Autopax, the Passenger Rail Agency of South Africa (PRASA) and insufficient funding are all potentially distorting competition in the public transport sector, according to the preliminary findings of the Competition Commission’s Public Passenger Transport Market Inquiry (PPTMI).

Autopax is the holding company of two South African intercity bus services and a wholly owned subsidiary of PRASA.

Speaking at the Southern African Bus Operators Association (Saboa) conference, held in Pretoria, Competition Commission principal analyst Itumeleng Lesofe said on Wednesday that the commission had the opportunity to assess all the evidence it had received during the PPTMI, and that it had now formulated its preliminary findings.

Two draft reports have already been compiled – one on e-hailing and the other on all other modes of transport under investigation.

However, the commission was encouraging further engagement on the report, noted Lesofe, as the preliminary findings did not necessarily translate into the commission’s final recommendations.

He said the inquiry had its origins in complaints received regarding excessive pricing, predatory pricing and exclusionary conduct (and so forth) in the public transport sector.

The study looked at aspects such as price-setting mechanisms, price regulation, route allocation, licensing, entry regulations, transport planning and transformation.

The scope of the inquiry included long- and short-distance bus services, Metrorail and Gautrain, as well as app-based, metered, tuk-tuk and minibus taxis.

Lesofe said the Competition Commission had since the start of the PPTMI received another five complaints related to South Africa’s public transport environment, which were currently being investigated concurrently to the PPTMI process.

AUTOPAX
Lesofe on Wednesday shared the PPTMI’s preliminary findings relating to the bus sector, and not the rail or taxi sectors.

He noted that the relationship between PRASA, as custodian of key intermodal facilities, such as at Park station, in Johannesburg, and Autopax, as an active participant in interprovincial bus services, led to competition distortions.

Autopax seemed to receive preferential treatment compared with other bus operators, he noted. It had an exclusive loading area at Park station, for example, while other bus operators had to share loading areas.

The preliminary findings also point to the fact that PRASA does not pursue Autopax for payment for these facilities as it did with other bus operators, competing with Autopax.

Autopax also appears “very inefficient” with high debt, but continues to receive funding – “protection” – from PRASA.

Lesofe said the Competition Commission questioned whether the State should be involved in intercity bus services as there was no market failure in the sector, with the State normally participating where there existed such failure.

Another market distortion uncovered by the PPTMI is the objection process relating to the licensing of intercity bus operators.

Large intercity operators often abuse this system, claiming market saturation, which delays and discourages new entries into the market.

However, regulatory bodies were inadequately funded and staffed to investigate this claim, which meant there was little capacity to determine true supply and demand scenarios – or to test the claims of the large intercity operators, said Lesofe.

Preliminary findings in the bus contracting sector note that the current system prevents effective competition between commuter bus operators, with lack of funding from government again a major contributing factor.

The unintended consequence of this was that there were monopolies operating on certain routes, noted Lesofe.

A competitive bidding process for these commuter contracts, as envisaged by government, had never happened, he added.

The low rates payable to bus operators also compromised the quality of service, added Lesofe.

These low rates also ensured that operators were unable to respond to the needs of commuters and constrained their ability to grow, he said.

The allocation of subsidies also failed to adequately take into account the challenges and high costs incurred by operators in rural areas.

As for bus rapid transit (BRT) systems, Lesofe said the PPTMI found that BRTs in their current format had led to a number of inefficiencies, wrong corridor choices, high and escalating costs and low ridership.

The PPTMI questioned whether BRTs were sustainable at this cost level.

The inquiry also found that BRTs, in their current format, were not suitable for smaller cities, owing to low passenger numbers and high costs.

Perhaps it would be more suitable to simply improve the currently municipal bus systems in these towns, noted Lesofe.

He said while the situation in Cape Town and Johannesburg was improving, “the situation at Tshwane’s BRT was bad”.