1. table of contents -...

Chapter I Introduction

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CHAPTER-I

INTRODUCTION

Public Road Transport system for the movement of passengers over short and

medium distance is essentially based on bus services. It is a basic infrastructure and a

public utility service that meets the travel needs of the general public connected with work,

education, social purposes and entertainment purposes. Now buses even compete with the

Railways in some long distance routes with convenient and comfortable services

throughout day and night. Passenger road transport sector is dominated by publicly owned

State Road Transport Corporations or Undertakings in some states like Andhra Pradesh,

Maharashtra, Tamil Nadu, Karnataka, Gujarat, Utter Pradesh etc, while in some other

states like Kerala it is dominant only in certain areas of the state. About 80% of the land

passenger transport needs in India is met by the bus transport system (Kulkarni, 2000).

These transport undertakings as public enterprises are conceived and organized to function

as commercial enterprises engaged in economic activity involving huge outlays of public

investment. Social and economic objectives of providing efficient and economical

transportation facilities to the masses have been the prime consideration for bringing the

passenger road transportation system under the umbrella of the state which was sought to

be achieved by the Road Transport Corporation Act of 1950 of Indian Parliament which

paved the way for the nationalization of the passenger road transport to a large extent

leading to the formation of State Road Transport Undertakings or Corporations in almost

all States in India. In this context this is a case study of bus-based public passenger

transport system in Kerala.


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1.1. STATE ROAD TRANSPORT UNDERTAKINGS

Passenger road transport services in India are operated partly by public sector and

largely by private sector in the proportion of about 29% and 71 % respectively. The extent

of nationalisation of public passenger transport in different states also varies considerably

with the highest being about 70% in Maharashtra State. The public sector passenger road

transport system in India is operated by 71 passenger Road Transport Undertakings owning

1,13,370 buses with individual fleet strength ranging from 5 to 17000 buses among these

organisations under single management(Kulkarni, 1998).

There are twenty bus transport undertakings having more than 1000 buses in their

Fleet, as on 31-3-1997. The largest among these are ‘Maharashtra State Road Transport

Corporation’ and ‘Andhra Pradesh State Transport corporation’ with about 17000 buses

each. The organizational form for public sector bus transport also varies from state to state;

the most common being that of the ‘statutory corporation’ form under the provisions of

the Road Transport Corporation Act, 1950. There are 21 such corporations, while 31

undertakings are formed under Indian Companies Act, 1956. Urban bus transport systems

are being operated by 10 Local Municipal Councils and the remaining 9 undertakings as

part of government departments.

Based on the passenger-kilometer produced, the STUs are classified as in the

Table 1.1, which gives an idea of the operations and productivity of different transport

undertakings and their ranking on the basis of output produced (Singh, 2000).


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TABLE – 1.1

Classification of Passenger Road Transport Undertakings

( Mean values/annum during 1983-‘84 to‘96-’97)

Category

Name of STU/

RTC

Pass-Km (out

put) produced

(million/annum)

Bus Km

million

Route

Km

(‘000)

Ranking

(output

based)

Large Andhra Pradesh 52725 1310 735 1

“ Maharashtra 49430 1243 1040 2

Medium Karnataka 33047 809 670 3

“ Gujarat 31444 788 879 4

“ Uttar Pradesh 20641 567 456 5

Small Kerala 12999 284 181 6

“ Rajasthan 12668 323 355 7

“ MadhyaPradesh 7945 210 258 8

“ Punjab S.T. 7853 199 166 9

( Source: Singh S.K, 2000)

1.2. KERALA STATE ROAD TRANSPORT CORPORATION

Erstwhile princely-states like Hyderabad and Travancore had been the fore-runners

of the process of nationalization even before the RTC Act. In 1937 Travancore

Government had nationalized the major road transport route and formed the State

Transport Department following the pattern of the London Transport System, under the

leadership of Mr. Salter, brought from London Passenger Transport Board as the


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Superintendent. The Transport Department started operations in 1937 with 60 imported

23-seater bus chasses and indigenously built bus bodies(www.ksrtc.com). Eventually this

department was reshaped into the present KSRTC in 1965 to give a commercial orientation

as laid down in the RTC Act. It was then considered essential to provide a cost-efficient

service to maintain a self-supporting passenger transport system without much reliance on

state subsidy.

In 2001 the RTC in Kerala had a fleet strength of about 4300 buses of which

about 3430 were running and operating about 4126 schedules. It had about one-third of

the share of total passenger transport in the state and the remaining was with the private

operators. Generally the performance of KSRTC has not been quite satisfactory in terms

of commercial and service yardstick. The accumulated losses of KSRTC stood at about

Rs.80 Crores, on a paid-up capital of Rs. 43 crores as of 1983-‘84, while the operating loss

alone in 2000-‘01 was Rs160 crores against a paid-up capital of Rs 122.69 crores (Annual

Report of KSRTC, 2000-01). The financial losses are written off by government regularly

to facilitate commercial standing of the Corporation and to enable it to borrow from

financial institutions for buying new buses and other capital expenditure.

In this aspect, most of the RTCs in India, except a very few undertakings like

those in Karnataka, U.P, Orissa and Sikkim are operating on profit as their cost of

operations was lower than their revenues from operations(CIRT,2006), while the

operational revenues of KSRTC was only about 86% of the cost of operations in 2000-01

(Annual Report, KSRTC, 2000-01).

The total revenues of all the State Transport Corporations during 1996-‘97 was

about Rs.100.88 billion, with traffic revenues of Rs.95.94 billion and other revenues of


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Rs.4.94 billion. The total cost inclusive of personnel, materials, taxes, interest,

depreciation and others came to Rs. 115.02 billion during that year. All the STCs/STUs

together had incurred a net loss of Rs. 14.14 billion (Rs. 1.70 billion, before taxes) during

the above year. This is about Rs 2.66 billion in the year 2005-’06. Karnataka, U.P, Orissa,

Sikkim and Bangalore Metro: Transport Corporations are the only ones which had made

profits in 2005-06 (CIRT, Pune,2006). The overall cost recovery index is only 88% for all

the STUs, put together. The undertakings mainly operating in rural areas could recover up

to 91% of their total costs, while for urban area STUs it is 69% and for those in hill

regions it is 76% of their total costs. The operating cost consists of material cost (fuel,

tyres, spares etc.) and the personnel cost i.e. towards salary, wages, fringe benefits, pension

and superannuation-payments. Thus, the overall operating costs of State Transport

Undertakings constituted 82% of their total revenues. The overall spending on their

‘personnel’ alone went up to 46% of their total operational income at the aggregate level

for those operating mainly in rural areas while in urban transport undertakings, it is as high

as 70% in 1996-97(Kulkarni,1998). In Kerala, this figure is around 51.64% in 2000-01.

The personnel cost index with reference to the base year 1987-88, had gone up by more

than 250% over a period of 10 years. Similarly the spending on ‘materials’ went up to

36% of total revenues. The total financial burden to State Transport Undertakings on

various concessions and subsidies provided to different classes in the society during 1996-

97 worked out to be about Rs. 400 crores (Kulkarni 1998).

A study by Singh S.K.(2000 b) shows that that the cost curves of STUs follow a

‘U-shaped’ pattern with a pronounced absence of any ‘economy of scale’. Evidence of

higher costs in a non-competitive scenario( Mishra et.al,1991) together with decreasing

returns to scale suggests that breaking up of larger undertakings into smaller ones to cater


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to different market segments and to smaller geographic markets may help to operate these

more economically and efficiently. Efficiency wise smaller undertakings are seen to be

better than larger ones and the relative efficiency and size of the undertakings is indicative

of an inverse relationship. Further the longer the route length per bus, the better the

productivity and a higher level of utilisation of buses and their capacity leads to higher

productivity. Management efficiency also plays an important part in this especially on the

personnel(HRM) and materials side with the result that the undertakings with better supply

side management achieving better efficiency(Singh 2000) in operations.

Passenger Bus Transport nationalization process is only partial in Kerala. The

share of KSRTC fleet in the State’s total stage carriages is only about one-third as

mentioned. But KSRTC has dominance in the districts of Trivandrum, Quilon, Alleppy,

Wynad and Kottayam. In the Districts of Palghat, Kozhikode, Malappuram, Cannanore

(Kannur) and Kasargode, private bus operators are dominant. However, in the long

distance routes, i.e., route lengths of about 150 KM and more KSRTC has a fair monopoly

in the State, with their Fast Passenger and Express Services, which have a higher fare

structure than the moffusil or Ordinary services. Because of poor financial performance

and the general dissatisfaction at the quality of the services of KS RTC, the extension of

nationalization to more routes in the States in the near future appears to be difficult.

Generally the public also do not view this proposition favorably, presumably because of

the lower quality of service rendered by the KSRTC compared to others.

. In an appraisal of the Planning Commission , the performance of Kerala RTC is

far behind, with Haryana and Tamil Nadu-RTC undertakings(combined) standing at the

top in Fleet Utilisation, load factor and vehicle productivity(1983). The statistics on this

indicate that the operational costs are comparatively high for Kerala RTC as per their


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annual reports published (1997-2001). This is partly attributed to the gruelling road

conditions in the State with uneven surfaces and pot-holes during most months of the year.

There is dense population on either side of most of the roads, as villages and urban areas

are almost in a single continuum in the state. The top surface of the roads are mostly rough

and bumpy because of flood-damages occurring due to five to six months of heavy rains

every year. All these affect the operational conditions and consequently the smooth

running of the buses are fairly difficult on most of the roads in Kerala, especially along the

district and lower grade roads. The age of the fleet is also a significant contributor to the

high operational costs. Of the 4413 Buses as on March 2001, about 50% were more than

5years old which required higher maintenance costs apart from the huge capital investment

to replace them in a phased and planned manner.

This appears to be an all-pervasive phenomenon in this country and the situation in

many of the developing and developed countries are not different, affecting the Public

Passenger Bus Transport systems adversely. None of the 43 major transport undertakings

in Europe recovered their entire cost of operations from their ticket revenues(Rao,1979).

The percentage of expenditures met from traffic revenues ranged from 13% in Italy to 70%

in the UK. In the USA also the urban public transport undertakings are in similar shape

though the environs and objectives in these countries are different from India. For example

in Europe and North America, the main objective is to reduce the use of car by

encouraging the use of public bus transit systems(Wright,2000). Thus in the case of

transport undertakings in the countries abroad, the reasons for lower revenues may be

attributable to factors which are not exactly comparable to the conditions prevailing in this

country. In this perspective, this study focuses on the bus-based passenger road transport


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system specific to Kerala and is a case study focusing on two representative routes in the

central part of the state.

1.3. TAMIL NADU STATE TRANSPORT CORPORATION (CBE-DIVISION) LTD.

The public Transport Corporations in Tamil Nadu had been showing a better

performance over the years, in spite of the non-hiking of the bus fares commensurate with

frequent hikes in Diesel prices in the past few years and as such Tamil Nadu has been

having comparatively lower bus fares. Among all the STUs in Tamil Nadu state, which

once had reached 21 nos., the Transport Corporation based at Coimbatore (formerly CTC;

now TNSTC-Coimbatore Division) has been showing consistently good performance. In

Tamil Nadu the public passenger transport undertakings were directly under the state

Government till 1972, which were then reorganized into various Corporations under the

Companies Act. Thus C.T.C(Cheran Transport Corporation Ltd, Coimbatore) was

incorporated in February 1972 and started operations from March same year with 110

buses taken over from ABT Ltd., Pollachi. Subsequently it took over 120 buses from 19

private operators in and around Coimbatore, Erode and Nilgiris in 1973. C.T.C. was

bifurcated and Jeeva Transport Corporation Ltd, with 1204 buses, for Erode district was

formed in 1983 and again in 1994 when Mahakavi Bharathiar Transport corporation was

formed with 1438 buses. Thus by 1997 there were about 21 Bus Transport undertakings,

all formed under the Companies Act, in TN state. In order to reduce the overheads of so

many corporations and to reduce the losses which had been mounting year after year these

were reorganised into 7 transport undertakings* in 1997 with the generic name of TN State

Transport Corporation and the name of the Head-Quarters city in brackets, except for

‘State Express Transport Corporation Ltd’. and ‘Chennai Metropolitan Transport

Corporation Ltd. The former runs long distance ‘Express’ and ‘Luxury’ bus services and


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the latter the City/Urban services in Chennai(formerly Madras). Thus C.T.C was renamed

as ‘Tamil Nadu State Transport Corporation,(Coimbatore Division) Ltd.’ or TNSTC(CBE

Dn.). But this was popularly being referred to as ‘CTC’ in the subsequent few years also.

Hence ‘TNSTC-CBE Dn.’ and ‘CTC’ are interchangeably mentioned in this study.

During 2000-01, TNSTC(CBE Dn.)(formerly, Cheran Transport Corporation Ltd or CTC)

had almost 1600 buses and had serviced the Districts of Coimbatore and Nilgiris and also

the City of Coimbatore. In 2007 it had about 2800 buses, 39 Branches and about 17000

employees and had carried about 29 lakh passengers/day. The erstwhile CTC had been

consistently paying dividend to Government and higher bonus to its employees in the

1980’s. It had been named the best State Transport Undertaking in India in

1980(www.tnstccbe.com). TNSTC(CBE Dn.) has also been running some services to their

neighbouring districts of Palghat, Trichur, Cannanore, Wynad and Kozhikode (Calicut) in

Kerala on a reciprocal arrangement. The average age of their fleet in 2000-01 was 4.78

years and the fleet utilization was 95%, while that of KSRTC was 79%. The

manpower/bus was 6.86 for TNSTC-CBE. (*The other TN State Transport undertakings

are: TNSTC(Villupuram),TNSTC(Madurai), TNSTC(Salem), TNSTC(Kumbakonam),

SETC and Chennai MTC).

1.4 STATEMENT OF THE PROBLEM

1.4.1 Nature of Public Passenger Bus Services

Passenger road transport services having been only partially nationalized in

Kerala, that too gradually to the extent of about one-third of the total routes, private bus

operators are dominant in the northern and central districts. There is a broad-gauge

railway line along the whole length of the state which attracts a good share of the

passenger traffic as the fare is lower, apart from the additional advantage of more comfort


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and speed. Total nationalization of the bus routes in the state is not a possibility in the near

future as the Planning Commission and Central Government have been emphasizing on

giving priority for improving the efficiency of the existing network of bus services for

striking a healthy balance between the operating costs and revenues to keep the public

transport undertakings commercially viable. Partial nationalization is assigned to be one

of the major causes of dismal economic performance of KSRTC as it has to face

competition from other operators in about two-thirds of the total routes in Kerala.

1.4.2 Competition

Competition is an important factor which affects the performance and revenues

of KSRTC. As nationalization is only partial and as there are other operators, KSRTC

faces competition in the routes studied in this. Private operators with better fleet and

flexibility attract a major share of the passenger traffic even though the fare structure is the

same and the number of buses and trips are regulated by the State Transport Authority and

the Regional Transport Authority as per the statute. This in turn affects the load factor and

revenues of the KSRTC adversely which is stated to be the major reason for their heavy

losses in some routes. But from the users’ or consumers’ point of view, competition is

good as it enables them to choose the service which is perceived as comparatively better

and which gives the most value to their money and more satisfaction. In fact, competition

should help the operators to identify potential opportunities before them and to develop

and to offer a better product(service) with the maximum value to the passengers and the

operator alike, satisfying the needs and wants of the user/market that it serves.


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1.4.3 Marketing Orientation in Management

Marketing is essentially the analysis, implementation and control of carefully

formulated programmes designed to bring about voluntary exchanges of values with target

markets for the purpose of achieving organisational objectives(Kotler,1977). This relies

heavily on designing the organization’s ‘offering’ in terms of the ‘needs and desires’ of the

‘target market’; here, the passengers and the public at large. The basic reason why any

firm/organisation should be committed to formal marketing principles is that it will enable

the organisation to be more effective in achieving its objectives.

Organisations in a free society depend upon voluntary exchanges of values to

accomplish their objectives. A marketing orientation in management helps in that: as it is

the technical knowledge about how various marketing variables perform separately and

together in influencing the target market of the organization which it aims to service.

Marketing orientation gives the organisation the skills for regulating the level, timing and

character of demand of a product, service, place or idea and it equips the organization to

face different demand situations which it might encounter, such as conversional marketing,

stimulational marketing, developmental marketing, re-marketing, synchro-marketing,

maintenance marketing, de-marketing and counter-marketing and to plan accordingly as

each demand situation calls for a particular set of psychological and behavioural concepts

and marketing strategies to cope with (Kotler,1977).

Thus a company offering a product or service in such an environment will have

to tailor-make its ‘offerings’ in such a way that it satisfies the needs and wants of the

consumer or user of that ‘offering’. For this, the pre-requisite is to understand the

users/customers and what they are looking for in the product or service to satisfy their

needs and wants. This will require a systematic assessment and analysis of the


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consumers/users comprising the target market, by monitoring and understanding the

perceptions, attitudes and impressions of the consumer towards the service on a continuing

basis to help in initiating appropriate management actions to match with the changing

market scenario. This requires that the organisation be responsive to the needs and desires

of their target market and implements the ‘marketing concept’ in its management process

which essentially is ‘marketing orientation’. The ‘Marketing Concept’ holds that the key to

achieving organisational goals consists in determining the needs and wants of target

markets and delivering the desired satisfaction more effectively and efficiently than

competitors (Kotler,1990).

1.4.4 Responsiveness of the Organisation: .

Marketing orientation implies that the organisation is willing to design its

‘Product/Service/Offerings’ in terms of the needs and desires of the target market. Thus it

responds to the customers’ needs and desires. An organisation which is termed a ‘highly

responsive’ organisation is that which shows concern and interest in learning about the

needs, perceptions, preferences and satisfaction of its customers and relies on systematic

information collecting-procedures and in sifting incoming information and taking positive

steps wherever necessary to adjust its products/services/offerings and organisational

policies and procedures. On the other hand, an ‘unresponsive’ organisation is one which

does not bother to do anything to measure the needs, perceptions, preferences or

satisfaction of its constituent public with the changes in time and the environment in which

it is functioning and it becomes increasingly maladapted to its environment. A responsive

organisation grows and prospers with time as it is able to meet the needs of its customers

with the changes in time, demand and preferences (Kotler,1977,’90). So the ‘degree of

responsiveness’ is an indicator of how much an organisation is marketing-oriented or


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adopts a marketing approach in the management of its activities which in turn determines

the effectiveness of that organisation. The service (product) of the transport undertakings

is not one that can be stored over a period of time and sold later. If it is not used as soon as

it is made available, it is left out and it is irretrievably lost that is, it has only ‘time value’.

Hence the success of any undertaking depends on how well it is able to judge the

requirements of its ‘Product’ (service) in terms of time, place and volume(frequency). This

brings out the necessity for planning the transport operations such that it will be customer-

oriented and market-responsive. Such an undertaking which is highly responsive can be

termed a ‘marketing oriented organisation’ or following the current usage, as ‘Market

Oriented’ as proposed by Kohli & Joworski (1990) and Narver & Slater(1990),

emphasising on ‘market intelligence’ and ‘dissemination’ of the same across the

departments of the organisation and their ‘responsiveness’ to customers’ needs and

preferences which is elaborated further in the following chapter.

1.4.5 Assessing the Service Features, Responsiveness and Profile of the service

Passenger Road Transport having been nationalized only partially in Kerala,

there is the option of other modes to the travelling public in a large geographic area of the

state, to some extent. This presents a competitive market scenario to KSRTC and other

bus service operators as well. The studies which were done and recommendations made

had centered mostly on the operational aspects of bus services. From the initial exploratory

studies it was apparent that the public in the state at large were not satisfied with the

services of KSRTC and so they tended to prefer other modes where ever such options are

available as in the central and northern districts of Kerala. So this scenario needs to be

looked at in a comprehensive manner, taking the KSRTC, its publics, its competitors and

external environment into consideration.


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In any enterprise, firm or organisation, marketing is intended to achieve certain

corporate objectives such as the targeted level of sales and profitability (Kotler,1977) by:

a. Identifying and defining the needs and wants of customers

b. Translating these requirements into product and service specifications, by

c. The formation and implementation of demand influencing policies and delivering

the resulting products and services to the firm’s various markets.

Thus the organization’s marketing programme needs to be based upon the information

about its present and potential(future) market, the number, type and location of customers

involved, the economic, social, competitive and other environmental factors which

influence their responses and choice behaviour. Viewed in this perspective, the questions

that arise are whether a ‘marketing approach’ or ‘market orientation’ as is currently being

termed would enable KSRTC to respond to the needs and wants of the travelling public

and whether it would lead to the development of a management strategy and organisational

adaptation aligned with the consumers’ needs, and be sensitive to the opportunities and

threats posed by the external environment and whether this would help KSRTC to become

effective, efficient and commercially viable organisation. Thus the main research question

is whether the gauging of the perceptions about and the rating of the bus services of

KSRTC in terms of the service attributes or features vis a vis the other services in the

routes would help to identify the weak and vulnerable aspects of the services of the

KSRTC and whether that can guide the management actions required to be adopted to

improve the services and the RTC as a whole by such adoption of a marketing oriented

management approach in the KSRTC.


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1.5. OBJECTIVES OF THIS STUDY

The background of this research study is given in the preceding sections and the

main focus is on evaluating and comparing the bus services of KSRTC with the services of

other operators along selected routes in Kerala. So this study involves, first the

identification of the major features or attributes of the passenger bus service as perceived

by the travellers/passengers and the ‘determinant’ nature of these features in the actual

selection of a particular service for their travel, and then the ‘rating’ of different bus

services including that of KSRTC on these attributes/features by the passengers which

would in turn provide a ‘profile’ of these services/operators on these service parameters as

perceived by the passengers in each of the bus route studied. The Bus passengers as a

macro group are heterogeneous in their travel needs and the perceptions and needs of

different sub-groups or segments of this group say, short-distance travellers, non-peak hour

travellers, work-related travellers, non-work related travellers and the like may be different

and their desired level of service attributes or features might accordingly be different. As

such the image of different services and their rating by different segments of the travellers

and consequently the service profiles evolving out of this might accordingly vary. The

level of importance that the travellers attach to the major service features and the ratings of

the competing bus services on these parameters might thus indicate the performance of

different operators in the routes in terms of load factor, passenger revenues, etc., which

could be corroborated with the actual operating data of these services. This in turn will

help to suggest the management approach and actions needed from the operators for

improving their services, wherever and in whatever aspects such improvement is found

necessary. In this perspective the objectives of this research study are:

1. To identify the major services attributes or service features that the passengers look

for and evaluate in a public bus transport service when they decide to travel.


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2. To assess the degree of responsiveness of KSRTC to the passengers’ needs and

perceptions on the above attributes and parameters and the comparative

responsiveness of other competing services like TNSTC(Coimbatore Division)

(formerly Cheran Transport Corporation or CTC) and Private operators in the same

routes.

3. To suggest guidelines within the constraints of prevailing fare structure for

improving the responsiveness of KSRTC and for better efficiency and management

effectiveness, taking this as a case study of Kerala.

The scope of this study is limited to two routes in the central part of Kerala State, viz.

Palghat-Coimbatore which is an inter-state route of length 51 Km and Palghat-Calicut an

intra-state route of 140 Km passing through three districts in central Kerala. These routes

have been selected after an exploratory research and study covering four routes in the

initial stage. The data collection is mainly from passenger surveys along these routes,

supplemented by secondary data from published annual reports and records and registers.

The main limitation of this study is that this had to be limited to two routes of the

state and so the analysis and inferences had to be based on that only. This could have been

done deeper and more exhaustively covering more routes and with a larger volume of data

but for the resource and the time-constraints of an academic work. However there is scope

for further research in this on the aspects of determinance of service attributes and

‘segmentation’ of the passenger market utilizing cluster analysis and multivariate

techniques, more exhaustively.


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1.6. THE RESEARCH QUESTIONS & HYPOTHESES

1.6.1 The Research Questions

In this back ground and in the theoretical premises of this study as described

above the research questions which arise here are:

Research Question 1:

How a service-offering like ‘passenger bus transport’, unlike a physical

‘product-offering’ is selected by the customers when there are competing services and

multiple choices available to the passengers in a given route/sector in a state like

Kerala, where bus-route nationalization is only about one-third of the total and along

which Kerala State Transport Corporation, other state RTCs and private firms operate

bus services ? In such a scenario what probably are the criteria considered by the

passengers when selecting a particular bus service for his/her travel and what are the

attributes/features of the bus service which is being evaluated or considered by the

passengers and whether all attributes are considered equally important or in varying

degrees of importance in making such a choice of service, and to what extent these

attributes are ‘determinant’ or ‘truly decisive’ in the bus or operator-choice decision of

the passengers? In such a situation will some of the service attributes be more

important than other attributes which could be different for different bus routes?

Research Question: 2

The needs, desires and expectations of the bus passengers about the service

attributes influence their decision to select a particular operator or service for their travel, it

is assumed. The ability, readiness and the management actions of different service-

operators to meet these needs, desires and expectations of the passengers is reflected in the


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manner the operators respond to these. In that case, can the ‘degree of responsiveness’ of

different service operators to the customers’ needs, wants and desires be gauged and can

this measure be used to indicate the physical performance of the operators in the particular

route and as an aid to effective management of the firm with a marketing orientation?

Proposition: 1

Public bus transport services may have some service features or attributes which

a passenger may consider and evaluate while making a decision on selecting a bus

service for his/her trip where such an option is available. Among numerous such

attributes which may be there, some may be more important than others and some may

be ‘determinant’ attributes in arriving at decision about the choice of a service by the

passengers. Hence there may exist an ‘ideal’ or ‘desired’ level of importance for each

of these service attribute to the passengers.

Proposition: 2

Though the bus passengers as a whole group may have some characteristics in

common, it may be possible to segment that macro market into smaller sub-groups or

market segments with fairly homogenous characteristics based on some criterion like

nature of travel, usage rate, distance travelled, purpose of travel, the day and the time

of travel and the like and these market segments may have different degrees of

importance for each of the service features, the evaluation of which may influence

their decision in the selection of a particular bus service for their trip. This in turn may

have implications for the bus service operators in designing their service-offerings and

formulating their management strategies.


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Proposition : 3

Once the major service attributes or features of the passenger bus service in a

particular sector or route are identified based on their importance to the passengers and

their determinant nature in selecting a particular service for travel and the responsiveness

of different operators to these are gauged and an appropriate index is developed, it can be

used to indicate(and predict) the actual performance of different operators in operational

and financial terms like load factor, revenues etc. In other words the responsiveness as

reflected by this Index may indicate the comparative performance of different operators in

each route.

Proposition - 4

Once it is understood what are the service features or attributes which the bus

passengers as customers of the service consider and evaluate when deciding on the

selection of a bus service or bus operator for travel and the level of importance of each of

the major attributes and their determinant nature in the bus-choice decision, the

operational and management strategies for improving the responsiveness of a particular

operator could be developed with reference to the other operators by a systematic

collection and the dissemination of market intelligence across the departments in the

organisation and with appropriate management actions.

Proposition – 5

Once the ‘responsiveness index’ or the indicator for each operator for each segment

of passengers is computed, some possible correlation of this index to the choice of the

service of a bus service/operator for travel by each segment of the travellers/passengers

could be established, whereby it could be a predictor of the physical performance of the

operator like the load factor, revenues etc, which in turn would be a management tool for


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the bus operator/undertaking in managing their bus-fleet operations to achieve better load

factors and revenues.

Proposition - 6

Once it is understood what are the service features or attributes which the present or

potential passengers of the bus service consider and evaluate while deciding on their

particular choice of a bus/operator for travel and the level of importance of each the major

service features/attributes and their determinant nature in the bus/operator-choice decision,

it can lead one to develop guidelines for the management and operational strategies for

improving the responsiveness of an operator with reference to other operators by

continuous and systematic collection and dissemination of market intelligence followed by

appropriate actions for effective management of the undertaking.

1.6.2 . Hypotheses:

From the above research questions and propositions as explained above, the

following hypotheses are formulated for testing of their statistical significance:

Hypothesis - 1

There is significant difference between the bus passengers travelling along the route,

Palghat – Coimbatore( PGT- CBE) which is an inter-state medium distance route and

Palghat-Calicut ( PGT-CLT) which is an intra-state long distance route, in terms of the

desired level of importance of major service attributes or features identified. .

Hypothesis -- 2

For the bus passengers travelling along both the routes ( PGT-CBE & PGT-CLT)

‘Convenient timing’ is more important than ‘Economy in fare’.


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Hypothesis – 3

For the passengers travelling along both the routes ( PGT-CBE & PGT-CLT)

‘Punctuality’ is more important than ‘Travel Comfort’.

Hypothesis – 4

For the bus passengers travelling along both the routes, ‘Safety of travel’ is more

important than ‘Convenient Timing’.

Hypothesis – 5

For the bus passengers travelling along both the routes, ‘Safety of travel’ is more

important than ‘Speed’.

Hypothesis – 6 .

The ‘determinant’(truly decisive) nature of the major service-attributes identified are

different for Palghat-Coimbatore(inter-state) and Palghat-Calicut(intra- state) routes. That

is the non-determinant nature of the service attributes are also different for these route.

Hypothesis – 7

The bus passengers as an aggregate and heterogeneous market may be sub-divided

into more homogenous market segments based on the nature of their travel and travel

purposes, and as such the desired level of the importance of the major service attributes

identified varies significantly between these segments of bus travellers along different

routes. .

Hypothesis – 8

There is significant difference in the service attributes between different passenger-

clusters identified in the Cluster Analysis done for segmentation in the inter-state route of

Palghat –Coimbatore.

Hypothesis – 9


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There is significant difference in the service attributes between the passenger

clusters identified in the Cluster Analysis done for segmentation in the intra-state route of

Palghat-Calicut. .

1.7. NEED FOR THIS STUDY

The earlier researches and studies done on State Transport Undertakings (STUs)

had been mainly on the operational aspects of the undertakings, looking from the

‘product’ angle such as vehicle utilisation, load factor, planning of the fleet and routes,

vehicle productivity and various associated costs. The Kerala State Transport Corporation

had been working in an oligopolistic environment, where there were other operators also in

two-thirds of the total bus routes in the state who were faring much better than KSRTC in

terms of profit. The average load factor was fairly high for KSRTC at 86.8% as per the

latest Annual Report(2000-01) published. But this was composed of a very high load

factor of 100 to 102% in the City and Moffusil services in Trivandrum and of some fully

nationalized sectors like Wynad where it was 90% to 92%. In Palakkad it was about 80%

while it was as low as 73% in some sectors, where there was competition from private

operators as in the northern and central districts. The cost of operations was high and the

net loss in 2000-01 was Rs. 160 crores i.e., about Rs 4.66 lakh per vehicle on road and in

use then.

Reducing the operating costs or increasing the fares might prove to be a short

term solution only, as seen from earlier experiences. The expenses on tyres and fuel

cannot be brought down very much for the bad condition of the roads, topography and

climatic conditions unique to this state as explained in the preceding pages.

Reducing the ratio of “employees per bus” also is not feasible in a single stroke,

because of political and trade union pressures. Though the employee/bus figure of about

6.8 as given in the Annual report 2000-01 compares well with the national average, it


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appears that this does not take into account the contract/casual drivers/conductors, termed

as ‘Empanelled workers’ who man a good number of services. The hiking of the fares,

which is regularly done after a considerable hike in diesel prices, causes severe

repercussions and public resistance, as the quality of the services of the KSRTC is

generally regarded not up to public expectations and the travelling public at large are

mostly not satisfied with the services, while the private operators generally give better

service at the same and at lower fares. The result is that KSRTC incurs heavy losses every

year. But state government is not able to pump in more funds, due to the financial crunch

faced by government. Further, for availing institutional finance it is necessary that the

KSRTC performs better on sound commercial principles to improve the economic

viability of the corporation.

So a long-term solution is necessary for ensuring stability and growth of the

corporation, which needs a comprehensive look at the problems, taking the organisation,

its markets, consumers and the external environment. That is the Corporation needs to be

highly responsive to the needs of the market it serves. This needs a marketing orientation

of the organisation, which in turn will contribute much to make the RTC commercially

viable, as brought out in some research studies already done on similar industries/sectors

and enterprises as detailed in the literature survey in the following chapter.

For achieving this, the bus operator/organisation should have adequate data and

information(market intelligence) about the ‘market’ it services in terms of the requirements

of its main constituents i.e. the travelling public. The passengers travelling along a

certain route in a bus might be expecting a certain ‘desired level of service’ to satisfy their

needs in terms of the features or attributes of the bus service. This information could be

systematically gathered by studying different types of passengers and their needs and


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desires and how much importance they attach to each of these service attributes and which

of these attributes are “determinant” or truly decisive in preferring a particular bus service

over the others. This information and the passengers’ perceptions of the Bus Service as

regards the service features can lead to an assessment of the “Perceived Image” and also

the “Service Profile” of the operators. This would in turn help to evolve the management-

strategy and approach needed to adapt the service to the needs of the market. Hence this

research has been done with focus on ‘marketing approach’ to Passenger Road Transport

Management.

In contrast to most of the earlier research studies on Passenger Road Transport

undertakings, done focusing on operational parameters, efficiency and operations planning,

this study has focused on the management aspects of the passenger transport services

considering the consumers of the services or the passengers, their perceptions, needs,

wants and desires looking through the users’ angle and current level of responsiveness

of different operators to these. So this study essentially centres on the principles of

‘marketing management’ as applied to Passenger Bus Transport services as a “Product” of

the transport service operators in a competitive environment, where other similar services

are available for the user( from competitors) of these services other than from the RTC.

This study places emphasis on service features/attributes of Passenger Transport

Service and the users’/passengers’ perceptions about the services vis a vis their

expectations and desires. Thus it is imperative that this covers competing services of

similar nature in the same routes where a meaningful comparison can be made of the

different operators based on some dominant service attributes and parameters. Hence the

bus routes for this study were selected in such a way that there are similar services

available to the passengers from different operators. The public passenger bus transport

DENDOGRAM ( CLUSTER ANALAYSIS - FOR SEGMENTATION ANALYSIS )


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service that is well organized and dominant in the state, with the largest network is that

of KSRTC, a public sector enterprise and being a statutory corporation, directly under the

control of state government. A similar public passenger transport corporation in the

neighbouring TN state and also operating in the routes selected for this study is TNSTC-

CBE Division (formerly Cheran Transport Corporation-CTC) based at Coimbatore, which

also operates services in some routes in Kerala on reciprocal arrangement. Except in the

southern-most districts in Kerala, the private operators are dominant especially in the

central and northern districts of Kerala, whose services are regulated by law as regards

routes, fare structure, number of buses permitted and their trips and trip-timings. Hence

this study has been done along the bus routes in the districts of Palghat and

Kozhikode(Calicut) where all the above three services are operating.

Thus this study has been done along the routes of 1) Palghat – Coimbatore and 2)

Palghat – Calicut, after conducting initial exploratory and pilot surveys of passengers in

some other routes also. As this study leans heavily on the services features/attributes of

bus services and the passengers’ perception and rating of the bus operators on these

service parameters, the emphasis was on primary data generation by survey of the

passengers on board the buses of different operators at actual travelling conditions to

develop the service image/profiles of the operators including KSRTC. The secondary data

available from records and publications on their operations, revenues, expenditure etc.,

have also been collected to assess their physical performance to compare, corroborate and

analyze the data for inferring the implications on the management of the services, with

reference to the service-image as perceived by the users, using the principles of ‘marketing

of services’.


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1.8. CONTRIBUTIONS OF THIS STUDY

The principal contribution of this research study is the application of the concept of

‘Responsiveness’ of organisations to the ‘needs and wants of the users’ and to identify the

parameters for improvement of the service of a Public Passenger Transport Organisation.

This will help the organisation to initiate appropriate management action for improving the

service to achieve the functional goals of the organisation, in terms of income, stability and

growth. This is thus the application of marketing principles to the management of

Passenger Road Transport service.

An Index viz. ‘Responsiveness Index’ of the Transport Service has been developed

from this study, which is a quick indicator of the responsiveness of an operator of the

service to the needs of the passengers, which is turn has a direct bearing on the revenues

and profitability of the organisation. This index can be used by the Transport industry as an

indicator of the quality of a bus service and in turn, its load factor and revenues

An approach for segmentation of the market for passenger transport services has been

developed, adaptable to the conditions prevailing here. Segmentation is the process of

identifying the homogenous sub groups of users of similar characteristics of a product or

service from the heterogeneous macro or whole group having diverse use patterns and user

characteristics.

For projecting the image or profile of the service, the concept of “Semantic

Differential” is applied here, based on rating of the service features/attributes of different

operators of the service, by the user. This method of developing the “Service Profile” is

applied, perhaps for the first time for the passenger transport services in indigenous

conditions.


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It is also illustrated in this study how the above Indices/ indicators and approaches

which are basically user/customer-oriented, can be applied for efficient, effective and

profitable management of a Passenger Bus Transport organisation, at all levels and spheres

of its activities, unlike earlier studies which had focused mostly on physical and financial

parameters of operations. So this study is unique in that it focuses on the users’ needs,

wants and desires and the organization’s responsiveness as a management tool for better

management of the public passenger transport organisations.

1.9 ORGANISATION OF THE THESIS

This is organized into 7 chapter in total with the first giving introduction to the work,

general background, objectives, scope and limiations and the contributions of this work.

Chapter 2 explores the available literature on the topic with the details of the studies

already done. Chapter 3 describes the methodology of research which mainly consisted of

the collection of primary data by passenger survey in the buses in the selected routes and

secondary data collection from the records and reports of the RTCs.

Chapter 4 is devoted to the analysis of data, both primary and secondary data, and

the analysis has been done route wise and passenger segment wise also. Chapter 5

contains the method of computing Responsiveness Index of the services / operators and

plotting their service profile on a Semantic Differential Scale.

Chapter 6 discusses the inferences from the analysis in detail passenger segment wise

and the also determinance analysis of the service attributes. This also contains the

guidelines developed for the effective management with a marketing orientation.

Chapter 7 is the concluding chapter outlining the contribution of this study, its

limitations and suggestions for the future research in certain areas.

1. table of contents -...

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