It was both a surprise and disappointment to read in the newspapers that the low-key competition between RapidPenang and older bus companies had changed into ‘bus wars’. The fact that this is occurring reflects that the government still has a poor approach to public transportation planning and operations.
We are often told that competition is healthy in the market economy. In theory, competition leads to lower prices and better services. However, anyone who is involved in public transportation and public transit knows that unregulated competition is the worst enemy of good service. Bus operators compete to offer lower prices but sacrifice the quality of services, an absolute necessity.
When competition leads to hyper-competition, bad things happen. Proper service is forgotten, schedules ignored, maintenance deferred to save money and poorly trained, inexperienced drivers are hired. All these combine to reduce the quality of service and drive customers away from the markets. This starts a downwards spiral that will lead to more reductions in service quality and more customers turning to private transportation. This is what happened in Penang, other Malaysian cities and other countries as well.
The occurrence of price wars show that the government still does not understand how to regulate public transportation. In December 2005, I told a traffic engineer in the Municipal Council of Penang Island (MPPP) that the new "hub and spoke" system would not work without strong regulation of bus operators. The new system failed soon after its April 1, 2006 introduction becoming a April Fool's joke played on Penang residents.
When the idea of a government-run operator Bus Negeri Pulau Pinang and RapidPenang was first mooted in late 2006, I wrote that the best way to fix the problems in Penang was to create a local transportation authority to regulate services. It is clear that adding a government-subsidised operator to a competitive market would not solve the problems of Penang, just as it has not solved problems in Kuala Lumpur.
Even before RapidPenang began operations in August 2007 there was already a great deal of grumbling about the competition and perceptions of unfairness. I wrote then that the government should regulate the market to give space to the other companies instead of allowing competition because it would only lead to “bus wars” which would damage the industry once again. Merely five months after RapidPenang started operations, we can see the results already.
I do not understand why, after all this experience, the government does not step in and regulate the market properly. Have they not learned from history, from the numerous examples in Penang, other cities in Malaysia and across the world? It is relatively simple to understand - unregulated competition will ultimately destroy public transit. Proper, regulated competition leads to improved service.
Once again, I would like to call on the government to start regulating public transit and public transportation properly. Begin by setting up local authorities in Kuala Lumpur and Penang to plan routes that need to be served and the levels of service needed. Cancel all existing permits to private companies and let them apply for new, government-regulated routes. Under this system, instead of competing with each other for customers, these bus companies compete to offer the best service.
If they fail to offer good service, they will lose routes to other companies. If subsidies are necessary to main proper levels of service (as they often are) then the government can provide proper subsidies where needed, by subsidising routes rather than companies.
Under this system, the customer benefits the most and ‘bus wars’ will be a thing of the past.
