9 BUS

Scheduled intercity bus services and ridership continue to contract, as they have for 50 years, with increased private ownership of cars and growth in air travel. By contrast, charter services have seen some recent growth. Bus transit services expanded and gained ridership until the late 1980s, but have recently lost riders.

The Legislative and Institutional Framework

Introduction

For most of the past half century, the intercity bus industry in Canada has operated in a stable regulatory environment.

Bus companies that operate regularly across provincial boundaries (extra-provincial undertakings) fall under federal jurisdiction. However, with one exception, ^{note 1} the federal government has never actually regulated the operation of these companies, instead allowing each province to do so under the authority of the Motor Vehicle Transport Act, 1987 (MVTA). Each province licenses extra-provincial bus undertakings in the same way it licenses local ones - i.e., those that are strictly intra-provincial - under authority of the federal act.

While the MVTA regime varies considerably from province to province, in most cases the province maintains some form of control over rates, schedules, routes, and entry to and exit from the market. Carrier licences are usually quite specific about the nature of the service the carrier is allowed to provide, typically specifying routes for scheduled service or the territory in which the carrier is permitted to offer charter service. Essentially, the MVTA regime obliges a carrier to obtain an operating authority in each province in which it wants to operate.

Regulatory Reform

Traditionally, Canadian jurisdictions regulated bus and truck carriers in much the same manner, using the same legislation and administrative institutions. This has slowly changed over the last decade, which has seen the almost complete deregulation of the trucking industry. Both buses and trucks are still subject to the same motor carrier safety rules, which are embodied in National Safety Code (NSC) standards. These are agreed to nationally, but implemented mostly through provincial legislation and regulation.

In the early 1990s, some provinces began deregulating their intercity bus industry, including those portions of the extra-provincial bus industry that fell under their control.

During negotiations leading to the federal-provincial Agreement on Internal Trade (1993-1994), some jurisdictions - including the federal government - suggested that the continuing economic regulation of the intercity bus industry constituted an interprovincial trade barrier. The negotiators could neither resolve whether this was the case, nor agree on whether or when the industry should be deregulated. Consequently, in the final version of the agreement, a number of jurisdictions exempted their bus regimes from the provisions of the transportation chapter. ^{note 2}

However, these exemptions are not absolute. The Council of Ministers Responsible for Transportation and Highway Safety is obliged to review them every two years, starting in 1997, with a view to their reduction or elimination. The Agreement on Internal Trade also obliges the council to develop a plan, based on a consensus among jurisdictions, for dealing with issues related to any of the exemptions. ^{note 3}

Until quite recently, most provinces, as well as almost all of the industry, supported economic regulation. Now, however, some provinces have either deregulated the bus industry or announced their intention to do so. Three provinces - Newfoundland, New Brunswick and Prince Edward Island - and both territories have at least partially deregulated bus service. Another - Alberta - has streamlined scheduled service regulations and deregulated most forms of charter service. Ontario has also streamlined its regulatory regime and has announced its intention to proceed to full deregulation on Jan. 1, 1998.

The differences of opinion revealed in the internal trade negotiations provided the impetus for the creation of the Canadian Intercity Bus Task Force. All jurisdictions (except P.E.I.) and four bus industry associations accepted invitations to participate. In November 1996, the task force presented its final recommendations to the Council of Ministers Responsible for Transportation and Highway Safety. These called for full deregulation of charter bus and bus parcel express (BPX), as well as for the relaxing and streamlining of regulations for scheduled bus service, by Jan. 1, 1998. They also called for a review in 1999 of the impact of these changes, and further recommendations. These recommendations would provide a context for possible changes to the bus section of the MVTA.

The task force stopped short of recommending full industry deregulation. For this reason, its recommendations were unacceptable to provinces already committed to deregulation. Others had reservations about the deregulation of charter and BPX services.

On the safety front, the major news for the bus industry (and, indeed, for trucking) is the development and the beginning of the implementation of the new NSC compliance review- safety rating standard.

Carrier Services

Overview

Statistics Canada identifies bus carriers from administrative records of business activities by establishment, classifying them by their main source of revenue as scheduled intercity, charter, school bus or urban transit. Those carriers surpassing a minimum annual revenue (currently $200,000) are surveyed, providing information on their operating expenses and revenues, balance sheets and traffic data. Statistics Canada tabulates the information and reports for each of the four main-revenue classes of carrier. ^{note 4}

A particular feature of the bus industry is that carriers primarily providing scheduled services also provide charter services, while carriers primarily providing charter services also provide some scheduled and school bus services. Long-distance bus transport is essentially carried out by operators providing both scheduled and charter service, while short-distance bus transport is predominantly carried out by school bus and urban transit operators.

Table 9-1 summarizes the industry revenues by type of carrier as measured in 1995. Some 95 per cent of revenues from scheduled services were earned by intercity operators, while charter operators received five per cent. Charter revenues, while important to all carriers except urban transit operators, went mostly to charter operators (about 54 per cent of the total), with the rest split between intercity operators (13 per cent) and school bus operators (about 32 per cent).

There is little overlap in services between the urban transit operators and the rest, and, apart from their charter operations, little overlap between school bus operators and the rest. (Note, however, that charter revenues are only about five per cent of the total revenues of school bus operators.)

Concentration of Bus Carriers

The results of some special tabulations by Statistics Canada, showing shares of revenues by size of carrier separately for scheduled and charter carriers between 1980 and 1992, are presented in Table 9-2.

Among scheduled intercity carriers, the proportion of total revenues accounted for by the five largest firms rose substantially through the first half of the 1980s - to about 84 per cent from 73 per cent - while the shares of the 10 largest firms increased to 95 per cent from nearly 90 per cent. Between 1986 and 1992, however, these proportions fell again to about 1980 levels, largely as a result of the divestiture of the network of a major carrier in Quebec into a number of smaller carriers.

The more detailed tabulations by carrier ^{note 5} show that the share of the largest firms rose during this period - partly through acquisition of shares from others. The explanation for the reduced concentration appears to lie in higher proportional losses of revenue by the larger carriers during the slump in bus demand since 1990.

Revenue shares among the charter carriers are dispersed much more broadly than those of the scheduled carriers, the largest five carriers receiving only 30 to 40 per cent of the total for the surveyed group, and the largest 10 carriers only 50 to 60 per cent. There also appears to have been a reduction in these shares through the period, but the significant changes in numbers of carriers surveyed make that observation very tentative.

Equipment

Fleet size and distance travelled are shown in Table 9-3. The number of buses operated by scheduled intercity carriers has fallen overall between 1981 and 1995 by about one quarter.

The early 1980s witnessed a peak of 3,000 vehicles used for charter services. This was followed by a steady decline to 1,800 vehicles in 1988. Since then, the number of vehicles has steadily increased, returning to 3,000 vehicles by 1993. In 1995, however, the number of vehicles again decreased - to 2,660 vehicles (see Figure 9-1).

The largest variation in fleet size involves school bus operations. The number of vehicles peaked at 24,000 in 1987, decreased to 21,000 by 1991, then jumped to 25,000 in 1992 and remained at that level during 1994 and 1995.

In the urban transit sector, the number of vehicles has been fairly stable over the past three years, in the 13,000 to 13,500 range.

Traffic

The lack of bus traffic measures inhibits service monitoring and intermodal comparisons:

• For scheduled services, the number of passengers carried is recorded, but not the distances they travel, so passenger- kilometres cannot be computed.
• The number of passengers using charter services is not available.
• Total bus-kilometre information is available for scheduled intercity carriers and charter carriers, but the data are not broken down to show scheduled and charter bus-kilometres separately within those groups.
• Because distributions of bus-kilometres by origin and destination, or even by trip distance, are not available, it is impossible to infer the extent of competition or the extent to which scheduled and charter carriers provide services in the same markets. Nor is it possible even to make broader comparisons with other modes.

Scheduled Intercity Bus Traffic

Long-term trends in the services provided by the scheduled intercity carriers are shown in Table 9-4, and illustrated in Figures 9-2 and 9-3. Even with the changes in survey coverage, the dramatic change that has taken place in the scheduled intercity business over nearly 50 years is clear. Passenger traffic peaked in 1949, at 129 million passenger-trips, or about 10 trips per person per year. Traffic then declined remarkably to just over 50 million trips in 1957 and fluctuated at around 50 million during much of the next decade. Since the late 1960s, there has been an almost uninterrupted decline - to 11.2 million passenger-trips in 1995, or an average of only about 0.4 trips per person per year (only one twenty-fifth of the 1949 figure).

The statistics clearly show that the market for bus trips has contracted, though the crude indication provided by passenger-trips probably conceals very different trends by trip length. It is probable that the decline was disproportionate in the earlier part of the period for shorter trips, as increasing car ownership allowed private travel to replace bus use for routine travel. And it seems likely that the decline over the most recent two decades has been predominantly in the longest trips, as declining relative prices made air travel increasingly accessible.

Figure 9-2 also shows scheduled bus-kilometres, which indicates very different trends. Bus-kilometres also rose rapidly in the years leading up to 1949, then declined over the next decade at a much slower rate than passenger-trips. In the two decades before 1980, however, scheduled bus-kilometres actually rose. Since that time, the trend has been downwards with only minor interruptions. By 1995, the level was 24 per cent below the 1980 peak. ^{note 6}

The relative trends in number of passengers and bus-kilometres travelled illustrate that the industry has been unable to match its services to the declining number of passengers, constrained as it is by the minimum capacity offered by a single bus, the attachment of carriers to the standard highway bus for service quality and short-term cost reasons, and the spread of passenger demand over hours and days. The implications of the different trends in passengers served and bus-kilometres travelled are illustrated in Figure 9-3, which plots passengers per 100 bus-kilometres. This rough indication of average bus loads - direct measures are unavailable - shows an almost uninterrupted decline over the past half century, from more than 70 passengers per 100 bus-kilometres in the late 1940s to fewer than eight in 1995. The figure has fallen by half since 1980, and by two-thirds since 1970.

Figure 9-4 combines distance travelled with the size of the highway bus fleet to show average per-bus kilometres driven. For scheduled intercity carriers, the average per-bus distance traveled peaked at 130,000 bus-kilometres in 1983 and declined to a low of 107,000 in 1992. By 1994, the rate was up 12 per cent from 1992, as high as 120,000 km per bus, indicating a return to better utilization levels.

Charter Traffic

Figure 9-4 indicates that charter carriers have been somewhat more successful than the scheduled carriers in matching bus fleet to traffic demand. Annual kilometres per bus nearly doubled between 1981 and 1989 - particularly as reported bus fleets contracted. Subsequently, per-bus kilometres travelled declined rapidly, as demand slumped by 1991. ^{note 7}

Figure 9-5 illustrates the development of charter carriers' services since 1981. Charter business expanded through the period, bus kilometres increasing by 54 per cent by 1995. Meanwhile their other operations - primarily school bus services - increased slightly (bus kilometres rising by 10 per cent).

Urban Transit Bus Traffic

Eighty urban transit companies across Canada were reported in operation in 1995. Statistics Canada's surveys from 1975 to 1993 covered the sub-group of companies with minimum revenues of $500,000, which increased to 74 from 30 during that period. A subsequent expansion of coverage in 1994 raised the number of reporting companies to 84, although this dropped to 80 in 1995. ^{note 8}

There is unfortunately no national measure available of the extent of transit networks - in route- kilometres, for example. Nor are there any indicators of the size of the population served. Inferences about the extent of services must therefore be made from the number of vehicles and vehicle-kilometres provided each year. Table 9-3 shows that the number of transit vehicles has expanded, while that of intercity and charter buses has actually declined. In fact, between 1975 and 1995, the number of transit vehicles among reporting companies increased by one third. Vehicle-kilometres expanded even faster, increasing by 50 per cent over the entire period, with a peak in 1989 about five per cent higher than the 1995 level (see Figure 9-6).

The increase in transit services brought an increase in ridership, particularly up to 1989. Figure 9-6 also indicates that the number of passengers increased by 37 per cent between 1975 and 1989. However, ridership has declined since 1989, and the decline has continued beyond the recession of the early 1990s, with the number of passengers down about 11 per cent in 1995. An overall decline in the average number of passengers per vehicle-kilometre throughout the period is revealed in Figure 9-7. The increase in passengers in the late 1980s resulted in only a brief revival, and by 1995 the number of passengers per vehicle-kilometre was nearly 20 per cent lower than in 1975.

Some final indicators of the changes in demand for transit bus travel are provided in Figure 9-8, which compares the numbers of passengers to the size of the entire population. Over the 20-year period considered, per-capita transit bus trips rose by 20 per cent prior to 1986, then declined before 1995, ending the period about five per cent below the initial rate.