# MISC | Deregulation of Bus Services



## thun (Aug 8, 2007)

wonwiin said:


> DB is one of the largest bus operators in Germany. They already have experience in international long distance busses. So if long distance busses are allowed in Germany DB will propably be one of the biggest operators.


The law actually didn't forbid DB to operate long-distance busses (it forbidded it to other companies as long as the federal railways were able to offer services of similar quality - which they always claimed), but only to other companies.
The DB nowadays operates mainly local and regional bus networks (obviously, they didn't have any incentive to invest in a long-distance network competing against their own trains).
But probably you're right, DB will definitely enter this market, too. If they will actually be one of the largest operators depends on a lot of factors.
I would expect routes closing gaps in the DB InterCity network under their own brand and a low cost/now frills subbrand (something like UK's Megabus) to compete against other companies.


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## Euklidisk (May 14, 2005)

Sweden deregulated the long-distance bus market in the late 90s. There were some who warned that the buses would knock out some of the national train services. And indeed, bus traffic increased sharply in the first years but has then stagnated out. In the end, the deregulation's impact on the train was barely noticeable, and train travel has increased dramatically in the last 10 years. The truth is that the bus can't compete, only supplement. Travel times are too long and comfort too poor, while the fare can't be dramatically lower than the train.


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## nachalnik (Nov 7, 2008)

Republica said:


> I was surprised when i couldnt get a bus in austria, because i expected it to be a cheaper alternative when i was a student.


There are hardly any domestic long-distance buses in Austria. Those which exist run on routes without suitable train service (like Graz - Klagenfurt or Wien - south of Burgenland province). 
Running a bus route in Austria requires a license ("Konzession"), which is usally not given, if the route would mean a heavy competition to existing rail services.

Students, who use rail services in Austria, usually have a Vorteilscard (costs 20 EUR if under 26, valid one year), which gives you a 50% discount.


Nachalnik


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## Suburbanist (Dec 25, 2009)

*If aviation were "regulated" abusively like trains/buses state semi-monopolies...*

I was just doing an exercise here... imaging a daunting, troublesome and backward scenario in which the commercial aviation industry were regulated like train services in Europe...

This is what you would get:

- no Ryanair or Easyjet to begin with. Politicians would not allow them to extract concessions from local government under an UE directive

- routes would be tightly controlled and planned to "match" and provide connections, without any regard of market forces, ability to charge more, price elasticity and so.

- token private competition would exist as governments would tender whole routes, planned by the government and lot sorted out by the market free hand, to private operators

- fares would be astonishingly high, discounts would be controlled and limited, all sort of hand-outs (free flights for seniors and students going for summer vacation) would exist

- routes without any viability would exist because "the whole country deserves an air transport network"

- the government would interfere with air routes to justify high speed train lines, cutting air service in routes it deemed "to be enough and more convenient rail service if you consider externalities"

- Lufthansa would still be bragging about whether it could fly Berlin-Frankfurt after DB announced it wants to invest on speeding the route by train

- CHAOS and BACKWARDNESS would ensure. Flight would become so expensive that it would be heavily subsidized and restricted only to medium and long haul. No more London-Amsterdam,. Barcelona-Madrid, Milano-Roma flights. 

- The shameful and stupid environwackos would start mingling with corporate decisions about routes, services and so. They would require something like a "clear skies a day a month" policy to "encourage people to explore more environmental friendly transportation".


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## Stainless (Jun 7, 2009)

Suburbanist said:


> - no Ryanair or Easyjet to begin with. Politicians would not allow them to extract concessions from local government under an UE directive
> 
> - The shameful and stupid environwackos would start mingling with corporate decisions about routes, services and so. They would require something like a "clear skies a day a month" policy to "encourage people to explore more environmental friendly transportation".


I would actually like these 2 things. I detest Ryanair and Easyjet, their pricing structure is designed to mislead and confuse the customer and they usually hide how stupidly placed the airport they use is. I do however think people should be encouraged to find more environmentally friendly transportation and the recent volcano has made people in some areas realise quite how much impact all the air traffic causes.


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## Suburbanist (Dec 25, 2009)

Stainless said:


> I do however think people should be encouraged to find more environmentally friendly transportation and *the recent volcano has made people in some areas realise quite how much impact all the air traffic causes*.



Well, I guess aviation was impacted by the ash cloud, not the other way around. The crisis only showed how fundamental the industry is to our modern economy.


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## Teach (Apr 17, 2009)

> imaging a daunting, troublesome and backward scenario in which the commercial aviation industry were regulated like train services in Europe...


You're comparing apples and oranges.


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## thun (Aug 8, 2007)

Its more like meat and fruit. Or even trees with rocks.


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## Rebasepoiss (Jan 6, 2007)

Gosh, every single thread...We know you have many ideas and opinions that differ a lot from the majority of the forumers but just try to keep yourself together once in a while and stick to the topic.


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## MarcVD (Dec 1, 2008)

Suburbanist said:


> - the government would interfere with air routes to justify high speed train lines, cutting air service in routes it deemed "to be enough and more convenient rail service if you consider externalities"
> 
> - Flight would become so expensive that it would be heavily subsidized and restricted only to medium and long haul. No more London-Amsterdam,. Barcelona-Madrid, Milano-Roma flights.


That would be absolutely great, a giant leap forward !!!


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## Apoc89 (Mar 4, 2010)

Well, the only response I have to Suburbanist's list is that the needs and limitations of air and train travel are very different, and trying to run one exactly like the other probably isn't going to go so well.

Admittedly, I find his idea of a railway where infrastructure and train ownership/operation are completely segregated to be interesting. Is there any place in the world which runs its train network like that? The closest thing I can think of is the UK's "open-access" operators.

That said, the best railway networks in the world seem to work fine the way they are.


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## strandeed (May 31, 2009)

MarcVD said:


> That would be absolutely great, a giant leap forward !!!


No it would do great harm to our economies


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## thun (Aug 8, 2007)

EU is opening the railway market step to step at the moment. All former state-owned European rail operators have to be transfered in a private company (the government can still own the majority of shares) and separate the network operations from the train operations (this is in most cases done under the roof of a single holding). The network operatos isn't allowed to prefer any train operator when planning slots. It works pretty well for cargo rail for quite a time now.


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## Suburbanist (Dec 25, 2009)

thun said:


> EU is opening the railway market step to step at the moment. All former state-owned European rail operators have to be transfered in a private company (the government can still own the majority of shares) and separate the network operations from the train operations (this is in most cases done under the roof of a single holding). The network operatos isn't allowed to prefer any train operator when planning slots. *It works pretty well for cargo rail for quite a time now.*


It does most of the time. I'd be happy if passenger transport followed the same policies, even at expense of breaking up national coordinated networks (not for the sake of breaking them per se, but to allow, for instance, a new operator to run trains in peak-times only charging 3x the usual price and paying 2x the slot price as the national railway who'd get displaced.


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## thun (Aug 8, 2007)

Apparently, you don't understand too much about pricing strategies as well.
It doesn't really make sense for a transport to rise prices on peak times to a theoretical maximum just for the sake of short-term profits. Some effects they almost surely have to fail are negative media coverage and angry clients which will prefer not to use their services at all. The main difference to pricing in airline industry is that most customers of rail companies use trains very regularily, if not daily, so they are much more price sensitive as air passengers. You can't raise prices to a theoreical maximus because most of your client base couldn't or wouldn't want to afford it. Its not rocket science, is it?
It might work, but it wouldn't necessarily do so.


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## EEH (Jul 16, 2010)

Very interesting topic. I saw the discussion involves not only DB but other railways too. Let me share with you the situation in Bulgaria as it is now quite the opposite of this in Germany but it was identical before 1990.

Before 1990, the state owned railway company was both the operator of trains (passenger and freight) and the holder of the infrastructure. No other rail compaies existed.

The market was quite strongly regulated and no competition was allowed. The bus companies could not operate on long distances, but only supplemented the trains or operated routes to towns and villages which didn't have a railway through or near them.

As a result, the transportation system was very well organized, the railway network was maintained in good condition and constantly improved although with their 130 km/h top speed the trains were far from the what the German trains achieved. However, considering the quite shorter distances, it was acceptable.

After 1990, the bus competition was unleashed and shortly after that from the mid 1990s the trains and rail infrustructure was severely neglected and speeds were significantly reduced. People started to avoid the trains in favour of the much more comfortable and faster buses. The control over buses' speed was negligible and it was normal for the drivers to speed up to 120-140 km/h even on normal roads. Most of them were brand new and modern after all. Even now, when the speed control is much stronger and busses can't speed over 100 km/h, people still prefer them despite the higher price as trains are even slower.

All this happened because of the strong lobby of the private bus operators at the expense of the rail public transport, owned by the state.



Apoc89 said:


> Admittedly, I find his idea of a railway where infrastructure and train ownership/operation are completely segregated to be interesting. Is there any place in the world which runs its train network like that? The closest thing I can think of is the UK's "open-access" operators.
> 
> That said, the best railway networks in the world seem to work fine the way they are.


In 2002 the rail infrastructure and the train operators were divided in separate companies and thus the Bulgarian railway network was open to other train operators. So far, only private freight train operators entered the market along with the state owned one. There has been no interest by private passenger companies.


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## Suburbanist (Dec 25, 2009)

@thun: you keep attacking me "you don't know this", "you don't know that", but there is a fundamental difference here: I don't see non-metropolitan rail transport as something that must exist, let alone a right. So when you write about cooperation as a mean to achieve better industry-wide results, I cry "cartel" and anti-competitive practices. EU, US, Canada, Australia all have agencies in charge of promoting competition and asserting that monopolies don't establish themselves and/or do not prevent economic dynamism and competition.

In regard of pricing, many air shuttles around the developed World (Roma-Milano, Washignton-New York, Los Angeles - San Francisco, Chicago - New York, London - Manchester) have a strong basis of commuter users, and there is fierce yield management on those routes. Just check it out: shorter routes have far more expensive prices on early morning and late afternoon, for obvious reasons - people travelling around these times are often less price-sensible than others, they are willing to pay far more instead of having to arrive late or the day before.

The fact is that a "theoretical maximum", if well calculated and studied, will consider factors like loss of ridership due to dissatisfaction generated by a different price policy itself (and, for sure, by the prices set themselves either...).

A true private company is interested in maximizing profits, not increasing ridership. But most state-controlled transportation companies are concerned about maximizing ridership while breaking even. However, in many cases the cost curve of transportation systems is so high that it doesn't intersect the demand curve at any point, meaning that there is no possible fare that will merely match costs and revenue.

In economic analysis, we call those markets impossibles, and projects expected to have such curves unfeasible.

Then it all comes backs to the same discussion: why not let the government provide the WAYS (runways, highways, tracks) while private companies decided what/when/at what price to run over them? It works for air and road transport, should work for rail.

To have a more free and competitive market in transport, we will need to accept coordination will be lost. When national telecom companies were dismantled and privatized, many whined about losing a national coverage plan, or unified fares and so on. On the first years, some roaming problems emerged and some coverage problems too. 15 years later, we are doing fine in N. America, Europe and elsewhere.

So it should happen if forced and imposed timetables and schedules were abolished in name of capitalistic competition.


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## Suburbanist (Dec 25, 2009)

EEH said:


> After 1990, the bus competition was unleashed and shortly after that from the mid 1990s the trains and rail infrustructure was severely neglected and speeds were significantly reduced. People started to avoid the trains in favour of the much more comfortable and faster buses. The control over buses' speed was negligible and it was normal for the drivers to speed up to 120-140 km/h even on normal roads. Most of them were brand new and modern after all. Even now, when the speed control is much stronger and busses can't speed over 100 km/h, people still prefer them despite the higher price as trains are even slower.


That just proved that private companies can work better and faster in many situations. Buses companies, not obliged to provide comprehensive network coverage or deal with cocky and entrenched labor unions, can adapt themselves faster even using technically inferior solutions like buses instead of trains. I dare to speculate that was the case in post-communist Bulgaria.



> All this happened because of the strong lobby of the private bus operators at the expense of the rail public transport, owned by the state.


The "road lobby" is always a scapegoat. Nothing prevented the state to keeping investing on its railways, but passengers shunt away from the tracks, hence the government should invest in better, wider and longer highways anyway.


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## Kuvvaci (Jan 1, 2005)

DB needs an alternate. It is to expensive with a low quality. When it was a state-owned company, DB was one of the best examples but now , it is something different. Maybe buses can be a better alternate.


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## EEH (Jul 16, 2010)

Suburbanist said:


> The "road lobby" is always a scapegoat. Nothing prevented the state to keeping investing on its railways, but passengers shunt away from the tracks, hence the government should invest in better, wider and longer highways anyway.


What prevented the state in doing that was the money of the "road lobby". And you are right, it is not the bus companies only but the trucks also. Actually, this is how the lobbies work. They give money to the state officials to get what they want. In some countries lobbying is legal (USA, etc.) in others it is not (Bulgaria, etc.). However, it works the same way everywhere and in most cases the outcome is not beneficial for the public.

In Germany, as DB is no longer holding the biggest bus company in the country, it may loose its influence in the future.


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