Let's talk about Ontario's intercity bus system

[Update: Our new post provides some important information about the below discussion.]

Here in Waterloo Region, people love to complain about Greyhound buses to Toronto, but few complain about Ontario intercity bus regulation as a whole. They should, as it has much to do with the relatively poor quality and availability of intercity transit here. Now Coach Canada and Pacific Western Transportation (PWT) have launched a campaign for “modernization” (read: deregulation) of the Ontario intercity bus system, with a “Where’s The Bus?” website aimed at the general public.

Where’s The Bus points to more competition and innovation as reasons to deregulate. And to its credit, PWT has shown innovation and competition with its successful luxury Red Arrow service between Calgary and Edmonton. But Ontario intercity bus regulation is an important issue, and one on which more than just financially interested parties should weigh in.

The Ontario Highway Transport Board (OHTB) is the agency that regulates intercity bus licensing within Ontario. It appears to currently only have two members, both with tenure from 1999. It is a very opaque entity, so from publicly-accessible documents, there is frustratingly little available about the operation of the OHTB. But there’s some hints – its application form for new service indicates factors for a successful licence application:

The Board will have to determine from the information in your application, if the issuance of an operating licence to an applicant will serve “PUBLIC NECESSITY and CONVENIENCE”. Over the years, the Board has given amongst other considerations to the following factors, when considering what constitutes public necessity and convenience: - the transportation needs of the public as seen through the public witnesses - the adequacy and quality of the existing services - the level of competition in the area in question - the choice of modes of transportation - the convenience of the public - the uniqueness or distinctiveness of the proposed service or equipment - the viability of the proposed service and market sustainability - the fitness of the applicant … financial, operational and safety - the impact on existing carriers if the service were granted

Above all, it sounds much as if a primary aim of Ontario Highway Transport Board decision-making is to prevent competition among private bus companies. You can oppose an application, for instance, only on the grounds that you have “an economic interest in the outcome of the proposed application”. And indeed, the result seems to be that private bus companies have effective monopolies on intercity transit between city pairs, e.g. Greyhound has Kitchener to Toronto and Coach Canada has Cambridge to Hamilton. Ostensibly, in exchange for a profitable monopoly route, bus companies provided subsidized service in rural areas, though with recent Greyhound cuts, it is unclear how much of that relationship still holds.

If the goal is good intercity transit to increase transit usage (as it should be), then the current situation is highly problematic. There is a large barrier to entry for new service: companies must apply and pay for a licence for any new route, and prove the “need” for the service. Imagine doing that if there’s currently a bus doing that run a few times a week – demand is low (because the service is poor) and new service would be competition to the existing carrier.

A private bus company will generally seek maximum profit rather than, say, maximum ridership. With a monopoly on buses between two cities, maximizing profit can mean higher fares, fewer trips, and lower quality service. In a competitive situation, maximizing profit would be more closely aligned with a public objective of maximizing ridership.

From the public perspective, there can be benefits to only one bus company running a route. If there is only enough demand to make one trip viable at a given time, competition between two companies would result in neither being viable. In other cases, consolidation into one route can mean a better experience for riders, as there is only one schedule to consult; moreover, there is more frequent service on a consolidated carrier than there would be on any one of multiple competing carriers.

But there’s an elephant in the room – a green one. GO Transit (originally Government of Ontario Transit) is the public regional and commuter transit agency operating trains and buses in the Greater Toronto & Hamilton Area and beyond. It is exempt from regulation by the OHTB, and can operate bus service anywhere it likes. GO Transit seems to have a good public reputation for service delivery, and many in Waterloo Region would like it to provide an alternative to Greyhound for intercity buses to Toronto.

However, apart from its twice-daily commuter trains, GO has steered clear of providing direct service on runs “owned” by private bus companies, for reasons that are not entirely clear. GO Transit as a public agency makes for a compelling candidate for consolidated service, as it does have the goal of increasing ridership. Further, GO is able to upgrade highway bus service to higher capacity and faster regional rail service based on demand.

GO receives an operating subsidy, so it is able to provide much more service than it would otherwise. It undoubtedly has many trips that are operationally profitable, which help support other services that are building up ridership or which are needed for the benefit of an all-day, all-week regional transit service. A deregulated bus system could mean private companies skimming the cream from GO Transit’s operationally profitable routes, requiring more subsidy for GO to provide its network service.

There has been previous discussion about deregulation in Ontario, with some taking place during hearings in 1996 for amendments to the current legislation. Other provinces have deregulated to varying degrees, and the Council of Ministers of Transportation has a report on industry regulation from 2010. But as far as I am aware, there has been little public discussion of the issue in the last few years.

Ontario could go in several directions at this point, including deregulation, a greater role for GO Transit, or both. A public conversation is desperately needed on the role of intercity transit in Ontario, and how regulation and GO Transit can result in better transit options and more usage. That conversation needs to include consideration of how to provide service that requires subsidy.

Clarity from the OHTB is needed on what, exactly, is the current state of intercity transit in Ontario. Which companies hold the licence for which city pairs, and what amount of service do they provide? What cross-subsidized service is provided by private companies, and what are the arrangements supporting it?

Coach Canada and Pacific Western Transportation know there’s a lot of demand for more and better intercity transit in Ontario. Thanks are due to them for starting the conversation. It is a conversation that should ultimately be about what will have the best outcomes for transit in Ontario.