Declining patronage, mounting losses: How the Chennai MTC can salvage itself

With the number of commuters falling steadily and losses mounting year on year, can the state-owned public transport service salvage itself and regain its former glory?
Declining patronage, mounting losses: How the Chennai MTC can salvage itself
Declining patronage, mounting losses: How the Chennai MTC can salvage itself
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The News Minute brings you The Last Stop, a series of stories on the state of public buses across south Indian cities.  

It is an open secret that Chennai’s Metropolitan Transport Corporation (MTC) is bleeding cash. Armed with a rich legacy of having served as the sole bus service provider in Chennai for almost five decades, all that threatens to remain for MTC now is the legacy. With the number of commuters falling steadily and losses mounting year on year, can the state-owned and operated public transport service salvage itself and regain its former glory?

According to data available with the Institute for Transportation and Development Policy (ITDP) and the MTC website, the number of commuters using MTC has fallen from around 189.98 crore in 2009-10 to around 129.79 crore in 2018-19.

Zone Nov 2019 Oct 2019 June 2019
Sholinganallur 3.45 4.00 6.45
Perungudi 3.78 4.16 8.35
Adyar 4.21 4.75 7.54
Alandur 4.68 5.12 9.28
Valasaravakkam 4.28 4.58 7.52
Kodambakkam 5.55 5.91 8.31
Teynampet 4.62 4.92 7.52
Anna Nagar 3.74 4.07 7.86
Ambattur 4.48 4.73 10.17
Thiru Vi Ka Nagar 4.86 5.18 8.64
Royapuram 6.47 6.66 8.09
Tondiarpet 6.08 6.28 8.12
Madhavaram 4.26 4.44 8.12
Manali 3.69 3.97 5.90
Thiruvottriyur 3.72 3.88 5.38

Data: MTC and ITDP

The reasons for this decrease are many, says J Sivasubramaniam, Manager, Transport Systems, ITDP. He, however, pins it on two crucial reasons – increase in share auto services and the fare hike by MTC in January 2018.

Share autos plugging demand gap?

According to this report from earlier this month, there are 60,000 odd share autos in the city, which are used by around 5 lakh people every day. One of the main reasons for people to choose share autos is its flexibility in operation and the fact that it can move faster on congested roads when compared to buses, says Sivasubramaniam.

“We can get in and get out wherever we want for a fixed price. The flexibility comes in handy for commuters. So a lot of people have started using share autos in the last few years. And in many places, these share autos are competing with public transport systems,” he explains.

MTC’s fleet size and sudden suspension of routes have also affected ridership adversely. MTC needs at least 6,000 buses to support the number of users taking the bus. However, with only 3,679 buses in 2018-19, MTC is almost 40% short of the required number of buses to support the existing number of commuters.

“Over the last few years, the fleet size of MTC has been declining. This is mainly because new additions are effectively made only to replace old vehicles, thereby not increasing the size of the fleet,” Sivasubramaniam points out.

According to the data on MTC’s website, the average age of a bus owned and operated by MTC as of March 2019 is over eight years. An affidavit filed by the Corporation in the court also points out that around 77% of its fleet as of September 2017 is overage.

Why the money woes

That the MTC has been in financial trouble is a well-known secret. According to a report in The Hindu, MTC posted a loss of Rs 730.45 crore for the year 2017-18, as against a loss of Rs 519.48 crore in 2016-17.

According to data with the ITDP, MTC receives 83% of its revenue from tickets. The increase in losses in 2017-18 was attributed to a fall in revenue from tickets and a simultaneous increase in expenses.

In an attempt to increase revenue, MTC announced a fare hike in January 2018. This was the first time that bus ticket prices were increased after 2011. The impact of the price hike was seen almost immediately, when the number of commuters fell by 30% in the next two months, even though a partial rollback was announced within days of the fare hike.

Sivasubramaniam says that the fare hike hit the ridership of MTC and the biggest gainers from this have been the suburban railway and the MRTS railway services. “I would not say Chennai Metro Rail (CMRL) has eaten into MTC’s share because the ridership of CMRL is still around 1.2 lakh commuters per month,” he adds.

Can MTC turn profitable?

For MTC to tide over its financial woes, it would take consistent and focused effort from the state government. But Sivasubramaniam says that public transport services are not supposed to be working ‘for profit’. “This is a concept agreed across the world. It is a service. It is one of the ways to promote sustainable transportation,” he points out.

However, one of the key issues that MTC, and by extension the government of Tamil Nadu, must direct its attention on is how to bring back lost commuters. Making bus services reliable and fast could be an important factor in accomplishing this. Establishing a dedicated corridor like the Bus Rapid Transit System (BRTS) for bus services on arterial roads could also help the Corporation achieve this goal, says Sivasubramaniam.

“When you have a dedicated and reliable bus service, people generally tend to take it because you can see buses moving faster while you are stuck in traffic in your car… it is normal for a commuter to prefer buses the next time,” he explains.

He also suggests that the Corporation find ways to monetise assets like bus depots and terminals in a better manner so that commuters are attracted to spend more time around them, bringing in extra revenue. He adds that the government can also consider setting up a dedicated transport fund for Chennai, which can raise money for the MTC through activities like parking management across the city. He, however, cautions that these might not work as standalone measures, but would need consistent push from the government to find funding mechanisms.

Agreeing with Sivasubramaniam’s view about MTC’s need to find more avenues to fund its operations, Aswathy Dilip, Senior Programme Manager, ITDP, says that ticket revenue alone cannot help the Corporation function.

“Farebox or earnings from tickets constitute the bulk of revenue for most transport undertakings. There is a rising gap between the earnings and expenditure. And there are complaints that public transport is slipping out of the reach of the people who need it the most,” she says.

Aswathy adds that MTC should consider looking at good public transport systems across the globe to see how they have addressed similar issues. “Transport for London’s (TfL) business plan is a good document to understand how public transport should be financed. A good 31% of the funding for TfL was expected to come in the form of grants and only 47% of the funds from the farebox in 2018-19. Compare this to MTC, for which farebox alone accounted for 82% of revenue,” she points out.

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