Ministry 

of Urban Development 
Asian Development Bank 
 
 
Guidelines and Toolkits   
for 
Urban Transport Development 
in 
Medium Sized Cities in India 
 
 
 
Module 3:   
Guidelines for Bus Service Improvement: 
Policy and Options 
 
 
 
 
October 2008 
 
PADECO Co., Ltd. 
Tokyo, JAPAN 
 Preface 
 
 
The  Guidelines  and  Toolkits  for  Urban  Transport  Development  were  prepared  by  a  Technical 
Assistance on Urban Transport Strategy (TA 4836‐IND) funded by the Asian Development Bank. 
These documents are to be used by decision makers and practitioners in states and municipal 
governments concerned with urban transport development in medium‐sized cities in India. In 
addition, officials within the central government may usefully refer to these documents when 
appraising  projects  for  funding  by  the  Jawaharlal  Nehru  National  Urban  Renewal  Mission 
(JNNURM). 
 
The initial set of Guidelines and Toolkits consists of the following five modules: 
 
Module 1: Comprehensive Mobility Plan (CMP): Preparation Toolkit 
Module 2: Bus Rapid Transit (BRT): Toolkit for Feasibility Studies 
Module 3: Bus Service Improvement: Policy and Options 
Module 4: Parking Measures: Policy and Options 
Module 5: Non‐motorized Transport (NMT) Measures: Policy and Options 
 
Guidelines for other topics are also under preparation and will be circulated at a later stage. 
 
These  Guidelines  and  Toolkits  focus  on  the  planning  process  and  policy  options,  and  serve 
more  as  checklists  of  available  measures  and  the  tasks  required  to  solve  urban  transport 
problems, rather than providing technical guidelines for the development of detailed transport 
measures.  Such  detailed  technical  design  guidelines  are  referred  to  wherever  possible  within 
these documents for the convenience of users. 
 
This module (Module 3) focuses on issues relating to institutional and regulatory aspects of the 
development  and  improvement  of  urban  bus  systems.  The  guidelines  are  intended  to  assist 
decision‐making  by  providing  various  policy  options  and  their  implications  with  reference  to 
domestic and international experiences. 
 
Guidelines and Toolkits for    Module3 Guideline for Bus Service Improvement: 
Urban Transport Development  Policy and Options 

Acknowledgement 

The Guidelines and Toolkits were prepared for the Ministry of Urban Development (MoUD),
Government of India, under the direction of an Advisory Group on urban transport consisting of
Shri S.K Lohia, Director (UT) MoUD, Shri O.P Agarwal (Vice President, IUT), Shri G.P Garg
(Advisor, UMTC), Shri Cherian Thomas (MD, IDFC), Prof. Geetam Tiwari (IIT Delhi), Prof.
Shivanand Swamy (CEPT, Ahmedabad), Prof. P.K Sarkar (HOD, Transport Planning
Department, SPA Delhi), Mr. Vinobha Singh (Dy. Director, Transport, Wilbur-smith Associates),
Shri B.S Diwan (Member Secretary, IUT), who gave valuable assistance and comments during
the advisory committee meetings to the authors throughout the duration of the TA.

The consultant team for the preparation of the Guidelines and Toolkits consisted of Dr. Chiaki
Kuranami (Team Leader), Mr. Christopher Rose, and Mr. Satoshi Ogita of PADECO Co., Ltd
(Tokyo, Japan). Ms. Sonia Kapoor Arora (Senior Transport Specialist), Ms. Kanika Kalra
(Senior Transport Specialist) and Mr. Sandeep Sharma of the Institute of Urban transport (IUT)
also assisted the team throughout the TA with research, technical assistance, organization of
workshops and logistical support.

The team would like to convey their special appreciation to Transportation Research and Injury
Prevention Program (TRIPP) group of the IIT, Delhi headed by Prof. Geetam Tiwari, Mr.
Pradeep Kharola and Mr. Brendan Finn who provided resource papers concerning technical
issues on bus service improvement, and to Shri J.B Kshirsagar (Chief Planner, TCPO), Mr.
Hubert Nove - Josserand (World Bank), Mr. Hideaki Iwasaki (ADB), Mr. Hiroaki Yamaguchi
(ADB), Mr. Prodyut Dutt, Mr. Markus Roesner for giving their valuable comments on earlier
drafts. Comments made by the sub-group on bus service improvement at the Goa Workshop
held between 15 and 17 June 2008, were particularly useful in revising the final version of the
module. The sub-group discussion was chaired by Prof. P.K. Sarkar, coordinated by Uttam
Khodoragade, and participated by A.L. Umale, Mr. M. Ramasubramanian, Mr. Ajay Chagti, Mr.
M.N. Srinivasa, Mr. Sumit Chatterjee, and Mr. Gideon.
 
 
Guidelines and Toolkits for    Module3 Guidelines for Bus Service Improvement: 
Urban Transport Development  Policy and Options 

Table of Contents 

SECTION I INTRODUCTION ..................................................................................................1

Introduction ....................................................................................................................................1
FAQs on Bus Service Improvement...............................................................................................1

SECTION II GUIDELINES........................................................................................................4
Stage 1 Getting Started: Guidelines Structure.............................................................................4
Stage 2 Describing the Starting Point .........................................................................................6
Stage 3 Setting Goals ................................................................................................................15
Stage 4 Exploring Improvement Strategies...............................................................................20
Stage 5 Developing the Improvement Plan...............................................................................27
Stage 6 Finance and Economics................................................................................................33
Stage 7 Implementing the Plan .................................................................................................35
Stage 8 Policy Advocacy...........................................................................................................37

SECTION III ANNEXES ..........................................................................................................39

Annex 1 Bus Operator Performance Parameters ........................................................................39
Annex 2 Options for Bus Service Development.........................................................................43
Annex 3 Choice of Fare Structure ..............................................................................................48
Annex 4 Domestic Case Studies of Good Practices ...................................................................51
Annex 5 International Case Studies of Good Practice ................................................................53
Annex 6 Case Studies of IC Cards for Public Transport.............................................................62
Annex 7 Example Bus User Questionnaire ................................................................................65

List of Tables

Table 1 Comparison of External Environment of Public Transport Systems in Foreign

and Indian Cases ......................................................................................................... 10
Table 2 Example SWOT Analysis of a Government-Owned Organization............................. 12
Table 3 Characteristics of Baseline Scenarios ......................................................................... 12
Table 4 Methods to Achieve Modal Integration ...................................................................... 21
Table 5 Summary of Systems Approach.................................................................................. 26

List of Figures

Figure 1 Guideline Structure for Bus Service Improvement....................................................... 5

Figure 2 Internal/External Environment of a Public Transport System ...................................... 7
Figure 3 Route Rationalization Process .................................................................................... 29
Figure 4 Organizational Structure of an SPV............................................................................ 33
Figure 5 Develop the Implementation Plan............................................................................... 36

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Abbreviations and Acronyms 
ADB Asian Development Bank
ATC Area Traffic Control
BOT Build-Operate-Transfer
BRT Bus Rapid Transit
BRTS Bus Rapid Transit System
CBD Central Business District
CDP City Development Plan
CMP Comprehensive Mobility Plan
CTTS Comprehensive Traffic and Transportation Study
DFID Department of Foreign and International Development
DPR Detailed Project Report
EIRR Economic Internal Rate of Return
FIRR Financial Internal Rate of Return
FS Feasibility Study
GoI Government of India
GPS Global Positioning System
HCBRT High Capacity Bus Rapid Transit
IRC India Road Congress
IT Information Technology
ITS Intelligent Transport Systems
IUT Institute of Urban Transport
JNNURM Jawaharlal Nehru National Urban Renewal Mission
LRT Light Rail Transit
MoUD Ministry of Urban Development
MRT Mass Rail Transit
MRTS Mass Rapid Transit System
NMT Non-Motorized Transport
NMV Non-Motorized Vehicle
NURM National Urban Renewal Mission
NUTP National Urban Transport Policy
O-D Origin-Destination
PHPD Peak Hour per Direction
PPP Public Private Partnership
SPV Special Purpose Vehicle
TA Technical Assistance
TDM Transport Demand Management
TOD Transit-Oriented Development
UMTA Unified Metropolitan Transport Authority
V/C Volume/Capacity
VGF Viability Gap Funding

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SECTION I  INTRODUCTION 
Introduction
These Guidelines are intended for use in medium-sized Indian cities (1–4 million people) where
conventional bus services will play a primary mobility role. The guidelines will be used by
authorities with responsibility for improving urban bus and passenger transport services.

The following basic principles apply:

• The urban public transport system operates in a very complex external environment, which
needs to be clearly understood
• The level and phase of development of public transport varies across Indian cities. There is
not one consistent model of urban public transport provision
• The guidelines accommodate this diversity and are applicable both where there is a high
degree of informal service and where bus services are already well organized
• The guidelines recognize that improvements to bus systems cannot be carried out in
isolation. The bus system is a sub-set within the transport system. Therefore, attempts have
to be made to improve the total system
• The guidelines are practical and take into account barriers and challenges which may be
faced in implementation
• The guidelines describe various policy options and their implications
• The guidelines assist decision taking
• Practitioners need relevant references to domestic and international good practice

The Guidelines are to assist the State/City authorities to determine the general policy direction,
course of action and key actions, with a broad understanding of the expected outcomes. They
are not intended to provide detailed engineering, or operational recommendations, or
design-level advice.

As a pre-requisite for use, it is recommended that a multidisciplinary Task Force be constituted.

This Task Force should have representation from all agencies with a role in providing or
regulating transport activities in the city and should also include agencies whose activities
indirectly impact on public transport. These Groups should also co-opt experts within the
transportation field. The guidelines should be used to help the team develop a city plan, with a
degree of detail and comprehensiveness appropriate to the situation. Nonetheless, it is also
practical for an individual manager or expert to use the guidelines, for example to develop an
outline proposal or discussion paper which, if accepted, would provide the basis for more
comprehensive and detailed analysis and planning.

FAQs on Bus Service Improvement 
What are the differences between para-transit and buses, and why do cities require modern
bus services?

Para-transit, such as shared minibuses without regular routes or stops, is often convenient for
users because it provides almost door-to-door service. As cities grow, however, para-transit
tends to contribute to traffic congestion and air-pollution. As para-transit owners are usually

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Guidelines and Toolkits for    Module3 Guidelines for Bus Service Improvement: 
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individuals and not companies, they compete aggressively, leading to unsafe conditions for
users. Fares may have to be negotiated each time and passengers may travel in an uncomfortable
environment. Modern urban buses, on the other hand, provide regular and consistent services
throughout the city on fixed routes and stops. This contributes to a reduction in traffic
congestion as buses have a higher passenger capacity. Also, drivers are better trained and do not
have to compete, but follow timetables, providing additional convenience and reliability to
passengers.

Existing bus services are not performing well. Is there any way to improve services?

There are ways to assist the improvement of existing bus services. Bus issues are, however,
highly complicated, and each city is recommended to analyze the existing situation carefully, set
goals and objectives for improvement, examine available options, select most appropriate
measures, and implement them carefully. As the decisions may affect the interest of a variety of
stakeholders, it is particularly important to involve them at appropriate stages in the planning
process. This module provides guidelines for available policy options and planning procedures.

Our city does not have any urban buses, what can be done to develop new bus services?

In a city where services are not available, the planning process requires additional steps, such as
changing the regulatory framework, establishing a regulatory body, SPVs and public or private
bus operators. Options for the regulatory framework etc., used in the improvement of existing
bus services still apply to the creation of new urban bus services. The introduction of such
services often faces a challenge from informal transport operators, therefore, political
commitment by the decision-maker is particularly important for plan implementation.

We have a plan to introduce BRT or a Metro. Do we still have to improve other forms of
public transport, such as ordinary buses?

The answer to this question is YES. BRT and Metro are Mass Rapid Transit modes carrying
high density traffic along trunk routes. Outside the catchment areas of such MRT systems,
traditional forms of public transport have to serve people’s mobility needs across the city region.
Conventional buses may have to be re-organized to serve routes other than the planned MRTs,
or to function as a feeder mode to the MRT. All cities are, however, recommended to examine
the potential of conventional buses as far as possible before preparing MRT proposals.

What are the options available for the expansion of bus fleets and operations?

Expansion of bus fleets or services can be done in a number of ways depending on the role of
the public sector and the potential of private sector involvement in the current environment. The
government could procure and operate buses directly, or let the private sector introduce or
expand all of the city bus services. There are several intermediate options. This module provides
guidelines on the available options and for selecting the most appropriate option for the city
concerned.

What could central and state governments do to support urban bus development?

Central and state governments can assist urban bus development by creating an environment
that is generally supportive to improvements. At central level, this may be financially, from
direct subsidies or funding schemes (including JNNURM), to tax concessions/exemptions for
importing bus units/parts, or assistance in seeking grants or loans from international donors.

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Assistance may also be through the provision of appropriate legislation, such as to promote
private participation in bus operations, and credible franchising arrangements with clear
government commitment. At state or city level and within the role of regulator, appropriate fare
structuring can ensure that bus fares are both affordable to the general public and profitable to
bus operators to encourage market entry. Institutional restructuring at local level can ensure that
effective, coordinated regulation and franchising is carried out. Publicly owned land can be
made available for bus terminals and depots, and municipal land use plans can help stimulate
passenger demand along strategic bus corridors. Local governments can provide appropriate
levels of enforcement to ensure that any bus priority measures are not encroached by private
motorists. More indirectly, governments can advocate transport policy that restrains the use of
private monitoring thereby making urban bus travel a relatively attractive mode. This is already
taking place in India at central level with the release of the NUTP.

What types of fare structure are available and how can we select the most appropriate option?

Choice of fare structure is a very important part of bus planning. It directly influences operators’
revenue. Options such as flat fare, distance-based fare, zone-based fare etc., are explained in
detail in the module, together with guidelines on their advantages and disadvantages. Each
operator or regulatory body could investigate the potential to reduce administrative costs and to
increase revenue by examining the options in detail. However, in India fare structure is set at
state government level and this aspect needs to be taken into consideration. Fares should also be
reviewed annually, so that variations in costs of bus operation are reflected. Also, fares should
address social objectives, so that disadvantaged groups are not excluded from public transport.
Internationally, some cities subsidize the publicly operated bus operator, so that discounted fares
can be included in their services.

How are urban buses generally organized in Indian cities? Are there any good examples?

There are many cities where there is NO urban bus service, although there are inter-city buses
regulated/operated by the state governments in some of these cities. These buses, however,
primarily serve inter-city travelers and their routes, stops, terminals and schedules are not
suitable for inner-city traffic. Experience with urban buses is mixed, but there are good
examples, such as Bangalore (public sector) and Indore (SPV and private sector). Details of
foreign and Indian experience are shown in the Annex to this module.

What are the options to involve the private sector in providing urban bus services?

It is widely recognized that the private sector is suited to the operation of transport services, but
the private sector alone cannot optimize services from the user/community points of view. The
public sector can best function as regulator and license or franchise the provision of bus services,
by route or by area, but infrastructure such as bus terminals and maintenance depots may have
to be provided by the public sector in Indian cities. Merits and demerits of various options and
the process of involving the private sector are explained in this module.

What can we do to increase non-fare revenue from urban bus operations?

Although the main source of revenue for public transport organizations is from trip fares, there
are other sources that can be explored: from property development and advertising, as
elaborated in this module.

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Guidelines and Toolkits for    Module3 Guidelines for Bus Service Improvement: 
Urban Transport Development  Policy and Options 

SECTION II  GUIDELINES 
Stage 1  Getting Started: Guidelines Structure
Eight Stages 
The Guidelines set out eight main stages toward bus service improvement:

STAGE 1: GETTING STARTED

STAGE 2: DESCRIBING THE STARTING POINT
STAGE 3: SETTING GOALS
STAGE 4: EXPLORING DIFFERENT STRATEGIES
STAGE 5: DEVELOPING THE IMPROVEMENT PLAN
STAGE 6: WORKING OUT THE FINANCES AND ECONOMICS
STAGE 7: IMPLEMENTING THE PLAN
STAGE 8: POLICY ADVOCACY

It is recommended that Stages 3–6 of the Guidelines be used in an iterative way. Initially, the
Goals may not be fully achieved – at least in the medium-term – due to constraints, such as
available finance, the current organizational and regulatory frameworks, or the technical
capacity of the operators.

In such cases, earlier phases can be reviewed and revised taking into account expected outcomes
and/or barriers. Perhaps targets need to be modified, or enabling actions must be added to the
direct actions. In the long run, policy advocacy would have to be resorted to in order to make
the external environment conducive to public transport.

The main advantages of an iterative approach are:

• All aspects of the plan are subject to critical analysis

• The overall coherence of the Plan is examined, as well as the individual elements
• Even if the first effort is good, there are always opportunities to improve and optimize
• Potential flaws are more likely to be discovered during the planning phase (when they can
be corrected or mitigated) rather than in the implementation phase (when they can be very
problematic)
• Stakeholder consensus can be achieved by greater involvement.

Figure 1 summarizes the process involved in developing bus service improvements.

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Guidelines and Toolkits for    Module3 Guidelines for Bus Service Improvement: 
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The guidelines are primarily
How can we use 
STAGE 1:    intended for use by the authorities
these guidelines? in Indian cities and are a tool to
GETTING STARTED 
assist in decision-making.

STAGE 2:    Comprehensively describe the

What stage are  transport environment (internal
we at?  DESCRIBING THE 
and external), identify the baseline
STARTING POINT 
bus service situation, and evaluate
problems and issue.

With participation of key

What do we want  STAGE 3:    stakeholders, identify existing
to achieve?  SETTING GOALS  policy objectives and then define
achievable and measurable goals
and any constraints to achieving
them.

Which strategy 
Consider strategic options
should we  STAGE 4: EXPLORING 
available to achieve the target
select?  DIFFERENT STRATEGIES 
outcomes

How can we develop  Develop a clear set of actions

STAGE 5: DEVELOPING  appropriate to the City, which will
improvement plans? 
THE IMPROVEMENT PLAN form a strategy to accomplish the
targeted goals.

Is the targeted  STAGE 6: WORKING    Workout necessary resources,

outcome feasible?  OUT THE FINANCES AND  financing options, and project
ECONOMICS  benefit.

What should we 
do to implement  STAGE 7:    Implementation plan must be
the plan?  IMPLEMENTING THE PLAN realistic and take into account the
conditions of the host environment.

How can we approach 
changing external  It may be necessary to make
STAGE 8: POLICY 
environment? changes to the organizational,
ADVOCACY  institutional or regulatory
frameworks.

Figure 1 Guideline Structure for Bus Service Improvement 

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Guidelines and Toolkits for    Module3 Guidelines for Bus Service Improvement: 
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Stage 2  Describing the Starting Point 
Public transport is complex and in order to evolve an effective and efficient service, it is
necessary to understand this complexity. The complexity exists both within the organization of a
service provider and the environment in which the service provider operates. As the external
environment impacts the transport system to a large extent, it is necessary for the external
environment to be examined properly. Similarly, the internal sub-systems need to be fully
appreciated. Adopting a correct and well-informed approach is a pre-requisite for improving
public transport.

Understanding and describing the existing situation is the primary step in making improvements.
The objectives of this stage are to:

• Understand the factors that impact on bus service provision

• Describe the existing baseline situation
• Evaluate the system and diagnose problems
• Ensure that all participants in the process are properly informed

“A detailed understanding of the existing transport environment will greatly assist in setting
realistic goals and targets”

A large part of the relevant information and data can be obtained while formulating the
Comprehensive Mobility Plan (CMP). The focus should be on compiling information
concerning the following:

The External Environment

• Socio-Economic Profile of the Area

• Demographic Profile
• Projections
• Regulatory Framework
• Institutional Framework
• City Development Perspective

The Internal (Bus) Environment

• Infrastructure – capacity and accessibility (length of arterial, sub-arterial roads, general

rights of way available)
• Travel Patterns – O-D Matrix (trip length distribution by purpose)
• Modal Split (including walking and non-motorised vehicles)
• Description of Bus System (fleet size, description of the service provider)
• Strengths and Weaknesses of the Bus System
• Description of Other Service Providers – by Mode
• Strengths and Weaknesses of Other Service Providers.
• Consumer Perspective on Transport Services
• Role of Citizens Groups.
• Evaluation of Existing Transport Scenario

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Assess the External Environment 
The external environment of a public transport system is graphically depicted in Figure 2 and
each component of the environment is explained in the paragraphs that follow.

Legal  Institutional 
Framework  Framework 

The Fiscal  City 
Regime  Development 
Planning  Operations

Personnel Finance

Socio‐economic  Demographic 
INTERNAL
profile  Profile 

Competition Infrastructure

EXTERNAL

Figure 2 Internal/External Environment of a Public Transport System 

Demographic Profile: The demographic profile provides a vital input in the optimum design of
the transport system. The important parameters are:

• City population and the historical trends and projections

• Spatial distribution of population
• Age structure of population

The city demographics assist with macro-level transport planning. The data can be easily
obtained from the Census.

Socio-Economic Profile of the Area: The demographic data should be supplemented by

socio-economic data. This assists in estimating the demand for public transport as well as
revealing the ‘affordability’ of public transport for the general public. The important parameters
are:

• Income distribution
• Occupational distribution

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The census data gives only limited information on the socio-economic profile. The details
should be ascertained from secondary data, or by carrying out sample surveys.

Legal Framework: The regulatory environment for urban public transport is laid down in
various Indian laws, regulations, policies and executive orders. Being a Federation, some of
these are National, but the majority are State-specific. With the third tier of governance
emerging as a strong unit of administration, some regulatory authority is exercised by urban
local governments. The distribution of legislative powers between the Union and State is spelt
out in the Constitution – Union, State and Concurrent List. ‘Public transport’ as a subject does
not figure in any of the lists. However, subjects such as shipping, airways and railways are in
the Union List, ‘mechanically propelled vehicles’ is included in the Concurrent List.
Communications, that is to say roads, bridges, ferries and other means, are included in the State
List. The most important law governing road transport is the Motor Vehicles Act. This is a
Central law which:

• mandates registration of all motor vehicles

• provides for licensing of drivers
• stipulates that no public service vehicle can operate without a ‘permit’
• empowers the state governments to control road transport
• creates an institutional mechanism to regulate road transport. This mechanism has been
placed under the control of the state governments
• makes provisions for payment of compensation to accident victims
• regulates the working conditions of drivers (along with the Motor Transport Workers Act).

Besides the Motor Vehicles Act there are state laws, which regulate public transport indirectly.
Almost all states have municipal laws, which lay down the structure and powers of the urban
local governments. The urban local governments are authorized to regulate traffic within their
limits. The states have also enacted the town and country planning acts, which regulate urban
planning (transport planning is supposed to be an integral part of this process). The pollution
control laws impose limits on vehicular emissions and the police acts and some other laws deal
with traffic violations.

Detailed information is required about the following:

• regulations/guidelines regarding issue of permits for operating public transport vehicles

• bye-laws/regulations issued by the city government to control movement of vehicles in the
city
• stipulations of labour legislation which affects the transport industry
• vehicular emission norms

Institutional Framework: The most important institutional framework for controlling public
transport is also created under the Motor Vehicles Act. This law creates a hierarchy of
institutions – Regional Transport Officer, Regional Transport Authority, State Transport
Authority and the State Government. Indeed, the Motor Vehicles Act is implemented under this
hierarchy. There is no exclusive institutional mechanism under the Motor Vehicles Act for urban
transport, however, there are a number of agencies whose activities impinge on urban transport.

These are:

• local municipal government – provides roads and infrastructure like bus stands, regulates
traffic (along with the police), controls all construction etc.

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• local city development authority – discharges town planning functions

• the police – regulate traffic offences
• public works department – responsible for some roads
• Development Authorities –responsible for city planning
• pollution control board – enforcing emission norms
• labour department – enforcing the labour laws
• tax authorities – imposing and collecting taxes

As the Task Force constituted for improving the bus services would have representation from all
these agencies, it should be straight-forward to ascertain the exact role of each. This will help in
the distribution of responsibilities once the improvement plan was prepared.

City Development Plan: The transport plan has to be a part of the city development plan. In
practice, it has been found that the city development plan often overlooks the transportation
requirements. Therefore, the city development plan needs to be prepared with consideration of
mobility and the transport plan prepared in accordance with it. If it is found that the city
development plan is making transport planning difficult, the city development plan may have to
be suitably modified. The details of the city development plan, also referred to as the CDP
(Comprehensive Development Plan) are available from the City Development Authorities.1

Infrastructure: The operation of any public transport system is dependent on the road
infrastructure. In a city, the road infrastructure is provided by different agencies, such as the city
government, the Public Works Department and the City Development Authorities. Besides roads,
different modes of transport require different types of infrastructure – pedestrians require
properly designed sidewalks, road crossings; cyclists require bicycle tracks; para-transit modes
require certain specific facilities; buses require well planned bus stops etc. Information on all
these will help in ascertaining the bottlenecks in the system, which need to be addressed.
Information about the following parameters would be particularly useful:

• Road right of way, length, bottlenecks.

• Facilities for pedestrians, cyclists and other modes of transport.
• Existing plans for expansion/upgrading of these facilities.

The Fiscal Regime: The financial viability of public transport operations is a major issue. By
and large, urban public transport services in the country are not financially viable. Although
viability can be improved by increasing efficiency, there are limits to any such improvement. A
major component of the cost is the taxes and levies of the Union, State and local governments.
The activities of a public transport organization, whether in the public or private sector, are
subject to taxes by various agencies. The important levies are:

• Taxes related to capital acquisitions

¾ Tax on land acquisition (Stamp Duty-levied by the State Government)
¾ Property tax (levied by the Municipal Body)
¾ Tax on acquisition of movable property i.e., the buses
- Value Added Tax (State Government)
- Central Excise (Union Government)
- Customs Duty in case of imports (Union Government)
- Entry Tax/Octroi (Octroi of the Municipal Authority and Entry Tax of the State
Government)

1
In fact, transport plan must follow CDP, or CDP is used as an input to the transport plan.

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• Taxes related to operations

¾ Value Added Tax on consumables (State Government)
¾ Excise Duty on consumables (Union Government)
• Tax on transport revenue i.e. on use of passenger transport vehicles.
¾ Motor Vehicles Tax (State Government)
• Other levies:
¾ Advertising Tax (local governments).

Apart from the taxes levied by various agencies, the state government exercises full control over
the fare levels of all public transport service providers. The state governments sometimes also
mandate dispensations for special categories of travel (e.g. students pay a nominal fare).
Information on these levies is important in undertaking financial and economic analysis of a
transport improvement plan.

Competition: Although the terms of competition are defined by the regulatory framework, the
cost efficiency of other modes of transport has a direct impact on the bus system. Information
on the cost of travel on other modes, such as personalized modes, para-transit modes etc.
provides certain benchmarks for the efficiency of the bus system.

The situation in India varies from city to city and a comparison with the situation in developed
countries is difficult. However, there are some outstanding characteristics. Understanding the
comparison is important because improvement models/tools used in developed countries have to
be suitably modified to succeed in Indian conditions.

Table 1 Comparison of External Environment of Public Transport Systems 
in Foreign and Indian Cases 
Parameter Cases in Developed Countries Indian Cases
Legal Framework The city governments are strong The city governments traditionally
units of administration. City have not enjoyed as much autonomy as
public transport is by and large their western counterparts. City
their responsibility. e.g., the transport generally does not fall within
reputed Curitiba (Brazil) model the purview of the city governments
was conceived and implemented (Maharashtra and Gujarat being
by the city Mayor exceptions). This has led to diffused
responsibility and multiplicity of
agencies
Effectiveness of The regime is generally that of The enforcement of laws and rules is
enforcement measures compliance with rules and laws generally not strict
Institutional Framework- Generally buses are operated by Generally buses are operated by
Competition private concessionaires government managed companies
Financial support Generally the provincial The situation varies from state to state.
government or the national In some cases the state government
government covers the viability provides financial support and in some
gap cases it does not
Taxation scenario Public transport is taxed at a There are multiple taxes on public
reasonable rate transport
Socio-economic High per capita incomes allows Low per capita income imposes an
conditions fares to be substantially higher upper ceiling on fares
City development Land use within the city is well Land use within the city is mixed and
defined heterogeneous
Diversity of traffic Traffic is by and large Traffic is very diverse
conditions homogeneous

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Assess the Internal Environment 
It is also important to describe and understand the bus industry structure. Any planned changes
will impact directly and indirectly on the owners, managers and personnel, and on other
stakeholders. Improvements will need to be financed, managed and implemented by the
agencies, operators and other stakeholders. Failure to understand the participants, their
relationships and their capacities is a common cause of problems, such as unrealistic plans,
which cannot be financed or implemented.

Having described the external environment, an analysis of the existing transportation system
needs to be made. Information on all modes of transport should be reviewed. The bus system
can be broadly classified into two categories – operated by a government agency or by private
operators.

Considering private operators, the following aspects should be described to the extent possible:

• Regulatory framework for the private operators – process for issuing permits.
• Monitoring mechanism in place (if any)
• Total number of operators and fleet size
• Organization of operators e.g. whether a company, proprietorship etc.
• Average staff salary
• Share of routes between different operators
• Tariff-setting mechanism
• Effectiveness of enforcement of rules and regulations governing the permits
• Coordination mechanism between operators

For Government-Owned Agencies, the following aspects should be described:

• Whether the bus company is owned by the State Government, City Government or via any
other arrangement
• How the bus organization is structured- Government Company, State Transport Undertaking
under the Road Transport Corporation Act, a government department or within the city
government
• Which agencies are represented on the Managing Committee/Board of Directors
• The extent of autonomy enjoyed by the agency
• The average tenure of the Chief Executive

The analysis of existing transport should form the basis for the evaluation of the system. It may
be necessary to compare the various parameters or indices with established benchmarks, or with
comparable cities. This will help in determining where improvements could be made. It should
be noted that strengths and weaknesses are within an organization’s competence, whereas
opportunities and threats are external. For a typical Government-run bus system, the SWOT
analysis would be as set out in the illustrative example below.

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Table 2 Example SWOT Analysis of a Government‐Owned Organization 
STRENGTHS (S) WEAKNESSES (W)

a. Expertise and experience in bus operation a. High cost of operations

b. Owns lands at key places b. Overstaffed
c. Skilled human resources c. High indiscipline amongst staff
d. Less pollution per person carried d. Financial pressure
e. Less road space occupied per person carried e. Obsolete bus fleet
f. Bureaucratic system of management
g. Inadequate autonomy
OPPORTUNITIES (O) THREATS (T)

a. Rising Demand for Public Transport. a. Unfavourable fiscal regime

b. Rising Cost of fuel b. Competition from other modes
c. Increasing concern for environment c. Increasing staff costs
d. Rising congestion on roads d. Unviable fares fixed by Government
e. Increasing population density e. Poor enforcement of laws and rules
f. Government patronage
g. Transport policy gives priority to public
transport systems

Identify the Baseline Scenario 
The baseline condition for the bus service can be identified as the closest fit to a scenario or
‘stereotype’. These provide a reference point for the assessment and for applying the toolkit.
Though an exact match may not be found, a particular scenario should be recognizable to
stakeholders. The five typical baseline scenarios are described below.

• Scenario 1 : Dominant informal sector, poorly regulated

• Scenario 2 : Dominant informal sector, orderly, basic regulation
• Scenario 3 : Declining dominant bus operator, inadequate supply
• Scenario 4 : Protected dominant bus operator, adequate supply
• Scenario 5 : Developed formal passenger transport system

Table 3 Characteristics of Baseline Scenarios 
Baseline Scenario Characteristics
1 Dominant • Informal sector is the dominant supplier of urban passenger transport
informal sector, services
poorly regulated • Regulation is weak or non-existent
• Some services are on recognized routes, others are ad hoc
• Services are not registered or controlled, although drivers and vehicles
must be licenced
• Industry sector consists of small companies or collectives of
owner-drivers, little co-operation among them, except where an attempt
is made to control them
• Parallel 2-wheeler and/or NMV passenger transport services
• Services encroach on each other without regulation, although they may
resolve it among themselves through turf wars or strong-arm tactics
• Low driver/vehicle standards, poor customer treatment

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Baseline Scenario Characteristics

2 Dominant • Informal sector is dominant supplier of urban passenger transport
informal sector, services
orderly, basic • Services are on recognized routes or corridors, using buses and
regulation minibuses
• Services operated by many small to medium operators, or driver
associations, which provide coherent organizational and operational
capacity, even if not to formal bus service standards
• Services are opened or expanded by members joining an association or a
new association without confrontation against the existing operators
• Regulated either under city supervision or by self-regulation
• Services are basic, but reasonably orderly and absence of turf wars (may
have existed in the past, but now resolved)
• Formal service exists, but has minor role; may be residual of former
large city operator
3 Declining • One or more large bus operators, most likely in public ownership
dominant bus • Similar to Baseline Scenario 4, the position of the operator(s) is
operator(s), protected by not granting route operating licences to competitors, and by
inadequate supply enforcement against encroachment
• The dominant bus operator(s) are in serious decline, due to combination
of inefficient operations, traffic congestion, weak finances, inability to
invest in new fleet, weak management
• Dominant bus operator(s) unable to meet demand due to poor fleet
condition and/ or inability to expand fleet to meet demand growth
• City / transport authority inhibits new operator entry, will not recognize
informal sector, which can only operate illegally and under harassment
• Overall passenger transport supply inadequate, services are
overcrowded, citizens dissatisfied
4 Protected • Small number of large bus operators are the dominant form
dominant bus • Regulatory body exists, but is not as strong as in Baseline Scenario 5
operator(s), • Services are on recognized routes, for which route operating licences are
adequate supply issued
• Operators have primary right of initiative for route design and service
levels (either by law or de facto)
• The dominant operators are protected both by not issuing operating
licences to other operators and against illegal encroachment – i.e.
(quasi-)monopoly situation

• The routes and service levels are by and large adequate to meet the basic
needs of the City
• Level of co-ordination and customer services/facilities less than in
Baseline Scenario 5
• Informal operations exist but are not dominant and are reasonably
orderly
5 Developed formal • Recognised transport authority for the City which has influence over the
passenger bus network and supply
transport system • Stable legal and regulatory framework
• Defined urban and transport policies (even if not comprehensive or fully
implemented)
• High proportion of passenger services operated by buses
• Buses operated by one or many large/medium-sized bus companies
which own/lease the buses and have maintenance facilities

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Baseline Scenario Characteristics

• Service are on recognized routes, for which route or area licences are
issued to one or more operator
• Informal operations are not dominant and are reasonably orderly
• Good enforcement and low levels of illegal operations
• Some coordinated customer services and facilities

Evaluate and Diagnose Key Problems 
The issues and problems of the existing bus system will typically include aspects such as
unreliable services, lack of buses, over-crowding, pollution, congestion, safety, fare levels etc. A
variety of methods can be employed to evaluate and diagnose key problems, including the
compilation of opinions and analysis of parameters.

Opinions from Stakeholders: Opinions may be received from transport authorities, city
officials, bus operators and passengers. In particular, the assessment should include a consumer
perspective on transport services, which can help to ascertain the weaknesses of the system and
also to set goals for the improvement plan. The commuter’s perception could be obtained either
by structured interviews or through a well designed return questionnaire (see Annex 6). This
would reveal various aspects about public transport which cannot be captured through various
performance indices.

The type of problems and issues that may be highlighted are listed below, though this should be
supplemented by other city-specific problems:

- Inadequate bus fleet - Pollution due to public transport

- Poor quality of vehicles - Mistreatment of passengers
- Poor safety performance - Conflicts between operators
- Unreliable services - Excessive transfers
- Irregular frequency - Excessive fares
- Unpunctuality - Low profitability of operators
- Poor route coverage - Excessive subsidy requirement
- Lack of access to bus network - Crew behaviour and driver performance
- Congestion due to public transport

Citizens groups can play an important role in persuading the authorities to improve the quality
of transport. They could also be helpful in bringing to light various violations which an
operator/driver may indulge in. They could also be of help to the fleet operators by helping in
curbing pilferage by the crew. Such groups, though common in bigger cities, do not exist in
smaller cities and towns. In order to involve the citizens in planning and monitoring public
transport, it is necessary to encourage such groups. Therefore, details about such groups, formal
mechanisms to encourage them and the activities they undertake should be monitored so that
they can evolve into effective instruments of citizen participation.

Cycling and pedestrian movements, though important, do not always receive appropriate
attention. It needs to be appreciated that each bus trip is associated with a walking trip. Similarly,
the extremely low cost of travel by bicycle, makes it very popular amongst the poor. The
percentage of bicycle and pedestrian trips, the average and the maximum length of such trips are
all important parameters. Most importantly, the perception of pedestrians and cyclists about
difficulties experienced while traveling will throw light on the inadequacy of the infrastructure.

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Benchmarks and Performance Indicators: In addition to opinions from stakeholders,

benchmarks and quantifiable performance indicators should be included to evaluate the existing
bus service. Typical indicators are listed below.

• Number of buses (per 1,000 people) and • Efficiency parameters:

total capacity - Earning per km.
• Number of passengers carried per day - Cost per km.
• Proportion of bus trips in total trips - Profitability.
• Average distance covered by a bus each - Bus-staff ratio.
day - Cost recovery ratio.
• Fare structure - Average vehicle availability
• Average commercial speed - Average vehicle utilization – kms
• Safety record: accident rate, breakdown traveled by a bus per day.
rate - Cancellation rate – (actual gross kms
traveled/scheduled kms
• Adherence to emission norms
- km per breakdown
• Average load factors
- km per accident
• Average age of buses
- Average staff salary
• Technical parameters of buses: low floor,
wide door, power steering, rear engine,
pneumatic suspensions etc.
• Concessional services

However, it is recognized that such data are difficult to obtain from an environment of numerous,
small and fragmented operators.

The bus system accounts for only a proportion of passenger trips. Other modes complement and
supplement bus services, including chartered buses, minibuses, vans, taxies, auto-rickshaws,
bicycles and walking. The performance parameters described above for buses could be used to
analyze the performance of chartered buses, minibuses and vans.

Stage 3  Setting Goals 
This is a critical element in the process, but the extent to which it can be done comprehensively
will depend on the structure and capacity of a City, as well as on the starting point described in
Stage 2. Ideally, this stage is undertaken with the participation of key stakeholders and properly
reflects their diversity of views and interests. It should aim to reach a consensus on goals and
objectives, so that there would later be consensus on actions and implementation.

The objectives of this stage are to:

• Identify established and official policies and visions

• Identify the key stakeholders and consult with them
• Formulate a set of Goals and Objectives relevant to urban passenger transport
• Identify potential constraints

Existing Policies and Objectives 
If there are already clear statements of policy, then it is not necessary to develop them. It will
just be necessary to understand which are relevant, so that they provide guidance to the project.
More likely, there will be some policies available, but not in the form of a comprehensive urban

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and transportation policy. In these cases, the challenge is to take what already exists and
adapt/complete it as required. In some cases there may be a lack of usable policy, either because
there is no available policy or guidance, or because what exists is unrealistic or has become
irrelevant over time.

Begin by identifying whether there are any existing policy statements and/or documents. These
could include:

• Government policy papers, including the NUTP

• City/regional policy papers
• White papers
• Inter-departmental and inter-agency committee statements

At this stage, the focus should not only be on bus services, or even on transportation. It should
include:

• Urban development
• Transportation and transport services
• Traffic and traffic management
• Social equity
• Macro-level environment and energy (e.g. fossil fuels and emissions)
• Local environment and community
• Fiscal policy
• Markets and competition
• City development and image

For each policy statement or document, establish:

• Policy owner(s), and/or who developed/approved them

• Their legal and political status
• Their timeframe and whether they are still deemed current
• Explicit goals and objectives
• Whether they were followed up with actions, supporting regulations etc.

Bring these together in a working document. As part of the Goal Development Process, identify
which Policy Objectives are still relevant, which are achievable within the planning timeframe.

Identification of Stakeholders 
Stakeholders are agencies, bodies or people who are interested in, or would be affected by bus
transport and any proposed improvements. Stakeholders can be either direct or indirect.

Direct stakeholders are entities that have a visible role in the organization, regulation, operation
and support of the bus service; or people, communities and entities that use the service or are
impacted by it.

Indirect stakeholders are anyone else whose interests are either enhanced or threatened. They
may be more difficult to identify and engage with. Nonetheless, they could have an important
role, either as supporters or in thwarting proposed courses of action.

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Identify the direct and indirect stakeholders for urban bus transport improvement:

• City transport authority • Informal transit associations

• City elected representatives, • Vehicle owners – some of whom may be in
sub-committees on transport, roads, the background
finance etc. • Drivers, conductors and other personnel
• Citizen groups and communities • Traffic authorities and police
• Bus users, covering the key user types • Financing entities
• Major bus operator(s) • State / national government
• Smaller bus operator(s)

Consultation Process 
Consultation with stakeholders is one of the most important and most underestimated parts of
the process. The stakeholders are the agencies, businesses and people, who are going to
implement the project, finance it, use it, or live alongside it. Collectively, they have a deep
understanding of the city and transport system, the problems, possible solutions, what can be
made to work, and how to overcome problems. Working with the stakeholders gives access to a
very substantial knowledge resource, helps to reach a consensus, and can develop the goodwill
and understanding which will support the project development and implementation.

All too often, key players are excluded until main decisions have been taken and the
consultation process is little more than telling them what is going to happen – sometimes in a
deliberately incomplete way to avoid their negative reaction. Not surprisingly, this can lead to
suspicion and misunderstanding, and a collapse of the goodwill and support needed for a
potentially worthwhile initiative.

“Consultation must be more than a PR exercise. It needs to genuinely involve the main
participants in an active way, and ensure that minor participants are never left out of the
loop. ”

The practical measures include:

• Establish one or more working group(s) involving the main stakeholders

• Hold focus groups and workshops for all relevant stakeholders to discuss and understand
their needs, priorities and suggestions
• Where necessary, work one-on-one with main stakeholders to understand their objectives,
concerns and how to overcome obstacles
• Communicate progress at regular intervals
• Work as much as possible towards achieving consensus, first at the level of broad goals,
then at the level of problem definition and only later at the technical level
• Be open to suggestions from all stakeholders and take particular care of their main concerns.
A good understanding at this stage of the process may avoid serious confrontation later

Defining Goals 
This stage defines a set of goals, ideally reaching consensus among the main stakeholders
(including those who have the power to block a project). The goals will reflect the main
interests of stakeholders. They should be clear and aspirational, and should focus on the desired
outcome, rather than how they are to be achieved. It also helps to cluster goals under themes
relevant to stakeholders.

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Goals are preferably specific quantifiable objectives to be achieved in a given time frame. It
should be understood that there is a hierarchy of goals and objectives and in the case of public
transport these can be formulated as follows:

• Macro-level Goals
• Accessibility Related Goals.
• Environmental Goals
• Transport Related Goals
• Internal Efficiency Related Goals.

Macro-Level Goals: These goals are at the societal level and could include:

(i) To provide a legal and institutional framework to enable bus improvements

(ii) To provide bus services that help achieve the goals of the city development and mobility
plans – allowing land use strategies such as core densification and peripheral development
(iii) To improve the quality and image of bus transport within the transport hierarchy
(iv) To contribute to improving transport safety by reducing road casualties

Public Transport Goals: These would include targets for some performance parameters which
are of relevance for commuters.

(i) To develop a regulated and financially sustainable bus system

(ii) To increase the modal share of public transport
(iii) To increase the bus fleet and carrying capacity
(iv) To increase daily bus passenger demand
(v) To increase the average speed of buses
(vi) To reduce the average age of the bus fleet
(vii) To keep the fare increase below the inflation level
(viii) To convert a % of the fleet to modern low floor buses within a given time period

Internal Efficiency Goals: These pertain to the internal working of bus organizations.

(i) To optimize service kms operated/vehicle owned

(ii) To optimize passengers carried/vehicle owned
(iii) To optimize passengers carried/staff member
(iv) To optimize staff/vehicle owned
(v) To increase revenue/vehicle owned
(vi) To increase revenue/vehicle km (or revenue/passenger trip or revenue/ passenger-km)
(vii) To reduce cost/vehicle km (or cost/passenger trip or cost/passenger-km)
(viii) To optimize % of vehicle fleet operating in peak hours
(ix) To increase kilometres operated between breakdowns
(x) To reduce fuel consumption/km
(xi) To reduce fare collection leakage
(xii) To reduce employees’ absenteeism

Accessibility Goals: These help in facilitating access to the public transport system.

(i) To ensure that the maximum walking distance a bus stop is reduced to 500m
(ii) To provide safe sidewalks in the entire city
(iii) To provide a safe cycle path network of a specified total length
(iv) To keep the fare increase below the inflation level

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(v) To convert a specified % of fleet to modern low floor buses

(vi) To increase the carrying capacity of the public transport system
(vii) To Increase commercial speeds
(viii) To reduce congestion in buses
(ix) To reduce waiting time in peak hours

Environmental Goals: These goals are normally specified under law for emissions from each
vehicle. However the total level of pollution is not specified. The total pollution load in a city
may be reduced by encouraging public transport.

(i) To reduce the gross emissions from public transport vehicles

(ii) To reduce public transport accident rates
(iii) To reduce public transport-related noise pollution

It is not within the scope of these guidelines to provide precise targets, as these should be
developed by each city based on the Starting Point and determined policies among stakeholders.
However, for comparison purposes, a list of indicators is presented in Annex 1.

Time spent in this phase is worthwhile. If goals are agreed, it provides a mandate and reference
framework within which actions can be developed and prioritized. It however needs to be
understood that the goals, especially operational ones, may have to be revised depending upon
the strategies that are adopted. Thus, goal setting and strategy selection is an iterative process.

Identifying Constraints 
This is also a key stage. Constraints need to be identified, described and understood. Sometimes
this will help lead to actions to remove or at least mitigate a constraint, or help to find a way to
bypass it. Nonetheless, constraints will exist, and if they are not properly recognized, they will
impact in the implementation phase.

For example, if something is not permitted under regulations, a legal challenge could be made
after implementation, leading to suspension of services and chaos on the streets. Or extensive
action plans that are beyond the organizational or financial capacity of the City will have no
chance of being implemented whereas more modest plans could be implemented in the
short-term and have immediate benefits.

Constraints are likely to include:

• Legal constraints
• Regulatory constraints
• Organisational and institutional frameworks and relationships
• Organisational and institutional capacity
• Availability of technology
• Infrastructure related constraints
• Availability of vehicles
• Practicality of allocating road and other space to public transport
• Ability to raise investment finance for infrastructure and vehicles
• Organisational capacity of the operator
• Technical capacity of the operator
• Relationships between operators and conflicts

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• Political impasse and opportunism

• Influential hidden owners of informal vehicles
• Resistance from the trade unions

Some of the constraints will be readily identified during the consultation and focus
group/workshops and will be discussed openly among stakeholders. However, some of the
constraints will be more sensitive and might not be discussed openly. Nonetheless, the
constraints exist and must be identified. The project team will need to find discrete ways to be
aware of covert constraints impacting on potential projects.

Stage 4  Exploring Improvement Strategies 
The goals and key objectives provide the broad reference framework for bus service
improvements. It is now necessary to consider the strategic options available in order to achieve
the target outcomes. The objectives of this stage are to develop a set of strategies appropriate to
the City, the Goals and the identified Constraints. SWOT analysis plays an important role in
developing the improvement strategy.

Urban travel has to be understood in the context of the growth of each city. The cities are a
heterogeneous mix of people from different income groups. Land use is diverse and changes
abruptly, which is reflected in travel patterns. Road space is used by buses, cars, three wheelers,
cycle rickshaws, bicycles and pedestrians. Developing improvement strategies under such
circumstances is a challenging task. Strategies will vary between cities and be determined by the
prevailing conditions and the chosen Goals. Presented here are measures, which could help
improve public transport.

List of Activities within Improvement Strategy:   
Public transport systems are highly complex and are extremely difficult to manage. This is one
of the main reasons for their unsatisfactory performance. They face multiple challenges and
constraints. Therefore, adoption of a single improvement measure will not create the desired
impact: the benefits accruing from it would be diffused by the complexities and inefficiencies in
the system. Therefore a multi-pronged approach is required, combining several measures, and
only then would it be possible to provide an effective city transport system. Key measures
(activities) which may be adopted are listed below and discussed in the paragraphs that follow.

(i) Optimizing the modal mix

(ii) Integrating all modes of transport
(iii) Optimizing the use of road space – priority to public transport
(iv) Selecting options for augmentation of bus services
(v) Considering the appropriate design of buses
(vi) Considering the appropriate fare system
(vii) Placing the bus user at centre stage (empowering citizens groups)
(viii) Ensuring effective enforcement of regulations
(ix) Improving the internal efficiency of the system
(x) Using information technology
(xi) Increasing non-fare revenue

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Activity 1: Optimizing Modal Mix 
Public transport comprises various modes and to improve it each has to be targeted. Each mode
has distinct advantages and any improvement plan should be able to capitalize on them. It is
frequently observed that demand for low cost modes, such as pedestrians and cycling, is
neglected in road planning. As a result, the road space has to be shared by a diverse mix of users
ranging from cars to pedestrians. This results in slow traffic flow, unsafe conditions and
sub-optimal use of each mode.

Bus transport tends to be the desired mode for trip length above 4–5 kms. Moreover, each bus
trip is associated with one or more pedestrian trips. The importance of non-motorized modes
should be taken into account and infrastructure be provided for them. Then, non-motorized
modes will not compete for road space with buses and they will complement the bus service.
Also, this may wean people away from car use and the patronage of bus services would increase
accordingly.

The approach so far in many Indian cities has been to take the demand for public transport as
given and then to try to cater for growth through supply-side management – building roads,
flyovers, inducing more vehicles etc. This approach has led to a very sharp increase in the
amount of private transport, with an adverse impact on public transport. Demand management
can take various forms, such as differential rate of taxation on vehicles, congestion charging,
prohibiting entry of private vehicles in certain zones during peak hours etc. Some of these
measures would require legislative support, but some could be carried out by executive fiat.
Staggering of office and school hours, staggering of weekly holidays, enhancing parking
charges etc are measures which could be adopted in the short run.

Activity 2: Integrating All Modes   
Integration of all modes needs to be undertaken at both management and physical infrastructure
levels. At present, there is no proper integration or rationalization of services between modes
and also within each mode. As a result, there are at times overlapping routes, large areas not
covered and underutilization of all modes. Each mode should have a well-defined role within an
integrated public transport system. The absence of a unitary transport authority, which could
review all aspects of the system, is the main reason for this lack of coordination. Until such time
as a formal authority is set up, the task of integrated planning and operations could be carried
out by a Committee, with representation from all relevant stakeholders.

Typical examples of planned integration between modes in large metropolitan cities are
identified below.

Table 4 Methods to Achieve Modal Integration 
Method Description (example)
Common infrastructure Multi-modal access to bus and rail stations, transport
inter-changes and park and ride facilities
Common travel information services Telephone-internet information and common information
standards at stops, stations and on trains and vehicles
Common ticketing and revenue sharing Fare products, tickets and passes and sales outlets and
systems purchase options
Coordination of service delivery Coordinated timings at interchanges; hours of service;
treatment of delays

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Opportunities to integrate current bus services with other modes is an important consideration.
For example, modern bus stations can be designed to accommodate taxi ranks, so that there is a
smooth and easy transfer between modes. Similarly, opportunities to integrate small vans and
minibuses serving a local district with nearby bus stations can encourage easy transfer of
passengers.

Activity 3: Optimizing Road Space – Priority for Public Transport 
It is well established that a bus pollutes less, occupies less road space and consumes less fuel
than a car or a two wheeler (on a per passenger km basis). Despite this, it has to jostle for space
on roads in a heterogeneous mix of traffic. Indeed, being heavy it is restricted by ‘no entry for
heavy vehicles’ signs. Keeping buses away from certain roads is under-utilization of road space
besides discriminating against non private transport users. Priority for buses may be given by
restricting access to certain areas only to buses, banning parking of vehicles on roads and
ultimately by having dedicated bus lanes.

Activity 4: Selecting Options for Augmentation of Bus Operations 
The bulk of public transport is provided by government undertakings. The Road Transport
Corporation Act (a Union law) empowers state governments to constitute fully state-owned road
transport corporations which provide public transport services in the state. Indeed, organized
public transport is only in the state sector. Apart from organizing the transport service provider
under the Act, in some cities public transport is under the control of the local urban government
(e.g. Mumbai), while in some states the service provider is a fully state-owned company under
the Companies Act (e.g., Tamil Nadu) and in some states the service provider is a government
department.

In some cities, private operators operate buses. These may be under a permit, but sometimes are
illegal. They are normally single bus operators and are not properly planned or coordinated with
other modes. A large number of cities are served by private mini-buses and vans. These
operations are run on purely commercial lines and cannot be said to be providing an organized
system of public transport.

It is a common perception that cities do not have sufficient buses to meet demand. Thus, there is
always a need to enhance city bus services. An increase in the number of buses and in the
quality of service can be undertaken in a number of ways. The options available for the
acquisition of buses depend upon the prevailing regulatory scenario in the city.

Details of the options available for the development of bus services are identified and discussed
in Annex 2.

Activity 5: Considering Appropriate Selection of Bus Design   
The public transport industry is characterized by the ‘standard bus’. These buses typically are
not characteristic of modern buses, which have wide doors, low floors, pneumatic doors and
rear engines etc. The height of the bus floor and narrow doors makes boarding and alighting
difficult and time-consuming. As a result, buses spend more time at stops. In addition, the high
floor and absence of pneumatic doors are often responsible for accidents to ‘foot board’
travelers, apart from being a big hurdle for the physically challenged and the elderly in
boarding.

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Modern low floor buses are now available in India. These have all the desirable features of an
urban bus. However, they are more expensive. Transport planners have a wide choice today
ranging from mini-buses to modern low floor buses and even articulated buses. The higher
initial cost of modern buses is compensated in the long run by the benefits in terms of increased
traveling comfort, higher safety standards, improved commercial speeds and ease of access for
all, resulting in greater patronage.

Activity 6: Considering the Appropriate Fare System 
Ticketing and revenue management is a core business system for the operator for the following
reasons:

• It is the primary revenue generator. If pricing is sub-optimal or unnecessarily crude, the

company or operator is failing to maximize potential income and hence has reduced
profitability
• It influences travel demand and, for vulnerable and low-income groups, whether they can
travel at all.
• Inefficient or poorly designed systems can cause operating delays, increasing costs and
reducing vehicle productivity
• Weak revenue protection damages profitability and creates a culture of evasion and fraud

It is important to understand that there are three issues:

• Pricing policy and revenue yield, including differential pricing by customer group
• The ticketing and revenue collection system.
• Revenue protection and customer management

The fare structure is at present defined by the State Government, as prescribed under the Motor
Vehicles Act. However, it is recommended that alternative fare systems be considered by
stakeholders, so that the authorities can consider their merits. Urban bus operations have
traditionally selected one of three fare systems. Operators within Commonwealth countries
typically applied finely graduated fares, in the Americas and much of Europe zonal-based fares
were common, whilst in many previously communist countries there were flat fare systems.
Recently, there has been a more pragmatic and commercial approach, using a variety of fare
systems. Further information on choice of fare structure is provided in Annex 3 of this
Guideline.

Activity 7: Putting the Public Transport User at Centre Stage – 
Empowering Citizens Groups 
There is a large amount of data on the performance of city public transport systems (particularly
for the organized sector), but there is hardly any indication of the level of commuter satisfaction,
and very few studies measure it. This reflects the low priority which, in general is given to
public transport users. Transport organizations focus on mobilizing their buses each day, with
the concerns of commuters relegated to a secondary consideration. This causes dissatisfaction
amongst commuters, and bus transport organizations eventually suffer declining patronage.
Even relatively simple tasks, such as keeping buses clean, safe driving, not parking in the
middle of the road etc., which do not involve additional resources can significantly improve
commuter satisfaction. Some transport organizations have even published citizen’s charters,
though these have generally remained just statements of intent.

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It is therefore necessary for commuter concerns, including disadvantaged groups, to be taken

into account. This can be made possible through mechanisms to obtain suggestions/complaints
and then redress them effectively. Feedback from citizen’s groups could also be used for
monitoring the bus service and even to reduce pilferage. Citizens groups could be involved as
partners.

Activity 8: Ensuring Effective Enforcement of Regulations 
Traffic-related regulations require high levels of enforcement to ensure road users comply, and
measures need to be taken in Indian cities to ensure that violations do not occur frequently.
These regulations are enforced either by the police or by officials of the Transport Department.
Unless rules are rigorously enforced the result is eventually detrimental to society. Proper
enforcement leads to more orderly behaviour on the roads, better utilization of road space and
provides a level playing field for all road users. Therefore it is essential that enforcement
agencies pay proper attention to this task. Strict enforcement should be preceded by an
awareness campaign and provision of the required infrastructure facilities.

Activity 9: Improving Internal Operating Efficiency   
The operating efficiency of city bus transport, in both the government and the private sectors,
often requires measures to bring improvements. For example, some organizations may be
efficient in some aspects, but still suffer problems in other areas such as staff indiscipline,
obsolete maintenance practices, high levels of pilferage, unscientific route planning, outdated
monitoring mechanisms, low crew motivation etc. Typically, the public sector can suffer from
overstaffing and the private sector, in a quest to keep costs under control, may underpay leading
to losses in service quality. If any of these factors are present, they should be identified and then
actions taken to provide effective solutions. Performance targets (efficiency parameters) can be
utilized to measure success in the appropriate actions.

Activity 10: Use of Information Technology 
Public transport systems are complex. The number of activities and sub-activities involved in a
running the system is quite large. These include monitoring bus operations, keeping crew
records, accounting for ticket sales, tracking bus maintenance schedules etc. In the past, these
activities were performed manually. Manual maintenance of data, apart from requiring extensive
skilled human resources, cannot be retrieved and processed easily. As a result, the wealth of data
generated could not be used as input to the decision-making process. The voluminous data
easily lends itself to computerization and, once computerized, it can be processed to provide
essential information. More sophisticated technology (GPS) could be used to track buses and to
provide online passenger information systems.

However, use of modern technology has certain pre-requisites. The existing processes have to
be re-engineered to make them suitable for computerization. Also a certain level of discipline
and adherence to internal procedures is necessary before recourse is made to modern
technology.

Activity 11: Increasing Non‐Fare Revenue 
Although the main source of revenue for public transport organizations is from passengers (fare
box collection), there is considerable potential for non-traffic revenue. This could be in the form

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Urban Transport Development  Policy and Options 

of tapping the real estate potential of properties owned and using properties and buses to
generate advertising revenue.

The organizations normally own valuable land at key locations, in the form of bus depots and
large bus stations. The ‘air space’ above this land could be used for commercial purposes, either
using their own resources or in partnership with the private sector. This could bring in
substantial revenues in the form of lease/rents. However, great care must be exercised that the
future public transport requirements are adequately taken care of and any such developments
should not jeopardize plans for expansion. Also it needs to be ensured that the interests of public
transport organizations are adequately safeguarded through appropriate legal instruments.

Another important source of revenue is from advertising. This could easily be tapped. The
properties of the organization could be used to display hoardings, the buses (both exterior and
interior), the tickets and passes could be used to display advertisements, generating substantial
revenue. There are two ways to achieve this. Advertising rights could be auctioned annually to
the highest bidder. Alternatively, the bus company could set rates and accept advertising from
any party at such rates. Care must be taken to ensure that the advertisements are in line with any
policy stipulated by the Authorities (generally Municipal bodies regulate adverting and levy
taxes on it).

It may even be useful to identify big clients and provide them with exclusive rights at a
premium. This should, however, be resorted to only when there is surplus capacity, as otherwise
the general public would suffer.

Systems Approach 
Public transport systems are highly complex and are extremely difficult to manage. This is one
of the main reasons for their unsatisfactory performance.

“A multi-pronged approach is required which should combine several strategies, and only
then would it be possible to provide an effective transport system in the city”

Users of these guidelines are reminded that:

• They are for reference. There are many variations and they can be tailored to meet the
specific circumstances of each city – that is a task for the user.
• The measures suggested are rarely independent and links between them must be considered
• Stakeholders should be involved, either directly at the option development and selection
stage, or to provide feedback on the initially selected set.
• Some of measures are long term, some are short term. Some these require financial
resources while some may require better utilization of existing resources. Some measures
require extensive participation by stakeholders.

Planning is an iterative process. After the first effort at defining Actions and an Implementation
Plan, strategies should be reviewed and perhaps changed, especially if some preferred options
cannot be effectively implemented within the planned timeframe.

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Table 5 Summary of Systems Approach 
Activity/Measure Steps Required Benefits Implications
Optimize Modal • Spell out the role of all • Duplication avoided • All modes perform a
Mix modes • Missing links role as per the
• Identify the areas to be identified common mobility
served by buses • All modes perform plan
optimally
Integrate All • Rationalising and • Better utilization of • With the same fleet
Modes rescheduling of existing assets better services could
routes be provided
Optimize Road • Banning parking of • Improved • Enforcement
Space vehicles on roads. accessibility to mechanisms would
• Removing encroachments public transport. be required
• Earmarking lanes for • Improved • Resistance from
public transport commercial speeds. some quarters would
• Permitting access in • Reduction in number have to be overcome
congested areas only by of accidents
public transport
Improve Bus • More buses to be • Coverage of the • Capital investments
Services introduced and higher transport system required
service level would increase • Livelihood of small
• Overloading of operators needs to be
buses would reduce considered
thereby increasing
comfort levels
Consider Best • Seek modern buses with • Increased patronage • The capital cost of
Bus Design improved accessibility • Reduction in buses increases, but
and features that allow all accidents through proper
sections of society to use planning this could
them be offset by
increased patronage.
Consider Fare • Consider alternative fare • Maximisation of • Fare setting of
System structures and select most revenue and profit public services has
suitable • Optimisation of bus implications for
• Lobby government to operations small private
implement • Reduction in fare operators
recommendation evasion
• Provide benefits to
certain social groups
Empower the • Institutionalizing • Consumer feedback • This task needs to be
Public Transport consultation mechanisms would lead to undertaken carefully
User with citizens. improvement in with an effective
• Install an effective quality of service consultation process
procedure to address • Greater consumer
grievances satisfaction and
hence increased
patronage
Enforce • The enforcement agencies • This would lead to • This would require
Regulations to take strict enforcement better utilization of intensive
Effectively measures road space. consultation with the
• It would provide a enforcement
level playing field agencies
for all the service
providers

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Activity/Measure Steps Required Benefits Implications

Improve Internal • Personnel efficiency • Bus services would • This move may
Efficiency of the within the organization to be improved both encounter resistance
System be improved. qualitatively and from the personnel
• Better operational quantitatively of the organization.
practices to be evolved

Use Information • Identifying processes • Operating cost • There may be

Technology which lend themselves to reduced opposition from staff
Information Technology • Better planning of for fear of
• Re-engineer the processes routes and also help displacement
in order to make them in exercising better • It is necessary to
computer friendly control re-engineer the
processes before any
attempt is made to
computerize them
Increase Non • Tapping the real estate • Additional revenue • The revenue
Traffic Revenue potential of property. at virtually no extra generation models
• Focusing on advertising cost should be carefully
Revenue planned.
• Working with dedicated • There are legal
clients problems associated
with such measures
which need to be
addressed properly

Stage 5  Developing the Improvement Plan 
Once the goals, constraints and strategies have been discussed with all stakeholders, the detailed
improvement plan should be drawn up. This would develop the selected strategies into an action
plan. The improvement plan should have the following sub-plans:

• Bus Infrastructure Plan

• Bus Operating Plan
• Modal Integration Plan
• Bus Institution and Regulatory Plan

Bus Infrastructure Plan 
The Bus Infrastructure Plan should cover the needs of all modes, especially non-motorized
modes and pedestrians, so that full modal integration is considered. There are several agencies
dealing with transport infrastructure and it is important that all are involved in preparing a
common transport infrastructure plan.

Supporting bus infrastructure, which can be highly cost-effective, allows better quality services,
improving both operational capacity and the conditions for customers. Improvement options
include:

• Marking out bus stops, pedestrian crossings and erecting bus poles or plates
• Providing hard standing, kerbs, rails, shelters and lighting at bus stops to protect passengers
• Providing lay-bys, pull-ins and other stopping and loading places convenient for buses

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• Restructuring bus and minibus loading areas, along with associated local traffic
management, to allow better circulation and avoid congestion at stops
• Providing parking and basic amenities at termini, for both vehicles operations and for
passengers
• Constructing interchanges for multiple bus routes at key nodes
• Constructing inter-modal interchanges at railway stations and long-distance/ suburban bus
stations. Ensure that these are designed for smooth passenger flow, and with good internal
layout for vehicle flow. For larger units, provide parking away from passenger loading areas
• Providing bus priority through reserved lanes and/or traffic signal priority

Bus Operating Plan 
Improving bus services can be achieved through a set of linked actions. The necessary actions
will depend on the problems identified, the ability to act and their expected impact. The action
plan flows from the strategies selected by stakeholders. It should include the following
components:

• Route Plan • Customer Orientation

• Capacity Augmentation • Human Resource Development
• Operations Management • Operator’s Efficiency
• Ticketing and Revenue Management

Route Plan: Network and route design is important for three reasons:

• It has significant influence on passenger demand and satisfaction and hence on revenue. It
can significantly reduce journey times if well designed. If poorly designed, it can frustrate
customers and provide opportunities for informal and illegal operators to enter the market.
• It affects operating cost. A poorly designed network (badly planned routes) is inefficient to
work, both at route and at network level, with avoidable congestion and delays. A high
degree of route overlapping leads to unnecessary costs and reduced profitability.
• A coherent network, rather than uncoordinated routes, is user-friendly and will increase use
of bus services. It also provides the basic platform for integration and advanced customer
support services.

The Route Plan may be based on either trunk routes supported by feeder routes; the hub and
spoke principle; or on a grid structure. Each has advantages as well as limitations.

Transport planners should decide on the route pattern in consultation with stakeholders. City bus
services are generally not planned scientifically - as a result there are overlaps and gaps. The
Route Plan will largely depend upon the existing infrastructure, but it is desirable for the
infrastructure plan to take into account the route planning norms.

This stage is suitable for computer modeling. Therefore it is recommended that experts in the
field should be involved.

Route rationalization (existing bus network): Route rationalization increases both commuter
satisfaction and the financial returns to the operator. It assumes that the fixed assets cannot be
changed significantly.

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Irrational route networks are characterized by duplication and overlapping of routes, some areas
are served excessively while others are under-served. From the users’ point of view, there are
overloaded buses together with under-utilised buses, a mix of extended intervals and buses
running in bunches. From the operators’ point of view, the load factor varies widely between
services, as do earnings per bus. Irrational route networks are uneconomic for operators and at
the same time result in user dissatisfaction.

Investigate Design Optimize

TASK 1: Prepare  TASK 6: Calculate  TASK 7: Adjust Operating 
Origin‐Destination  Operating Requirements  Characteristics 
Matrix  and Assign Resources

TASK 2: Identify  TASK 5: Assign Services  TASK 8: Evaluate System 

Passenger Demand and  to Trunk‐and‐Feeder  Using Parameters 
Distribution  Routes

TASK 3: Investigate Bus  TASK 4: Identify Trunk  Bus Route 

Route Patterns    Routes and Feeder  Rationalization 
Routes

Figure 3 Route Rationalization Process 

At Task 6, if there is a lack of fleet capacity, route lengths or operating frequency may need to
be adjusted. In Task 7, the parameters typically used for evaluation are: load factor, average
travel time, average waiting time, earnings per bus, average walking distance to bus stop.

Route planning should consider that travel demand is not uniform throughout the day. There
may also be a conflict between revenue maximization and providing accessibility for all areas. A
balance has to be achieved.

Capacity Enhancement: route planning may require enhanced capacity. For cities lacking
adequate bus services, or where services are undeveloped, the quickest and most effective action
is to add routes. The basic need is identified in the initial problem diagnostic and in the
consultation process. Capacity enhancement has to be scheduled properly, in coordination with
other improvements, especially human resource development.

Operations Management: The relevant measures will depend on whether there is a

coordinated operations management and whether operators are consolidated or fragmented.
Operations management and service planning is an interdisciplinary subject. It is therefore
suggested that a team of experts be associated with such planning.

Ticketing and Revenue Management: defining the fare structure is not the responsibility of
the task force or the group working on service improvements. The fare structure should be
reviewed, however, to see whether viability can be improved, in conjunction with the authorities
concerned. This is an iterative process.

It may be desirable to introduce more options, for example passes entitling travel on all or a set
of routes for a day, week or month. Smart cards etc. could also be explored. The cost of revenue
collection should be minimized and the chances of pilferage reduced.

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Customer Orientation: Satisfactory service results from reliability, punctuality and comfort.
Other customer-friendly measures include:

• Preparing an enforceable citizen’s charter.

• Setting up a mechanism to redress public transport users’ grievances.
• Establishing a citizen’s consultative forum.
• Involving citizens in monitoring operations.
• Installing effective passenger information systems.
• Display of passenger friendly maps, routes and schedules at bus stops.
• Establishing active marketing and outreach programmes.

Customer support can greatly improve the image of public transport, reduce stress on users, and
resolve issues that would otherwise lead to dissatisfaction.

Human Resource Development: Public transport operation is labour intensive and therefore a
pre-requisite to reforms and improvements is a motivated, competent and disciplined workforce.
Staff need to be properly trained in customer care to maintain an image of high quality transport.
Human resource development requires personnel policies, encompassing recruitment, training,
incentives, employees grievance redressal mechanisms, fair and transparent methods of
enforcing discipline, sensitivity towards customers needs etc. Making commuters aware of the
problems the crew face would also help in improving mutual understanding. The capacity of
operators can also be improved. This is relevant to associations and consolidation of
independent operators who lack corporate experience, to traditional operators who do not have
professional qualifications and to large companies that have not invested in modern business
practices.

Significant change can offer new opportunities to bus companies of all sizes and structures and
these need to be fully exploited. In many cases, the improvements are not an end in themselves,
but the platform from which an improved and more sustainable business model can be
established. This requires training, know-how and capacity development. It also requires an
upgrading of the knowledge and support systems within the organization.

Improvements in human resources include:

• Training for owners and senior management in modern business and management practices
• Training for operations, financial and administrative managers in modern practices
• Study tours and secondments for key personnel
• Encouragement of recognized qualifications such as Certificate of Professional Competence.
It can be made a condition of service contracts and operating permits that key personnel
must be so qualified
• Assistance, training and know-how transfer for computerization and data management

Modal Integration Plan 
Although the focus is on improving bus services, this should go hand in hand with other modes.
While modal integration may be a long-term goal, realistically it can only be achieved where
there is a co-operative framework and a reasonable quality of service.

Integration can be achieved at the following levels:

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• Routes and services

• Network
• Physical infrastructure (e.g. terminals)
• Tariffs and ticketing
• Information and marketing
• Customer support

Improvements to enable integration can include:

• Comprehensive multi-modal data collection, analysis and network design

• Common or consistent branding and information
• Integrated and multi-modal tariff structures
• Revenue-sharing agreements among operators
• Harmonisation of operational practices
• Creation of a special-purpose company to manage integrated facilities (e.g. ticketing,
information, customer support, network planning)

Operator’s Efficiency: Improvements to operator efficiency and productivity achieves better

use of resources and improves profitability. Inefficiencies can arise from many factors
including:

• Small scale, leading to higher unit costs

• Lack of technical facilities
• Lack of technical know-how
• Lack of organizational know-how
• Lack of data and analytical skills
• Poor operating conditions
• Poor organizational practices that the individual operator cannot change (e.g. having to
queue at terminals)
• Restrictive or destructive practices by staff (e.g. fraud, theft, absenteeism)

If the operators are working inefficiently, profitability will be low and they will find it difficult
to raise finance for fleet renewal or for quality maintenance. The overall service level offered to
customers will be low.

Quite often, change is difficult for the individual operator or small company who must work
within an established system or within the limits of their training and experience, and it requires
external intervention to introduce new practices and raise efficiency levels.

Improvements include:

• Developing a template for a self-implemented efficiency review for operators. Focus on

basic indicators such as:
- Service-kilometres operated/vehicle owned
- Passenger carried/staff member
- Staff/vehicle owned
- Revenue/vehicle owned
- Revenue/vehicle km, or revenue/passenger trip or revenue/passenger-km
- Cost/vehicle km, or cost/passenger trip or cost/passenger-km
- % buses operating in the peak

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- Kilometres operated between breakdowns

- Fuel consumption/km
• Track performance parameters over time and across operators
• Implement benchmarking and train operators in how to use it effectively – it is not just
statistics, the primary objective is to identify areas for improvement
• Provide experience exchange, technical know-how, technical assistance and grants to
operators willing to implement measures to improve efficiency and productivity
• Encourage and assist consolidation of independent operators into larger companies or
associations that can gain efficiencies of scale

These principles would also apply to government-run companies.

Bus Regulatory and Organization Plan 
Improving public transport services or introducing such services may require new institutional
arrangements for system planning, operating and regulation. Some of these institutions are
within the public sector – especially the planning and regulatory bodies. Organizations
providing transport services could be in either the private or the public sector. The organizations
to be created will vary and will depend upon the legal framework. There is a need to establish
an agency with an overall view of the transport sector and to prepare well coordinated plans.
Similarly, the existing regulatory mechanisms – which essentially are the Regional Transport
Authorities – should be strengthened or recast to shoulder more responsibilities. If the
concerned authorities decide to encourage the private sector, a different type of regulatory
mechanism will be required. Similarly, the private sector will also require some assistance to
organize efficiently. Plans will fail if the institutions to implement them are lacking.

Improvement options and sub-options include:

• Strengthen the legal and regulatory framework for urban bus services
- Develop by-laws for bus service regulation, approved by the City Council
- Assign legal rights to regulate, plan and manage bus services

• Establish or strengthen the Transport Authority

- Establish a bus service co-ordination unit within the city administration
- Establish a route licensing and/or operating permit authority
- City takes responsibility for network and route planning
- City has responsibility for all aspects of passenger transport services

• Reform the market for bus services

- Require all services to register with the city
- Open market to new entrants
- Break up monopolies and uncontested market sectors

• Place all services under contract to the Transport Authority

- Services can only operate under permit from the city
- Establish route or area operating contracts or franchises
- Set service parameter, quality and standards
- Award services or franchises under competitive tendering

A Special Purpose Vehicle may be necessary to oversee the planning and operation of bus
services. This should represent all stakeholders (transport related). The SPV may be headed by

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the City Mayor and could have the following as members:

a. Collector (Vice Chairman)

b. Chief Executive of the City Development/Planning Authority.
c. Commissioner of the City Corporation.
d. Representative of the Police.
e. Representative of Commuters’/Citizens’ Associations.
f. Transportation Planning Expert.
g. Representative of a Government Transport Organisation.
h. Chief Executive of the SPV.

Initially, the SPV can be set up with an Executive Order, but when it enters into contracts it
should be given a corporate status. This could be done by registering it as a Government
Company. The function of the SPV would be to assess the transport scenario in the city, to plan
the transport system and to contract services from bus operators. It would have to be authorized
for this purpose by the State Government. The bus operators could be private entities or a
government company. The internal structure of the SPV is shown in Figure 4. Once the system
stabilizes, the SPV could be converted into a statutory body with powers of regulation, fare
setting etc.

Governing Board

Chief Executive

Chief Planning  Chief Finance  Chief of  Chief of 

Officer  Officer  Contracts  Operations Mgmt. 

Figure 4 Organizational Structure of an SPV 

Stage 6    Finance and Economics 
Implementation of the improvement plan requires mobilizing resources and estimating benefits.
Viability depends upon the extent to which the improvement plan is self supporting. The various
components are listed below:

• Working out the costs and distribution of financial requirements amongst Agencies.
• Quantifying benefits.
• Estimating the FIRR and EIRR.
• Funding plan.

Cost Estimation 
The capital works/investment for the improvement plan includes:

• Activities which are not likely to generate revenue.

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• Activities which would have a revenue stream or could be sponsored.

• Activities which would require capital investment, but would generate revenue.

The first category would largely comprise civil works, such as road improvements, pedestrian
facilities, cycle tracks etc. These activities would largely have to be carried out with public
funds.

The second category would basically comprise supporting infrastructure for public transport.
This would include construction of wayside bus shelters, pedestrian and cycling facilities,
signages etc. Though the funds required are much lower than for the first category, they would
have to be provided by the city government.

The third category is directly related to bus operations and investment would be required to
procure vehicles. The operating agency would have to mobilize the funds.

Quantifying Benefits 
The benefits of the Improvement Plan have to be assessed in a cost benefit analysis. Several
stakeholders contribute to the service improvement plan and benefit. The benefits accrue under
three broad headings:

• Benefits to the city as a whole:

¾ Better environment – lower pollution levels.
¾ Improved safety to road users.
¾ Increase in real estate values.
¾ Benefits to bus users.
- More comfort.
- Less travel time.
- Savings in time of amount spent on traveling
¾ Benefits to other road users:
- Increased commercial speeds.
- Opportunity to use other modes as feeder services to bus

• Benefits to the city authorities:

¾ More orderly road traffic, hence ease of regulation.
¾ Well planned transport system facilitates further growth of city.
¾ Advertising revenue.

• Benefits to the bus operators:

¾ Revenues from the fare box.
¾ Revenue from advertising on buses.

Financial and Economic Analysis 
Once the cost and the benefit streams have been quantified, an economic and financial analysis
should be carried out to determine whether the improvement plans are viable or not. Two
agencies are investing – public authorities like the city government and the bus companies. As a
first step, it is necessary to assign costs and benefits between them. For example, fare box
revenue is a cash inflow for the bus operator, but not for the city government. In several project
reports this distinction is not made and a macro economic and financial analysis is undertaken

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for the entire plan, which often leads to misleading results. The economic analysis is required to
make policy decisions.

The financial analysis is necessary for bus operators. The economic benefits accrue to other
agencies or users.

The analyses should include FIRR (Financial Internal Rate of Return) and EIRR (Economic
Internal Rate of Return) and NPV (Net Present Value). They may guide decision makers on
fares policy. For example if economic return is very high, subsidizing public transport through
tax concessions is appropriate. A high EIRR may indicate potential financial benefits can be
realised.

Mobilisation of Funds 
Once agency activities have been decided, each agency would have to prepare a fund
mobilization plan for:

• Activities which are not likely to generate revenue

• Activities which would have a revenue stream or could be sponsored.
• Activities which would require capital investment but would generate substantial revenue.

Activities which are not likely to generate revenue: Funds for these would have to come either
from the surpluses of the city governments or be allocated by the state government or the Union
for city development. Innovative methods could also be used to convert benefits into revenue in
the long run. This could be in the form of a cess on the property tax levied by the city
government for road improvements or levy of a betterment tax on areas around improved
infrastructure. If this is done the city government or the development authority may be able to
raise resources through financial institutions/banks.

Activities which would have a revenue stream or could be sponsored: These activities can
generate immediate revenue streams. For example, construction of bus shelters can provide
revenue in the form of advertising. If planned properly and in coordination with the bus
operating companies, this could even be profitable. It is also possible to get sponsors for these
works.

Activities which would require capital investment but would generate substantial revenue: It
may not be necessary to invest public funds for this purpose as this activity generates a cashflow,
which if managed properly could be used to fund the initial investment. Once again, innovative
mechanisms like escrow accounts, leasing/hiring of buses etc. could be used.

Stage 7  Implementing the Plan 
An Implementation Plan should be developed for the Actions selected in Stage 4. This must
consider all the elements of the project, how they are linked and sequenced, how they are to be
financed, and who should implement them. It must also consider risks and how to deal with
unexpected circumstances, delays, challenges and setbacks.

Above all, the Implementation Plan must be realistic and take into account the conditions of the
host environment.

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The objectives of this stage are to:

• Develop a practical Implementation Plan that will achieve the desired actions within the
available resources and constraints in an effective and efficient manner
• Prepare the implementation team and structures to deliver the project

This stage consists of four activities:

• Develop the comprehensive Action Plan, including individual actions, their linkages and
interdependencies, sequencing, timing and communications strategy
• Develop the Financing Plan, including financing of actions and project management
• Assess Feasibility and Risk and prepare Contingency Plans
• Identify Roles and Responsibilities and specify the Implementation Team

These are illustrated in Figure 5.

Actions, 
Timeline and 
Sequencing

Develop the  Roles and  Assess 

Implementation  Financing Plan  Implementing  Feasibility and 
Plan  Team Review 

Risk and 
Contingency 
Planning

Figure 5 Develop the Implementation Plan 

The Guidelines do not provide guidance on individual elements in preparing Implementation

Plans

However, it is advisable to:

• Consider the applicable baseline scenarios and be realistic about what is feasible
• If any changes are required in the regulatory, institutional or organizational frameworks, pay
very close attention to the sequencing of events and the available contingencies. Changing
laws and regulations is notoriously slow and contains risk that the outcome might not be as
desired. There are also risks of legal challenges or obstacles

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• Similarly, if permissions/approvals are needed, especially for innovation, care must also be
taken. Refusals, delays, or unexpected conditions can thwart the project.
• Pay close attention to the sequencing of Actions, so that enabling Actions are guaranteed to
be in place by the time other Actions need them
• In multi-Action projects, try to achieve some visible improvement actions early on in order
to gain public and political confidence in the program
• Keep the consultation and participation of stakeholders throughout the project, including
customers and general public
• Identify a project champion at senior political or administrative level, who will provide
support during the inevitable times of slow progress, setbacks, or negative reaction from
stakeholders
• Establish professional project teams with a clear mission and mandate to implement the
Action(s), and with sufficient experience and motivation
• Ensure that responsibilities are clearly defined
• Where possible, involve directly affected stakeholders in implementation – e.g. within
project and design teams – both to harness their knowledge and to maintain their support
• Make adequate provision for training and know-how transfer to both the project
implementers and stakeholders who must operate, use or manage the system. This could
include study tours and secondments for innovative processes, so that the implementation
team properly understands what it is trying to implement
• Ensure that the financing plan is practical, comprehensive and realistic. Double-check that
the finances really are available and that stakeholders are willing to commit the investment
and operating funds
• Where operators are expected to provide investment finance, consider ways to assist them to
gain access to funds at reasonable rates. This is especially important where banks do not
have experience of lending to the sector.
• Pay adequate attention to the disruption and inconvenience during the implementation and
start-up phases. This covers customers, other road-users, and the buses themselves. It this is
not properly planned, it can cause serious revenue loss to some bus operators, with long
periods of disrupted bus services, and provoke strong reaction from motorists and
politicians.
• In the Risk Assessment and Contingency Planning Process, be honest in assessing the real
level of risk. Pay attention to the risks of legal challenges (including ones designed solely to
delay) and of stakeholders working against the project
• In complex projects, prepare mechanisms for handling disputes among stakeholders.

Stage 8  Policy Advocacy 
The external environment impacts the transport sector much more than any other sector. The
regulatory framework is often ‘unfair’ to public transport. Depending on the scale and nature of
the improvement actions, it may be necessary to make changes to the organizational,
institutional or regulatory frameworks – when you cannot play by the rules of the game, try to
change the rules of the game. This is not something to be undertaken lightly, as practical
experience in many countries has shown that frameworks are difficult to change even when all
stakeholders are agreed, let alone when one or more key stakeholders make overt or covert
resistance to change. By and large, it is easier to develop and introduce new frameworks where
they are absent or weak, and more difficult to change established active frameworks.

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Improvement options and sub-options include:

• Strengthen the Legal and Regulatory Framework for urban bus services
¾ Develop bye-laws for bus service regulation, approved by the City Council
¾ Assign legal rights to the City to regulate, plan and manage bus services
¾ Reform the taxation structure.

• Establish or Strengthen a City Transport Authority :

¾ Establish a bus service co-ordination unit within the City administration
¾ City Transport Authority takes responsibility for network and route planning
¾ City Transport Authority has responsibility for all aspects of passenger transport
services

• Place all services under contract to the Transport Authority

¾ Services can only operate under permit from the City
¾ Establish route or area operating contracts or franchises
¾ Set service parameter, quality and standards
¾ Award services or franchises under competitive tendering

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SECTION III  ANNEXES 
Annex 1  Bus Operator Performance Parameters 
General
Number of Buses per 1,000 People: With so many variables, the minimum requirement varies
considerably from city to city, but will typically lie between 0.5 and 1.2 per 1,000 population.

Percentage of Urban Area within 500m of Bus Stop: It is generally considered that an acceptable
range for a city in a developing country is 75%-90%.

Further information on such parameters can be found at www.ppiaf.org/UrbanBusToolkit

Indian Case Studies 
Table 1 Indian Bus Company Performance Indicators 
BEST DTC MTC(CNI) BMTC CSTC PMT AMTS
Mumbai Delhi Chennai Bengaluru Kolkata Pune Ahmedabad
Profit/loss
(PAISE/KM) -1263 -3013 -59.3 259.3 -296 -1817 -897
Earning per bus
per day (Rs) 7340 3576 5770 4445 5483 5027 4771
Cost per bus
per day (Rs) 10041 9836 5925 3849 6126 5679 6645
Staff per bus 11.7 8.94 8.34 5.76 10.21 10.27 10.12
Bus utilisation
per day (km) 213 207 261 229 148 212 208
% of cancelled
kms to
scheduled kms 4.36 20.31 12.53 2.63 24.68 11.72 19.04
Source: STUs-Profile and Performance (2004-05)

European Case Studies 
Table 2 Bus Operation Productivity Indicators 
Indicator # 1: Passengers/Veh-km
City/ Bucharest Berlin - Budapest - Prague -Vienna - Warsaw -
Bus Operator - RATB BVG BKV PPT Wiener MZA
Linien
Value 6.0 4.3 6.5 5.2 4.5 4.8
Implication of A low result may indicate that: (i) ridership is insufficient for the given amount of service
Results: provided; and/or (ii) the amount of veh-km provided may be too high for the inherent demand in
the city – that excessive resources are devoted to running vehicles with few riders on them.
Shortening of routes and minimization of non-revenue veh-km can improve this indicator.

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Indicator # 2: Passengers/Total Owned Vehicles

City/ Bucharest Berlin - Budapest - Prague - Vienna - Warsaw -
Bus Operator - RATB BVG BKV PPT Wiener MZA
Linien
Value 354,705.40 279,382.90 405,162.60 242,065.30 218,108.70 373,215.50
Implication of A low result may indicate that: (i) the vehicle fleet is too large given the ridership – this impacts
Results: storage, maintenance, and operating costs; and/or (ii) ridership is insufficient given the owned
vehicle fleet.

Indicator # 3 Total Owned Vehicles/Million Passengers

City/ Bucharest Berlin - Budapest - Prague - Vienna - Warsaw -
Bus Operator - RATB BVG BKV PPT Wiener MZA
Linien
Value 2.8 3.58 2.47 4.13 4.58 2.68
Implication of This indicator is the inverse of Indicator #2 and may indicate that for the amount of passengers
Results: served, the bus company has an oversized bus fleet

Indicator # 4 Veh-km/Total Owned Vehicles

City/ Bucharest - Berlin - Budapest Prague - Vienna - Warsaw -
Bus Operator RATB BVG - BKV PPT Wiener MZA
Linien
Value 58,740.80 65,427.80 62,199.60 46,630.30 48,692.20 77,754.00
Implication of Comparison of results with other operators can indicate whether mileage by the average bus is
Results: high or low i.e. severity of wear and tear on the buses.

Indicator # 5 Total Owned Vehicles/Million Veh-km

City/ Bucharest Berlin - Budapest - Prague - Vienna - Warsaw -
Bus Operator - RATB BVG BKV PPT Wiener MZA
Linien
Value 17 15.3 16.1 21.4 20.5 12.9
Implication of This indicator is the inverse of Indicator #4.
Results:

Indicator # 6 Passengers/ 1,000 Passenger Place-km

City/ Bucharest - Berlin - Budapest Prague -Vienna - Warsaw -
Bus Operator RATB BVG - BKV PPT Wiener MZA
Linien
Value 72.360 - - 64.089 47.225 -
Implication of This indicator can suggest whether: (i) the capacity of the bus units is relatively small or large
Results: given the ridership; (ii) whether the operator runs its buses on average, less frequently per route
and per day; and/or (iii) the intensity of boarding compared to the amount of service offered.

Indicator # 7 Million Passenger Place-km/Total Owned Vehicles

City/ Bucharest - Berlin - Budapest Prague - Vienna - Warsaw -
Bus Operator RATB BVG - BKV PPT Wiener MZA
Linien
Value 4.9 - - 3.8 4.6 -
Implication of Comparison of this indicator can suggest whether buses could be operated more frequently or
Results: intensively as well as the relative the bus capacity.
Source: EBRD City of Bucharest Public Transport Reform Study, PADECO, 2005.

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Table 3 Bus Staff Productivity Indicators (Europe) 
Bucharest Budapest Prague Vienna Warsaw
# Staff Productivity Indicator RATB BKV PPT Wiener MZA
Linien (Bus)
A Department Staff (by Mode) per Million Veh-km
131 56 66 95 46
Operated
B Department Staff (by Mode) per Million Pax
22 9 13 21 10
Served
C Department Staff (by Mode) per Vehicle Owned 7.7 3.5 3.1 4.6 3.6
D Drivers per Million Veh-km Operated 35 36 37 52 28
E Drivers per Million Pax Served 5.8 5.5 7.0 11.6 5.8
F Drivers per Vehicle Owned 2.1 2.2 1.7 2.5 2.2
Source: EBRD City of Bucharest Public Transport Reform Study, PADECO, 2005.

Asian Case Study 
Service Parameters for Bus Service Franchises in Singapore

Bus Operating Franchises in Singapore are subject to Quality of Service Standards established
and monitored by the Passenger Transport Council (PTC). The following text describes the
current Quality of Service Standards. It is reproduced from the PTC website at www.ptc.gov.sg

One of the key roles of PTC is to regulate bus service standards. In fulfilling this role, the PTC
has put in place a comprehensive regulatory framework to assure the quality of bus services.
This includes setting quality of service standards for the compliance of basic bus operators,
conducting regular compliance audits and spot checks to track the performance of bus services.
The PTC also intervenes when service lapses are detected, and directs the operators to take
remedial action to address them. In addition, the PTC encourages public transport operators to
continuously improve their services to meet the needs and expectation of commuters.

Quality of Service Standards

The PTC established a comprehensive set of bus service standards and specifications to regulate
the performance of the basic bus operators in 1994. To better reflect and match the commuters’
needs and experience, the PTC has introduced a new set of Quality of Service (QoS) standards
for basic bus services in July 2006. The new QoS standards are used to measure performances
and hold the operators to strive to deliver better services without unnecessarily pushing up the
costs of service provision.

The new QoS standards cover various attributes in six aspects of bus services that relate closely
to the actual travelling experience of the commuters.

1) Reliability
1.1 Scheduled bus trips operated on At least 96% monthly.
each bus service
1.2 Bus service should adhere to not Not less than 85% daily.
more than 5 minutes of its
scheduled headway (frequency)
upon departure at the bus
interchanges and terminals
1.3 Bus breakdown rate on all bus Less than 1.5% monthly.
services

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2) Loading
2.1 Bus loading during weekday peak Not exceeding 95% daily.
periods on each bus service
3) Safety
3.1 Accident rate on all bus services Less than 0.75 per 100,000 bus-km per month.
4) Availability
4.1 Access to any bus service To run at least one bus service within 400m radius of any
development subject to minimum demand.
4.2 Provision of direct bus service To run direct bus services:
connections a) Between an HDB neighbourhood and a nearby bus
interchange or MRT station.
b) Between major employment/ activity centres and a nearby
bus interchange or MRT station.
c) Between HDB towns and the Central Business District,
and Jurong Industrial Estate.
These requirements are subject to minimum demand. The
requirements may not be applicable where there are
available MRT/NEL/LRT services.
4.3 Bus service operating hours At least 18 hours daily, unless otherwise stipulated by the
PTC.
4.4 Bus service scheduled headways a) At least 80% of bus services to operate at headway of not
(frequencies) more than 15 minutes (to be changed to 10 minutes with
effect from Aug 2009) during weekday (excluding public
holidays) peak periods, unless otherwise stipulated by the
PTC.
b) At least 85% of bus services to operate at headway of not
more than 20 minutes during off-peak periods, unless
otherwise stipulated by the PTC.
c) 100% of bus services to operate at headway of not more
than 30 minutes, unless otherwise stipulated by the PTC.
5) Integration
5.1 Bus service integration in HDB a) At least one bus service to depart from the bus
Towns interchange/terminal at 6.00 am or earlier, daily.
b) At least one bus service to depart from the bus
interchange/terminal at 12 midnight or after the last train
service, whichever is later, daily.
6) Information
6.1 Availability of up-to-date a) To provide hotline and information on internet website for
information convenient trip planning;
b) To display information at all bus interchanges/ terminals
with passenger boarding activities;
c) To display information at all bus stops with display
facilities; and
d) To provide timetables at bus stops for bus services with
long headway (i.e. headway of 20 minutes or more, for
more than 20% of the bus trips)
Source: Reproduced from the PTC website at www.ptc.gov.sg

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Annex 2  Options for Bus Service Development 
The options available for acquisition of buses depend upon the prevailing regulatory scenario.
Broadly speaking there are two types of baseline scenarios, i.e., that in which a government
undertaking (or the municipal government) enjoys a monopoly in bus service provision and that
in which it does not. The available options for improvement under each are described below.

Baseline Scenario 1: A government undertaking (or the municipal government) does

enjoy monopoly in bus service provision

Figure 1 shows three basic options for the augmentation of bus operations under the monopoly
baseline scenario.

Baseline Scenario 1:
Government or Municipal 
Undertaking enjoys Monopoly 

OPTION A  OPTION B OPTION C 

Monopoly acquire buses  Monopoly hires buses from  Monopoly tenders routes or 
through own capital  Private Sector  areas to Private Sector 

OPTION B1  OPTION B2 OPTION C1  OPTION C2

Without crew  With crew  Gross Cost  Net Cost 
(wet lease)  Contract  Contract 

Figure 1 Options for Bus Service Improvements under Monopoly Situation 

OPTION A: Monopoly Acquires Buses Through Own Capital

Under this Option, the monopoly finances the procurement of new buses either by a grant from
the government, or using its own financial surplus, or by borrowing. Most government
corporations adopt this option. The acquisition of buses can be either by the City government or
the Government Companies already running public transport.

Acquisition of Buses by City Government: Prima facie operation of buses by the city
government appears to be a simple solution. Such a system prevails in cities in Maharashtra and
Gujarat. Operation of buses by the city government has the advantage that the agency owning
the roads and regulating them and the agency running the buses is the same. This may lead to
better planning and coordination. Added to this is the advantage that the bus system is not
subjected to various levies by the City Government. However, experience has been mixed. In
Mumbai the City Government runs one of the biggest bus systems in the country, but many
smaller municipal bodies provide bus services of poor quality. The financial performance of
these bus operations tends to be poor and the finances of the municipal bodies are usually

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inadequate to invest in new buses. Moreover, this option is available only in a few States where
the municipal bodies are mandated under law to run public transport services.

Acquisition of Buses by Government Companies Running Public Transport: In several cities,

the government organizations running buses have a monopoly and no private operator is
allowed. Under such circumstances the only way to introduce new buses is by the government
owned company. The financial performance of these organizations, like those run by the
municipal bodies, has generally been poor. Therefore, they do not have surpluses which could
be invested in additional buses and the prospect of making further losses deters them from
borrowing. Thus this option also has limited potential.

OPTION B: Monopoly Hires Buses from Private Sector

The Monopoly Operator has the responsibility of providing bus services in the city. The usual
practice is that the operator owns and runs the buses: therefore, any expansion or induction of
new buses requires procurement of vehicles. However, the financial condition of the monopoly
operator (which is a state owned company) is typically precarious and it cannot invest in
additional buses. In such cases, a partnership between the public sector monopoly and the
private sector may be beneficial. The public sector is known for its social concern for the people
and the private sector is known for its efficiency and professionalism and these aspects can be
brought together.

Under this Option, the monopoly hires buses directly from the private sector. It can take the
buses on hire from the private owner and compensate the owner on the basis of distance run.
Such buses are normally taken on ‘wet lease’ for a long period.2 The farebox revenue goes to
the Government monopoly operator. The advantage of this arrangement is that private capital is
brought into the system by the private operator. Moreover, the private bus owner is insulated
against the unpredictability of the government’s fare revisions.

The system can have several variants. The contract may have ‘pass throughs’ for costs of inputs.
The buses may be run under the ‘colours’ of the monopoly operator. The Government monopoly
operators could put their own conductor in the bus or even outsource the fare collection to a
third agency. A variation of this model was adopted in the ‘Km-scheme’ of Delhi Transport
Corporation (DTC), in which the operator is paid a fixed amount for each kilometer of bus
operation, and the ‘Hiring of Bus Scheme’ of Bangalore Metropolitan Transport Corporation
(BMTC) (See Annex 4). Another variant could be hiring of buses with both crew (driver and
conductor) being supplied by the Government monopoly operator.

OPTION C: Monopoly Tenders Routes/Areas to Private Sector

Under this Option, the Government agency (with monopoly on the routes) may tender the routes
or area and invite bids from private operators. The private operator offering the highest premium
is given the authority to operate on the given route or within a specific area.

The decision to tender either routes or areas is based on a number of considerations. For
example, whether the city has a number of relatively self-contained areas or if the authority
wishes a particular operator to be identified with an area. The area basis contract has an
advantage in that the operator can plan services better and does not have to compete with
another operator in his area: therefore there is less incentive to cut corners in quality of service.
However, this system creates problems when certain services have to cut across the areas of one
2
‘wet lease’ includes crew.

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or more permit holders. This problem can be overcome to some extent by allotting permits for a
set of routes instead of an area. Even this system creates problems in the case of overlapping
routes of different operators. Route contracts may be preferable if the authority wishes to offer
opportunities to small operators or retain control over routes and schedules.

Gross-Cost Basis Contract (Option C1): Under a Gross Cost Contract, the authority pays the
Operator to provide a service in the specific area or route(s) for a set period. This Option is
appropriate if the authority wishes to avoid on-street competition for passengers and to provide
free or discounted interchange between routes.

Net-Cost Basis Contract (Option C2): Under a Net Basis Contract, the farebox collection is
retained by the Operator, though the fare rates are usually fixed by the authority. The operator
should have an incentive to run a good service and collect more revenue, however, often the
operators in their quest to maximize revenue cut corners, violate the rules and tend to maximize
profits, which can be detrimental to providing comfortable and safe services. The authority may
pay the Operator a subsidy if the bus services are unprofitable. On the other hand, if the services
are profitable, the authority can receive a royalty from the Operator.

Table 1 below provides a summary of the advantages and disadvantages of the above options.

Table 1 Advantages and Disadvantages of Bus Service Improvement Options 
under Monopoly Conditions 
Option Advantages Disadvantages
OPTION A • Easiest method for fleet • Government companies tend to have
Monopoly acquire acquisition insufficient capital to acquire buses
buses through • Government Company retains full • Each additional bus requires
own capital control additional staff of 7–10 persons
• Existing facilities such as depots
can be used
OPTION B1 • The Government Company does • Crew has to be employed by the
Monopoly hires not require available capital Government Company
buses from • The private sector (fleet owner) is • Fixation of rate payable to operator
Private Sector insulated against fare revisions may create problems especially when
(without crew) cost of inputs is increasing
• Lack of competition
OPTION B2 • No capital required for Govt. • Fixation of rate payable to operator
Monopoly hires Company may create problems especially when
buses from • The private sector (fleet owner) is cost of inputs is increasing
Private Sector insulated against fare revisions • Lack of competition
(with crew)
OPTION C • No capital required from • Tendency for operator to maximize
Monopoly tenders Government Company profit by cutting corners
routes or areas to • The Government company earns a • Impractical on loss making routes
Private Sector fixed revenue • Problems created during fare
• Brings in competition revisions and if input costs increase

In practice, worldwide many cities have adopted net cost route systems (C2). This option often
replaces unrestricted private operation and requires the least level of public sector
administration and management. Gross cost systems may be suitable if strongly administered
systems are in place and revenue clearing systems exist. It can also assist inter-modal
coordination.

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Baseline Scenario 2: Government company does not enjoy a monopoly over bus
service provision

Figure 2 shows the basic options for the augmentation of bus operations under the condition that
no monopoly exists. In this situation, either the Regulatory Authority can issue permits to
operators or this can be facilitated by a Special Purpose Vehicle (SPV).

Baseline Scenario 2:
Government bus company does not exist 
or does not enjoy a monopoly 

OPTION D  OPTION E OPTION F 

Unregulated Entry  Regulatory Authority  Special Purpose Vehicle 
issues Permits  engages Private Sector 

OPTION F1 OPTION F2 
SPV tenders routes  SPV works in 
to Private Operators  partnership with 
Private Operators 

Figure 2 Options for Bus Service Improvements under Non‐monopoly Situation 

In many cities, the baseline condition allows unregulated entry of bus operators either with
quality control (issuance of permits from competent authority) or without quality control. In the
latter case, free entry to the public transport market is permitted (Option D). The main
disadvantage of this condition is that it attracts illegal operations and services concentrate only
on the most profitable routes. Private operators do not wish to risk investing in new or
additional buses as they fear a change in fares policy by the government or uneconomic fares
may well ruin their investments. However, leaving the pricing of the service to be determined by
market forces would be detrimental to a large section of society. Apart, from the fare structure,
the regulatory framework, the fiscal regime and exposure to a large number of enforcement
agencies are factors that keep private operators from investing in city buses. For such reasons,
most of the buses under this scenario are over-aged and are run to maximise profit, rather than
with a view to a professional, high quality service.

Under Option E, the Regulatory Authority directly issues permits at fixed rates, or the rates are
fixed by bidding. This option is currently practiced with Blue Line services in Delhi. Entry to
the public transport market is permitted, subject to the vehicles meeting specified standards for
public transport vehicles. This may be viewed as an improvement over unregulated entry, but
many of the problems of illegal and congested operations, as well as lack of investment, still
apply.

Under Option F, a Special Purpose Vehicle (SPV) involving all stakeholders is introduced and
granted authority to engage private operators to provide services. This SPV is required as the
regulator (Regional Transport Authority) does not usually have the expertise to plan and run the

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public transport system. The selection of private operators may be through a bidding process.
The SPV can tender routes and enter into contracts with private operators at rates fixed by
bidding (Option F1). This option is currently not practiced, but remains a possibility.

Alternatively, the SPV can work in partnership with private operators (Option F2) by making
collaborative agreements. In several cities, there is no State owned monopoly operator and the
services are provided by a group of private operators under permits from the Regional Transport
Authority. This leads to a lack of coordination among the operators. This problem could be
overcome if a government agency acts as a facilitator and provides certain value added services
to operators so that all come under its umbrella. In Indore, a Company owned by the local
authorities provides certain value added services and coordinates the operations of all the
private operators. This system also brings in private capital and the state agencies are not
required to invest any funds out of the public exchequer (See Annex 4 for the Indore model).
The table below provides a summary of the advantages and disadvantages of the above options.

Table 2 Advantages and Disadvantages of Bus Service Improvement Options 
under Non‐Monopoly Conditions 
Options Advantages Disadvantages
OPTION D • No investment on buses is • Tends to attracts illegal operations
Unregulated required to be made by the • Services concentrate only on the most
Entry Government profitable routes
• No single operator enjoys a
monopoly and this promotes
market competition
OPTION E • No investment on buses is • Competition may degenerate as
Regulatory required to be made by the operators start cutting corners
Authority issues Government • There would be no takers for
permits • The Government earns a steady uneconomical routes
stream of revenue • It becomes difficult to have monthly
• No single operator enjoys a or travel anywhere passes
monopoly and this promotes • Investment in infrastructure like bus
market competition stands has to be made by the
Government
OPTION F1 • No investment on buses is • Running on uneconomical routes
SPV tenders required to be made by the requires a complex subsidizing
routes to Private Government mechanism
Operators • Different stakeholders can be part • The SPV being a principal is
of SPV-ensures better coordination responsible for all acts of the private
and planning operator
• The SPV earns a steady stream of • Revision in prices of inputs poses
revenue complex problems of revision of
• The SPV and the Operator have a premium rates payable by the private
Principal-Agent relationship operators
OPTION F2 • No investment on buses is • Running on uneconomic routes
SPV works in required to be made by the requires a complex subsidy
partnership with Government mechanism
Private Operators • The SPV earns a steady stream of • The operators have to obtain permits
revenue from the RTA.
• Different stakeholders can be part • Revision in prices of inputs poses
of SPV-ensures better coordination complex problems of revision of
and planning premium rates payable by the
• The SPV and the Operator do not private operators
have a Principal-Agent • The system becomes complicated as
relationship the scale increases

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Annex 3  Choice of Fare Structure 
Introduction 
This Annex provides details of fare systems and an approach to determining the most
appropriate system, together with measures to counter fare evasion.

The fare systems described are listed below and described in the paragraphs that follow.

• Graduated fares;
• Flat fares;
• Zonal fares; and
• Time-based fares.

Graduated Fares 
Graduated fare systems (sometimes called ‘stage fares’) provide a closer association between
price and distance traveled than other systems, with the price per kilometre typically ‘tapering’
with distance. This aligns price with the cost of service provision and so strikes a balance
between consumer and producer interests. In this system, each route has a series of
distance-related ‘fare-stages’ and payment varies according to the number of ‘stages’ travelled.
Usually there is no facility for transfer tickets, with separate fares for each vehicle boarded.
However, unless the degree of taper is extreme, the price penalty on transit is relatively small.
Stage fares systems generate an extensive range of fares across a network and even an extensive
range of fares within one long route. As with other fare systems, the number of fares increases
when special conditions apply for particular user groups, such as students or pensioners.

The current structure, presently notified by the State Government (as prescribed under the
Motor Vehicles Act) is a stage fare system. The Figure below compares the fare rate for three
operators in India, i.e., Brihan Mumbai Electric Supply Transport Undertaking (BEST), Delhi
Transport Corporation (DTC), Bangalore Metropolitan Transport Corporation (BMTC).

14

12

10
BEST
Rs 8
DTC
6
BMTC
4

0
0 2. 5. 7. 10 13 15 18

Km

Figure 1 Comparative Analysis of Fares in Indian Cities 

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Flat Fares 
The advantage of a flat fares system is that it is easy to understand, as everybody pays the same
irrespective of distance travelled and transaction time tends to be shorter than with other
systems. In some cities, the same fare applies on all routes, whilst in others there are different
fares depending on route length. The latter approach can cause confusion on sections that are
common to two or more routes, as the fare depends on the route of the bus.

The disadvantage of a flat fares system is that it is unfair to short distance riders and therefore it
tends to discourage such riders. It can also be unfair to operators, who incur costs on long routes
that cannot be recovered. Under these circumstances, unrealistic fares control can lead to
operators breaking down routes into smaller sections, so that an additional fare can be charged;
the resultant fragmentation of the network can be observed for example in many sub-Saharan
cities. A further problem with a flat fares system is that it can result in a high price penalty for
interchange, unless the ticketing system provides onward validity of travel for transfers. This
problem increases with the size of the city, where networks become more complex, and
disadvantages many travellers who cannot travel directly to their destination.

From a route planning perspective, a flat fares system provides no meaningful information on
trip distances, unless conductors record ticket sales at selected points. In practice, intermediate
point sales records are not usually undertaken and planning has to be undertaken through
surveys.

Zonal Fares 
Zonal fare systems are a hybrid with features of both flat fare and fare-stage systems. They are
common in many cities worldwide with fares related to the number of zones crossed on a
journey. The main advantage of zonal fares is that, whilst fares are broadly related to distance
travelled, the range of fares is small and can be easily understood. The more zones crossed the
higher the fare.

The zones are typically concentric rings around the central business district that acts as the
attractor for the majority of commuter trips. However, some larger cities have travel nodes in
the suburbs and subdivide the outer zone radially, to recover the cost of the resulting longer trips.
A coarsely graduated fares system results, with the stages large geographic areas. In the pilot
corridor, which is largely segregated from the rest of the network, with only a few interchange
points, the latter approach is clearly preferable. Because zonal fares differ depending on the
number of zones crossed, tickets are for one, two or three zones etc. Short trips across a zonal
boundary may be penalized, unless a special short distance fare is available.

Zonal fares require care in siting the zonal boundaries. It is difficult to change boundaries once
established. Where a boundary is at, or close to an important traffic generator (major market,
hospital or college), there may be a marketing advantage in providing a zonal overlap for the
generator, so that trips to it from both zones are at the single-zone fare.

The attraction of zonal fares is that they enable some fare discrimination between long and short
distance travel, yet are not as complex as stage fares. However, there can be a high price penalty
for route interchange, unless the main interchanges are at zone boundaries with overlapping
zones. Changing to zonal fares requires high quality support and publicity to familiarise all
users with the system. This should include a simple map or schematic illustrating the zones and
what the fares between zones. Zone number should be indicated on each bus stop.

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Time‐Based Fares 
Time-based fare systems provide unlimited interchange within a set period from initial boarding
(typically 1 hour). This system may be used to address the problem of the onward validity of
tickets for journeys on two or more vehicles, to reduce the price penalty of an interchange. This
is only suitable for a densely served network, where connection times are short. More
commonly, taxi services may offer a time and distance based system, though it is rare for bus
services.

A time-based fares system requires on-board validation equipment, and synchronisation of

clocks across the fleet.

Fare System Selection 
To assess alternative fare systems, the following criteria may be considered.

Ease of User Understanding: To speed up fare transaction time and to minimise disputes
between staff and passengers, a simple system is preferred. However, whilst regular users will
quickly get used to the system, occasional passengers may not understand it. The simplest
system is a flat fare; zonal fares are well understood if the number of zones is limited to 3–4.

Ease of Fare Collection: The simpler the fare system, generally the easier the fare collection
process.

Selection of Fare Zones: A system with too many zones is less easy to use and understand. The
location of zone boundaries is important. Once boundaries are set, they are virtually fixed. The
strategy is to define boundaries that are reasonably equitable for all users, yet optimize revenue.

Fare Evasion and Revenue Protection 
Fare evasion is a common feature, even in sophisticated operating environments. London
Transport had advanced ticket issuing equipment and both overt and covert surveillance and
inspection systems, but until state-of-the-art smart-cards were introduced, some 5% of
passengers had some form of ticketing irregularity and 4% of potential revenue was lost.

Operators in developing countries typically consider that they lose 5–10% of potential urban bus
revenue to passenger fraud and staff peculation: a sum comparable to their operating profit. Less
technically proficient operators have identified revenue leakage of up to 50%.

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Annex 4  Domestic Case Studies of Good Practices 
BMTC Scheme of Hiring Buses 
Bangalore Metropolitan Transport Corporation (BMTC) took the major step of introducing
private capital and entrepreneurship in 1997. The first four BMTC buses ran in December 1997.
There are currently 102 buses, with applications for another 400 being processed. BMTC hires
buses under an open tender scheme and intends to hire 500 buses, 25% of the fleet. The buses
are hired on a first come, first served basis. The minimum number of buses an individual can
apply for is 10 and the maximum 40. Operators are offered a pre-determined rate per km and are
guaranteed a minimum of 250 kms a day. Since only new buses built under the supervision of
BMTC are allowed, a commitment is made to use the bus for five years. In order to reduce
operating risk and to ensure that the operator gets a fair return, the rate per kilometre is linked to
factors such as distance travelled per day, price of petrol etc. Any change in these automatically
changes the rate.

Advantages

1) The hiring of buses has resulted in substantial cost savings. The 102 hired buses plying
under BMTC colours generate savings of Rs 3 per km operated, vis-à-vis BMTC owned
buses. (Figure for 1999)
2) There is no investment in depots. To run an additional 102 buses at least one depot would
have been needed. The cost of each depot is about 1 crore. By opting for private buses Rs. 1
crore is the notional saving to the Corporation. There is also no investment in buses and
bodybuilding.
3) The Corporation is relieved of the burden of appointing operating staff, such as drivers,
mechanics and even some supervisory staff.
4) During emergencies such as strikes, a skeleton service can be provided by the private buses.

Disadvantages

1) There is scope for claiming unwarranted extra payments. Operators can claim money for
kilometres not run, by manipulating records.
2) Unauthorised trips may at times be made in the name of the STU.
3) Higher cancellations take place due to poor maintenance. Reasons are as follows.
a) No spare buses
b) Harassment by law enforcement agencies. Vehicles are detained for long periods
c) Lack of proper garage and repair facilities
d) Inexperience in the field of urban transportation.
4) Drivers are less amenable to control
5) Operators prefer light long routes to high density routes.
6) Operators are unable to provide spare vehicles in case of repairs/ breakdowns .

(Source: Hiring of Private Buses: A viable option. Indian Journal of Transport Mgmt. Vol. 23. No. 11. Nov. 1999.)

Indore Model of Public Private Partnership 
Indore City Transport Services Ltd. has been incorporated to operate and manage the public
transport system. The new SPV is ideally constituted as a Public Limited Company,

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incorporated under the Companies Act, 1956. The initial paid up capital of Rs. 25 lacs is being
held by the Indore Municipal Corporation and Indore Development Authority in equal
proportions. The main objects of the company are:

• To create specialized and effective regulatory agency to monitor cost effective and good
public transport services within the city of Indore, with private partnership.
• To establish and maintain a line of passenger coaches.
• To develop support systems for improving the transport infrastructure.

The company surveys and identifies routes. These routes are then tendered and private operators
offer a premium and the highest bidder is selected. The main sources of revenue are from the
fare box, advertising and passes. The fare box revenue goes to the private operator. The
advertising revenue is shared between the operator and the company and 80% of the pass
revenue goes to the operator. At present there are about 100 buses operating under the system.
Thus with no major investment from the government the system has proved to be self-sustaining.
The very fact that the operators are offering premiums on routes shows that running buses is a
profitable venture.

Other special features of the system are GPS-based vehicle tracking and bus information display
systems; a fully-outsourced bus maintenance system and a self financing and revenue generating
model for bus stops.
(Source: Extracted from the website of ICTSL: http://www.citybusindore.com/default.aspx)

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Annex 5  International Case Studies of Good Practice 
Introduction 
This Annex presents examples from four cities of international good practice in provision of
urban bus services. These are practical measures that are reasonably achievable by Indian cities
in the medium-term. Collectively, they provide a mix of framework, operational, integration and
quality measures, all of which are necessary to develop a good level of urban passenger
transport. The examples are summarized in Table 1.

Table 1 Examples of International Good Practice in Urban Bus Services 
City Country Good Practice Examples
Helsinki Finland • Competitive tendering for bus services
• Integrated ticketing
• Quality standards
• Bus priority
London UK • Network design and development
• Procurement of bus services
• Quality standards
• Integrated ticketing
Paris France • Bus priority (Mobilien)
• Passenger information
Singapore Singapore • Service design by operators within parameters set by the
authority
• Quality appraisal
• Integrated ticketing and information

These examples of good practice should be used in conjunction with the Guidelines for
improving Bus Services in Medium-Sized Indian Cities. The reader must note two important
points:

• It is the underlying principles of the measures which can be applied in the Indian context,
rather than specific values or technical details which may or may not be so relevant.
• The measures presented here are selected examples of the good practice in each of the cities.
For each city, there are also many other relevant items of good practice. The reader should
not presume that various measures are not implemented in a city just because it is not listed
in these pages. It is recommended that the interested reader uses the web links to learn more
about the full range of practice in the four cities.

Helsinki, Finland3 
Helsinki is the main city and capital of Finland. HKL is the municipal-owned commercial
enterprise which is responsible for providing local public transport within the city. It plans the
traffic, produces tram and metro traffic services, competitively tenders and purchases bus
services and takes care of the building and maintenance of the track network, the stops and
depots and is responsible for the economy of the public transport. The neighbouring areas of
Espoo, Vantaa and several small municipalities join with Helsinki City to form the Helsinki

3
References: HKL (Helsinki City transport) www.hkl.fi; YTV (Helsinki Metropolitan Area) www.ytv.fi; BEST
Benchmarking Network www.best2005.net.

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Metropolitan Area Council (YTV), which co-ordinates urban planning, infrastructure, passenger
transport and other inter-municipality services of common interest.

Four measures of good practice in Helsinki are presented:

• Competitive tendering for bus services

• Integrated ticketing
• Quality standards
• Bus priority

Competitive Tendering for Bus Services: Bus services in Helsinki City and Helsinki
Metropolitan Area are procured by HKL and YTV respectively, using competitive tendering to
select among interested bidders. Services had been provided by both public and private
operators under long-term contracts, and over the period 1994 to 2002, the entire network in
both areas was systematically converted to competitive tendering. The main features of the
system operated in both Helsinki City and Helsinki Metropolitan Area are:

• All services are planned by the transport authority (HKL or YTV), and the fine detail is
specified by the authority (route, timetable, vehicle type, ticketing, service quality)
• Available services are offered in ‘lots’ by competitive tender, typically once a year. Lots can
consist of individual routes or clusters of routes. The tendering cycle has been organised so
that about 20–30% of the total service is available each year. This is considered to give a
good balance between sufficient work to stimulate bidders, while keeping stability in the
system.
• Services are offered on a gross-cost basis - i.e. the operator is paid for providing the service
and all the revenue is passed to the authority.
• Contracts are normally for 5-year duration, with the possibility to extend by a further two
years
• The contract includes quality incentives, but also has penalties for below-standard
performance
• Buses and depots are provided by the operators
• Publicly-owned and private firms compete on an equal basis. The public company HKL has
succeeded to win about 55% of the services, the remainder mostly are operated by
international private firms.
• Finnish labour and market law provides protection to employees who would be affected
when the incumbent operator loses the contract to another operator.

The tendering system was implemented smoothly and is considered to have been successful.
The cost per vehicle-km was reduced by about 20% when competitive tendering was introduced.
Some of the cost saving has been reinvested in the form of additional services and increased
investment in vehicles and quality. Service quality and customer satisfaction have increased.

Integrated Ticketing: HKL has responsibility for fares/ticketing policy on all services in the
region. The Helsinki has a fully integrated fares and ticketing system, with tickets valid on all
modes and services. Season cards account for 78% of the travel, and 55% of the revenue. Value
tickets account for 10% of the travel, and 17% of the revenue. Single tickets account for 12% of
the tickets and 28% of the revenue.

Electronic Travel Cards (smart cards) are used in Helsinki. Customers can buy a personal Travel
Card at HKL service points. Both period and value can be loaded into the same Travel Card.

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For single trips, a flat fare tariff applies for Helsinki City (HKL area). Tickets can be bought
from vehicle drivers. It allows unlimited transfers among tram, metro, bus, commuter train and
ferry, for a specified period of time.

Quality Standards and Benchmarking: Helsinki measures service quality and customer
opinion in a structured way, and uses this information to guide the development of the services.
Helsinki is a founder member of the BEST Benchmarking Network, which also include
Barcelona, Berlin, Copenhagen, Geneva, Manchester, Oslo, Prague, Stockholm and Vienna.
From the perspective of Indian cities, there are three highly relevant aspects of the BEST
network’s activities:

• All of the participants measures service quality using 10 common parameters. Surveys are
carried out every year and the results are published both locally and internationally. The 10
parameters are listed below.
• The transport authorities of the participating cities benchmark against each other, and share
experience, know-how and methods. This helps each city to identify where it can improve,
to set realistic quality targets, and to develop practical means of achieving those targets.
This can be done by bilateral agreement, but Common Interest Groups are established for
themes of interest to many of the participants.
• The BEST network holds seminars, events and other activities for measurement, research
and other development. Non-members can also participate and either follow or learn from
the BEST participants.

The ten common quality parameters used within BEST are:

• Citizens’ Satisfaction
• Transport supply
• Reliability
• Information
• Comfort
• Staff Behaviour
• Personal Security and Safety
• Value for Money
• Social Image
• Customer Loyalty

Experience has shown that these parameters are truly international and reflect customer
concerns everywhere, even though the values will vary from one country to another.

Bus Priority: Helsinki has implemented bus priority measures to improve both the journey
speeds and the reliability for passengers, and to reduce the operating costs and inefficiencies for
the operating companies. This has been achieved by bus priority lanes, a small number of
bus-only streets, and by priority for buses at the traffic signals.

London UK4 
Transport for London (TfL) is the integrated body responsible for London’s transport system. Its
role is to implement the Mayor’s Transport Strategy for London and to manage the transport
services across the city, for which the Mayor has responsibility. TfL is responsible for both the
4
References: Transport for London www.tfl.gov.uk; Oyster Card (ticketing) https://oyster.tfl.gov.uk.

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planning and delivery of transport facilities, based on an integrated strategy on how people,
goods and services move around London.

TfL manages London’s buses, London Underground, Docklands Light Railway and London
Trams. It operates the integrated transport payment system (Oyster Card, see below), runs
London’s Congestion Charging Scheme, manages the 580 km network of main roads, all of
London’s 6,000 traffic lights, regulates the taxi and private hire trade, and operates the Transport
Operational command Unit jointly with the Metropolitan Police. Four measures of good practice
in London are presented:

• Network design and development

• Procurement of bus services
• Quality standards
• Integrated ticketing

Network design and development: London has more than 8,000 buses which carry about 1.8
billion passengers per year. Total annual supply was 458 million bus-kms in 2006/7 on about
700 route. TfL plans all of the routes, specifies the service levels and monitors the service
quality. TfL is also responsible for bus stations, bus stops and other support services.

Network design and planning is carried out in-house by TfL. It is done as a rolling program
across the network of 700 routes. Each year, this covers all routes in the next year’s tendering
program, plus associated routes, plus other parts of the network affected by major change, e.g.
Congestion Charging.

TfL has a formal consultation process bus service changes. Consultations are done when it is
proposed (i) to open new routes or to change the route the bus takes; (ii) to change the vehicle
type; (iii) to change the operational hours and/or frequencies of the service; or (iv) for
large-scale changes to the bus network. The details of consultations are posted on the TfL
website. The main purpose of this section is to hear bus users’ views and get their feedback
using questionnaires. Some decisions are made jointly with partners, such as the boroughs or
other community representatives. All feedback is considered in decision making. However, the
final plans must meet financial, legal, safety and technical limitations.

Procurement of bus services: Bus services in London are procured by TfL through competitive
tendering. Services are offered in ‘Tranches’. Due to the large volume of bus work available,
new tenders are offered approximately every month. Interested bidders must register with
London Bus Services Ltd. in order to take part in tenders and to receive tender documentation.
Selection is made according to price and quality criteria. The results of all tender competitions
are published on the TfL website, including the identity of the winner, the number of bids, the
value of the winning bid and, where relevant, the reason for not selecting the lowest cost bid.

Contracts are gross-cost with quality incentives which reward operators for good performance,
with deductions for poor performance. The standard contract is for five years.

Quality standards: TfL sets quality standards for bus services and monitors performance on all
routes and for all contracted operators. The primary concern for TfL is the reliability of the
service as it operates in the street, since they have adequate contractual measures to ensure
factors such as bus cleanliness and driver behavior.

TfL have decided to focus on two main perspectives:

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• For high-frequency services, the Average Excess Waiting Time shows how much longer
passengers have to wait compared to what was planned.
• For low-frequency services, the % of services that depart on time

On a periodic basis, a team of more than 100 part-time data collection staff record buses using
hand-held data-capture devices at designated locations throughout the TfL area. The data is
transmitted back to London Buses, where it is validated. Staff match the results against the
timetable and report on how much longer a passenger would have to wait than if the bus service
ran exactly as expected.

London Buses measures the performance of each route against minimum standards and
benchmarks. These vary between routes in order to reflect the different operating environments
in London. Factors taken into account include, for example, the number of major centres,
congested corridors and other traffic hotspots served, together with the length of the route. Past
performance is also taken into consideration when contracts are re-tendered.

Reports of all Quality of Service Indicators are placed in the public domain – in part for the
customers’ information, in part to acknowledge good performers and the shame of
below-standard performance. All results are published on the TfL website, including
performance by operator, by route and by sector of the city.

Integrated ticketing: Tariff setting and ticketing in London is the responsibility of TfL. In 1997,
TfL launched the PRESTIGE project to transform the ticketing system for all of London’s
transport modes. This was developed as a Private finance Initiative (PFI) in which a group of
private sector companies designed, developed, built, installed and support the integrated
ticketing system. A new generation of electronic ticket issuing machines was deployed on
London’s buses, all of London’s underground and rail stations were fitted with gates, and a new
generation of both self-service and ticket-office ticket issuing machines was installed at all
stations. In the background, extensive systems management, data collection and storage, and
reporting and analysis software were developed.

At the core of the system is the Oyster Card, a smart card that can contain time-based tickets,
stored value, and special user travel permits. The Oyster Card is integrated and interoperable
across all of the transport modes operating in the London area, and has an extensive network of
sales and value-loading points. Single tickets using Oyster are generally cheaper than cash
alternatives.

‘Daily price capping’ automatically calculates the cheapest fare for the collective journeys a
customer makes in a single day aim, to ensure that Oyster always charges the lowest
fare. Where it doesn’t, TfL will refund the difference. An ‘Auto top-up’ facility is available to
customers, this ensures the customers will not run out of pay-as-you-go credit by automatically
topping up the Oyster card whenever the balance falls below £5.

Paris, France5 
Passenger transport in the Greater Paris Area is organized, co-ordinated and funded by the
Societe de Transport en Ile de France (STIF). The main passenger transport services (metro,
regional rail, bus, tram) are operated by RATP, who also provided all of the customer-facing
5
References: Paris City www.paris.fr; STIF (Regional transport) www.stif-idf.fr; RATP (Paris Transport)
www.ratp.fr; Le Mobilien (Bus Priority Scheme) www.mobilien.paris.fr; English article at www.connectedcities.eu/
guide.mobilien.html.

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services including passenger information and ticketing. Commuter rail services are operated by
SNCF, the national rail company. There are also private bus companies operating in the Greater
Paris area. STIF determines who can operate in the Greater Paris Area and defines the general
operating conditions. RATP and SNCF operate under contract from STIF, which sets out the
service, quality and financial obligations of both sides. STIF also creates policy for ticketing and
tariff-setting, sets quality of service standards, invests in the infrastructure and other transport
improvements, and provides the operating subsidy. Two measures of good practice in Paris are
presented:

• Bus priority (Mobilien)

• Passenger information

Bus Priority (Mobilien): Bus services in Paris have traditionally received the least advantage,
with the large investments going to the Metro and the suburban rail systems. As a result, bus
services were a less attractive mode and suffered from traffic delays. The Urban Travel Plan for
Paris of 2000 recognised that a large number of urban and suburban trips are diffuse and are not
well served by the Metro and rail, and that only a greatly improved bus service could properly
serve this market.

The Le Mobilien project was developed to make this major improvement to the Paris urban and
suburban bus services. It consists of 150 bus lines, mostly already existing, and 150 multimodal
public transport hubs. The network has been designed as a network in its own right, consisting
of radial bus routes leading to the centre of Paris, linked by a system of orbital routes. The lines
also connect with the Metro and rail services, providing the third layer of the multi-modal
network.

A key feature of the Le Mobilien project is the extensive bus priority given to the services. It is
not full BRT, but it gives a much higher level of priority than standard bus lanes. The objective
is to improve the bus operating speeds by at least 20% and to raise the frequency of
services.

It invests in the running way infrastructure for the buses to improve the operating speed. Special
attention has been given to reducing delays at intersections. Buses approaching traffic lights are
given priority by adjustment of the traffic signal sequence.

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A high emphasis is given to the visual aspects. The most visible improvements are changes to
the street layout and the road profile. Attention is given to the need of other users, including the
waiting passengers, pedestrians and cyclists. Accessibility for all users is assured by low-floor
buses and by the design of pavements, crossing areas and waiting areas.

The first Mobilien route to come into service was line 38 in mid-2004. About 20 routes are
currently operational (end-2007), with the target to have more than 40 operational by end-2008.

Passenger Information: Extensive passenger information is provided for all modes through a
wide range of communication channels. All stations and most bus stops have route maps and
service schedules, as well as local area maps to help passengers find their local destination.

The RATP website has route planning facilities, interactive maps, timetables, and extensive
information on how to use the transport services. Customers can set their personal preferences
(e.g. least number of interchanges, quickest journey, cheapest fare). The route planner supports
information based on streets, landmarks and other locations. Help facilities are available to
explain to users how to use the service.

Real-time passenger information is provided on the web and at bus stops. Within the bus, the
next-stop is displayed and announcements are made automatically.

While a high use is made of technology, great attention is still given to the basic, traditional
information methods. Bus routes and destinations are clearly displayed on the buses, route
numbers are displayed at the stops. Logos, signs, and information are consistent, and are tested
extensively with users of all categories before being put into use. Since Paris is a major
international city with many visitors, information is provided in many languages as well as
French.

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Singapore6 
Transportation, transport infrastructure and traffic in the island-state of Singapore is planned,
managed and regulated under the Land Transport Authority (LTA), a statutory board under the
Ministry of Transport. Singapore has invested heavily in metro (MRT), but also has a substantial
bus supply. Bus services are regulated by the Public Transport Council (PTC) which was
established in 1987 as an independent regulator for the sector. Three measures of good practice
in Singapore are presented:

• Service design by operators within parameters set by the authority

• Quality appraisal
• Integrated ticketing and information

Service Design by Operators within Parameters set by the Authority: Virtually all of the
scheduled bus services are provided by two operating companies – SBS Transit and SMRT
Transit – both of which also have MRT operations. In effect, the two operators have uncontested
area franchises which they operate without subsidy. The issue facing the authorities is how to
manage the balance of private and public interest, and how to ensure that there is a satisfactory
level and quality of service without damaging the profitability of the bus operating companies.

The Public Transport Council has established “Quality of Service Standards”. These define the
minimum standard of service to be provided by the bus operating companies in the areas for
which they have been assigned operating rights. Operators may exceed the standards where they
feel there is commercial advantage – and they do so in many cases – but they are not permitted
to fall below the standard levels. The criteria which are controlled are:

1. Reliability 4) Availability
1.1 Scheduled bus trips operated on each 4.1 Access to any bus service
bus service 4.2 Provision of direct bus service
1.2 Scheduled headway (frequency) upon connections
departure at the bus interchanges and 4.3 Bus service operating hours
terminals 4.4 Bus service scheduled headways
1.3 Bus breakdown rate on all bus services (frequencies)

2) Loading 5) Integration
2.1 Bus loading during weekday peak 5.1 Bus service integration in HDB Towns
periods on each bus service
6) Information
3) Safety 6.1 Availability of up-to-date information
3.1 Accident rate on all bus services

The detailed criteria are presented in Annex 1 and are available on the PTC website.

Quality Appraisal: PTC analyses the service offer and arranges regular compliance audits and
spot checks to ensure that the bus operating companies comply with their obligations. The PTC
also intervenes when service lapses are detected, and directs the operators to take remedial
action to address them.
6
References: Transport Council www.ptc.gov.sg; TransitLink www.transitlink.com.sg; EasyLink www.ezlink.
com.sg; Land Transport Authority www.lta.gov.sg; SBS Transit Ltd. www.sbstransit.com.sg; SMRT Buses Ltd.
www.smrtbuses.com.sg.

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In 2004, the PTC initiated the first Bus Passenger Satisfaction Survey to better determine the
quality and expectation of bus services from the commuters’ viewpoint and to facilitate setting
of new quality of bus service standards. Similar surveys had since been conducted by the PTC
in 2005 and 2006. The PTC’s Bus Passenger Satisfaction Survey was replaced by the LTA’s
Public Transport Customer Satisfaction Survey. Commissioned by the LTA in November 2006,
this survey measures commuters’ satisfaction with public transport services and involves both
the public bus and rail services, measuring 10 service attributes (1 represents ‘not important’
and 10 represents ‘very important’). These attributes include:

i) General level of service; vi) Comfort;

ii) Waiting time; vii) Travel time;
iii) Reliability; viii) Staff customer service;
iv) Service information; ix) Fare and level of service; and
v) MRT Station/Bus interchange, bus-stop x) Safety protection and security.
accessibility/location;

Results of the survey have revealed that eight in 10 (84%) respondents were satisfied with bus
and rail services in Singapore. For bus commuters, accessibility/location, safety and security
and comfort were ranked as the top 3 service attributes that they were most satisfied with. The
PTC has taken these findings into account in the setting of the QoS standards for basic bus
services.

Integrated Ticketing and Information: The transport operators are independent commercial
firms. Full integration of the passenger transport is a goal of the LTA, so that the MRT and the
LRT combine their services to provide a single planned network. TransitLink is a
special-purpose organisation which was established to achieve this. It is owned by the transport
operating companies and is licensed by the PTC to provide ticketing services. Integration is
achieved by:

• Fare Integration: TransitLink partners with EZLink to provide the smart-card based
integrated ticketing, which allows common ticketing across modes and services, and
handles rebates among the operators for transfer trips. TransitLink is also the master load
agent of EZLink to manage all topping-up of value.
• Information Integration: TransitLink provides the comprehensive multi-mode passenger
information, in particular through the journey planner, timetables and service information
on the TransitLink website, through printed timetables, and through information panels at
bus stops and stations.
• Network Integration: TransitLink’s provides the central planning and coordination of the
bus network. The key criteria are to be complementary to the MRT and LRT systems, to
reduce wasteful duplication of services, and to improve the use of transport resources.

TransitLink has developed a Customer Charter to advise all customers of the ticket services
provided by TransitLink, and the service standards to which TransitLink is committed.

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Annex 6  Case Studies of IC Cards for Public Transport 
Many public transport entities all over the world have adopted IC card systems for fare
payments within their transport services. Examples include the OCTPUS Card in Hong Kong,
Touch’s Go Card in Malaysia, ex-link Card in Singapore, Easy Card in Taiwan, Oyster Card in
UK, and PASMO/Suica in Japan.

PASMO/Suica, Tokyo, Japan 
PASMO and Suica are prepaid public transport IC cards which provide various payment options
to users in the Tokyo Metropolitan Region, as well as benefiting the transport entities by
reducing the required management of the complicated fare collection, as well as delays of buses
caused by fare collection.

PASMO and Suica are different, but inter-changeable IC cards, provided by two separate
companies. In 2002, East Japan Railway Company introduced Suica for travel within their
railways as the first public transport IC card for multiple line travel in Japan. At first, this IC
card system was isolated for their railway services only and those of a few other public transport
entities, though this was later expanded. In 2004, PASMO Corporation was set up and funded
by 11 railway and 19 bus entities as a provider of common IC cards for their transport services.
By 2007, when PASMO IC card started to be issued, PASMO and Suica became popular IC
cards covering almost all public transport services in the Kanto area of Japan. As of April 2008,
27 railway entities, including metros, monorails, and heavy rails, and 52 bus entities have
introduced PASMO or Suica system as their IC card system. This high participation of major
public transport entities has contributed to the smooth travel of passengers among different
transport modes and reduced the time to purchase tickets by cash.

PASMO and Suica IC cards can be purchased at ticket machines or ticket offices of participating
entities. The primary price of one card is JPY 2000 (approximately US$20) including a deposit
of JPY 500, which is paid back when the user eventually returns the card. Once the user has
purchased the card, it can be re-charged at any time by purchasing additional credit at the ticket
machines up to maximum balance of JPY 20,000. It is also possible to purchase and store train
passes for one month or longer on the IC card at those ticket machines.

When the passenger approaches the railway gate entrance, he simply touches the ‘blue zone’ of
the gate machine with the IC card and the gate opens. This is repeated at the destination station
at the exit gate. A record of the station origin and destination is recorded on the card, so that the
correct charge is deducted from the card’s credit. The fare and remaining credit value is also
displayed on the gate machine. In the case of buses, a ticket machine with a coloured zone
touch-pad for the IC card is located next to the driver seat.

IC cards are available not only for public transport services, but also for general purchases at
vending machines and shops, which participate in the IC card system. Users can therefore store
credit on IC cards as an optional service and use them for various payments. A further option is
the installation of Suica on mobile phones, which allows users to need only their personal
mobile phone to pay for public transport services and other shopping.

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Ticket Machine for Gate Entrance with Blue Zone Touch-pad Purchasing Goods
Suica Card Suica System for Gate Entry using a Suica Card
Source: East Japan Railway Company

In addition to passengers, the public transport entities also obtain various benefits from the IC
card system, such as reduced congestion around ticket machines or reduced bus delays caused
by on-board cash fare collection. Another benefit is an increase in public transport users due to
the provision of convenient services with smooth transfers between different public transport
entities or different transport modes. The commercial activities of rail companies inside stations
are also increased due to the simplification of purchasing by transport IC cards.

All sales from PASMO card are collected by PASMO Corporation and divided into between the
individual participating public transport entities on the basis of fare revenue share. For this
procedure, PASMO Corporation records the origin and destination of each trip made by PASMO
users. The trips are considered as the shortest path connecting the origin and destination using
the participating transport entities. In the same way, East Japan Railway Company collects and
distributes the sales of Suica.

Although not all public transport services in the Kanto region of Japan have installed the
PASMO/Suica system, the number of participating entities and service lines have been steadily
increasing and will cover all services in this area within the near future. There are also plans for
PASMO/Suica to become operable with other IC systems in other areas in Japan.

Source: www.jreast.co.jp, East Japan Railway Company, www.pasmo.co.jp, PASMO Corporation

Oyster card, London, UK 
Oyster card is a prepaid public transport IC card used in London for all buses, tube lines, trams,
light rail, and some national rail services. The uniqueness of this card is to charge the lowest
fare for any trip within London compared to the cash fare. In addition, Oyster fares for some
services are set to give discounts to trips during off-peak period. Table 1 compares the Oyster
fare on buses with the cash single fare. Table 2 shows general Oyster and cash single fares on
the tube and light rail, and through to London Overground, including travel in Zone 1. This also
shows the discounts for Oyster card users during off-peak periods.

Cash fares are not accepted on buses in the Pay-Before-You-Board area in central London.
Therefore, passengers must buy a ticket from a roadside ticket machine before boarding if they
do not have an Oyster card or a valid ticket. This prevents the delay of buses caused by
on-board fare collection.

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Table 1 Oyster and Cash Single Fares on Buses in London 
Oyster Single Fares
16+, New Deal, and Bus and Cash Single Fares
Adult
Tram Discount
￡0.90 ￡0.45 ￡2.00
Note: Wheelchair users travel for free on buses and trams.
Source: Transport for London

Table 2 Comparison of Oyster and Cash Single Fares on Tube/DLR 
Oyster Single Fares
Zones Monday to Friday All other times Cash Single Fares
7:00-19:00 including holidays
Zone 1 only ￡1.50 ￡1.50 ￡4.00
Zones 1-2 ￡2.00 ￡1.50 ￡4.00
Zones 1-4 ￡2.50 ￡2.00 ￡4.00
Zones 1-6 ￡3.50 ￡2.00 ￡4.00
Zones 1-7 ￡4.50 ￡3.00 ￡5.50
Zones 1-9 ￡5.50 ￡3.00 ￡7.00
Note: Fares shown for Adult Zone 1 travel
Source: Transport for London

Though there are various other discount tickets available for public transport use in London,
including 1-day Travelcards, 1-day bus passes, and 7-Day and longer Travelcards, the system
ensures that Oyster cards always charge the lowest fare. It is also possible to store 7-day and
longer period travelcards and bus passes on an Oyster card as well as other tickets for travel
around London. These can be obtained online, or at ticket offices and ticket machines. Discount
fares are set during the off-peak period, which is effective in shifting trips from the congested
peak period to off-peak.

Oyster Card Machine Oyster Card Machine Oyster Card Machine

on Bus at Railway Gate in Shops
Source: Transport for London

Source:tfl.gov.uk, Transport for London

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Annex 7  Example Bus User Questionnaire 
The questionnaire presented below was used to derive feedback from bus users on the transport
environment with Jakarta, Indonesia. Such questionnaires should be designed and tailored to the
characteristics of the particular city and the one presented in this module should be referred as
an example only.

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