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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.
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