Service contracting is the future

(Today’s column is the plenary speech prepared by me and Toix Cerna, spokesman for Komyut and a member of the Move As One Coalition for the First Policy Dialogue on Service Contracting organized and hosted by the University of Asia and the Pacific last March 23, 2023.)

AS a commuter, I dream of public transport that is sufficient, predictable, affordable and safe — with service standards I can rely on. If Philippine cities can offer their citizens public transport with these good attributes, it would raise the quality of life for millions of Filipinos and make our country vastly more attractive as a tourism and investment destination.

Every public transport system should aspire to give its customers a pleasant and comfortable travel experience, not something that is agonizing or stressful. Unfortunately, many urban Filipinos today face three to five hours of difficult and unpleasant travel daily to get to and from their destinations. In any society, this is unacceptable, unsustainable and wasteful. This problem deserves the priority attention of the highest levels of government and a meaningful response.

We already know the dire consequences for all Filipinos if we

fail to act. Being inside a car or on a motorcycle is not pleasant when roads are congested. Already, major Philippine cities suffer from heavy motor vehicle traffic with only 6 percent of Filipino households owning cars. If more people shift to using their own motor vehicles, it will only magnify the ongoing transportation crisis.

The only sustainable solution is to raise the level of service of public transport and improve the attractiveness of walking and cycling while discouraging private motor vehicle use — so that people will leave their motor vehicles at home. How do we achieve this transformation of our mobility environment? What are some of the essential features that commuters would like to see in a public transport service?

The supply of public transport and regularity of service should be such that anyone can be certain of securing a ride without prolonged waiting, even during rush hour. A commuter should be able to rely on a fixed interval between vehicles or on an announced schedule. If, for example, vehicles serving a route arrive every five to 10 minutes with regularity, there will be no need to memorize a schedule — you know that the next jeep or bus will be coming around at any moment. The supply of public transit should be adjusted regularly to respond to observed and projected demand so that commuters do not experience long waits or heavy crowding. Fares should be set at levels that are affordable for the vast majority of Filipinos.

Safety is a paramount consideration in the operation of every public transport service. Drivers and other transport industry workers deserve stable jobs and compensation, with fixed salaries, ample benefits and humane working conditions that enable them to have good health and to give their families a dignified life. To ensure safe and responsible driving behavior, driver compensation should not be linked to the number of passengers served or to fare collection. Drivers should not have to work excessively long hours to make a decent living. Drivers shouldn’t be competing for passengers on the road or rushing to get to the next stop ahead of other public utility vehicles. Nor should they be lingering at stations, waiting until the vehicle is full.

Service contracting can help to make these commuter-friendly attributes standard features of our public transport services. All over the world, where you see attractive, convenient and reliable public transportation, there is likely to be a service contracting arrangement behind it. In places like London and Singapore, service contracting is the preferred modality for organizing public transport. This is because service contacting, done right, motivates and enables transport operators to deliver high quality services.

Under long-term contracts, usually five to 10 years, private operators are paid to deliver services according to an agreed service plan and measurable standards. The government defines the transport service standards that need to be provided to meet commuter needs such as universally accessible vehicles, regular and frequent service and 24-hour operation, among others.

Accordingly, transport operators receive a stable and predictable flow of income. Operators are insulated either fully or partially from fluctuations in ridership and fare revenues. Outputs are monitored using objective measures of performance and transport operators are subject to incentives (bonuses and penalties) to encourage compliance with service standards. Service contracts can also be an attractive “carrot” to encourage vehicle owners and drivers to consolidate under a single legal entity to enable them to meet a common service plan.

As a side benefit, service contracting can provide the stability and continuity that operators need in order to make meaningful longterm investments. A transport operator with a five- to 10-year contract and a steady income stream gains additional creditworthiness for financing fleet replacement or additional vehicles.

Without a doubt, service contracting is one of the tools we need to apply to realize the vision of the Department of Transportation for a Philippine transport industry that meets global standards. Many reforms will be needed in order to achieve the kind of public transportation that commuters need and deserve. Antiquated and outdated policies and practices should be replaced by more practical and appropriate ones. We have no choice: to preserve the status quo is to invite disaster.