The Influence of Ownership and Business Models on Achieving Transit Improvements

In recent years, several cities in Mexico have embarked on a series of public transport initiatives to improve operations in road-based urban transportation directed to a more centrally regulated provision. Implementation of these improvements is contentious because of informal transport suppliers’ reluctance to enter into such modifications. This paper assesses three ownership models’ impacts on informal transport suppliers’ willingness to participate in bus improvements. The models are: (1) a man-and-his bus, in which the owner of the concession operates and manages a single unit; (2) a concession and vehicle lease, in which a driver leases the vehicle from and pays a service fee to the concession holder for the right to operate the unit; and (3) a concession-only lease, in which the driver pays a monthly set amount for the right to operate. From this assessment, the authors conclude that greater opportunities exist to engage informal transport suppliers in a desired public transport initiative in places where models (2) and (3) exist rather than model (1). Converting from model (1) to centralized operations represents a loss of social status which is not felt to the same extent when converting from models (2) or (3). Finally, they note that many areas in Mexico are served by illegal but tolerated private operations. These cases present opportunities to introduce an improved service because governments may persuade those operating illegally to participate in legal franchise systems.