The Arriva demise is not the end of the intriguing and expensive public transport saga. Much more remains to unfold. That will include the first event, right at the beginning of the financial year 2014, to shove the Budget projections off course. The hiatus, if a hiatius it is, between the termination of the Arriva contract and the start of a new one will see losses mounting.
These losses will be for the account of the new temporary (so runs the government’s hope) public company. Nevertheless they will tighten the conditions any private bidder will demand to accept the challenge of taking over the public transport system.
Although a successful bidder will find the company stocked with buses which should not need depreciating, it will have to add to that stock to replace the defunct bendy bus and cater for a revised route network.
A new operator will surely demand a higher, possibly open-ended running subsidy by the government. Which is where the 2014 Budget will be shifted off course. That said, the government had no alternative to try out. For Arriva to go into liquidation would have triggered an almighty jam in the transport system.
The negotiations, according to the limited information available so far, seems to have secured a good deal for Malta. The Arriva owners were eager enough to cut their losses, which should anyway be offset against profits elsewhere in the Deutsche Bahn group.
The Opposition’s reaction to the deal in terms of what it now expects from the government was both infantile and hypocritical. The Arriva mess, even if one recognises the positive elements within it, was the child of the previous Nationalist government’s making. That is a political point.
It cannot be forgotten, but neither should fresh partisan jerks be pulled out to attempt to cushion it as the government tries to take the public transport situation forward towards another attempt at a solution.
Fares will be an issue. There is no way that the present level can be maintained, even if there are offsetting efficiency gains
In that regard there are details which need closer scrutiny. The government is in an understandable hurry. Yet it has to be careful about issuing a rushed call for expressions of interest, although Transport Malta will already have been working on that behind the scenes. And it will be very hard to see a new contract with a private operator hammered out and in force by March or April, as hoped for by the government.
To the extent that there are feasible expressions of interest, any subsequent negotiations will be hard and stretched. Fares will be an issue. There is no way that the present level can be maintained, even if there are offsetting efficiency gains. Inevitably, making fares equal for locals and non-residents alike adds an estimated €3 million to operating costs. Purchase of additional modern buses will add depreciation charges.
That will be built on the underlying tendency for the transport system as devised to run at a loss.
Time should be spent on determining whether, in addition to adding new routes in line with the government’s consultations with local councils, the existing routes need to be curtailed. Some of them do not seem to make economic sense. It would be cheaper to ferry their limited users by taxi, rather than extend a bus to service them. The hub principle also needs revision, given that concentrating on Valletta has not yielded good results.
Throughout, my own thinking as indicated above has been sceptical. I would dearly love to be proven wrong. But the more I think about it the more I feel that the new transport system, after all possible efficiencies have been gained, will substantially increase the burden on the public purse.
That may be so even if fares are increased by a margin which combines consideration for both social and economic realities.
Raising expectations at this stage is in nobody’s interest, if a solution is to be realistically sought. That should influences the stances of both the government and the Opposition, as well as the trade union or unions that organise the new company’s employees.