Tariffs for travel in private shuttle buses keep growing. Thus, the fare of two hryvnias for some routes has been increased up to UAH 2.50, while buses that used to charge UAH 2.50 have increased the fare to three hryvnias.
As ForUm learned from one of the private bus enterprises, the travel cost has not changed for four years, but the fuel and drivers' salary have. The only transportation company, which has no intention to increase tariffs for now, is 'Kyivpasstrans', and it owns the third part of the total of 2500 Kyiv shuttle busses.
Meanwhile, head of the Kyiv City State Administration Oleksandr Popov says that economically justified fare in public transport in Kyiv is 2.5 UAH. "The fact is that the city and state budgets subsidize about 1 UAH to the Kyiv passenger transport in order not to raise prices. We will continue doing so." Popov specified that the annual subsidy to public transport consume about 350 million USD. In response to the question about raising fares, Popov said that the city government simply cannot influence the decisions of private carriers. Therefore, ForUm has decided to ask Kyiv officials, MPs and economic analysts whether the price rise is reasonable and if it can improve the city bus fleet.
Oleksandr Serhiyenko, director of the research and analysis center "City Institute":
- Any owner can set prices for his goods, and increase them as he sees fit. The rule is that increased prices decrease demand. However, this rule does not apply to city shuttle buses, as this business does not have many rivals. A carrier wins the tender on this or that route and the local authorities have no influence on this company. The only alternative is municipal transport, which will cover all Kyiv routes. If people have a choice which bus to take - a private or a city one, private companies will not be able to increase tariffs uncontrollably. Unfortunately, this alternative is hardly real. The city authorities purchase large size busses and trolleybuses that can take only certain streets and routes of the city. Thus, the rest of the city has been given to private companies with good faith they will not abuse the tariff policy. To change the situation, the authorities must change the basic principles of the contract with carriers, introducing limits for price rise.
Ivan Shpilevoy, deputy director of the transport infrastructure department of the Kyiv city state administration:
- Private carriers do not receive subsidies, thus they have to increase prices to preserve some profit. According to the legislation, we cannot change the tariff policy of private companies, thus the only way is to create a competition. The state carrier 'Kyivpasstrans' regularly refills its bus fleet and increases its influence on the market. Private companies have to take into account the prices 'Kyivpasstrans' sets. Thanks to subsidies from the city and state budgets, the state company can keep the tariffs low, forcing private companies to follow the example.
Moreover, the city authorities can control the process of fare calculation. To agree the price rise with the city authorities, a carrier must provide solid grounds for such tariff change. Thus, controlling the process, the authorities can prevent groundless price rise.
Pavlo Rozenko, MP of UDAR party, member of the parliamentary committee on social policy and labour:
- These are simple tariff games we observe not the first year. For example, several months before the October elections of 2012 some popular routes decreased the tariffs, though there were no economic grounds for that. The elections passed and the prices grew again. At the same time, the city authorities declare they have no influence on shuttle buses and cannot control their tariff policy.
Oleksandr Okhrymenko, president of the Ukrainian analytical center:
- The situation is that UAH 2.50 is economically justified price for large size buses. However, if we apply the same calculations for small shuttle buses, this price becomes over-inflated. Speaking about the future development of the city transport infrastructure, what we need is to use more large size buses. It would enable to decrease expenses for prime cost of transportation and to improve the service quality. Numerous small buses only complicate the traffic and create a nuisance for passengers.
Vasyl Khvostyk, representative of the All-Ukrainian association of carriers:
- I cannot announce the official position of the Association, but the price rise is economically expedient. Otherwise, private shuttle buses may go bankrupt.
Andriy Pavlovski, MP of Batkivshchyna party, member of the parliamentary committee on social policy and labour:
- On one hand, there are economic grounds for fare rise, such as price rise for fuel and spares. On the other hand, the city authorities must regulate the tariffs in accordance with financial possibilities of Kyiv residents, especially pensioners. With the pension of 1000 hryvnias, any price rise will hit in the pocket.
As ForUm learned from one of the private bus enterprises, the travel cost has not changed for four years, but the fuel and drivers' salary have. The only transportation company, which has no intention to increase tariffs for now, is 'Kyivpasstrans', and it owns the third part of the total of 2500 Kyiv shuttle busses.
Meanwhile, head of the Kyiv City State Administration Oleksandr Popov says that economically justified fare in public transport in Kyiv is 2.5 UAH. "The fact is that the city and state budgets subsidize about 1 UAH to the Kyiv passenger transport in order not to raise prices. We will continue doing so." Popov specified that the annual subsidy to public transport consume about 350 million USD. In response to the question about raising fares, Popov said that the city government simply cannot influence the decisions of private carriers. Therefore, ForUm has decided to ask Kyiv officials, MPs and economic analysts whether the price rise is reasonable and if it can improve the city bus fleet.
Oleksandr Serhiyenko, director of the research and analysis center "City Institute":
- Any owner can set prices for his goods, and increase them as he sees fit. The rule is that increased prices decrease demand. However, this rule does not apply to city shuttle buses, as this business does not have many rivals. A carrier wins the tender on this or that route and the local authorities have no influence on this company. The only alternative is municipal transport, which will cover all Kyiv routes. If people have a choice which bus to take - a private or a city one, private companies will not be able to increase tariffs uncontrollably. Unfortunately, this alternative is hardly real. The city authorities purchase large size busses and trolleybuses that can take only certain streets and routes of the city. Thus, the rest of the city has been given to private companies with good faith they will not abuse the tariff policy. To change the situation, the authorities must change the basic principles of the contract with carriers, introducing limits for price rise.
Ivan Shpilevoy, deputy director of the transport infrastructure department of the Kyiv city state administration:
- Private carriers do not receive subsidies, thus they have to increase prices to preserve some profit. According to the legislation, we cannot change the tariff policy of private companies, thus the only way is to create a competition. The state carrier 'Kyivpasstrans' regularly refills its bus fleet and increases its influence on the market. Private companies have to take into account the prices 'Kyivpasstrans' sets. Thanks to subsidies from the city and state budgets, the state company can keep the tariffs low, forcing private companies to follow the example.
Moreover, the city authorities can control the process of fare calculation. To agree the price rise with the city authorities, a carrier must provide solid grounds for such tariff change. Thus, controlling the process, the authorities can prevent groundless price rise.
Pavlo Rozenko, MP of UDAR party, member of the parliamentary committee on social policy and labour:
- These are simple tariff games we observe not the first year. For example, several months before the October elections of 2012 some popular routes decreased the tariffs, though there were no economic grounds for that. The elections passed and the prices grew again. At the same time, the city authorities declare they have no influence on shuttle buses and cannot control their tariff policy.
Oleksandr Okhrymenko, president of the Ukrainian analytical center:
- The situation is that UAH 2.50 is economically justified price for large size buses. However, if we apply the same calculations for small shuttle buses, this price becomes over-inflated. Speaking about the future development of the city transport infrastructure, what we need is to use more large size buses. It would enable to decrease expenses for prime cost of transportation and to improve the service quality. Numerous small buses only complicate the traffic and create a nuisance for passengers.
Vasyl Khvostyk, representative of the All-Ukrainian association of carriers:
- I cannot announce the official position of the Association, but the price rise is economically expedient. Otherwise, private shuttle buses may go bankrupt.
Andriy Pavlovski, MP of Batkivshchyna party, member of the parliamentary committee on social policy and labour:
- On one hand, there are economic grounds for fare rise, such as price rise for fuel and spares. On the other hand, the city authorities must regulate the tariffs in accordance with financial possibilities of Kyiv residents, especially pensioners. With the pension of 1000 hryvnias, any price rise will hit in the pocket.
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