September 15, 2013 • No 314 | Archives | Search QL | Subscribe



No Room on the Train (Or on the Bus)
by Harry Valentine

People who travel between cities by train or bus may remember that many years ago, customers could arrive at a terminal and purchase a ticket to travel. At the time, the business plan of the bus and railway companies was to provide transport service to all customers who arrived at the terminal in time for a departure. Bus companies often chartered services from other companies to deal with overloads of passengers, including providing transportation between cities aboard school-bus-type vehicles. During peak season, the railways assigned additional trains that departed within minutes of each other on main routes. The railways sometimes assigned commuter trains to certain intercity routes to transport an overload of travelers to their destinations.

Government regulators stepped in to improve the quality of transportation carrying passengers on intercity journeys. By so doing, they achieved the same result as Soviet economic central planners who produced either gluts or shortages. Many intercity bus and train operators have since revised their business plans and require prospective customers to book their tickets several days ahead of the scheduled departure. Quite recently, three days prior to a departure, the railway had sold out all economy seats.

The same is true of bus companies that operate heavily traveled intercity routes. One Eastern Canadian operator has introduced double decker coaches into service between Montreal and Toronto, despite a government bureaucrat having claimed several years prior that the industry ridership did not warrant the capacity of such a vehicle. But government bureaucrats are not businesspeople, and they generally possess very little in the way of entrepreneurial acumen. If they actually possessed the acumen, they would more than likely have been owners of successful businesses. Their contribution may be to retard rather than advance transportation services.

The double decker buses conformed to all weight and dimension requirements and were allowed to carry revenue passengers. Ridership increased as the service provider borrowed a long-proven strategy from the airline industry, that being to drop the ticket prices while greatly increasing seating capacity. Pan-Am pioneered such strategy when the introduced the Boeing 707 to trans-Atlantic service. The so-called experts in government transportation departments claimed that there was no market for such an airplane. It carried double the passenger load of the next largest aircraft and could fly twice the range, at twice the speed, at three times the altitude.


“Perhaps for purely political reasons, successive federal transport ministers have refused to end the insanity of enforcing economic regulation on intercity passenger transportation services.”


But within ten years of its first commercial flight, ten times the number of travelers were crossing the North Atlantic aboard passenger jet aircraft. When Pan-Am introduced the Boeing 747 “jumbo” aircraft to the North Atlantic route, the so-called experts again dismissed any prospects of such a large aircraft becoming a commercial success. Within ten years of the first commercial flight of a jumbo size aircraft, the Boeing 747 became the premium aircraft to fly on the majority of heavily traveled international routes. On Canada’s main intercity bus route, the jumbo buses were sold out three days prior to a Monday departure.

While the intercity truck transportation industry operates semi-trailers that are 25% longer than the sometimes booked-to-capacity double decker buses, government bureaucrats dismiss any suggestion of any need for larger buses on some intercity routes. They want to apply the same standard on all roads across the nation, despite vast differences in the travel markets along those roads. Regulation compels some bus companies to operate empty buses on regular schedules, just in case someone actually wants to ride on a bus.

Some 20 years ago, a bureaucrat wrote a report suggesting that economic regulation of intercity buses served no useful purpose. But senior bureaucrats quashed that report. They also quashed several reports and research papers on improving the revenue-to-cost situation on the intercity passenger trains. On the main intercity routes, the economy seats can be sold out up to four days ahead of time during peak travel season. Earlier research papers have suggested that intercity passenger train operators introduce double decker passenger carriages into intercity service, that is, upgraded versions of the commuter carriages that serve Montreal, Toronto and Vancouver. The same number of staff per carriage would oversee a greater passenger load, thus increasing staff productivity.

Canada’s newest intercity passenger railway carriages were built in England, to British dimension standards. While the 2+1 seating across the aisles of the narrower coaches may be comfortable, they reduce the productivity of the onboard staff. By comparison, the operator of the privately owned tourist train that travels through the Rocky Mountains includes several double decker carriages on its trains. Its service has achieved international recognition. It is one of several privately owned tourist and excursion passenger trains that operate seasonally and without subsidy. It appears that only government-regulated and government-owned passenger trains require an operating subsidy.

While regulation may have been intended to ensure service along lightly traveled routes through a process of internal cross-subsidy, Canada’s rural passenger trains are now history, while local and rural intercity bus routes barely carry any passengers. The regulation of intercity passenger transportation falls under federal jurisdiction, but federal authorities delegated economic regulation of intercity bus service to the provinces. Perhaps for purely political reasons, successive federal transport ministers have refused to end the insanity of enforcing economic regulation on intercity passenger transportation services.


Harry Valentine is a free-marketeer living in Eastern Ontario.


From the same author

School Bullying and the New York Male Teacher Experiment
(no 313 – August 15, 2013)

The Federal-Provincial Debate over Job Skills Training
(no 313 – August 15, 2013)

Much Ado about Fixing the Price of Chocolate
(no 312 – June 15, 2013)

State Economic Regulation and Opportunity in Atlantic Canada
(no 311 – May 15, 2013)

State, Society, and School-Related Teen Rape Cases
(no 310 – April 15, 2013)



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