R s 6,000/= 3.7% 5.6 % 5.6 % 18.5% % 55.6% R s 6,500 R s 10,000/= 9.6% 1.9 % 17.3% 3.8 % 7.7% 59.6% Table 3 Distribution of Household Expenditure on Public Transport by Income (Sri Lanka) Income Group (Rs) Percent Over Expenditure Total 0 percent to 3 percent to 6 percent to 9 percent to 12 percent to 15 percent Over 15 percent Total
8 Fares & Fare Support Viable Fare (to maintain Cost Benefit for operator) Affordable Fare (to strike a balance between Quality and Cost) Fare Support (to determine subsidies where CBR < 1, and Load Factors <1) Methodology for Fare Policy Bus Operating Cost Index Fare Structure Elimination of Fare Anomalies Cost Benefit Ratio and Quality of Service
9 Bus Operating Cost Index
10 Variants of Bus Operations Type of Route Type of Service (normal, A/C) Size and Age of Bus Country of Origin Trips and Hours of Operation per day Kms per day and Speed of travel Days operated per month and Route Supply Level Load Factor (Quality of Service)
11 Ten Representative Routes Low Country Long Distance (normal & a/c) Up Country Long Distance (normal & a/c) Regional Urban Line Haul (normal & a/c) Urban Cross Town Urban Feeder Rural
12 Cost Components * Fuel (tare of bus, type of service, cost of diesel) * Crew (hours of work, wage rate, EPF/ETF/Gratuity) * Oil & Lubricants (oil consumption rate, cost of fuel, servicing) * Tires & Tubes (tyre wastage, cost of tires and tubes) * Air Conditioning (repair, refil of gases, fuel consumption) * Repairs (engine/body work, minor repairs- labour and parts) * Daily Overhead (tickets) * Monthly Overheads (log sheets, administrative costs) * Annual Overheads (license, insurance, route permit, fitness) * Depreciation(value of bus, depreciation rate) * Interest on Capital (Prime Lending Rate, Treasury Bill Rate) * Risk on Enterprise (value of bus, risk rate)
13 Calculation of Costs Costs per Route based on Route Characteristics Operational Characteristics Regulation (Supply Level) Weighted Route Cost based on Weighting buses per route type
14 OPERATIONAL COST (RS/KM) C1. Fuel Cos t (Diesel) C2. Crew Cos t C3. Service & Lubricants C4. Tires & Tubes C5.Air Conditioner (maintenece+ overhaul) C6. Repairs C7. Daily Overheads C8. Monthly Overheads C9. Annual Overheads C10. Depreciation of Bus C11. Financing of Bus C12. Provis ion for Risk Total Cost
15 INDICES USED FOR REVISION OF COSTS C1. Fuel Cost (Diesel) Price C2. Crew Cost Wage C3. Service & Lubricants Price, C4. Tires & Tubes Price (CEAT(New), DAG(Rebuilt) C5. Air Conditioner Repair, Prices C6. Repairs C7. Daily Overheads All Prices C8. Monthly Overheads All Prices C9. Annual Overheads All Prices C10. Depreciation of Bus Value of Price C11. Financing of Bus Treasury Bill Rate + Prime Lending Rate C12. Provision for Risk Fixed %
16 Computation of Cost Index Base Year BOC Revision Year BOC Cost Index = Revision Year/Base Year Example for Revision from December 2000 to May 2001
17 COST INCREASE DEC 00 TO MAY 01 December May % C1. Fuel Cost (Diesel) C2. Crew Cost C3. Service & Lubricants C4. Tires & Tubes C5.Air Conditioner (maintenece C6. Repairs C7. Daily Overheads C8. Monthly Overheads C9. Annual Overheads C10. Depreciation of Bus C11. Financing of Bus C12. Provision for Risk Total Cost
18 Fare Structure
19 Figure 1: Forecasted Fare Revision ( ) Fare Rs/Km Distance (kms) Existing
20 BASE YEAR 1980 Year Dec-00 May-01 % p.a New Bus (40 seater) Diesel (litre) New Tire (CEAT 900 x 20) US $ CCPI Cost (Rs/km) Bus Fares 1st nd rd th th th th
21 Elimination of Fare Anomalies May require a phasing out period of 3-5 years Step on Fare (presently 5 kms Reduce to 3) Based on per km (reduce taper from 42% to 70%) Adjustments for Mid Country Up Country Type of Service Rural Services
22 FARE FORMULAE Step on Factor (equivalent kms) Luxury Fare Factor Mid-country Factor Up-country Factor Rural Factor Present 1st Inc 2nd Inc 3nd Inc 4th Inc Year Stages Kms 1 to 2 0 to pc 3 to 7 5 to pc 8 to to pc 16 & up 30 & up pc Cost Increase (%) 8.9 Fare Increase (%) Balance for Quality Improvement (%) 1.6 Load Factor (%)
23 Cost Benefit Ratio and Quality of Service Presently QOS measured by Level of Loading(Load Factor) Future QOS may include Travel Time
24 PERFORMANCE INDICATORS CBR LF % LF LD (LC) LD (LC) (AC) LD (UC) LD (UC) (AC) Regional ULH ULH (AC) UCT Feeder Rural Total
25 Application of Fares Policy
26 10% FARE INCREASE Section Present
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