Dublin Bus Massacre, yes "MASSACRE"

maxheadroom wrote:

Not necessarily. The franchise model works quite well in Helsinki, for example.

Sunday Business Post wrote:

Finnish expert warns on Dublin bus plan

19/09/04 00:00

By Gerard Kiely
A leading transport expert from Finland has warned against the privatisation of the bus market in Dublin, saying a similar move destroyed the market in the Finnish capital, Helsinki.

Ravi Mehta, operations manager of Finland's largest private bus operator, Koiviston Auto, said: ``From the Helsinki experience, it's a bad idea to liberalise the bus licence system in Dublin.''

Competition was aimed at increasing the number of bus operators in Helsinki. However, it has reduced the number of companies in the market, according to Mehta.

``When we began franchising competition in the mid-1990s we had 20 operators and now we have five, with just one major operator.



"So you can say we are back to square one,'' he said. ``We are left with large conglomerates that are only interested in dominating the market. They are all in major financial difficulties and are waiting for the other companies to die off.''

The government plans to franchise a quarter of the bus routes in Dublin to private operators. Mehta warned that the government must be careful not to assume that competition will make the situation any better. ``It's easy to destroy a system, but it's difficult to build it up,'' he said.

He said Helsinki was an important example of how the franchise system of bus services can go wrong. Large companies, such as Goldman Sachs, Vivendi and the Swedish Jonsson Corporation, all won licences to run bus services in Helsinki in the last three years.

``We know the disadvantages of liberalisation of the bus market in Helsinki. Companies are leaving because they can't dominate the market,'' Mehta said.

Bus licences have been run under a franchise system in Helsinki for the last ten years in the Scandinavian city with companies tendering for three-year licences.

Mehta said: ``Indigenous bus operators can't bid for these franchises because the price of the tender has been driven down so low there is no room for profit.

``If you liberalise the Dublin market, you will get an international conglomerate bidding which doesn't want 20 per cent of the market but 100 per cent and it will replace Irish companies.

``It is likely that we will be down to two companies soon in Helsinki and that means they can dictate prices. In one case, a licence has changed hands three times in three years.''

Liberalisation of the bus market removes the barriers to entry to the sector. However, Mehta said unrestricted competition would adversely affect the quality of service.

``Short-term licences have created a huge problem with personnel who have no commitment to the job because they face the risk of losing their job every year,'' he said.