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The JUTC and a Protest - Wrong Protest

               Colidez  Sweet Music Jamaica  Tech Life

As of August 24, 2014 the Jamaica Urban Transport Corporation (JUTC) bus fares will be increased in Jamaica. This comes on the heals of an increase as recently as 2013. Obviously no one welcomes this. The Oppositions  is even planning a protest. Before I join them there are a few thing I though I clarify for myself. What is more important to me is whether commuters want a quality bus system or not and are they willing to pay for it? Is the Government still mismanaging the JUTC? Can a bus operate efficiently, pay for fuel, tyres,  maintenance and servicing as well as  pay the driver and all support personnel and management with revenues of less than a $1 million per month?



Let's  examine some facts. The JUTC serves some 150,000 commuters daily. In 2013, 240 buses brought in revenues of $240 million per month. Each bus was therefore making approximately $1,000,000 per month and interestingly it was not profitable. Today there are 400 buses bringing in revenues of $366 million per month. Each bus is therefore now making approximately $915,000 per month and this in a context of inflation. The real value of the revenues is therefore even less. It could be argued that for buses to operate efficiently revenues of $1,200,000.00 is required per bus.

Almost the entire operation of the JUTC is dependent on imported capital items and raw materials.  All of which are affected by inflation. Fuel cost have gone up 37%; tyres cost up 68%; toll cost up 73%; maintenance and repair cost up 184%. The Exchange Rate on January 1, 2012 opened at  US$1:JM$86.75. Fast forward to August  21, 2014, the closing rate  US$1:JM$112.79. A difference of JM$26.04,  this represents a devaluationof  30.02% over the last two years and 8 months. Jamaica does not manufacture buses, they are imported; daily operating fuel is imported; tyres are imported.  All repair and maintenance materials are imported. Toll charges which are tied to the exchange rate have also gone up and has resulted in higher cost to the JUTC. At the very least all this should cost the JUTC 30.02% more as a result of the dollars devaluation. Everything is imported and as a result more expensive and therefore operations cost will continue to rise steadily.  Someone has to pay. An increase is inevitable and if not now when?

This trend is expected to continue  but is exacerbated by the fact that the JUTC acquired over 124 new buses within the last year and are expected to get more. The bus fleet and therefore seating capacity increased by 66% where as ridership has increased by only 28% to 5.1 million monthly. It would be inevitable that the JUTC loses money if the demand is not there. The  JUTC is losing as much as $250 million monthly. This has been coming down to $162 million in July.  This is where I believe part of the real problem lies. This suggest that there is an over capacity of buses and this could be attributed to possible poor decision making on the part of the management team. Was there a proper analysis of the demand for the service and hence were more buses justified?

While highlighted in this one company on this particular occasion, the general mismanagement is what I believe people should be more focused on. If there should be a protest it should be against gross national mismanagement that exist throughout most of Government and contributes to the wider problem of under productivity of the nation leading to poverty and other social problems. The opposition would do well targeting the lack of jobs which are necessary to afford the buses and all other injustice,  in a more meaningful manner instead of appearing to care for the poor in this case 150,000 of the over 2,000,000 Jamaican's that suffer injustice daily.

Jamaican will pay and continue to pay for all and sundry piece of mismanagement whether directly as in the case of the JUTC or indirectly through increased taxes. Remember the proposed Bank Withdrawal Tax. Should the wider Jamaica subsides the JUTC from taxes? I don't think so. The fares will go up and probably should.


               Colidez  Sweet Music Jamaica  Tech Life

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