1 2) Road based urban transport Paratransit –Publicly available passenger transport services outside the traditional transport regulatory system –Example Large minibus, minibus, “ojeg”,” becak”, etc

2 2.1) Characteristics Unscheduled services –“very” demand-responsive services –“filling gap” formal transports Smaller sizes and simple Need small investment “Non-corporate” and “fragmented” Else?

3 2.2) Roles or service provided Dominant for the poor Supplement to formal transport services Feeder services and local distributions Trunk services (compete with formal)

4 2.3) classifications Vehicle types –large bus, minibus, motorcycle, etc. Service features –Routes and routes: fixed or flexible Passenger capacity Market regime –Franchised, licensed, and unregulated See table 7.2 (ref 2, chapter 7)

5 2.4) Merits Source of employment for the poor “of the poor” and “by the poor” services Entry point to urban employment High & better respond to consumer demand –Little need for government regulation “feeder services” to formal transports

6 2.5) Disadvantages Image and reputation problems –Very low earning sectors –Exploitation of vehicle owners (unfair business) –Associated with poverty

7 Why image problems? A) Dangerous on-the-road behavior –Associated with crime and violence B) Urban congestion & adverse environmental impacts C) Undermining of basic network services

8 A) Operating practice Exploitation on leased vehicles & undisciplined services with low profitability Due to competition pressure to earn living –Excessive capacity –Anti-social and dangerous operation Passenger safety, racing, turning short, transferring passengers, blocking, etc. Self regulation (long run) to limit entry & organize more disciplined services –Association

9 Is self regulation good? Outside public control –Acts not in the interest of consumers Fares may increase Self-regulation not based on any legal rights of exclusion –Leads to violent means (to enforce the need) The need to ensure fair revenue allocation results in suboptimal practice

10 B) Externalities Excess supply due to competition (to earn living) –Smaller vehicles (need less capital and operating costs) –With low labor costs -> no incentive for using larger vehicles The effects of congestion & adverse environmental are external, incentive to use smaller (less expensive) vehicles (as a results) level of congestion is severe

11 Externalities: economic distortion Excess supply of labor in urban areas Minimum public sector wage rates Inefficient operation of informal operators No appropriate transport pricing system for using road space No incentive for using larger vehicles (results in) explosion of informal services in SMALL vehicles

12 C) Undermining network services With its capability to provide door-to-door services (dense networks), informal can compete with the traditional larger vehicles Disadvantages of those captive to the traditional (larger) vehicles –Higher fares –Less frequent services

13 Things to wonder Informal provides better respond to consumer demand & Employment (economic) activity Informal brings congestion & environmental degradation & Network problems Policy Control the growth of informal