Interurban Buses in Public Competition

Exprés.cat

This essay explores the workings of the art of public competition, in search of the reasons for its conflict with liberalisation. It details the interurban bus “market” serving Barcelona’s hinterland, with reference to passenger usage, historical policy, administrative structure, and comparative costs. Analysis suggests a dualistic form of counter-balancing competition on key routes, regulated by the need to maintain equality between operators – albeit an equality bounded by the operators’ focus, which often masks an inequitable distribution of public funding within public transport overall. A pattern conflated by the tendency to emphasise only short run operating costs, and sometimes rely, almost blindly, on higher tiers of the state for fixed assets.

“Interurban Buses in Public Competition” is the second in a sequence of four essays titled, “The Art of Public Competition“, which together explore the competitive model underlying Spanish public transport. An anthropological analysis of the tension between this internal model and that of globalised economics, reveals the distortion of external finance on the internal workings of the art of public competition. The first essay in the sequence establishes the policy context for the liberalisation of public transport in Spain. The third examines how the art of public competition functions when one of its most important competitors is absent, using the case of post-Independència Catalunya. The final essay ponders the strategic interplay of risk, debt and optimism, using the example of Spain’s high speed railway network.

Exprés.cat

Given its thwarted railway ambition, it would be logical for the Generalitat de Catalunya (the regional government) to become more focused on (scheduled, public) interurban buses – which when combined with autopistas (motorways) can be competitive against railway journey times. The reality is not so simple. The Exprés.cat network was initiated in 2012 as a (peak-only) commuter service intended to make use of a new High Occupancy Vehicle lane on the C-58 autopista, a busy road that links the north side of Barcelona to Sabadell and Terrassa – territory already well served by both Renfe and FGC. Thereafter (Barcelona area routes e5 and later from 2013) Exprés.cat became largely a rebranding exercise (of marketing and vehicles) for pre-existing moderate-to-high frequency interurban bus services, albeit with some marginal improvements to frequencies or hours of operation. So while the Exprés.cat network does include key Renfe Rodalies destinations such as Vic, Mataró and Vilanova i la Geltrú, and covers the Mataró-Granollers-Sabadell corridor where the Generalitat had once hoped to build as a transversal railway, it also serves Igualada, an FGC terminus.

Expres.cat patronage data for 2017 can be be roughly compared to (the most recent) 2016 railway station usage data. FGC categorise journeys by station of origin, while Renfe provide separate totals for boarders and alighters. Renfe data for Rodalies line 3 exhibits significant differences between boarders and alighters – for example, twice as many passengers alight at Vic than board, while further up the line at Puigcerdà, ten times more people get on than off – skews not explained by underlying geography. To mitigate this error, Rodalies boarders and alighters have been summed and halved for purposes of comparison. While the nature of the Expres.cat network means almost all journeys counted will be to or from Barcelona, railway station data includes journeys involving intermediate stations. 34% of all Rodalies boardings (and 34% of all alightings) occur at Barcelona’s central stations, with a broadly similar proportion – a third – recorded by FGC. Assuming journeys between Barcelona’s central stations are negligible (such journeys will tend to use metro or bus), a third of all journeys board in Barcelona and a third alight in Barcelona, leaving a third that do not involve Barcelona at all. Ergo at any non-Barcelona station, half the journeys can be assumed to involve Barcelona. Assuming each of those boardings returns to its origin as a second journey, the total number of journeys between any non-Barcelona station and Barcelona is (conveniently) equal to the total number of boardings at the non-Barcelona station. While inevitably flawed in the detail, these assumptions allow rough comparisons of public transport mode share.

The table below compares Exprés.cat with the train on routes where both compete directly. Together these routes conveyed 6.3 million Exprés journeys in 2017, representing just under half of the Barcelona Exprés network’s ridership. The remainder of the Exprés routes do not match railway services sufficiently closely to warrant comparison (or in the case of Mollet del Vallès only started operation during 2017 and lack representative patronage data).

Annual Passenger Journeys (000s) by Exprés.cat and Train to/from Barcelona
Town Route Exprés FGC Renfe % Exprés Note
Sabadell e1 172 2190 3666 3 Exprés service is peak only.
Terrassa e2 89 3427 2705 1 Exprés service is peak only.
Universitat Autònoma via Cerdanyola del Vallès e3 839 1646 2820 16 FGC only serves Universitat Autònoma.
Igualada e5 872 191 82 Exprés patronage includes other services on the same corridor (see below).
Vilafranca e6 268 878 23
Mataró e11 1596 2378 40
Vic e12 541 736 42
Sant Pere de Ribes, Vilanova i la Geltrú and Sitges e14-6 1950 4391 31 Sant Pere de Ribes is not served by rail.

Igualada patronage includes other services on the same corridor, totalling over a hundred weekday departures in each direction, only about a quarter of which are Exprés services. However even a quarter of the quoted patronage would give Exprés a greater market share than FGC. This skew in favour of the bus is rational:

  • The railway station is on the east side of Igualada, not well sited for much of the town, in contrast to Exprés, which serves both east and west.
  • The Exprés travels to Barcelona in 70 minutes, while FGC takes at least 84 minutes, with broadly comparable frequencies.
  • Fares are identical for both modes (within the ATM system).

Vilafranca’s Exprés service is provided by the same operator, Monbus La Hispano Igualadina. It also has a small journey time advantage over rail, with broadly comparable frequencies in the peaks, but obtains a far lower market share – just 23%. The most obvious difference from Igualada is the location of the terminals – both rail and bus serve the centre of Vilafranca equally well. Indeed, the railway has generally better access to the centre of Barcelona, which for many journeys will offset the extra time spent travelling by train. On both these routes mode choice can primarily be explained by the transport economic logic of time minimisation, where the service associated with the lowest total (door-to-door) journey time tends to obtain the greatest market share.

The competition on the Mataró route is extremely mature – the railway is the oldest in mainland Spain, and the bus has been competing along the autopista since 1970. Journey time, frequency, terminal access and fare are close to identical for both bus and train – a pattern established by the Moventis group after buying Casas in 1996. The Rodalies secures the greater 60% of the market. A similar market share is achieved on the route to Vic, where the railway’s limited (single-track) infrastructure could make it vulnerable to high frequency bus-based competition – but in practice bus and train offer similar frequencies (with similar journey times) during the peak. Vic’s population is a third of Mataró, so neither the bus operator Sagalés, nor the rail operator Renfe, can expect to sustain Mataró-level frequencies from a much smaller base market. Short-run competition might lead one operator to attempt market domination by temporary over-supply of service (a form of competition seen in the early years of British bus deregulation), but with operations guaranteed in the short run (by a public mandate, such as a concession), competition can only occur in the long run. Where key competitive factors (fare, time, terminals) are similar for both competitors, a long run equilibrium emerges where each competitor offers a similar service and achieves a similar market share. Based on the Mataró and Vic routes, that equilibrium is currently slightly skewed towards Renfe, possibly by an intangible or irrational factor (such a social status bias towards rail travel). The equilibrium remains dynamic – for example an improvement by one operator, such as in vehicle quality, must be broadly matched by the other – and thereby competition serves to keep each operator “honest”, to keep their product offer current. As this sequence of essays progresses, it will become clearer that the “product” in this competition is more than just its transport utility, and that in turn makes this model of competition much more political and strategic than this initial economic introduction implies.

The Sabadell and Terrassa routes suggest that Exprés services that are unable to match the offer of the railways, risk achieving no tangible share of the market: Here journey times are similar (30 minutes from Sabadell, 45 from Terrassa), rail frequencies are better (typically every 10 minutes on both of two different railway lines, compared to 20 minute Exprés headways), and the railway has better access to the centre of Barcelona. On a rough calculation, vehicle occupancy on the Terrassa service averages just 7 passengers. Sabadell twice that, but still an underwhelming performance from one of the most highly trafficked interurban corridors in Spain. Cynically, these two routes serve only to justify the existence of the high occupancy vehicle lane they use. Neither route reflects well on its operator, Moventis Sarbus, which is apparently unwilling or unable to compete effectively. But since price and time are impossible to differentiate, they might reasonably retort – how? Well based on observations from other Exprés routes, match the railways by doubling or quadrupling the Exprés services’ frequency, and perhaps improve access to the centre of Barcelona. In theory both Sabadell and Terrassa have sufficient population (roughly 200,000 each, compared to Mataró’s 125,000) to sustain such high frequencies. Thus the question to ask is not how, but, why haven’t they?

In both Sabadell and Terrassa the competition between public transport operators has historically been between the two railways, FGC and Renfe’s Rodalies, as reflected in the patronage data presented above. Sabadell and Barcelona were historically also connected by bus, but only by a route intended to serve intermediate places – the A1’s one hour journey time and half-hourly frequency logically dissuades through passengers. FGC’s Sabadell service is less direct than Renfe’s, although the Generalitat has attempted to mitigate that by the 2016/17 extension of the FGC line within Sabadell, the results of which are not indicated in the (2016) patronage data. Thus to Sabadell and Terrassa, the competitive model outlined above functions as a railway duopoly. A third competitor, in the shape of a competitive Exprés service, adds nothing that the competitive model does not already achieve from its existing duopoly. That’s quite a statement to make, because a bus operator, whose buses typically have lower (full life) costs than trains, and whose infrastructure costs are distributed across many more users (especially private motorists), could compete here on journey time – and thus given a commercial market could challenge the (relative, monetary) inefficiencies of incumbant railway operators. But this market isn’t commercial: All this public transport is at the bequest of, and in substantial part paid for by, the public sector.

The Sabadell and Terrassa Exprés services are anomalies that logically will never be supported sufficiently to attain their (commercial) potential. That these routes were ever created is thus curious. As is the current intention to repeat the concept for Manresa – another strong railway duopoly and another peak-only Exprés service. The development of the Sabadell service may reflect the post-Crisis financial difficulty in completing FGC’s Sabadell extension – perhaps an attempt to try something different. Wider policy logic would seem to be utilitarian, although it can also be interpreted as the need to be seen to: The need to (be seen to) make use of the new High Occupancy Vehicle lane on the C-58 autopista, and the need to (be seen to) incorporate two of the largest cities in Barcelona’s hinterland within the coverage of the Exprés network. The utilitarian defense of transport that often isn’t, will become a recurrent theme of this sequence of essays – a function of an underlying tension between two different ways of societal organisation – of understanding, first touched on in earlier discussion of presence.

Continue reading “Interurban Buses in Public Competition”

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Alex van Someren’s Lucky Acorns

Alex van Someren. Alex van Someren is one of those rare people, without whom our modern world would probably be a little bit different. From writing the first book about programming ARM architecture, the computer processor which now sits at the core of almost every mobile phone on the planet. To providing the technology that made Secure Socket Layer (SSL) more commercially viable, and helped enable the ecommerce internet revolution of the late 1990s.

Yet his story is fascinating because it is a definitive study in luck: Not just pure chance. But the type of luck that comes from a combination of unusual personal interests, social circumstance, and the active pursuit of something different.

It’s a reality that few “successful” entrepreneurial people acknowledge, because it’s an uncomfortable reality: It doesn’t fit neatly into a 5-point plan for instant fame and fortune [also see box below]. And it leaves a nagging doubt that the outcome could easily have been unsuccessful. And while I suspect that Alex isn’t comfortable with pure chance, he provides ample examples of how other elements of luck can be biased. How the odds can be improved. The dice loaded more favourably.

Those examples make Alex van Someren worth understanding. This article is based on a talk he gave to the Edinburgh Informatics Forum. Continue reading “Alex van Someren’s Lucky Acorns”

Optimism

As I write, the United Kingdom is in the midst of a national election campaign. A month during which politicians vie to confuse the electorate with big numbers. Politics is suddenly ravaged by intangibility, because the national economy is unable to sustain the usual tangible proxies for a better life – “more schools and hospitals” – and because the tangible results of fixing that economy tend to be unattractive – “less schools and hospitals”. So the best political strategy is not explaining the consequence of choices in a language ordinary people can understand.

Do you like the sound of £100 million ($150 million)? Can I tempt you with £160 billion? Expressing these figures per person in the population can be useful. The first figure is one bar of luxury chocolate for everyone. Doesn’t sound so big now, does it? The second figure is like everyone having a £2,500 bank overdraft (loan). Strange that, because indirectly, we do.

Unfortunately, applying the economics of household groceries to major items of government expenditure introduces certainty. The idea that one can visit a store where luxury chocolate bars are sold for precisely £1.70. Yet many large elements of government expenditure are akin to ordering a chocolate bar years before it can be eaten, for a price that transpires to be somewhere between £1 and £5.

Larger businesses will be familiar with this concept. It’s called risk. Such businesses are often far more interested in what “it might cost” (£5) than what “it will cost” (£1.70), because what it might cost might lead the business to bankruptcy.

The national economy is chaotic in its complexity, but overall, things should average out. So long as all the assumptions are broadly reasonable: Ultimately some will earn/cost more, some less. Short-term in-balance can be solved by (basically) printing more money, and then down-grading future assumptions until everything is back in balance.

However, this breeds a form of arrogance. A sense that government doesn’t need to consider the possibilities. That we can deliver a radical new policy – that has never been done before – and, in spite of it never having been done before, we know precisely how much it is going to cost. Just like a bar of chocolate.

Unfortunately, assumptions tend towards optimism. On average, projected costs are less than actual costs. This isn’t just a problem for accountants. It means that decisions are taken which do not reflect reality. Potentially leading to a Disneyland scenario, where everything is affordable until after the decision is taken, when suddenly everything has become too expensive. It ultimately challenges the validity of decisions, and in doing so, the moral authority of those that take them.

This article uses the Edinburgh Tram project to demonstrate the inherent uncertainty of large government infrastructure projects. It discusses the role of optimism in planning, and the methods used to reconcile planned optimism with subsequent reality. The article describes how the involvement of the private sector in public projects has evolved over the last 20 years, and the highlights the different time-scales applied to private investment and public choices. It concludes that optimism is not only unavoidable, but necessary. Rather, the true problem lies in tendency of people to demand certainty from the public sector, while accepting uncertainty in the private sector. Continue reading “Optimism”

Ian McCaig’s History of Lastminute.com

Lastminute.com. Ian McCaig, lastminute.com‘s Chief Executive Officer, told the history of this online travel and lifestyle retailer to the Edinburgh Entrepreneurship Club.

From a stereotypical “dot com” baby in 1998, to the rapidly maturing teenager of 2010. Ian charted the way in which the business’s strategy, structure and ownership had evolved as it matured from something with the turnover of a small local pub, to a multi-billion enterprise. Covering the problems of merging acquired companies, the need to scale costs, and the change from a public (stock market) ownership to private equity.

This article is based on Ian’s talk. It concludes with some personal analysis of the future, with particular reference to my favorite topic, public transportation information… Continue reading “Ian McCaig’s History of Lastminute.com”

Why We Travel

If we could eliminate transportation from our daily lives, would we want to? Or do we still need to travel, even if we have nowhere to go?

This article explores the desire to travel – to make economically irrational transport journeys. It ponders the apparently unnecessary role of travel in virtual worlds. It considers how travel contributes to immersion within the world, and how such travel can be substituted. Finally, the article addresses some of the difficulties in bringing lessons from the virtual back into the physical world. Continue reading “Why We Travel”

Financing Hyper-Virality in the Clouds

This article probes the implications of cloud computing for financing very rapidly distributed internet-based services and products. It contains rough, inadequately researched thoughts, sparked from discussions at the recent CloudCamp Scotland. Continue reading “Financing Hyper-Virality in the Clouds”

Michael Malone on The Protean Corporation

Michael S. Malone is perhaps best known for his work defining the “Virtual Corporation” in the early 1990s. At Stanford’s Media X conference he proposed the next iteration of organisational development – the Protean Corporation. The topic forms the basis of Malone’s next book. This article is based on his talk.

Trends

The total number of consumers is growing exponentially. Wireless broadband covers an ever-increasing amount of territory. The US may become the first truly “entrepreneurial society”, with skill-based work that never last more than a few years, where people never plan to do the same work forever: A mixture of creativity and volatility. The increasing size of the customer base will lead to larger organisations. Simultaneously, competitive threats can appear from anywhere, particularly in fast-moving technology sectors.

The result is two contradictory forces:

  1. Centrifugal: Technology enables workers to be spread out.
  2. Centripetal: Humans still need a sense of legacy and wider purpose; and are inherently social creatures. The “fatal flaw” of the Virtual Corporation was that once everything has been pulled apart, nothing is left.

Throughout history, from pre-corporations (such as early modern trading companies and guilds), through Taylorism to the virtual/adaptive/wired organisations, two trends can be seen:

  • Increased autonomy of employees, with greater communication between them.
  • Reduced management control.

The Protean Corporation

The paradox is simple: How to build an enterprise that lasts, while still being flexible and adaptive?

Michael used the Quantum atom to demonstrate the shape of things to come: An organic form, in constant flux, which retains its core. The design attempts to recreate the structures within Hewlett Packard, where a group of long-term employees remained at the core, with the traditional enterprise formed around them.

The Protean Corporation has three parts:

  1. Core
  2. Inner Ring
  3. Cloud

The Core are the permanent staff – people that have been with the business since as long as anyone can remember – “the immortals”. Their role is to protect the culture of the company, which they do somewhat informally. For example, they might be highly regarded by other employees for their experience or ability to get a result out of the organisation. Largely unseen, they are the people that make the organisation run smoothly. They may not be immediately apparent to the senior management, and as such they need to be protected from a new CEO – they are likely to be accidentally culled along with the rest of the workforce.

The Inner Ring are the traditional full time employees. They manage and operate the business. Their job is to recruit the Cloud.

The Cloud are 90% of the organisation. Their employment might last a matter of hours or days. They might work remotely, never having met their employer. The cloud is so transient that they might make errors before they have time to learn. It is critical that the Core is able to watch over the Cloud, and maintain the company’s culture and standards.

The role of the company’s board is merely to adjudicate and not to manage – to act like the company’s Supreme Court.

Competence Aggregator

The Protean Corporation will be fixed in perpetual motion. The most important role in such a corporation will be “competence aggregators”. These people pull individuals together for specific projects, much like creating start-up companies within the corporation. Competence Aggregators exist within the Cloud, but are still governed by the Core. The Competence Aggregators will be the new superstars of the economy.

Private and Public

The shape-shifting Protean Corporation can exist in both public and private sectors of the economy. To achieve this is the zenith of the concept.

A key problem remains: There is no way to accurately value the Protean Corporation. Its assets are intangible, and not reflected in conventional accountancy-based corporate market valuation. It is a similar issue to that which limits social entrepreneurs – there is no way to measure the performance of non-profit organisations. The ultimate limitation on the whole process is the lack of a market for intellectual capital.

The Protean Corporation in Practice

Wikipedia was cited as an example of a protean-like corporation.

I personally recognise the existence of both the Core, Inner Ring and Cloud from the Open Directory Project. The Core was part-formalised as “Editalls” – floating editors that had no fixed role, but which were always trusted and experienced veterans of the project. The Inner Ring consisted of “Meta” editors (and later Admins), who appointed everyone else, and took the formal leadership role. However, neither group entirely matched these roles. The Cloud, the regular editors, were just as described by Malone: The majority of the organisation, often with very limited ties to the project, many moving on after a short period of work.

The Core is also commonly found within British local government: In most long-established authorities there are a handful of people who both provide a sense of stability, and can simply get things done that nobody else can (usually through some combination of contacts and experience). Without these people I suspect that much of local government would be rendered totally dysfunctional (as close to collapse as a public body can become).

It was noted that Intel had originally shunned the concept of the Virtual Organisation, yet had subsequently developed into one “by walking backwards into it”. For example, only 20% of its “employees” are now traditional permanent staff. Far more contribute “virtually” or as suppliers. Yet all need access to company data and systems, so have to be trusted. A fifth have never met their boss face-to-face, and half of those never expect to: Such an organisation is logically already facing the challenges that the Protean Corporation seeks to answer.

Michael S. Malone’s book is called The Future Arrived Yesterday: The Rise of the Protean Corporation and What It Means for You.