Service delivery

International practice recognizes that route services may be provided by either the public or the private sector, and sometimes by both in combination. In general, however, it may be difficult to expose public-sector provided services to competitive pressures in order to raise their efficiency. In some cases, organized labor in a monopoly service provider may enjoy political protection and then be able to exploit this so as to improve its terms of employment and hence the cost of operations.
Conversely, political pressure can be exerted on a public-sector provider to provide services below their cost of operation and so delay needed fares increases accordingly. In some cases, public sector operators may also be granted duty concessions on some of their input costs and / or preferential access to rolling stock that has been centrally funded or has benefited from development assistance, in order to reduce their costs and hence the fares levels needed to recover these. Clearly, in a competitive environment, either of these approaches then confers an unfair advantage over private operators and is unsustainable in the longer term.
The private sector may also be contracted to provide fare collection services, typically being rewarded by a set proportion of the sales generated. Public-sector companies may also sub-contract some of their non-core activities to the private sector, ranging from vehicle cleaning to accident repairs, either to reduce costs or to raise efficiency.