Ontario wants to “Modernize” intercity bus service……what the heck does that mean?

Hey, all you Ontario bus riders? Did you know the province is working on an update to the rules surrounding how intercity bus companies operate? If you didn’t, that’s ok, I didn’t either and I write about this stuff in my free time.

Back in the summer of 2016, the MTO released a document, entitled “Intercity Bus Modernization: Creating Opportunities and Connecting Ontario Communities”. Personally, when I first heard of this, I was ready to jump for joy: Finally, a government that wants to take action on the sorry state of bus service in the province! Reading further, it became clear that the changes being proposed could have profound effects on the bus riding public; both negative and positive. I’ll be breaking down my thoughts on the plan in this post and as always, you’re all welcome to fire up the conversation in comments.

Firstly, the plan provides a useful primer for anyone unfamiliar with how bus companies operate in Ontario right now. Any operator that wants to operate scheduled, intercity bus service on a given route needs to apply to the Ontario Highway Transport Board for a permit to service that route. However, an existing operator that also runs service on the same route can object to this and the Board will, in that case, need to adjudicate between existing permit holders and new entrants to the market. According to the province, this limits the number of bus companies that can service popular routes and is resulting in a lower quality of service for Ontarians. In my opinion, some of this is valid. The regulations have been in place for decades and result in some absurd situations. For example, an operator can significantly reduce or cease service on a particular route but can still hold the permit to operate on it and formally object to any other operator trying to offer competing or new service. So let’s say, for the sake of argument, that Megabus wanted to start an Owen Sound-Barrie run. On our map, you can see that Greyhound only operates one trip per day and Megabus may feel they can offer more frequent service. Greyhound would be legally able to delay the introduction of that service through objections. Those objections will require a hearing, which comes with a financial cost. Megabus may then decide to go through those hearings is not worth it and decide not to service the route, after all, leaving riders with the paltry service that exists today.

Of course, Megabus probably doesn’t want to service the route in any case but I can see the absurdity of this situation and the province is right to take aim at the regulatory system. However, it’s solution is where I feel the MTO has gone wrong. In the round of consultations leading up to the release of the intercity bus document, the bus industry predictably took aim at the regulations as the main reason for declining service. However, when we look at the other sets of responses (page 6 on the document) we can see that different groups want different things out of the bus system. For example, transit advocates apparently want to see more integration between travel modes, social service providers want buses to help vulnerable groups access healthcare/services and the more general riding public want more frequency, cheaper tickets, and a more comfy experience; among other things. Clearly, you can see that “more competition” is only one desire expressed by the many stakeholders.

However, this is exactly what the MTO is proposing when it ostensibly wants to “modernize” the passenger bus system in Ontario. The proposal outlined in the document outlines changes to the safety regulations, to allow for smaller vans to provide intercity services between rural communities and changing the permit system to allow for new entrants to given intercity markets. Finally, there is a reference to integration with local transit providers and the so-called “sharing economy”.

The plan also tries to address the concerns leveled by bus riders themselves, such as high fares and lack of service to some communities. However, the solutions to these issues are expected to flow from “competition” as, according to the MTO, these deficiencies are merely side effects of a lack of competition.

There are definitely some good things contained in this plan. In one of my earlier rants on this blog, I took aim at the silly location of Greyhound’s new Edmonton terminal, where, sandwiched between the Yellowhead Highway and an abandoned airport, it had absolutely no connection to local transit nor even a sidewalk. Due to Alberta removing controls on new entrants to intercity corridors, a company called Red Arrow also began to run service between Edmonton and Calgary. (as well as a few other Alberta communities EG. Fort McMurray) Having a competing bus company did lead to better service in this case, as Red Arrow still maintained a downtown terminal and thus, was a real option for bus riders traveling between Alberta’s biggest cities.

Also, changing the licenses necessary to allow smaller vehicles to transport passengers could offer benefits as well. Bus companies in the past would have a system called “cross-subsidization” where they would take profits from one operating division, say, parcel shipping, and use it to shore up passenger routes that were not making money. One of the reasons for route cuts is that operators now require divisions to be profitable on their own. According to Ontario’s plan, allowing for smaller vehicles would cut fuel and insurance costs for companies, perhaps allowing lower patronage routes to survive. This sounds logical, although I haven’t been able to find a case where a bus route facing cuts was replaced with a van, even in Alberta with its low regulation environment.

However, in spite of the very real benefits of removing market controls, on its own, it leaves much to be desired as an intercity bus strategy. Mostly, this is due to very optimistic assumptions about what will happen when market controls are removed. If we look at how intercity buses are evolving in Ontario, these assumptions begin to look pretty unrealistic.

Firstly, take a look at our map. Take a look at a few major city pairs, for example, Toronto-Montreal. What do you see? If we’ve shown things correctly, you see multiple operators serving those trips, in this case, both Greyhound and Megabus. What allowed this to happen, if there supposedly controls inhibiting glorious competition from happening? I can only guess here but I assume that under the existing regulation, Megabus applied for a permit to operate service on that corridor and the Highway Traffic Board approved the service, perhaps after the required hearings coming from a Greyhound objection. Now, this isn’t the case on every corridor, as Toronto-Ottawa remains a Greyhound route, but it seems that competition and new entrants to the bus market can be accommodated through the existing framework if a government put it’s mind to the task.

Furthermore, we see most major city pairs on the map having frequent service. Certainly, with multiple providers, this service can increase but even on the Greyhound only corridors, riders are hardly starved for service. Removing market controls might improve the situation somewhat, to give riders other options if the dominant operator makes a bonehead decision like moving their terminal to an inaccessible location, but is this the only strategy the MTO can pursue?

Similarly, we already see small vehicles being used as well. So far, these are largely run by “airporter” services, from southwestern Ontario communities to Pearson Airport but tickets can be purchased between towns as well and these buses can be thus used as scheduled intercity transport. I’m not sure exactly how they got their licenses but they do seem to be another example of how the existing regulations can be used well.

This is not to suggest that bus service between major cities is ideal, only that throwing open the market controls does not seem to be the only, nor the best, way to improve these services. In the consultations, bus riders themselves wanted access to more communities, with lower ticket prices and as much frequency as possible to high-quality terminals. All of these seem to be goals that can be met using other strategies.

Moving beyond major city pairs, what do we see? Lower frequencies, sometimes less than one trip per day, as well as threatened cuts on many routes. Typically, these are on routes deemed unprofitable and would have been cross-subsidized through other operations of the bus companies. For smaller communities at risk of losing their only public transport link to the rest of the province, what would throwing open the regulations do for them? The bus plan put forward by the province assumes that by doing so, there will be a rush of new market entrants providing service. There are a number of problems with this assumption. To begin with, as we have seen with the major intercity routes, the existing regulations can be used flexibly. The aiporter services are an example of this and there is no evidence that they would necessarily proliferate under a more lax system. Secondly, for rural services, the intercity bus policy direction completely ignores how driving is publicly subsidized and thus cut into the potential bus ridership. Actually, the document does acknowledge that “the intercity bus industry faces increased competition from cars” without mentioning that a lot of this car traffic benefits from “free” roads, highways and parking. With driving being so subsidized by the public, even allowing new market entrants does not mean such companies could turn a profit.

This is maybe the most damaging assumption of the provincial bus strategy. It blandly asserts the benefits of competition between bus companies but does not level the playing field between modes. This might be OK for major city pairs, where many already live car free/light existences for many reasons. However, even though many residents of smaller communities are also without cars (or may wish to travel without them) the lack of large populations, coupled with government subsidy towards roads and single autos, means that the bus will have a built-in disadvantage. This disadvantage won’t go away just because regulations are removed as the competition from artificially cheap driving is not addressed.

Last but not least, the strategy vaguely mentions the “sharing economy” as something that will affect local connections to intercity transport. Now, given that local connections were listed as important to many stakeholders in the consultations, it is important that all options be considered. However, myself and others have written about how an overblown reliance on Uber to offer “disruptive” innovation on the part of some public agencies is an excuse not to fund decent and liberating local transit. The same arguments apply here. Assuming that the sharing economy (whatever that actually is) will create a magic solution is not a realistic policy proposal. Instead, where local transit exists it needs to link up with intercity providers. If that means spending public money on a bus terminal, so passengers aren’t dumped off at a big box plaza on the edge of town, then so be it. It communities without local transit, this could mean well-lit areas for passengers to pick up taxis or locating the drop off points in walkable “main street” areas so riders could perhaps walk home or find a safe place to wait. Telling passengers to “just take an Uber” is a cop out and should not be done.

So what would we Dudes like to see in an intercity bus plan? We would like to see the needs and views of riders put first. This doesn’t mean we are against all forms of regulatory changes, as I mentioned before, more competition provided benefits on the Edmonton-Calgary route and could do the same for Ontario city pairs too.

However, the insistence that changing regulation will revitalize the intercity bus system as a whole is false and the province needs to consider how trying out a formal subsidy system for buses would work unless there is a plan to implement toll highways province-wide, which is so unlikely it’s not worth talking about. Subsidies are needed to ensure we have buses serving all communities, as opposed to a few high-frequency runs between major cities by a few companies. Subsidy looks like the only way to level the playing field between intercity buses and private autos as well as maintaining something resembling a network. Barring a complete overhaul of how we run buses, which is probably not politically feasible in the run-up to an election, this is the change we would like to see added to this bus strategy.

Hoping for the magic of the free market to provide more options for bus riders, especially while driving still receives a massive subsidy, is not a realistic way forward for the MTO. We hope to see more consultations so riders can hold the government’s feet to the fire and craft a solution that moves as far as possible towards a network of usable bus services, connected where possible to local transit.

As always, feel free to chime in on the comments!

 

 


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3 thoughts on “Ontario wants to “Modernize” intercity bus service……what the heck does that mean?

  1. Has there been an recent analysis of the ROI of subsidizing service to low population communities? I see articles and the resulting comments on this topic from time to time and that has always led me to wonder, should the provincial government be in this business at all? Is it a social service? Does this help business in the respective towns? Is this subsidization a drag on the Ontario economy and enabling mediocrity in our economy? What are the numbers?

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  2. Heya Arthur, thanks for joining the conversation!

    If I may turn your comment back on you a bit….. (in the spirit of debate of course) Has there been a recent analysis of the ROI of subsidizing road construction to low population communities? Should the provincial government be in this business (road construction/maintenance) at all?

    Personally, I hear calls like this from the political Right (not saying that you are necessarily, just that it is common on that side of the political spectrum) all the time: “why are we subsidizing buses/trains/public transit of all kinds.” Rarely do we see this same free market logic applied to car culture, which gains implicit and explicit subsidy from all levels of government.

    Quite frankly, all forms of transportation cost money to run and I can’t think of any that fully pay their way or operate without some form of subsidy. For example, airports are typically publicly run or when they are run by nonpublic entities, were often built by the public sector in the first place. Ditto for expressway systems, parking lots etc. So, to use your logic, all economies worldwide are mediocre as the public sector is somehow involved in transportation!

    I’m not saying you’re entirely wrong, just trying to widen the perspective here.

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  3. @Arthur Kebbers,

    Following up on the question “should the provincial government be in [the] business [of subsidizing service to low population communities]?”

    To be clear, as best I know, the Government of Ontario is not currently engaged in this business in southern Ontario. Yes, GO Transit receives a subsidy, but I wouldn’t consider any of their service area to be a coverage service for low population areas. I understand that Ontario Northland receives a subsidy, but most of the news I hear about @OntNorthland is about it being cut.

    For the for-profit bus companies that provide most of the intercity public transport outside of the GTA, I believe that the government’s involvement is only with respect to regulation – such that it may be. TriTAG drafted a post on this subject a few years ago that is consistent to Vincent’s post but with complementary details.

    http://www.tritag.ca/blog/2014/04/03/shedding-light-on-ontarios-intercity-bus-system/

    @Vincent,

    I get it that “rider subsidies should equal driver subsidies.” What I don’t see is *how* this should be done. Are you proposing that public money be poured into private, for-profit companies? It’s hard for me to imagine that this would provide a great supplemental value to the currently mediocre, privately-operated (but bizarrely-regulated), status quo.

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