pricing & fare fixation in public...
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PRESENTATION ON
PRICING & FARE FIXATION IN PUBLICTRANSPORT
BMTC - A CASE STUDY
By
Anjum Parwez, IASManaging DirectorBMTC , Bangalore
4th December 2013
• It was first public transportcompany in the princely stateof Mysore, established on 31st
Jan 1940 as BangaloreTransport Company.
• On 1.10.1957, it was Mergedin to Mysore GovernmentRoad Transport Department.
• Became an operating Divisionof Mysore State RoadTransport Corporation on 1st
August 1961, as BTS.
• Formed as an independentTransport Corporation on 15th
August 1997
Bus FleetTotal Growth: 86%Annual GrowthRate: 8.05%
Daily Service KMTotal Growth: 46%Annual GrowthRate: 7.97%
Since 2004 –
Overall Increase: 64.7%
Annual Rate of Growth: 6.4%
Own 6587 Buses
Operate 6441 Bus Schedules
Perform 13.50 Lakh Service kms.
Make 83327 Bus Trips
Earn Rs 5.00 Crore
Carry 49 Lakh Passengers
Bus Depots 39
Bus Stations 50
Manpower 35090
Bus Staff Ratio 5.2
As on August 2013
Distance in Kms Fare per passenger Distance in Kms Fare per passenger
2.00 5.00 22.00 20.004.00 9.00 24.00 21.006.00 12.00 26.00 21.008.00 15.00 28.00 21.00
10.00 16.00 30.00 21.0012.00 16.00 32.00 22.0014.00 17.00 34.00 22.0016.00 18.00 36.00 22.0018.00 20.00 38.00 23.0020.00 20.00 40.00 23.00
Present Fare Structure for Non A/C Service
Distance in Kms Fare per passengerper Km Distance in Kms Fare per passenger
per Km
2.00 2.50 22.00 0.91
4.00 2.25 24.00 0.88
6.00 2.00 26.00 0.81
8.00 1.88 28.00 0.75
10.00 1.60 30.00 0.70
12.00 1.33 32.00 0.69
14.00 1.21 34.00 0.65
16.00 1.13 36.00 0.61
18.00 1.11 38.00 0.61
20.00 1.00 40.00 0.58
Present Fare Structure for Non A/C Service Contd…
Present Fare Structure for Non A/C Service Contd…
Distance in Kms BMTC APSRTC2.00 5.00 6.004.00 9.00 7.006.00 12.00 8.008.00 15.00 9.00
10.00 16.00 10.0012.00 16.00 11.0014.00 17.00 13.0016.00 18.00 14.0018.00 20.00 15.0020.00 20.00 16.0022.00 20.00 17.0024.00 21.00 18.0026.00 21.00 19.0028.00 21.00 20.0030.00 21.00 21.0032.00 22.00 22.0034.00 22.00 23.0036.00 22.00 24.0038.00 23.00 25.0040.00 23.00 26.00
Comparison of Fare for Non A/C Service in BMTC and APSRTC
Distance in Kms Fare per passenger Distance in Kms Fare per passenger
2.00 10.00 26.00 70.004.00 15.00 28.00 80.006.00 30.00 30.00 80.008.00 40.00 32.00 80.00
10.00 45.00 34.00 90.0012.00 50.00 36.00 90.0014.00 50.00 38.00 90.0016.00 60.00 40.00 100.0018.00 60.00 42.00 100.0020.00 60.00 44.00 100.0022.00 70.00 46.00 100.0024.00 70.00 48.00 110.00
Present Fare Structure for A/C Service
Distance in Kms Fare per passengerper Km Distance in Kms Fare per passenger
per Km
2.00 5.00 26.00 2.69
4.00 3.75 28.00 2.86
6.00 5.00 30.00 2.67
8.00 5.00 32.00 2.50
10.00 4.50 34.00 2.65
12.00 4.17 36.00 2.50
14.00 3.57 38.00 2.37
16.00 3.75 40.00 2.50
18.00 3.33 42.00 2.38
20.00 3.00 44.00 2.27
22.00 3.18 46.00 2.17
24.00 2.92 48.00 2.29
Present Fare Structure for A/C Service Contd…
Present Fare Structure for A/C Service Contd…
Distance in Kms Fare Per Passenger PerKm for A/C Buses
Fare Per Passenger PerKm for Non A/C Buses
A/C to Non A/C Ratio ofFare
2.00 5.00 2.50 2.004.00 3.75 2.25 1.676.00 5.00 2.00 2.508.00 5.00 1.88 2.67
10.00 4.50 1.60 2.8112.00 4.17 1.33 3.1314.00 3.57 1.21 2.9416.00 3.75 1.13 3.3318.00 3.33 1.11 3.0020.00 3.00 1.00 3.0022.00 3.18 0.91 3.5024.00 2.92 0.88 3.3326.00 2.69 0.81 3.3328.00 2.86 0.75 3.8130.00 2.67 0.70 3.8132.00 2.50 0.69 3.6434.00 2.65 0.65 4.0936.00 2.50 0.61 4.0938.00 2.37 0.61 3.9140.00 2.50 0.58 4.35
Ratio of A/C to Non A/C Fare
Ratio of A/C to Non A/C Fare
Expenditure Component for the year 2012-13
Growth of Cost Component (In Crore)
Cost of Capital
Date Price Date Price
25-05-2011 45.36 01-04-2013 52.99
01-07-2011 45.36 17-04-2013 53.07
04-01-2012 44.88 11-05-2013 54.18
25-07-2012 44.12 01-06-2013 54.80
14-09-2012 50.25 01-07-2013 54.77
01-01-2013 50.36 01-08-2013 55.46
21-01-2013 52.06 01-09-2013 56.07
16-02-2013 52.62 01-10-2013 57.06
23-03-2013 53.17 01-11-2013 57.67
Increase in Diesel Prices (In Rs.)
• In a span of two years diesel prices has increased by 30.70%• It is increasing almost every month
Period Staff CostJan-Mar 2011 123.85
Apr-June 2011 124.48
Jul-Sept 2011 131.28
Oct-Dec 2011 148.99
Jan-Mar 2012 146.64
Apr-June 2012 149.17
Jul-Sept 2012 164.73
Oct-Dec 2012 193.28
Jan-Mar 2013 198.03
Apr-June 2013 200.39
Jul-Sept 2013 206.85
Increase in Staff Cost (In Crore)
• In a span of two years staff cost has increased by 59.10%
-74.43
-36.44-12.02
14.67
94.81
172.07
261.13
460.12
560.02587.55
625.21
675.56 663.04
515.09
-200
-100
0
100
200
300
400
500
600
700
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Accumulated Loss / ProfitRs. Crore
2000-011999-00 2001-02
• Increase in the Price of Diesel– F(DPA) = (F-D)+(RPD/BPD) x D) Where,– F(DPA) is the revised fare in terms of Paise per passenger km.– D is the earlier diesel cost per passenger km.– RPD is the revised price of Diesel.– BPD is the earlier basic price of the Diesel.
• Increase of Dearness Allowances rate– FR = F+(CPKM(L)/CPKM)x P x F/100 Where,– F is the current fare per passenger km.– FR is Revised Fare Paise per passenger km.– CPKM is Total cost per km.– CPKM(L) is staff cost per km.– P is the % increase in the staff cost due to D A increase over the previous staff
cost.
Passenger Fare Revision Policy
The Terms & Conditions for formula as per Government Order 30-09-2000 Whenever, there is decrease in the diesel price the fare shall also be
decreased. Fare increase on account of diesel hike and DA increase will be affected by
the STUs only if the combined effect of diesel and DA increase exceeds 0.25paise per passenger km.
The STUs will be given the liberty to distribute the quantum of fare increasebetween the different services , namely ordinary, express, luxury anddeluxe, ensuring however that the combined effect of all these increase theshall not exceed what is given by the formula.
Before effecting fare revision on account of Diesel and DA hike approval ofthe respective Board of Directors of the STUs shall be obtained.
The additional revenue realization on account of revised fares shall notexceed the total increased cost of Diesel.
Passenger Fare Revision Policy
Date Fare Revision (Percentage) Cumulative Increase (Percentage)
26.06.2010 8.65 8.6526.06.2011 7 16.2501.10.2012 10.1 27.9916.06.2013 14 45.9
Year EPKM Increase(Percentage)
Cumulative Increase(Percentage)
2010-11 26.44 - -2011-12 29.77 12.59 12.592012-13 32.68 9.77 23.592013-14 36.22 10.83 36.97
Fare Revision
Earning Per Km (EPKM) Growth
Travel Expenditure for the journey from KBS to Kadugodi for Various Modes ofTransport
Sl.No Mode ofTransport Type Distance
in KMs Amount Wear& Tear
TotalAmount
Amountper KM
Amt perpersonper KM
1 BMTC BUSVolvo 28.1 90 90 3.20 3.20
Ordinary 28.1 22 22 0.78 0.78
2 Personal Vehicle(Two Wheeler)
Bike 28.1 50 15 65 2.31 1.16
Scooter 28.1 63 15 78 2.78 1.39
3 Personal CarPetrol Car 28.1 160 30 190 6.76 1.69
Diesel Car 28.1 115 30 145 5.16 1.29
4 Private TaxiSmall 28.1 600 600 21.35 7.12
Sedan 28.1 900 900 32.03 10.7
Note: 1. Diesel Rate @ Rs.57.08 KMPL for Diesel Car: 15 KMPL for Scooter: 352. Petrol Rate @ Rs.79.35 KMPL for Petrol Car: 15 KMPL for Bike: 45
Wear & Tear Cost Estimation: Private Taxi Charges are ascertained from Private Taxi Operators1. For Two Wheeler : Re.0.50 per km2. For Four Wheeler : Re.1.00 per km
Comparison of EPKM
% Increasein EPKM
% Increasein Fare overthis Period
NaturalGrowth
in %
EPKMIncreaseadjustedagainstNaturalGrowth
Of Period EPKM(Paise) With Period
EPKM(Paise)
Apr-Jun 2011 2701.77 Apr-Jun 2012 3027.04 12.04 7
5.65
6.39
Apr-Jun 2012 3027.04 Apr-Jun 2013 3368.13 11.27 10.1 5.62
Jul-Sep 2011 2939.74 Jul-Sep 2012 3105.87 5.65 0 0
Jul-Sep 2012 3105.87 Jul-Sep 2013 3566.14 14.82 25.51 9.17
Oct-Dec 2011 2759.58 Oct-Dec 2012 3061.89 10.95 10.1 5.3
Jan-Mar 2012 2725.82 Jan-Mar 2013 3014.10 10.58 10.1 4.93
Fare Elasticity
• Since 09.03.2012, for more than a year the Auto fares have not increased due tonon-increase of price of gas
• In recent time the augmentation of schedules are very high
There is limitation on increasing thePassenger Tariff
Other Sources of Revenue GenerationEfficiency Improvement
Cost CuttingPopularizing Public Transport
Operational Optimization
Traffic and Transit Management Centers (TTMCs)
• BMTC is the first urban transport organization in the country to get JnNURMfunding for a national pilot project for an innovative idea called TTMC.
• Construction of 10 Traffic and Transit Management centers was taken and allhave been commissioned.
TTMCs were taken up to;
• To Provide an integrated transportation facility with adequate facilities andamenities to cater to the requirements of all user groups.
• Smooth flow of all types of traffic to and from the terminal such that there is nocongestion/disturbance caused to traffic along the main road.
• Minimum /no conflict between various traffic types-Passengers, buses andprivate vehicles and to achieve minimum passenger and vehicle processing time.
• To encourage use of public transport and provide first-mile connectivitythrough provision of park and ride facilities.
Facilities at TTMCs• Bus terminal
• Bus bays• Platforms• Seating & lighting• Public conveniences• Information systems• Safety and security
• Bus maintenance depot• Maintenance bays,• Washing platform• Bus parking• Services and Utilities• Fuel filling station• Amenities for crew
• Passenger amenities• Bangalore One centers• Other citizen amenity centers• ATMs• Daily needs shopping
• Park and Ride facilities Before After
• Expenditure on these 10 TTMC is Rs. 425 Crore.• Total built up area - 32.0 lakhs Sqft.
• Out of which 6.2 lakhs sft. is for Bus Terminus and Depot.
• 18.3 lakhs sft. for Passenger Amenities and office space.
• 7.5 lakhs sft. is for parking facility.
• 3715 four wheeler and 2800 two wheeler parking.
• Expected income from these 10 projects is Rs. 33 Crore peryear.
• IRR for these TTMCs varies from 12% to 26%.• BMTC has identified 35 more Traffic & Transit Management
Centers (TTMCs) in and around Bangalore city. These willbe developed through PPP.
Chartered/Dedicated Premium Pass Service
• BMTC is providing buses on chartered services on kilometrebasis to companies/factories, schools and colleges.
• To minimize loss of revenue due to clandestine operation byprivate operators, Dedicated premium passes services wasintroduced for the Industrial / Company workers during theyear 1998 with TWO buses.
• At present 572 trips are operated with 285 buses to Schools &Colleges and 1106 trips are operated with 504 buses tocompanies/factories.
• 308 number of buses operated to companies on Dedicatedpass basis.
• Realizing average revenue of Rs.8.97Cr per month.
YearAnnual Revenue (Crore)
Chartered Service Dedicated PassService Total
2005 14.528 13.042 27.572006 19.521 14.338 33.8592007 26.738 12.325 39.0632008 39.119 08.884 48.0032009 38.483 07.878 46.3612010 39.453 8.022 47.4752011 42.337 14.891 57.2282012 46.086 32.351 78.437
2013 (Est.) 58.510 39.478 97.9882013 (up to Oct ) 34.131 23.029 57.16
Revenue from Chartered/Dedicated Premium Pass Service
Growth of Revenue from Chartered/Dedicated Premium Pass Service
Hosur Road Corridor Improvement Plan
Moving from the existing‘Destination Services’ model
to an‘Integrated Services’ model
(Direction Oriented model)
Existing Destination Services Model Bus services in Bangalore are based on the ‘Direct Services’
model. Each locality is directly connected to destinations in the city
centre with a dedicated route. Such system leads to inefficiency. As city expands and number of destinations increases, the
number of routes increases exponentially. It results in a large degree of route redundancy. Long wait times on specific routes. High number of routes increases system complexity for users. Inability to match demand precisely to supply.
Route Rationalisation
Trunk Buses
Feeder BusesMidi Buses
Same height and Width as normal Bus120-130 HP Engine
28-36 Seater9.5 Meter Length
Procurement Based on Life Cycle Cost
• At present the procurement of buses and other major items aredone through the process based on e-Tendering where thesuccessful bidder is decided based on the lowest quoted rate.
• It is quite possible that a particular brand of bus has costed lessinitially but in the long run it consumes more diesel and otherconsumables like Engine oil, Gear Box oil, Fuel Filter, resulting inhigher overall cost in the life cycle.
• This situation is practically happening in the present system.• To avoid this kind of situation and from the point of view of
having low cost in terms of life cycle, tender based on life cyclecosting has been started in BMTC for two items namely buschasis and tyres.
Procurement Based on Life Cycle Cost for Buses
The Tenderers have to furnish complete data regarding,• Changing period in Kms for:
• Engine Oil.• Gear Box Oil.• Rear Axle Oil.• Coolant.• Power steering.• Fuel filter cum water separator.• Fuel strainer.
• Projected life of the O.E. engine in Kms.• Projected life of the O.E. Gear Box in Kms.• Projected mileage of HSD in KMPL.
Procurement Based on Life Cycle Cost for Buses Contd…..
Life Cycle cost is based on consumption of Major Lubricants, Fuelline aggregates, O.E. Engine life & mileage of HSD (KMPL) for arunning of 7.5 Lakhs Kms.Subsequent deductions will be made towards shortfall inguaranteed performance.Considering the data submitted by the Tenderers, cost on MajorLubricants, Fuel Line Aggregates, OE Engine and performance ofHSD KMPL of the respective type of Chassis of the Tenderer will beevaluated.The total cost arrived for all the items indicated for life span will beadded to the quoted rate by the bidder. The resulted cost will bethe basis for deciding the L-1.
Tyre Brand Average NewLife
RetreadingFactor
Life afterRetreading Total Life
Brand 1 44142 3.71 22267 123262
Brand 2 35582 3.5 19159 101057
Brand 3 44929 4.01 23427 136266
Brand 4 85427 2.14 33401 148323
Brand 5 39323 4.67 22786 144623
Brand 6 106358 1.97 55195 192244
Brand 7 57500 4 23143 150072
Procurement Based on Life Cycle Cost for Tyre
• Life Cycle cost is based on life of new tyre, life of tyre afterretreading and number of times retreading is possible(Retreading Factor).
• These figures are calculated based on the historicalperformance of different brand tyres in KSRTC and BMTCtogether.
A = TOTAL COST = NEW TYRE COST + (RETREAD COST x NO. OF RETREADS).
B = TOTAL MILEAGE = INTIAL TREAD MILEAGE + (RETREAD MILEAGE OF No. of processes).
Cost per Km running = (A)/(B)
• L1 is decided based on least cost per Km running.
Procurement Based on Life Cycle Cost for Tyre Contd…..
BMTC New website “mybmtc.com”Commuter Friendly Initiative
Geo-coded Bus stops
54Non- Sheltered bus stopSheltered bus stop
Trip Planner Route Map : Printable
Route Timings : Printable
Commuter
Airport
BusStands
InsideBus
BMTCoffices/
Ticketingoffices
BusStations
Mybmtc.com
Helplinenumbers
Increasing Visibility
AT AIRPORT
On-going Initiatives
ITS : Intelligent Transport SystemVehicle Tracking System & 2 Way
Communication
• Operations Monitoring• Incident Management• Real Time ETA/D
Electronic Ticketing Machines• Revenue Monitoring & Management• Ticket and Smart Card
PassengerInformation System
• Revenue Monitoring & Management• Applications
6500
10000
35
Data & Command Control Centre• Monitoring & Reporting• Communication• Call Centre
1
Depot Management System• Crew Management• Vehicle Management• Scheduling
1
Takes Care the Concerns of :• Commuter.
• Which bus should I take to reach my destination?• What is the bus route between my origin & destination?• When should I reach the bus stop to take my bus?
• Management.• Revenue earned, Targets Met & Exceptions Reported.• Duty/Depot management, Scheduling, Fleet Usage, Crew Appraisal.
• Operations Manager.• Is any of the bus over-speeding?• Has there been any accident?• Are there any breakdowns/ Idling/ Bunching?
• Crew• Control Centre Support for incident management.• Easy reconciliation and end of duty process.
Vehicle Tracking System
• Location, Time & Speed Monitoring.
• Based on above Driver Appraisal Card.
• Incident management through two waycommunication system.
• Tracking on GIS maps @ 1:2500 scale.
• Various graphical, tabular and spatialreports on important parameters.
• Alerts on exceptions (reporting) – missingtargets.
Smart Card Fare Collection System
Mobile Application
Mobile Application for iOS, Android and Windows 8
Find Nearby Bus Stops• The user can use the app to
find nearby bus stops usingintegrated Google Maps withGeo-location of the user.
• The bus stops will be markedwith icons as as a overlay onthe map.
• User can also search for nearbybus stops by keying in the areaor the address.
Installation of Passenger informationKIOSK at ten Major Bus stations.
CCTV with live monitoring at all major bus stationsIn Bus Camera with Recording
Free Wi-Fi in A/C BusesLeave Management System.Training Information System.
Human Resource Management.MIS
Estate & Land Information System ( EIS )Inventory Management System
File Management System ( FMS )
Other Applications
68
Other Factors of Importance in Pricing
• Operation on un economical/obligatory routes.• Clandestine operation by the illegal operators.
• Burden of Concessional tickets/passes.
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