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July 04, 2009
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APTA > Services & Programs > International Transit > International Focus  

The Many Faces of Privatization in Latin American Public Transit

By George G. Wynne

APTA Consultant for International Affairs

A doubling of ridership and of fare income figures in recent years; metrorail and bus fleets that cover more than their operating costs; capacities of urban rail achieved by bus systems along dedicated corridors--these were among the findings of a recent International Transit Study Program Mission to Latin America.

The ITSP is managed by the Eno Foundation under contract to the Transportation Research Board. Candidates are nominated by their transit systems and selected by a peer panel.

A full report based on team members' inputs will be published by the TRB as a Research Results Digest and will become available directly from the International Page on APTANet, <www.apta.com>. Here are first impressions and some lessons learned from systems visited in Buenos Aires, Argentina; Montevideo, Uruguay; and the Brazilian cities of Porto Alegre, Curitiba, and Sao Paulo.

In Buenos Aires

Statistics tell the story. In Buenos Aires, coalitions of private bus associations and rail operators, including some from the U.S., have obtained concessions from the government and have managed to turn around metro and commuter rail systems that were on the verge of collapse. The infusion of capital and management skills over the past few years in an environment where private operators take all the risks and get all the rewards have had startling results:

  • Metrovias, which operates the subway and two commuter rail lines, has doubled its ridership to 200 million since 1994, is now practically self-sustaining, and will begin sharing profits with the government starting next year;
  • Metropolitano, which operates three commuter lines, has nearly tripled its ridership to 222 million since 1993, and its operating subsidy has dropped from $335 million to $65 million last year, with zero anticipated by 2004; and
  • Trenes de Buenos Aires, which operates two commuter rail lines and took over from the government in 1995, has cut staff by 40 percent, doubled ridership to 192 million, and is operating with a subsidy of $30 million instead of $300 million.

The COMETRANS consortium of private bus and rail operators, which is largely responsible for the successful turnaround, has just won a bid to run the deficit-ridden Rio de Janeiro metro. The consortium will seek to replicate its Buenos Aires success, receiving no subsidies but a government commitment to invest in upgrading of the infrastructure and rolling stock.

In Montevideo

In Montevideo, the capital of Uruguay, the two main associations of private bus operators run an urban bus fleet of close to 1,500 vehicles that carries 325 million passengers annually. The system receives no operating subsidies, but operators are compensated by the city, which regulates fares, for the discounted "social fares" offered to students, the elderly, and persons with disabilities, who comprise about 15 percent of the ridership.

Fleet renewal, now 60 percent complete, has been facilitated by a leasing system guaranteed by the national bank, which started in 1994. Buses are financed over an eight-year term.

The larger of the two associations, which has been around for more than 60 years, operates 1,027 buses, carries 200 million passengers annually, and runs its own insurance and housing finance companies for its members. The cooperative has been consistently profitable over the past five years, with operating income as high as 21 percent over expenses.

Bus acquisition costs in Argentina and Uruguay run only a little over $100,000 per full-size standard unit, while fares are relatively high in relation to average incomes. This may contribute to the companies' lower operating costs.

In Brazil

The busway experience in Curitiba, Brazil, has been extensively documented in the U.S. Transportation planners have available a number of reports and videotapes, the Federal Transit Administration has launched its own Curitiba-triggered Bus Rapid Transit initiative, and some people in the profession are beginning to ask, "If the Curitiba system is all that great, why isn't it being used by other Brazilian cities?"

In fact, busways are being used by many cities in Brazil less well known than Curitiba. One of these we visited is Porto Alegre, with a population of 1.3 million, where a low-tech, low-cost system of six busways has been in place for years and is used very effectively every day by 16 private operators under contract to the city. The fleet totals more than 1,500 vehicles and moves more than 320 million passengers a year.

On working days during rush hour, bus flows on some of these corridors reach 350 an hour, five to six a minute, moving upwards of 20,000 people per hour in each direction. These reserved bus lanes leading downtown are located in the median of major roads and, except for protected curbside "stations" and transfer terminals, their stops are reached by passengers crossing the outer traffic lanes. The city's Transit Secretariat (SMT) fields personnel for traffic control at bus stop crossings.

Bus platooning used to maximize the capacity of the exclusive lanes, which average five kilometers in length, is a special Porto Alegre wrinkle. SMT personnel hold buses to and from different suburban destinations at lane entry points to travel as a unit between stops.

The farebox fully covers operating costs. An electronic bus location/passenger information system is under construction.

Everyone in the profession has heard of Curitiba by now. The fully integrated 60 km network of dedicated busways, with its fleet of some 2,000 buses carrying about 1.3 million passengers a day in a city of 1.6 million, lives up to the billing.

Curitiba's tubular boarding stations; the buses color-coded according to type: direct, express, inter-district, and local; the bi-articulated red Volvo express that holds 270 passengers with a dwell time of just 19 seconds--all are a trademark of the city.

Fares are turned over to URBS, the municipal oversight company that pays its 10 private operators per kilometer traveled in a self-supporting system that builds in a profit margin and rewards efficiency. Over 100 foreign transit delegations came to observe and experience the system last year.

Curitiba has become a byword for its rail capacities reached in the high speed bus corridors at 1 percent of the cost of building a light rail system, holistic land use planning, and a far-reaching approach to service delivery. Land use decisions over the past quarter century have encouraged high density and mixed use in the areas adjacent to the busways. (A professional quality video made available by the city is available on short-term loan to transit properties from the Eno Foundation, e-mail <tracy@enotrans.com>.)

Less known than Curitiba's exemplary transit system but also deserving of notice is the city's design of the end stations as "citizen streets" that serve the function of district city halls, offering a wide assortment of government outreach offices and social services, along with retail outlets and amenities.

The system has reached maturity, is operating at near capacity, and faces new challenges in the years ahead. With 680,000 private cars in the city, new registrations at 4,000 a month, and the population growing at 2.3 percent a year, congestion looms outside the reserved busways.

Curitiba's response to these challenges is now being fashioned and is likely to include a combination of tunnels and overpasses to increase transit capacity, efforts to control the private car, and perhaps a guided light transit system, depending on the availability of outside funding. Tough decisions will have to be made.

Innovative privatization concepts and a willingness to strike out in new directions characterize the situation in Sao Paulo (population 18 million), which is poised to become the world's largest city in the next century.

The publicly owned 44-km metro counts more than 2.5 million daily passengers and more than covers its operating cost. A 9-km extension that will add another 700,000 daily riders is due to be put out to bid as a build/ operate/transfer private operation this year. In addition, a two-line 264-km commuter rail network that is now being updated brings in almost a million passengers a day.

The transit market also includes three dozen private bus operators who own a combined fleet of 11,000 vehicles and account for about four million daily passengers. Sixteen busways operate in the city, and a regional agency has contracted out a 33-km metropolitan corridor that carries another 300,000 people per day and is to be operated by trolleybuses.

With an estimated 20 million passenger trips a day in the metro region, split about evenly between public transit and private cars, the Sao Paulo system is vast, complex, confusing and, apart from the dedicated busways, subject to huge daily traffic jams. The current administration is seeking to introduce some new ideas:

  • consolidation and better integration of the bus fleet with the rail network, allowing a reduction in the number of buses, which will help lower congestion. A number of new contracts will be let this year;
  • replacement of polluting diesel buses with alternative fuel vehicles that have lower emissions, coupled with expansion of the trolleybus fleet; and
  • introduction of a single rail fare/smart card system for the metropolitan area. Two million farecards are projected for next year.

The new concessions will be completely customer-oriented. A fixed range of incentives and penalties for operators will be triggered by the results of periodic, probably semi-annual, user surveys by an independent firm. Repeated flunking of the popularity test can lead to contract termination.

Finally, a guided light transit system operating biarticulated hybrid trolleybuses is under development and is to be phased in next year, initially with 30 Marco Polo Brazilian-built artics. We had a test ride in the impressive prototype.

The complex systems of Sao Paulo are still evolving in light of population pressures. An election is due in October and, if incumbent governor Mario Covas is not re-elected, transportation policy priorities might shift direction.

All the systems visited were delighted to have some attention paid them by colleagues from up north interested in their challenges and triumphs.

Oversight agencies are using different strategies to involve the private sector, but all are achieving similarly positive results in ridership and cost coverage.

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