Contract Areas and Service Quality Issues in Public Transit Provision: Some Thoughts on the European and Australian Context

Abstract

The introduction of contract regimes for the provision of bus services, such as competitive tendering1 and performance-based contracts, is usually premised on a prior assumption that the size of the physical contract area is given and that any policies related to interactions between contract areas, such as integrated ticketing and fares,2 are agreed to. This article examines the evolving arguments that encourage a review of contract area sizes before recontracting and the positions supporting the benefits of service quality-related issues such as an integrated fares policy. Given that a growing number of analysts (especially in Europe and Australia) are promoting the appeal of increasing physical contract area size to facilitate, among other reasons, an integrated fare regime, it is timely to explore the pros and cons for such reform to ensure that they are not counterproductive to the desired outcomes of a reform process. The arguments presented here caution the support for too small a number of large contract areas on grounds of internal efficiency losses and limited gains in network economies (but support amalgamating very small contract areas). Existing empirical evidence, limited as it is, tends to support contract areas (and depots) currently serviced by fleet sizes in the range 30 to 100 regardless of urban development profile. Alternative ways of delivering cross-regional and broad-based network benefits are proposed.