PRESENTATION ON

PRICING & FARE FIXATION IN PUBLICTRANSPORT

BMTC - A CASE STUDY

By

Anjum Parwez, IASManaging DirectorBMTC , Bangalore

4th December 2013

• It was first public transportcompany in the princely stateof Mysore, established on 31st

Jan 1940 as BangaloreTransport Company.

• On 1.10.1957, it was Mergedin to Mysore GovernmentRoad Transport Department.

• Became an operating Divisionof Mysore State RoadTransport Corporation on 1st

August 1961, as BTS.

• Formed as an independentTransport Corporation on 15th

August 1997

Bus FleetTotal Growth: 86%Annual GrowthRate: 8.05%

Daily Service KMTotal Growth: 46%Annual GrowthRate: 7.97%

Since 2004 –

Overall Increase: 64.7%

Annual Rate of Growth: 6.4%

Own 6587 Buses

Operate 6441 Bus Schedules

Perform 13.50 Lakh Service kms.

Make 83327 Bus Trips

Earn Rs 5.00 Crore

Carry 49 Lakh Passengers

Bus Depots 39

Bus Stations 50

Manpower 35090

Bus Staff Ratio 5.2

As on August 2013

Distance in Kms Fare per passenger Distance in Kms Fare per passenger

2.00 5.00 22.00 20.004.00 9.00 24.00 21.006.00 12.00 26.00 21.008.00 15.00 28.00 21.00

10.00 16.00 30.00 21.0012.00 16.00 32.00 22.0014.00 17.00 34.00 22.0016.00 18.00 36.00 22.0018.00 20.00 38.00 23.0020.00 20.00 40.00 23.00

Present Fare Structure for Non A/C Service

Distance in Kms Fare per passengerper Km Distance in Kms Fare per passenger

per Km

2.00 2.50 22.00 0.91

4.00 2.25 24.00 0.88

6.00 2.00 26.00 0.81

8.00 1.88 28.00 0.75

10.00 1.60 30.00 0.70

12.00 1.33 32.00 0.69

14.00 1.21 34.00 0.65

16.00 1.13 36.00 0.61

18.00 1.11 38.00 0.61

20.00 1.00 40.00 0.58

Present Fare Structure for Non A/C Service Contd…

Present Fare Structure for Non A/C Service Contd…

Distance in Kms BMTC APSRTC2.00 5.00 6.004.00 9.00 7.006.00 12.00 8.008.00 15.00 9.00

10.00 16.00 10.0012.00 16.00 11.0014.00 17.00 13.0016.00 18.00 14.0018.00 20.00 15.0020.00 20.00 16.0022.00 20.00 17.0024.00 21.00 18.0026.00 21.00 19.0028.00 21.00 20.0030.00 21.00 21.0032.00 22.00 22.0034.00 22.00 23.0036.00 22.00 24.0038.00 23.00 25.0040.00 23.00 26.00

Comparison of Fare for Non A/C Service in BMTC and APSRTC

Distance in Kms Fare per passenger Distance in Kms Fare per passenger

2.00 10.00 26.00 70.004.00 15.00 28.00 80.006.00 30.00 30.00 80.008.00 40.00 32.00 80.00

10.00 45.00 34.00 90.0012.00 50.00 36.00 90.0014.00 50.00 38.00 90.0016.00 60.00 40.00 100.0018.00 60.00 42.00 100.0020.00 60.00 44.00 100.0022.00 70.00 46.00 100.0024.00 70.00 48.00 110.00

Present Fare Structure for A/C Service

Distance in Kms Fare per passengerper Km Distance in Kms Fare per passenger

per Km

2.00 5.00 26.00 2.69

4.00 3.75 28.00 2.86

6.00 5.00 30.00 2.67

8.00 5.00 32.00 2.50

10.00 4.50 34.00 2.65

12.00 4.17 36.00 2.50

14.00 3.57 38.00 2.37

16.00 3.75 40.00 2.50

18.00 3.33 42.00 2.38

20.00 3.00 44.00 2.27

22.00 3.18 46.00 2.17

24.00 2.92 48.00 2.29

Present Fare Structure for A/C Service Contd…

Present Fare Structure for A/C Service Contd…

Distance in Kms Fare Per Passenger PerKm for A/C Buses

Fare Per Passenger PerKm for Non A/C Buses

A/C to Non A/C Ratio ofFare

2.00 5.00 2.50 2.004.00 3.75 2.25 1.676.00 5.00 2.00 2.508.00 5.00 1.88 2.67

10.00 4.50 1.60 2.8112.00 4.17 1.33 3.1314.00 3.57 1.21 2.9416.00 3.75 1.13 3.3318.00 3.33 1.11 3.0020.00 3.00 1.00 3.0022.00 3.18 0.91 3.5024.00 2.92 0.88 3.3326.00 2.69 0.81 3.3328.00 2.86 0.75 3.8130.00 2.67 0.70 3.8132.00 2.50 0.69 3.6434.00 2.65 0.65 4.0936.00 2.50 0.61 4.0938.00 2.37 0.61 3.9140.00 2.50 0.58 4.35

Ratio of A/C to Non A/C Fare

Ratio of A/C to Non A/C Fare

Expenditure Component for the year 2012-13

Growth of Cost Component (In Crore)

Cost of Capital

Date Price Date Price

25-05-2011 45.36 01-04-2013 52.99

01-07-2011 45.36 17-04-2013 53.07

04-01-2012 44.88 11-05-2013 54.18

25-07-2012 44.12 01-06-2013 54.80

14-09-2012 50.25 01-07-2013 54.77

01-01-2013 50.36 01-08-2013 55.46

21-01-2013 52.06 01-09-2013 56.07

16-02-2013 52.62 01-10-2013 57.06

23-03-2013 53.17 01-11-2013 57.67

Increase in Diesel Prices (In Rs.)

• In a span of two years diesel prices has increased by 30.70%• It is increasing almost every month

Period Staff CostJan-Mar 2011 123.85

Apr-June 2011 124.48

Jul-Sept 2011 131.28

Oct-Dec 2011 148.99

Jan-Mar 2012 146.64

Apr-June 2012 149.17

Jul-Sept 2012 164.73

Oct-Dec 2012 193.28

Jan-Mar 2013 198.03

Apr-June 2013 200.39

Jul-Sept 2013 206.85

Increase in Staff Cost (In Crore)

• In a span of two years staff cost has increased by 59.10%

-74.43

-36.44-12.02

14.67

94.81

172.07

261.13

460.12

560.02587.55

625.21

675.56 663.04

515.09

-200

-100

0

100

200

300

400

500

600

700

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

Accumulated Loss / ProfitRs. Crore

2000-011999-00 2001-02

• Increase in the Price of Diesel– F(DPA) = (F-D)+(RPD/BPD) x D) Where,– F(DPA) is the revised fare in terms of Paise per passenger km.– D is the earlier diesel cost per passenger km.– RPD is the revised price of Diesel.– BPD is the earlier basic price of the Diesel.

• Increase of Dearness Allowances rate– FR = F+(CPKM(L)/CPKM)x P x F/100 Where,– F is the current fare per passenger km.– FR is Revised Fare Paise per passenger km.– CPKM is Total cost per km.– CPKM(L) is staff cost per km.– P is the % increase in the staff cost due to D A increase over the previous staff

cost.

Passenger Fare Revision Policy

The Terms & Conditions for formula as per Government Order 30-09-2000 Whenever, there is decrease in the diesel price the fare shall also be

decreased. Fare increase on account of diesel hike and DA increase will be affected by

the STUs only if the combined effect of diesel and DA increase exceeds 0.25paise per passenger km.

The STUs will be given the liberty to distribute the quantum of fare increasebetween the different services , namely ordinary, express, luxury anddeluxe, ensuring however that the combined effect of all these increase theshall not exceed what is given by the formula.

Before effecting fare revision on account of Diesel and DA hike approval ofthe respective Board of Directors of the STUs shall be obtained.

The additional revenue realization on account of revised fares shall notexceed the total increased cost of Diesel.

Passenger Fare Revision Policy

Date Fare Revision (Percentage) Cumulative Increase (Percentage)

26.06.2010 8.65 8.6526.06.2011 7 16.2501.10.2012 10.1 27.9916.06.2013 14 45.9

Year EPKM Increase(Percentage)

Cumulative Increase(Percentage)

2010-11 26.44 - -2011-12 29.77 12.59 12.592012-13 32.68 9.77 23.592013-14 36.22 10.83 36.97

Fare Revision

Earning Per Km (EPKM) Growth

Travel Expenditure for the journey from KBS to Kadugodi for Various Modes ofTransport

Sl.No Mode ofTransport Type Distance

in KMs Amount Wear& Tear

TotalAmount

Amountper KM

Amt perpersonper KM

1 BMTC BUSVolvo 28.1 90 90 3.20 3.20

Ordinary 28.1 22 22 0.78 0.78

2 Personal Vehicle(Two Wheeler)

Bike 28.1 50 15 65 2.31 1.16

Scooter 28.1 63 15 78 2.78 1.39

3 Personal CarPetrol Car 28.1 160 30 190 6.76 1.69

Diesel Car 28.1 115 30 145 5.16 1.29

4 Private TaxiSmall 28.1 600 600 21.35 7.12

Sedan 28.1 900 900 32.03 10.7

Note: 1. Diesel Rate @ Rs.57.08 KMPL for Diesel Car: 15 KMPL for Scooter: 352. Petrol Rate @ Rs.79.35 KMPL for Petrol Car: 15 KMPL for Bike: 45

Wear & Tear Cost Estimation: Private Taxi Charges are ascertained from Private Taxi Operators1. For Two Wheeler : Re.0.50 per km2. For Four Wheeler : Re.1.00 per km

Comparison of EPKM

% Increasein EPKM

% Increasein Fare overthis Period

NaturalGrowth

in %

EPKMIncreaseadjustedagainstNaturalGrowth

Of Period EPKM(Paise) With Period

EPKM(Paise)

Apr-Jun 2011 2701.77 Apr-Jun 2012 3027.04 12.04 7

5.65

6.39

Apr-Jun 2012 3027.04 Apr-Jun 2013 3368.13 11.27 10.1 5.62

Jul-Sep 2011 2939.74 Jul-Sep 2012 3105.87 5.65 0 0

Jul-Sep 2012 3105.87 Jul-Sep 2013 3566.14 14.82 25.51 9.17

Oct-Dec 2011 2759.58 Oct-Dec 2012 3061.89 10.95 10.1 5.3

Jan-Mar 2012 2725.82 Jan-Mar 2013 3014.10 10.58 10.1 4.93

Fare Elasticity

• Since 09.03.2012, for more than a year the Auto fares have not increased due tonon-increase of price of gas

• In recent time the augmentation of schedules are very high

There is limitation on increasing thePassenger Tariff

Other Sources of Revenue GenerationEfficiency Improvement

Cost CuttingPopularizing Public Transport

Operational Optimization

Traffic and Transit Management Centers (TTMCs)

• BMTC is the first urban transport organization in the country to get JnNURMfunding for a national pilot project for an innovative idea called TTMC.

• Construction of 10 Traffic and Transit Management centers was taken and allhave been commissioned.

TTMCs were taken up to;

• To Provide an integrated transportation facility with adequate facilities andamenities to cater to the requirements of all user groups.

• Smooth flow of all types of traffic to and from the terminal such that there is nocongestion/disturbance caused to traffic along the main road.

• Minimum /no conflict between various traffic types-Passengers, buses andprivate vehicles and to achieve minimum passenger and vehicle processing time.

• To encourage use of public transport and provide first-mile connectivitythrough provision of park and ride facilities.

Facilities at TTMCs• Bus terminal

• Bus bays• Platforms• Seating & lighting• Public conveniences• Information systems• Safety and security

• Bus maintenance depot• Maintenance bays,• Washing platform• Bus parking• Services and Utilities• Fuel filling station• Amenities for crew

• Passenger amenities• Bangalore One centers• Other citizen amenity centers• ATMs• Daily needs shopping

• Park and Ride facilities Before After

• Expenditure on these 10 TTMC is Rs. 425 Crore.• Total built up area - 32.0 lakhs Sqft.

• Out of which 6.2 lakhs sft. is for Bus Terminus and Depot.

• 18.3 lakhs sft. for Passenger Amenities and office space.

• 7.5 lakhs sft. is for parking facility.

• 3715 four wheeler and 2800 two wheeler parking.

• Expected income from these 10 projects is Rs. 33 Crore peryear.

• IRR for these TTMCs varies from 12% to 26%.• BMTC has identified 35 more Traffic & Transit Management

Centers (TTMCs) in and around Bangalore city. These willbe developed through PPP.

Chartered/Dedicated Premium Pass Service

• BMTC is providing buses on chartered services on kilometrebasis to companies/factories, schools and colleges.

• To minimize loss of revenue due to clandestine operation byprivate operators, Dedicated premium passes services wasintroduced for the Industrial / Company workers during theyear 1998 with TWO buses.

• At present 572 trips are operated with 285 buses to Schools &Colleges and 1106 trips are operated with 504 buses tocompanies/factories.

• 308 number of buses operated to companies on Dedicatedpass basis.

• Realizing average revenue of Rs.8.97Cr per month.

YearAnnual Revenue (Crore)

Chartered Service Dedicated PassService Total

2005 14.528 13.042 27.572006 19.521 14.338 33.8592007 26.738 12.325 39.0632008 39.119 08.884 48.0032009 38.483 07.878 46.3612010 39.453 8.022 47.4752011 42.337 14.891 57.2282012 46.086 32.351 78.437

2013 (Est.) 58.510 39.478 97.9882013 (up to Oct ) 34.131 23.029 57.16

Revenue from Chartered/Dedicated Premium Pass Service

Growth of Revenue from Chartered/Dedicated Premium Pass Service

Hosur Road Corridor Improvement Plan

Moving from the existing‘Destination Services’ model

to an‘Integrated Services’ model

(Direction Oriented model)

Existing Destination Services Model Bus services in Bangalore are based on the ‘Direct Services’

model. Each locality is directly connected to destinations in the city

centre with a dedicated route. Such system leads to inefficiency. As city expands and number of destinations increases, the

number of routes increases exponentially. It results in a large degree of route redundancy. Long wait times on specific routes. High number of routes increases system complexity for users. Inability to match demand precisely to supply.

Route Rationalisation

Trunk Buses

Feeder BusesMidi Buses

Same height and Width as normal Bus120-130 HP Engine

28-36 Seater9.5 Meter Length

Procurement Based on Life Cycle Cost

• At present the procurement of buses and other major items aredone through the process based on e-Tendering where thesuccessful bidder is decided based on the lowest quoted rate.

• It is quite possible that a particular brand of bus has costed lessinitially but in the long run it consumes more diesel and otherconsumables like Engine oil, Gear Box oil, Fuel Filter, resulting inhigher overall cost in the life cycle.

• This situation is practically happening in the present system.• To avoid this kind of situation and from the point of view of

having low cost in terms of life cycle, tender based on life cyclecosting has been started in BMTC for two items namely buschasis and tyres.

Procurement Based on Life Cycle Cost for Buses

The Tenderers have to furnish complete data regarding,• Changing period in Kms for:

• Engine Oil.• Gear Box Oil.• Rear Axle Oil.• Coolant.• Power steering.• Fuel filter cum water separator.• Fuel strainer.

• Projected life of the O.E. engine in Kms.• Projected life of the O.E. Gear Box in Kms.• Projected mileage of HSD in KMPL.

Procurement Based on Life Cycle Cost for Buses Contd…..

Life Cycle cost is based on consumption of Major Lubricants, Fuelline aggregates, O.E. Engine life & mileage of HSD (KMPL) for arunning of 7.5 Lakhs Kms.Subsequent deductions will be made towards shortfall inguaranteed performance.Considering the data submitted by the Tenderers, cost on MajorLubricants, Fuel Line Aggregates, OE Engine and performance ofHSD KMPL of the respective type of Chassis of the Tenderer will beevaluated.The total cost arrived for all the items indicated for life span will beadded to the quoted rate by the bidder. The resulted cost will bethe basis for deciding the L-1.

Tyre Brand Average NewLife

RetreadingFactor

Life afterRetreading Total Life

Brand 1 44142 3.71 22267 123262

Brand 2 35582 3.5 19159 101057

Brand 3 44929 4.01 23427 136266

Brand 4 85427 2.14 33401 148323

Brand 5 39323 4.67 22786 144623

Brand 6 106358 1.97 55195 192244

Brand 7 57500 4 23143 150072

Procurement Based on Life Cycle Cost for Tyre

• Life Cycle cost is based on life of new tyre, life of tyre afterretreading and number of times retreading is possible(Retreading Factor).

• These figures are calculated based on the historicalperformance of different brand tyres in KSRTC and BMTCtogether.

A = TOTAL COST = NEW TYRE COST + (RETREAD COST x NO. OF RETREADS).

B = TOTAL MILEAGE = INTIAL TREAD MILEAGE + (RETREAD MILEAGE OF No. of processes).

Cost per Km running = (A)/(B)

• L1 is decided based on least cost per Km running.

Procurement Based on Life Cycle Cost for Tyre Contd…..

BMTC New website “mybmtc.com”Commuter Friendly Initiative

Geo-coded Bus stops

54Non- Sheltered bus stopSheltered bus stop

Trip Planner Route Map : Printable

Route Timings : Printable

Commuter

Airport

BusStands

InsideBus

BMTCoffices/

Ticketingoffices

BusStations

Mybmtc.com

Helplinenumbers

Increasing Visibility

AT AIRPORT

On-going Initiatives

ITS : Intelligent Transport SystemVehicle Tracking System & 2 Way

Communication

• Operations Monitoring• Incident Management• Real Time ETA/D

Electronic Ticketing Machines• Revenue Monitoring & Management• Ticket and Smart Card

PassengerInformation System

• Revenue Monitoring & Management• Applications

6500

10000

35

Data & Command Control Centre• Monitoring & Reporting• Communication• Call Centre

1

Depot Management System• Crew Management• Vehicle Management• Scheduling

1

Takes Care the Concerns of :• Commuter.

• Which bus should I take to reach my destination?• What is the bus route between my origin & destination?• When should I reach the bus stop to take my bus?

• Management.• Revenue earned, Targets Met & Exceptions Reported.• Duty/Depot management, Scheduling, Fleet Usage, Crew Appraisal.

• Operations Manager.• Is any of the bus over-speeding?• Has there been any accident?• Are there any breakdowns/ Idling/ Bunching?

• Crew• Control Centre Support for incident management.• Easy reconciliation and end of duty process.

Vehicle Tracking System

• Location, Time & Speed Monitoring.

• Based on above Driver Appraisal Card.

• Incident management through two waycommunication system.

• Tracking on GIS maps @ 1:2500 scale.

• Various graphical, tabular and spatialreports on important parameters.

• Alerts on exceptions (reporting) – missingtargets.

Smart Card Fare Collection System

Mobile Application

Mobile Application for iOS, Android and Windows 8

Find Nearby Bus Stops• The user can use the app to

find nearby bus stops usingintegrated Google Maps withGeo-location of the user.

• The bus stops will be markedwith icons as as a overlay onthe map.

• User can also search for nearbybus stops by keying in the areaor the address.

Installation of Passenger informationKIOSK at ten Major Bus stations.

CCTV with live monitoring at all major bus stationsIn Bus Camera with Recording

Free Wi-Fi in A/C BusesLeave Management System.Training Information System.

Human Resource Management.MIS

Estate & Land Information System ( EIS )Inventory Management System

File Management System ( FMS )

Other Applications

68

Other Factors of Importance in Pricing

• Operation on un economical/obligatory routes.• Clandestine operation by the illegal operators.

• Burden of Concessional tickets/passes.