In Part 1 of this series, we saw how BMTC’s ridership is affected by the corporation’s slashing of services post COVID. In this part, we explore how BMTC can sustain services in these difficult times, despite its severe losses.
Across the world, public transport corporations are reeling under losses during COVID. There is hardly a corporation that is recovering without government support, say transport experts. Dr Ashish Verma, Associate Professor, Transportation Systems Engineering at the Indian Institute of Science, has been reviewing case studies on the topic from across the world.
“The experience is similar everywhere. As long as there are COVID cases in Bengaluru – and now with the second wave too – there is no easy way out for public transport. Until vaccination happens on a mass scale and herd immunity develops, it’s very difficult to bring back the confidence of riders and get them to use public transport.” This reflects in sharp hike in the purchase of private vehicles during the pandemic. “Until the ridership numbers return to normal, government should give direct subsidy to BMTC so that it doesn’t die,” says Dr Ashish.
Experts say this is critical because transport is a public good, and BMTC’s key ridership is low-income groups who have no other way to get to work. “If BMTC is operating as a business, it will have to shut down routes that cause losses. This would have been ok if people can opt out of BMTC, say, the way we do with a restaurant. But it’s not so because most BMTC commuters have no other option to get to work to access their livelihood. So the government has to ensure minimum connectivity,” says Harsha Krishna of the research organisation Fields of View, who specialises in transport simulations. Besides, such access is essential for the gradual economic recovery of the city from COVID.
Experts say BMTC could perhaps try to identify some additional revenue sources, though this would be nowhere enough to make up for its losses. As of this March, BMTC is said to have been making losses of Rs 1 crore per day. Now with the bus strike and COVID second wave, losses would increase further.
Dr Ashish says BMTC could perhaps offer its fleet for goods transport, as KSRTC did recently – companies can now hire KSRTC buses to ferry goods. “The demand for such a transport service has increased recently with more deliveries happening, including that of medical supplies. Since BMTC is unable to use all its buses, they could use buses to offer cost-effective goods transport,” he says. Similarly, BMTC could consider leasing out its land or the office space in TTMCs, but this would be difficult given the overall slump in businesses now.
Among the case studies Dr Ashish reviewed, two Chinese cities have stood out for increasing ridership, at least in the short-term, by offering discounts and free rides. In Ningbo, the policy of ‘more rides, more discounts’ and free rides in the off-peak hours, increased subway ridership by about 24% in the first month. And in Xiamen, the policy of free rides on holidays increased subway ridership by 2.3 times over five holidays. But in a third city Hangzhou, offering free rides during peak hours did not significantly affect ridership.
“For BMTC to reduce fares like this would be a gamble at this point. As long as the virus is around, anybody who has a choice of not travelling, or travelling by some other mode, would think twice before using public transport,” says Dr Ashish.
Vision for the long term
While in the short term, BMTC needs immediate state support to survive COVID, this has to continue in the long term, say experts. The corporation needs capital investment for increasing its fleet and providing frequent, reliable services. Currently, BMTC has a fleet size of 0.5 per 1000 population, whereas the national average is 1.2 buses per 1000 people.
Harsha says, “BMTC needs more funds to expand its capability to deliver services better. With this, it will be easier for the corporation to attract non-bus-users to buses, and thus cover more of its operational costs by itself. But this is not easy – better understanding and strategising will be needed.”
For example, BMTC should know where exactly to use the additional buses to cater to new crowds, improve its reliability by giving prior information to commuters on bus availability in a route, number of vacant seats, etc. “A high amount of investment is also needed before good public response comes about,” adds Harsha.
Bus priority lanes also need to be enhanced and designed better so that riders can reach their destination faster by bus than by private vehicles.
Harsha suggests that BMTC can also provide tiered services to get better revenue. “For example, there could be more expensive but reliable, comfortable buses specifically for employees going to ITPL from Jayanagar. Instead of providing charter services to companies, BMTC can provide the service by itself and keep the revenue. The employees would switch to these buses because their company buses would be even more expensive.”
Dr Ashish says that BMTC’s focus on profits – which led to decisions like investment in TTMCs and expensive AC buses, and previous fare hikes – along with the lack of priority for bus movement, have contributed to its deteriorating financial health. “Even before COVID, no public transport corporation in the world has maintained a good level of service without government subsidy. So direct government subsidy to BMTC should be a permanent policy, so as to keep services attractive and affordable.”
Despite BMTC’s losses over the years, there has been little support from the state government. A February news report in The Hindu quoted BMTC MD C Shikha as saying that the corporation is estimated to suffer losses of Rs 700 crore for 2020-21. The loss in 2019-20 was Rs 540 crore.
To raise loans, monetise land
Shikha says the state government has given sufficient funds to ensure salaries for BMTC staff up until June. “The government has also allocated us Viability Gap Funding of Rs 200 cr in this year’s budget, though of course, more support is needed,” she says. In comparison, BMTC’s operational costs was over Rs 2,600 crore in 2018-19, with the majority of costs going towards salary payments and fuel costs.
BMTC is now planning to take a soft loan of Rs 700 crore from an international lending agency, for a five-year bus rejuvenation programme, to attract all categories of users. This would including doubling of BMTC fleet, digitisation, development of bus priority lanes, a data analytics system for service planning and performance management, integrating buses with other transport modes, etc, as per a report in the Bangalore Mirror. The interest rate is expected to be 1%.
Shikha says the State government has already approved the loan proposal. “State has not guaranteed it will repay the loan. But we are planning to repay 25% of the loan from our own revenue, and will propose to the State government to include repayment of the remaining 75% in its annual budgets. Since the repayment is over a five-year period, it will be less of a burden for the State.”
Shikha believes that the government will agree to this. “If you look at the previous 5-6 State budgets, the government has been repaying the loans that BMTC took from KUIDFC for procuring around 3000 buses. The State repays the loans to KUIDFC directly.”
While BMTC’s Rs 700 crore loan will go towards capital investments over a five-year period, it’s unclear how the corporation will sustain adequate operations without state funding at least during the pandemic.
Shikha says BMTC is also planning to monetise its vacant lands in the city outskirts. “There are plans to give land on lease to PSUs like HP to set up petrol pumps, or for electric vehicle recharge points.” Shriram Mulkavan, Chief Traffic Manager (Commercial) at BMTC, says they are still studying the concept to see if it would be feasible. “Since the land was given to us for transport use, we have to see if it would be permissible to use it for commercial purposes. We are also checking what models of operation would be feasible.”