Product Differentiation Under Deregulation
The United Kingdom provides a great service to the world - implementing ideas advocated by transport economists, so that the rest of the world can observe whether they work or not.
If you are thinking of deregulating your bus services, or privatising your railways, there are pointers as to what to do and what not to do.
In 1986 bus services outside London were fully deregulated.
The introduction of competition to London was done under centralised control, and seems to be internationally recognised as a successful model.
Outside London, in the ten years since deregulation, the effects are mixed (to put it mildly):
- bus kilometres increased by 29% (hooray!)
- unit costs of bus operation fell by 45% (hooray!)
- passenger trips dropped by 28% (hoo ... oops)
These strategic indicators are well pored over by analysts. The tactical effects are also interesting.
In the old days, the main differentiation between bus services was where they went. If you wanted to go to Bolton you wouldn't board a bus to Bury. So the destination blind and a route number were all the operator needed to display.
Now, however, there may be lots of different operators jostling to take you to Bolton or wherever, and they need to attract your attention with whatever it is they consider makes them special. This was brought home to me a couple of years ago when I was watching buses come and go at Piccadilly, the focus of Manchester's bus system. The traffic has become as colourful as a supermarket shelf.
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The blue bus stands out. It wants you to know that it is unusually inexpensive (I do not know if this was in fact the case). Fair enough. |
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More up-market, this chap has invested in superior vehicle technology. He wants you to know that his bus has a low floor and a green engine and is a super bus. |
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This operator has clearly seen Crocodile Dundee ("call that a knife ? THIS is a knife"). Here is a low floor to beat all low floors and he wants you to know it. Not a mere super bus, an easy access super low floor bus. |
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I thought for a moment when this came round the corner that it was yet another bus operator who had spotted an edge. |
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