Editorial | JUTC vs private firms

Last week’s complaint by JUTA Tours against the Government’s bus company’s inauguration of long-haul express services, reopens this newspaper’s question of three months ago about the wisdom of state enterprises engaging in direct competition with private firms.

Indeed, the matter is especially relevant when there is no clear or compelling need for the service offered by the government company, any real basis for it to be declared a public good, and when the service provider loses money hand over fist and has to be heavily subsidised by taxpayers.

Which is the case with the Jamaica Urban Transit Company (JUTC).

The issue also underlines the pertinence of The Gleaner’s long-standing and ongoing call for a coherent, rational, and integrated national transportation policy, which we again recommend to the transportation minister, Daryl Vaz.

The JUTC was established primarily to provide a decent bus service in the Kingston Metropolitan Region (KMR), where around a third of Jamaica’s population lives.

People who reside in the KMR clearly enjoy an advantage. They have a relatively well-organised bus service that charges lower fares than its route-taxi competitors in the KMR and elsewhere in the island.

Yet, all taxpayers contributed to covering the JUTC’s losses, which, in the current fiscal year, will be $18 billion – that is, the $11 billion that will show in the bottom line but which will be after the injection by the Government of approximately $7 billion in operational subsidies.

This expenditure is probably explainable on the basis that the KMR is Jamaica’s primary commercial and industrial centre and that an effective and efficient bus service in the area is indispensable to the national economy.

When the Government, ahead of the September general election, announced that it would expand the JUTC’s operations to some rural communities as well as launch a school bus service, that was understandable.

What, however, for this newspaper, was perplexing was the introduction of the express service between Kingston and Montego Bay, with plans to add other towns and cities.

This meant that the JUTC would compete directly against at least two private companies that provided similar services at a high quality. Moreover, the JUTC’s “introductory” fare of $2,000 was approximately half of what was charged by its timetable-bound, public-passenger competitors. There are also luxury-style charter-bus services that transport passengers on these routes.

JUTA Tours is part of the Jamaica Union of Travellers Associations (JUTA), a cooperative-style group of private-bus and taxi-service providers who operate mostly in the tourism sector, including doing airport transfers.

According to JUTA Tours, it is planning to relaunch a Kingston-to-Montego Bay express service but does not believe that the playing field is fair, with the JUTC in the market.

“We think the JUTC should focus on providing public transport in the Corporate Area (KMR), Montego Bay, and urban St Catherine,” said Noel Williams, the president of JUTA’s Kingston chapter. “We are concerned that what is happening right now will have serious implications on the service that we are planning to provide.”

He also complained about other types of non-commuter services offered by the JUTC, which JUTA believes unfairly compete with private-transport operators.

On the latter matter, The Gleaner reserves a view.

However, we are not convinced that long-haul express services that compete with those of private companies represent the best use of the JUTC’s, and, hence, taxpayers’ resources. Will the JUTC, on these routes, charge the real economic price of delivering the service?

There are, indeed, areas, and circumstances, where it is sensible for the State and its enterprise to operate in the market, but this should not be a willy-nilly process which, without real and tangible economic or social gains, proves costly to taxpayers.

If the Government believes that public-transport operators are overcharging consumers, fare setting, as this newspaper suggested previously, should be brought under fair and transparent regulation, possibly by the Office of Utilities Regulation.

In the meantime, the Government should explain its philosophy on the State’s role in the market and how, and when, it decides to compete with private companies.

At the same time, Minister Vaz should invite broad-based public consultation on a national transportation policy that plans, for the next 50 years, how commuters will be moved based on where they will live, work, and play, and the kinds of places Jamaicans envision their communities ought to be.

These will also define how our cities will look.