For a national or city government, particularly when a developing country is involved, franchising does offer a potential for implementing a rapid transit system which otherwise might not be built. This concept has fallen out of favor in recent decades because of the declining profitability of transit operations. It is here suggested for Bangkok and has been used for the Hong Kong Mass Transit Railway. Franchise bids for transit might be negative or positive with the negative bids inferring some level of subsidy for the private operator. This paper provides some historical background and then considers reasons for franchising. Because of high costs, rapid transit is beyond the financial capabilities of private enterprise. Because there are important external benefits such as reduction in traffic congestion, governments encourage a level of investment greater than is likely to be commercially viable. Economic return is thus seen in excess of financial return and a valid reason for government intervention. Recently such enterprises as the Channel Tunnel and London Regional Transport's approach to regional bus service tendering do indicate a renewed reliance on the private sector. Four reasons for franchising the design, building, equipping and operation of a rapid transit system are given: (1) A marginally profitable system could be bid on the present value of future profits to produce bids favorable for government; (2) Appropriate rules for franchise could include some benefits of land development and land use going to the private operator; (3) Private operation can result in enhanced operational productivity; (4) While political intervention is inevitable even in a private transit system, such operation would be somewhat distanced from politics. Some of the difficulties of franchising are described, along with possible methods for attracting private operators. At the same time, however, the government interest must also be protected.

  • Availability:
  • Corporate Authors:

    Ian Allan Limited

    Terminal House
    Shepperton, Middlesex  England  TW17 8AS
  • Authors:
    • Goldstein, A
  • Publication Date: 1986-1

Media Info

  • Features: Photos; References;
  • Pagination: p. 16-20
  • Serial:
    • Volume: 43
    • Issue Number: 448
    • Publisher: Ian Allan Publishing, Limited
    • ISSN: 0026-8356

Subject/Index Terms

Filing Info

  • Accession Number: 00455096
  • Record Type: Publication
  • Files: TRIS
  • Created Date: May 31 1986 12:00AM