A Strategic Analysis of Urban Public
Transport Industry: A Case of Ahmedabad,
Gujarat in India
Mahesh L. Chaudhary
Yogesh C. Joshi
Abstract
Urban transport is the lifeblood for any urban area in
products or services, bargaining power of suppliers,
the modern era. As urban areas are expanding,
and rivalry among existing competitors have been
commuters spend increasing amounts of time to travel
analyzed keeping the urban public transport industry
within the city. They are also exposed to congestion of
of Ahmedabad at the centre stage. The analysis reveals
traffic and inhale polluted air, besides spending a lot of
that these forces have varied strengths; most of them
money individually. In doing so, an individual is
have strengths ranging from medium to high. Hence,
exposed to risk of accident as well. Ahmedabad in India
the industry in consideration is highly competitive and
has been shortlisted by the government of India to be
unprofitable. In the final stage, to improve
transformed into a 'Smart City'; the city therefore
competitiveness and profitability of the urban public
requires an efficient urban transport system. Already
transport industry in Ahmedabad, the authors
multiple modes of transport are used in Ahmedabad.
recommend various measures related to route
The BRTS (Bus Rapid Transport System) is the latest
rationalization, creating differentiated services, taxing
addition to this category, which promises to deliver an
the users of personal vehicles and inter para transit
efficient, economical and comfortable mode of
players for not compensating for the costs they levy on
transport for commuters in the city and surrounding
the society by using public infrastructure. The analysis
expanse of Ahmedabad. Hence, this paper analyzes
could be used by policy makers, urban local bodies,
industry competitiveness and profitability, two very
companies, researchers, and academia interested in
important dimensions to decide the fate of
urban public transport industry.
participants and potential entrants in any industry. The
industry in consideration is the urban public transport
Key words: Public Transport; Urban Transport;
industry in the city of Ahmedabad, Gujarat, in India.
Porter's Five Forces; Profitability; Competitiveness;
Porter's five forces namely threat of new entrants,
Strategic Management.
bargaining power of buyers, threat of substitute
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
81
1. Introduction
government of India to be transformed into a 'Smart
It is the industry structure that drives competition and
City'; the city therefore requires an efficient urban
overall profitability, not whether an industry produces
transport system. Already multiple modes of transport
a product or service, is emerging or mature, high tech
are used in Ahmedabad. The BRTS (Bus Rapid
or low tech, regulated or unregulated. Understanding
Transport System) is a latest edition to this category,
the competitive forces and their inherent causes
which promises to deliver an efficient, economical and
unwrap the roots of an industry's current profitability
comfortable mode of transport for commuters in the
while providing a framework for foreknowing and
city and surrounding expanse of Ahmedabad.
influencing competition and profitability over time
(Porter, 2008). Porter's Five Forces (hereafter referred
In this paper, an analysis of urban public transport in
to as PFF) framework is derived from the industrial
the city of Ahmedabad, as an industry, has been
e co n o m i c s a p p ro a c h . T h e b a s e i s t h at t h e
attempted. The paper shows how the five forces, as
attractiveness and overall profitability of industry in a
described by Porter, shape competition and
particular market can be defined by understanding the
profitability in this industry. Awareness of the five
underlying market structure (Slater & Olson, 2002).
forces can help Ahmedabad Municipal Corporation
The market structure successively influences the
(AMC) understand the structure of urban public
strategic behaviour of the organization and hence the
transport industry in the city of Ahmedabad and carve
organizational success is therefore circuitously
out a position that is more profitable and less
dependent on the market structure (Fabian, 2014).
vulnerable to attack.
In addition to the points discussed above, the PFF
1.1 Characteristics of urban public transport
model is also a “useful starting point for strategic
scenario in Ahmedabad
analysis even where profit criteria may not apply”
Ahmedabad has one of the oldest urban transport
(Johnson, Scholes, & Whittington, 2008). Hence, it
organizations in the country. Its traditional public bus
becomes pertinent for policy makers or industry
transport services, Ahmedabad Municipal Transport
players or government bodies to understand industry
Services (AMTS), runs under the aegis of Ahmedabad
structure before they take a leap in penning down their
Municipal Corporation (AMC). It commenced its
position in the industry. Urban public transport, as an
operations in the year 1947. AMTS then had a bus fleet
industry, cannot be an exception in this regard. It needs
of 724, operating on 187 routes and serving 0.62
to pass the litmus test of industry structure analysis as
million passenger-trips daily with a daily revenue of Rs.
explained by the PFF model. Urban transport is the life
1.32 million (Central Institute of Road Transport,
blood for any urban area in the modern era. As urban
1996).
areas are expanding, commuters spend an increasing
82
amount of time to travel within the city. They are also
Another new feature added to the AMC's urban
exposed to congestion of traffic and inhale polluted air,
transport services is BRTS launched in 2009, in the
besides spending a lot of money individually. In doing
name of Ahmedabad Janmarg Limited (A J L).
so, an individual is exposed to the risk of accident as
Inferences from Table 1can be drawn that although the
well. Ahmedabad in India has been shortlisted by the
passenger trips served per bus per day by AMTS
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
(705.88) is higher by twelve percent compared to
Additionally, the fare of AMTS ranges from Rs 3 to Rs
passenger trips served by its counterpart AJL (630.43)
25 and that of BRTS ranges from Rs. 4 to Rs. 29 per ride.
for the year 2014-15, the revenue generated per bus
per day by AMTS (Rs. 3765) is lower by forty six
As far as IPT players are concerned, they churn around
percent compared to its counterpart BRTS (Rs. 8217)
56.25 million rupees per day. However, their
for the same period. This is due to the fact that fares of
diseconomies of scale due to small size of auto
AMTS bus services are highly subsidized compared to
rickshaws and fragmented and plentiful number of
fares of its counterpart AJL. It can further be
auto-rickshaws restrict their income per auto-
substantiated from Annexure 1 that the AMTS offers a
rickshaw to a meagre 450 rupees per day.
variety of concession schemes to its users.
Table 1: Key performance indicators of BRTS and AMTS for the year 2014-15
Particulars
A
Fleet size
B
Passenger trips served per day
C
Passenger trips served per vehicle per day [B/A]
D
Revenue generated per day (INR in million)
E
Revenue generated per vehicle per day (INR) [D/A]
AMTS
AJL
IPT- inter para transit
(Shared Auto)
850
230
125000
6,00,000
1,45,000
5625000
705.88
630.43
45
3.2
1.89
56.25
3,765/-
8,217/-
450/-
Source: Authors' analysis from discussions with urban transport consultants and auto rickshaw drivers.
In order to gain greater insight into various aspects of functioning and operation of urban public transport industry
in Ahmedabad, a brief review of literature has been undertaken and the same has been presented below.
2. Review of Literature
& Olson, 2002; Mohamed, Shamsudin, & Latif, 2013).
The approach of the industrial organization (IO) theory
The knowledge of interaction of five forces namely
forms the base for Porter's Five Forces framework. The
rivalry among existing players, bargaining power of
IO theory assumes that market structure determines
suppliers, bargaining power of buyers, threat of
the attractiveness of an industry because market
substitutes and threat of new entrants is of great
structure affects the behaviour of market participants
importance for strategy formulation by the companies
(Raible, 2013). It was Porter who synthesized the
(Porter, 2008). The competitive forces facilitated
disciplines of industrial organization and strategy
simplification of the micro-economic theory by using
(Argyres & McGahan, 2002). Hence, the market
only five forces. It provides an opportunity to examine
conduct or behaviour of market participants to
and evaluate complex interactions of competitors in an
achieve their goals will depend on market structures,
industry in a more structured manner (Porter M. E.,
and the overall attractiveness and profitability of the
1979). The answer to number and nature of forces
market can be determined by market structure (Slater
identified by Porter is well explained in the interview of
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
83
Porter. On one hand, he argues that “these forces have
“capabilities-based competition” by Stalk, Evans and
to be intuitively grounded and on the other hand, he
Schulman's in 1992 are of the view that the
claims that the conclusion about five forces was only
competitive environment since 1990s has changed
after he looked at hundreds of industries (Argyres &
significant enough that the structural approach
McGahan, 2002).
Industry structure, through the
represented by Porter's competitive forces framework
mentioned five competitive forces, determines the
is no longer effective” (Aktouf, 2004). However, the
industry's long-run profitability. It determines how the
robustness of the PFF framework can be appreciated
economic value created by the industry is divided
from the fact that the very purpose of the PFF
among industry participants (Porter M. E., 2008).
framework is “not to declare the industry is attractive
There is substantial literature that supports, revises or
or unattractive but to understand the underpinnings of
complements Porter's basic premises since the
competition and the root causes of profitability. The
inception of the PFF framework in 1980. Some
five forces have diverse degrees of impact in certain
researchers claimed that there were deficiencies in the
industries and individual forces and their collective
PFF framework. For instance, Porter's non-recognition
impact will change as the government policies and
of information technology (IT) as a distinctive
macroeconomic and overall business environments
competitive force was critically noted by researchers
change” (Mohaptra, 2012). “The five forces reveal why
who emphasized that IT be treated as the sixth
industry profitability is what it is” (Porter M. E., 2008).
competitive force (McFarlan, 1984; Thurlby, 1998;
Andriotis, 2004). The PFF framework did not recognize
Hence, the PFF framework is used for its robustness to
information technology (digitalization), globalization
perform the urban public transport industry analysis to
and deregulation as distinctive competitive forces, but
understand the bearings of competition and the root
has conceived them as fleeting factors which are
cause of (un)profitability which further helps in carving
considered as a means of supporting the five forces
strategies to thrive in the industry.
(Fabian, 2014). These attributes could be either
enabling or inhibiting tools in any industry (Porter M.
84
E., 2001). One should avoid the common trap of
3. Objectives, Methodology and Structure
misinterpreting certain visible attributes of an industry
of the Study
such as industry growth rates, technology and
3.1 Objectives of the study
innovation, government and complementary products
In the present paper, an attempt has been made to
and services for its underlying structure (Porter M. E.,
perform strategic analysis of the urban public
2008). “While Porter's framework is the basis of a
transport industry in Ahmedabad city by applying the
systematic approach to strategy, it definitely does not
P F F f ramewo rk. It is u s ed to meas u re th e
guarantee the scientific rigour, Porter claims for it and
attractiveness and profitability of this industry as
also does not assure a competitive advantage that is
determined by the action of the five basic forces
lasting, defensible and hard to imitate” (Aktouf, 2004).
namely threat of new entrants, bargaining power of
Adding to it, “the resource based approach that
buyers, threat of substitute products or services,
emerged in 1990 with Prahalad and Hamel's article on
bargaining power of suppliers, and rivalry among
“core competence” followed by an article on
existing competitors. This will facilitate better strategic
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
decision making by industry participants and policy
Secondary data
makers at the city level. Similar framework could be
Secondary data was collected from academic journals,
applied for other cities too with necessary changes.
books, dissertations, theses, research papers, working
papers, monographs, magazines, circulars and tender
Because each city in itself is a different market (i.e. no
d o c u m e nt s o f u r b a n t ra n s p o r t p ro j e c t s o f
city competes with other cities for business in urban
Ahmedabad, newspapers and websites.
transport services), it is appropriate to use the PFF
framework for the analysis of urban public transport
3.1 Structure of the study
industry of Ahmedabad. Also, the robustness of the
Analysis of the urban public transport industry of
PFF framework ensures that the analysis looks into all
Ahmedabad using Porter's Five Forces framework was
aspects of the business environment throughout the
conducted using an exploratory research design
value chain of the urban public transport industry of
approach. The intensity of forces determines the
Ahmedabad.
profitability or competitiveness of an industry. An
industry with high intensity of forces leads to poor
3.2 Research Methodology adopted for the study:
profitability and high competitiveness within the
The researcher has relied on exploratory research
industry, and vice versa. The study encompasses how
design. The primary and secondary data collected for
the industry structure grows out of a set of economic
conducting the entire research is subjected to
and technical characteristics that determine the
qualitative analysis. The findings may be considered as
strength of each competitive force. These drivers have
tentative and the insights gained from exploratory
been examined taking the perspective of an
research might be verified or quantified to the extent
incumbent AMC and its urban public transport
possible by conclusive research. Further, inferences
services provided by AMTS and AJL. Conclusions and
strictly refer to the period of study.
recommendations emerging from the study have been
made at the end.
3.2.1 Data and Data Collection
Primary data
4. Analysis of Urban Public Transport
Since the research design adopted is exploratory in
Industry of Ahmedabad Applying Porter's
nature, the research process is quite flexible and
unstructured as far as data collection is concerned.
Urban transport experts having understanding and
knowledge of Ahmedabad urban public transport
industry, bus operators of Ahmedabad Janmarg Ltd
and auto rickshaw drivers in the city were interviewed
for the purpose of this study.
Five Forces Model:
4.1 Threat of new entrants:
The threat of entry in any industry depends on the
magnitude of entry barriers that are present and on
the retaliation entrants can expect from incumbents. If
entry barriers are low and new comers expect little
retaliation from the entrenched competitors, the
threat of entry is high and industry profitability is
moderated. It is the threat of entry, not whether entry
actually occurs, that holds down profitability (Porter,
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
85
2008). The existence of entry barriers limit the number
this. Hence, the earning declined to an extent of 33
of companies in the industry and therefore influence
percent in nominal terms (The Times of India, 2014).
competition among existing players (Johnson et al.,
The real rate of decline in earnings would be even
2008). “The height of barriers to entry has been found
higher than 33 percent.
consistently to be the most significant predictor of
industry profitability” (Rothaermel, 2008).
As far as the metro rail service connecting the
emerging twin city of Ahmedabad and Gandhinagar is
There are six major sources of entry barriers here,
concerned, route rationalization is being undertaken
which decide whether the industry supports high or
presently. Duplication of physical infrastructure (i.e.
low threat of new entrants.
running BRTS and Metro parallel) will create a dent in
the balance sheets of both AJL running BRTS and
4.1.1 Supply-side economies of scale:
MEGA meant for running metro service between
The urban public transport industry in Ahmedabad has
Gandhinagar and Ahmedabad. In urban transport,
two major categories of players. One, AMC which runs
competition in the market is not always healthy. It may
traditional and BRTS bus services under the aegis of
lead to a penny-war situation where all the players in
AMTS and AJL respectively; second, the inter para
the market fight for every single passenger which is
transit (IPT) (shared auto rickshaws). AMC is a large
done by reducing fares (Arturo, 2005). The end result
player with a total bus fleet of around 1,080 buses (850
in such an event is that everyone loses. It is fortunate
AMTS buses and 230 AJL buses as referred to in Table
that the government recognizes this problem and is
1) whereas auto rickshaws are around 0.125 million in
prepared to tackle it. There are talks that Metro train
numbers but are fragmented with individual
(MEGA) and BRTS will run parallel for 8 km. Two
ownership (The Times of India, 2014).
parallel routes have been identified - one being the
third phase of BRTS' APMC – Vadajand another being
Hence, the advantage of economies of scale, if any, is
Metro's North- South Corridor (The Times of India,
enjoyed by AMC and not by IPT players. This is
2014).
apparent from how fares have been set for bus
services and IPT services. Generally, in long distance
86
travel of 5km and more within the city, the fares of
4.1.2 Demand side benefits of scale:
AMTS, BRTS and IPT can be observed as FAMTS< FBRTS<
Since commuters of the urban public transport
F IPT. This is a strong case that supports the cost
industry are from the lower and middle income
disadvantage of IPT players which are large in numbers
groups, their demand is very price elastic. Additionally,
but fragmented and hence, has no advantage of
urban public transport services being necessity-based
economies of scale. Adding to it, the ever increasing
services, commuters don't aim to patronize large
auto rickshaw fleet has drastically reduced the
players (i.e. commuters don't necessarily want to be
earnings of drivers. Auto rickshaw drivers who used to
associated with large urban public transport service
earn around Rs 600 a day in the year 2010 could
providers). Their preference for a particular mode of
manage to earn around Rs 400 per day in the year
transport is largely weighed by the fares charged and
2014. Adoption of CNG fuel has also contributed to
the reliability of services. Hence, the demand side
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
benefits of scale are not very attractive for public
minuscule amount of tax) for using physical
transport service providers. This is also one of the
infrastructure that is being set up by the urban local
reasons why a lot of IPT players enter the market on a
body (ULB). Hence, many players enter this field. The
continuous basis.
easy availability of credit facility both from banks and
non-banking financial companies also facilitate entry
4.1.3 Customer switching cost:
of IPT players on the roads.
Switching costs are fixed costs that buyers bear when
they change suppliers. The competitive fares between
On the other hand, AMC cannot scale up its operations
AMC (AMTS and BRTS) and IPT players ensure lower
in the short-run period as this business is capital
switching costs to passengers. Hence, whenever
intensive – it requires a huge amount of money for
passengers feel that fares of either of the public
procurement of buses and other allied infrastructure
transport services or IPT players are hiked, they shift
facilities. This scenario further facilitates entry of
from one mode of commutation to another. This
potential entrants as there is a lot of latent demand
behaviour of commuters is acknowledged by AMC and
that is unmet by AMC.
IPT service providers and hence, they fix fares with
minimal difference between each other.
4.1.5 Incumbency advantage:
Urban public transport, by its very nature, is a natural
AMC tries to increase switching costs for passengers
m o n o p o l y. I n t h e p r e s e n t c o n t e x t , r o u t e
especially since it offers concession on fares for
rationalization between AMTS and BRTS essentially
students, differently-abled, senior citizens and heavy
supports monopoly. AMTS and BRTS don't compete.
users. These fares at concessional rates bring in
Rather they complement each other. Also, the
disparity between fares charged by AMTS and IPT.
incumbency advantage arises from the fact that it has a
Additionally, AMC has also provided smart cards with
dedicated corridor for BRT buses (no other vehicles
very attractive recharge offers (for instance, pay for
can use this corridor). Additionally, the major trunk
100 kilometres and travel 110 kilometres) to promote
and feeder routes are already being served by either
its BRT services. These schemes, which are meant to
BRTS or AMTS bus services. Potential entrants will
promote usage of public transport, indirectly facilitate
definitely find it difficult to create a dent to the existing
increase in customer switching costs from public
incumbent. Importantly, technological intervention in
transport mode to IPT mode. However, one has to
the form of Integrated Transit Management System
remember that these schemes are used by regular and
helps to track the bus position on real time basis and
heavy users and not by infrequent users.
also keep passengers updated regarding the arrival
time of buses. This facility helps in retaining the
4.1.4 Capital requirements:
commuters and also in proper bus scheduling thereby
Capital requirements for unorganized and fragmented
giving a cutting edge over competitors. However, lack
IPT players are relatively very low compared to their
of sufficient fleet on some routes affects quality and
counterpart AMC. IPT players don't pay for the full
reliability of services, and subsequently loses
cost they impose on the society (Nicolas, et.al., 2007).
commuters to the IPT players.
For instance, IPT players don't pay (except for paying a
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
87
4.1.6 Restrictive government policy:
passengers allowed in a taxi, types of vehicles, age of
Currently, in the city of Ahmedabad, there is no major
vehicles, fuel used to run vehicles, and the area or
restrictive government policy that is enforced to
routes of operation of taxi services. In future, if the
inhibit entry of potential entrants in the market.
government feels that the pressure of competition
However, Section 67 of the Motor Vehicle Act, 1988
from IPT players becomes grave, Section 67 and 73 of
bestows powers on the state government to control
the Motor Vehicle Act, 1988 facilitate retaliation by
road transport with respect to –
AMC for bringing in the required restrictions on IPT
(a) The advantages offered to the public, trade
players, taxi and radio taxi services. The scope of
and industry by the development of motor
retaliation by decreasing fares by incumbent public
transport,
transport players are very gloomy bearing the fact that
(b) The desirability of coordinating road and
rail transport,
(c) The desirability of preventing uneconomic
it is already at subsidized rates. Further fare cuts would
rather deteriorate the financial health of both AMTS
and AJL.
competition among holders of permits (the
state government may, from time to time,
From the above six factors that have been analyzed,
by notification in the Official Gazette, issue
one can say that the threat of a new entrant is medium-
direction to both the State Transport
to-high at present.
Authority and Regional Transport Authority
regarding fixing of fares).
4.2 Bargaining power of suppliers:
Powerful suppliers capture more of the value for
From sub-section 3 (a) of Section 73 of the Act (refer to
themselves by charging higher prices, limiting quality
Annexure 3), one can infer that the State Government
of services, or shifting costs to other industry
shall, if so directed by the Central Government, having
participants (Porter, 2008). The bargaining power of
regard to the number of vehicles, road conditions and
suppliers can be influenced by the size of the supplier,
other relevant matters, by notification in the Official
the number of suppliers, and the availability of
Gazette, direct a State Transport Authority and a
alternative customers (Slater & Olson, 2002).
Regional Transport Authority to limit the number of
88
contract carriages generally or of any specified type as
The major categories of suppliers are fuel and raw
may be fixed and specified in the notification,
material suppliers, vehicle manufacturers (i.e.
operating on city routes in towns with a population of
investments in fleet), spares and repairs, workforce,
not less than five hundred thousand. Since the
financiers, and road infrastructure builders. The
government is not able to serve existing demand on its
capacity of public transport operation companies to
own, it does not discourage private operators to
influence their suppliers' price fixing mechanism is
provide transport services in the city. On the contrary,
very limited owing to lack of bargaining power that
it encourages entry of new operators to run city taxi
they have when confronted with their main suppliers,
services and radio taxi services (RTO Gujarat, 2015).
which is particularly potent in the case of fuel, vehicles
These circulars reflect the restrictions that
manufacturers and tyre producers (Diaz, Martinez, &
government can lay down on the number of
Barea, 2000).
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
4.2.1 Fuel and lubricant suppliers:
seems as if bus manufacturers are taking advantage of
Fuel pricing, in India and Ahmedabad, be it diesel or
our urgency. We will not allow this. We have just asked
compressed natural gas (CNG) prices, is not fixed by
for an extra door in their basic model. This leads to
municipal corporations. They cannot bargain on fuel
saving on metal for the manufacturer.”
prices and will have to accept whatever price is
decided by oil marketing companies and City Gas
4.2.3 Spare and repair suppliers:
Distribution (CGD) players for diesel and CNG
When it comes to spares and repairs, the power of
respectively. Additionally, the fuel and lubricant
suppliers of these services is moderate-to-high. The
market in India is an oligopoly market. Hence, the
major factor that determines the power of spare and
bargaining power of fuel and lubricant suppliers is very
repair suppliers is the brand of vehicle and
high.
manufacturer of the vehicle. For instance, the power
of spare and repair suppliers of Volvo bus will definitely
4.2.2 Bus manufacturers/ suppliers:
be higher than its counterparts i.e. spare and repair
When it comes to procuring a fleet of buses, the buyer
suppliers of TATA Motors and Ashok Leyland buses.
(i.e. AMC in this case) predominantly has to bear
This is because TATA Motors and Ashok Leyland enjoy
pressures from bus manufacturers. Since procurement
the advantage of economies of scale and have many
of buses is at the least price quoted by suppliers of
suppliers across the nation. Volvo has a very limited
buses, international players like Volvo are not able to
market in India and hence, will have lesser number of
withstand competition from domestic players like
spare and repair suppliers.
TATA Motors Ltd and Ashok Leyland. Eventually buyers
have to depend a lot on these two companies for
4.2.4 Banks and non-banking financial companies
supply of buses. This facilitates oligopoly markets and
supplying finances:
consequently bargaining power of the suppliers
Banks generally shy away from financing urban
increases. Instances of bargaining power of suppliers
transport projects. They are aware that the fares in
of buses are reflected through the addendum of
most of the public transport services are subsidized
responses to pre-bid queries for procurement of high
and the municipal corporations running these services
quality buses for AJL, Ahmedabad. This addendum
are making losses. This problem raises concern
raises many technical and commercial deviations and
regarding servicing of debt by municipal corporations.
the efforts made by bus suppliers to get advance
Banks extend financial help provided they are being
payments for the delivery of buses and their
counter guaranteed by the state or federal
unwillingness to change the bus specifications for the
government. In general, urban public transport
purchaser (AJL, 2012). Another instance of higher
depends upon grants issued from the state and the
bargaining power of bus manufacturers is reflected
central government. For instance, AMC's BRTS project
from the statement made by one of the senior officials
in general and AMTS bus services, to the extent of bus
of Ahmedabad Janmarg (AJL, 2009), “There's no way
purchases, are funded under the Jawaharlal Nehru
bus manufacturers will agree to lower prices. We are
National Urban Renewal Mission (JnNURM). The
approaching states where the same manufacturers
situation even worsens when responsibility of
have supplied basic buses and preparing a price list. It
procurement of buses lies on the shoulders of private
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
89
bus operators which operate on public-private
understand that the amount spent on conveyance by
partnership basis. As far as IPT players are concerned,
the bottom 40 percent of urban population is lower
they hardly have any bargaining power. This can be
than one spent by the top 20 percent of the urban
understood from the fact that most of the IPT players
population. Hence, one could conclude that the
in Ahmedabad are from the lower middle class or poor
bottom 40 percent of the urban population is either
classes and they rely on financial help extended by
using non-motorized mode of commutation (cycling or
non-banking finance companies (NBFCs). Since these
walking) or shared auto or public bus services. They
NBFCs are aware of the underlying risk of financing
contain their conveyance expenditure and the same is
proposals from these IPT players, they charge
reflected from the fact that conveyance expenditure
astronomical rates to the tunes of 18 per cent to 24
has gone up modestly from 2.9 percent of the total
percent per annum. Banks generally charge anything
expenditure to 3.0 percent from year 2004-05 to 2009-
from 12 to 15 percent but IPT players find it difficult
10. This reflects the strength of bargaining power of
and time consuming to avail loans from banks. Hence,
commuters. Consequently, they would not mind
after analyzing various factors as described above, one
retaliating to a price increase. More often than not the
could say that the bargaining power of suppliers is
retaliation is in the form of shift in mode of
from moderate to high.
commutation. The magnitude of price elasticity of
demand for BRT services can be reflected from the fact
4.3 Bargaining power of buyers:
that one rupee increase in base rate leads to a
Powerful customers can capture more value by forcing
decrease in demand of 15000 commuters on a daily
down prices, demanding better quality or more service
basis (The Times of India, 2014). Quoting Prof.
(thereby driving up costs), and generally playing
Shivanand Swamy's statement from this article, he
industry participants off against one another, all at the
says --
expense of industry profitability (Porter, 2008). It is
also regarded as the “flip side of bargaining power of
“The people of Ahmedabad are very sensitive to the
suppliers” (Porter, 2008). The bargaining power of
fare. Surprisingly an increase of rupee one in the base
buyers is high if buyers are large, they are able to
fare reduces the passenger traffic by around 15,000
switch easily to another supplier and they are few in
passengers. Though Ahmedabad offers one of the
numbers (Porter, 2008; Slater & Olson, 2002).
cheapest modes of transport, the fare factor has to be
kept in mind. Also the shuttle rickshaws (i.e. shared
4.3.1 Price elasticity of demand for public transport
auto rickshaws) are back on the road and run parallel
services:
to BRTS; this rickshaw travel is not safe but despite
The propensity to consume is high for the households
realizing the risk, people travel in such rickshaw.”
that fall in middle income and lower income groups.
They have to allocate their modest income among
Hence, one could assess that most of the users are
heads like food expenses and non-food expenses such
from middle income or lower income groups and
as fuel and light, clothing and footwear, education,
safety is not ranked higher in priority compared to the
medical, durables, conveyance and rent. From the
expenditure they bear in commuting.
expenditure heads reflected in Annexure 2, one can
90
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
4.3.2 Degree of convenience:
Hence, the high price elasticity of demand for public
AMTS bus services are highly unreliable. Even the
transport services, degree of convenience in use of
quality of travel is below acceptable standards. The
public transport and the inherent quality of public
headways are sometimes more than the travel time.
transport being an undifferentiated service results in
Also, the fleet being inadequate, commuters face the
higher bargaining power of buyers.
music of overcrowding in the buses. AJL's BRT services
on the other hand provide a relatively comfortable
4.4 Threat of substitutes:
experience compared to AMTS bus services or IPT
A substitute performs the same or a similar function as
services. However, it comes at a cost which not many
an industry's product by different means. Substitutes
commuters are willing to bear. IPT too has its own
are always present, but they are easy to overlook
advantage. Despite commuting by IPT mode being
because they may appear to be very different from the
unsafe, it gives commuters flexibility to board and un-
industry's product (Porter, 2008). Had anyone ever
board at any spot on the route and is very easily
thought that cell-phone instruments might be
available. This is something which is really valued a lot
substitutes for wrist watches or smart-phones might
among the commuters. As one commuter says, "I
be substitutes for cameras or even computers? Some
travel by shared rickshaw to Shivranjani daily as I get it
of the key factors that influence threat of substitutes
within 5 minutes and it is available right at the door
are switching costs between substitute products/
step of the society and for catching BRTS, I have to walk
services and industry products, or buyers' addiction to
for nearly 10 minutes." Commuters using bus services
buy substitutes (Klemperer, 1995; Hubbard &
may shift to IPT mode and at times to non-motorized
Beamish, 2011; Porter, 2008).
travel mode.
4.4.1
Advent of information technology and
4.3.3 Undifferentiated service and effect on other
switching costs between substitute products/
costs of commuters:
services:
Urban public transport is perceived by the commuters
Urban public transport service is not an exception and
as an undifferentiated service. They believe they can
it too has substitutes in the form of personal vehicles
always find an equivalent service (through usage of IPT
or car pooling in personal vehicles facilitated by online
mode for commuting) and hence, end up playing one
platforms like blablacar (visit www.blablacar.in for
player against another. This eventually magnifies the
more details) or organized taxi services in the city like
degree of competition in the market.
Ola cabs, Meru cabs, etc. In the advent of information
technology, many markets have been revolutionized
Public bus transport service does not affect the quality
and urban transport cannot be an exception.
of commuters' products or services barring a few
Information technology has changed the way
exceptions such as workforce which requires extensive
businesses are done and Internet economies are
intra-city travel as part of their work portfolio. This
taking shape.
workforce rarely uses public transport.
Since substitutes that have been discussed are at a
nascent stage of development as of now, they are not
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
91
in a position to place a ceiling on prices. However, in
4.5.1 Number and size of competitors and existing
coming days, one cannot ignore these services which
rivalry among them:
are facilitated by information technology. The quality
The urban public transport industry confronts
and performance of the current public bus transport
numerous competitors. On the one hand, there are
services have to be raised in order to avoid losing
AMTS and BRTS bus services run by AMC and on the
commuters to substitutes.
other hand, we have thousands of auto rickshaws that
compete with each other for commuters on the same
The commuters' switching costs are vital in deciding
routes. As a matter of fact, there is no clear industry
upon the threat of substitutes. At present, the
leader in the urban public transport industry. This, in
switching costs to substitutes for commuters using
turn, increases the incidents of poaching of business
public transport services are low-to-medium for
among rivals. AMC has solved poaching of business by
shared services and medium-to-high for owning one's
route rationalization between AMTS bus services and
own vehicle. If commuters are not satisfied by the
BRTS bus services. However, the route rationalization
services provided by public bus transport services,
has not been extended to the IPT service providers.
they may go ahead with purchasing their own two-
This is one of the major reasons why commuters switch
wheeler or may opt for car pooling with daily
among rivals if fare rates are increased by either of the
commuters travelling the same route and timings.
service providers.
4.5 Rivalry among existing competitors:
4.5.2 Exit barriers for rivals and their commitment
High rivalry among existing competitors limits
levels:
profitability of an industry. The degree to which rivalry
Exit barriers for AMC are high. Being a municipal
drives down an industry's profit potential depends,
corporation, it is obliged to provide the city's residents
first, on the intensity with which companies compete
with bus services (public good). A high investment in
and, second, on the basis on which they compete
bus services, especially for BRTS bus services, results
(Porter, 2008). The important factors that influence
in a high exit barrier. The IPT players are from the
this force are industry growth rate, fixed costs/ storage
middle income and low income groups and most of
costs, number and size of competitors, switching costs
them don't have any other skills making them
between competitors, degree of differentiation, or exit
ineligible to be absorbed by labour markets. Hence,
barriers (Hubbard & Beamish, 2011; Johnson, Scholes,
earning livelihood by driving an auto rickshaw seems
& Whittington, 2008; Slater & Olson, 2002).
to be the most suitable option. Also, they are
financially indebted to banks for loans taken to
The intensity of rivalry is greatest if competitors are
purchase their auto rickshaws. Hence, they cannot
numerous or are roughly equal in size and power,
leave the business very easily and therefore, exit
industry growth is slow, exit barriers are high, rivals are
barriers for even IPT players are from medium-to-high.
highly committed to the business and have aspirations
High exit barriers retain competitors in the market
for leadership, or firms cannot read each other's
even though they may be earning low or negative
signals well because of lack of familiarity with one
returns.
another (Porter, 2008).
92
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
AMC has goals that go beyond economic performance
puts southward pressure on fares.
in urban public transport services. AMC's BRTS bus
service is a matter of prestige for AMC to provide
Ideally BRTS, AMTS and IPT service providers
quality public services. The same can also be justified
compete to meet the same need of providing
from the fact that despite operational losses, the BRTS
commuting services to commuters. However, their
bus service keeps expanding in leaps and bounds. It
attributes are different. BRTS is a rapid transit service
serves with social benefits like environment
which promises to provide comfort, reliable, safe and
protection, decongestion of roads, less accidents,
speedy commuting services. AMTS provides very
tension free ride and economic benefit while travelling
subsidized bus services while IPT provides cheap and
for passengers, etc.
speedy commuting services and lacks comfort and
safety.
4.5.3 Basis of Competition:
The basis of competition in urban public transport
5. Conclusion
services is price, which is a major concern for rivals. If
The PFF framework discussed above in the context of
rivals compete on the basis of prices, they destroy the
the urban public transport service industry can be
profitability of the industry as the competition
summed up as follows:
transfers profit directly to its customers. In this case,
profits are transferred from urban public transport
The threat of new entrants is from medium to high.
service providers to commuters. Pricing of bus services
This can be substantiated from the fact that supply side
and IPT service providers is very close to each other
economies of scale and the demand side benefits of
and are responding to each other with frequent price
scale are low and hence, facilitates the entry of new
adjustments that are detrimental to profitability of all
players in the market. Among other factors is the low
the players.
capital requirement by IPT players facilitated by easy
availability of credit facilities which paves the way for
Price competition in the urban public transport
easy entry into the market.
industry occurs due to the fact that services of rivals
are nearly identical and there are few switching costs
Bargaining power of suppliers is from high to moderate
for buyers. Fixed costs in the urban public transport
bearing the fact that fuel and lubricant suppliers, bus
industry are high (highest for BRTS and lowest for auto
manufacturers, spare and repair suppliers are
rickshaw service providers) and marginal costs are low.
operating in oligopoly market conditions. Either due to
This creates intense pressure for competitors to cut
regulatory framework (as seen in the case of fuel and
fares below their average costs. In some cases, fares
lubricant suppliers) or due to high price disparity
are close to their marginal costs. AMTS and BRTS have
among the costs of buses by various manufactures, the
to serve fixed networks of routes regardless of
city bus services players have hardly any say or options
volumes and this further creates a dent in their
left with them to enhance their bargaining power
profitability. Also the perishable nature of transport
against the suppliers.
services, i.e. the unused capacity can never be
recovered by urban public transport service providers,
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
93
Bargaining power of buyers (i.e. commuters) is high
air pollution, increased accidents, etc. Also, it indicates
bearing the fact that the demand for public transport
a significant negative demand for urban public
services is price elastic, the degree of convenience in
transport services.
public transport is low and public transport services
are inherently undifferentiated. Due to this condition,
6. Recommendation
we often find commuters moving from one mode of
Based on conclusions, it can be recommend that the
commutation to another resulting in players cutting
urban public transport industry's profitability and
fares to capture/recapture commuters.
attractiveness could be improved to a certain
extent, provided the following measures are taken
The threat of substitutes might not necessarily be very
by the AMC:
apparent at this instance, but one cannot neglect this
• Route rationalization should not be restricted
threat. Due to the advent of information technology,
between AMTS and AJL only. AMC should go ahead
new industry structures are shaping up. At present,
with cooperative strategy whereby shared auto-
switching costs to substitutes are from medium to high
rickshaws are also taken into consideration while
for shared services (such as Ola cabs, Blabla cars, Meru
deciding route rationalization. Doing so will ensure
cabs, etc by car pooling) and owning one's own vehicle
that the competition of shared auto-rickshaws with
respectively.
AJL or AMTS gets annihilated and undue price-war
among these competitors to grab commuters is
Finally, the rivalry among existing competitors is from
restricted. The integrated multi-modal transit
high to moderate owing to the fact that there are
system should ensure a similar level of service
numerous players in the market with no clear leader,
delivery throughout the commuters' journey.
high exit barriers for the players due to large sunk
• Let the AMC not fall in the trap of a chicken-egg
costs, and basis of competition being price. This brings
dilemma. The present bus fleet of AMTS is very low
down the profitability of the industry.
and hence, the bus services are highly unreliable,
overcrowded, and unsafe. It needs to increase the
94
Hence, the analysis of the urban public transport
bus fleet so that it facilitates better headways which
industry using PFF framework concludes that the
in turn, will ensure better flow of commuters to bus
urban public transport industry in Ahmedabad is very
transport services resulting in better revenue.
competitive in nature accompanied by poor
• AMTS has a plethora of concession schemes for
profitability. AMTS, BRTS and IPT players are
commuters. It is high time to think about adding
financially bleeding due to lack of profitability. Even
more buses to its fleet with value added services for
the commuter is not a winner as his value triad is badly
upper middle income group of commuters which
affected. The quality and services of the urban public
have negative demand for public transport. AMC
transport services are not worth the prices the
cannot think of serving only the bottom of the
commuters pay. Otherwise, why would more than one
pyramid. Adding high end bus services with value
million vehicles get registered in Ahmedabad in the
added services will facilitate better flow of
last five years? Such a whopping number of vehicles
commuters since the service levels will be at par
would add to the social costs by leading to congestion,
with the service levels of AJL bus services and will
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
cross-subsidize for the commuters that travel on
through public transport. This will help in catering to
concessions.
commuters who fall in the negative demand
• Today's commuter is very techno-savvy. Bus
category for public transport services.
services provided by AJL and AMTS and IPT players
• Owners of personal vehicles don't pay for the usage
need to be integrated using information technology.
of infrastructure (especially roads and parking
Real time reliable and consistent information
space) in its entirety. In order to discourage the rise
regarding the movement of these vehicles could be
in the number of personal vehicles, the policy of
made available to the commuters. This will
owning or purchasing a parking space from AMC
eventually lead to acceptance of urban public
before owning a vehicle should be put into practice.
transport services by commuters.
These funds, in turn, could make up for operational
• A culture of using public transport needs to be
inculcated among people to increase demand in the
losses of bus services. Singapore already has this
policy in place.
city of Ahmedabad and in other Indian cities in
order to derive full advantage of efficient public
Implementation of the above stated measures may
transport systems. Awareness programmes and
help in making urban public transport services more
better communication strategies should be
reliable, convenient, comfortable, safe, and rapid so
adopted by AMC to inculcate the required culture of
that the value triad of commuters is in place; this shall
using public transport services. We need to educate
help industry players AMTS, BRTS, and IPT players
commuters on how they help in achieving the triple
achieve profitability. This can be achieved by not
bottom line goals of economic benefit, social
competing with each other but complementing each
benefit and environmental benefit by commuting
other.
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
95
References
• Ahmedabad Janmarg Limited. (2012, May 30). Response to Queries for RFP for Procurement of High Quality
Buses. Addendum -1 . Ahmedabad, Guajrat, India.
• Ahmedabad Municipal Transport Services. (n.d.). Schemes: Ahmedabad Municipal Transport Services.
Ret r i eve d A u g u st 2 3 , 2 0 1 5 , f ro m A h m e d a b a d M u n i c i p a l Tra n s p o r t S e r v i c e s We b S i te :
http://www.amts.co.in/SitePage.aspx?id=60 .
• AJL, S. O. (2009, May 1). AJL, Bus Makers Price War hits BRTS. (T. Paul John, Interviewer) Times of India.
• Aktouf, O. (2004). The False Expectations of Michael Porter's Strategic Management Framework. REvista
Universidad & Empresa, VI (6), 9-41.
• Andriotis, K. (2004). Revising Porter's Five Forces Model for Application in the Travel and Tourism Industry.
Tourism Today, 131-145.
• Argyres, N., & McGahan, N. (2002). An Interview with Michael Porter. Academy of Management Executive, 16
(2), 43-52.
• Arturo, A. (2005). Study of urban public transport conditions in BOGOTÁ (Colombia): Draft Report. UPI.
• Central Institute of Road Transport. (1996). Ahmedabad Municipal Transport Services: A Report on Structure
and Strategies. Pune: CIRT Publication.
• Diaz, A., Martinez, O., & Barea, P. (2000). El futuro del transporte de viajers por carretera. CIT.
• Fabian, D. (2014). Are Porter's Five Competitive Forces Still Applicable? A Critical Examination concerning the
Relevance for Today's Business. 3rd IBA Bachelor Thesis Conference. Enschede, The Netherlands: University of
Twente.
• Hubbard, G., & Beamish, P. (2011). Strategic management: Thinking, Analysis, Action. Australia: Pearson
Education.
• Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring Coporate Strategy: Text & Cases. Pearson
Education.
• Klemperer, P. (1995). Competition when consumers have switching costs: An Overview with Applications to
Industrial Organization, Macroeconomics, and International Trade. The Review of Economic Studies, 62 (4),
515-539.
• McFarlan, F. (1984). IT Changes the Way you Compete. Harvard Business Review, 62 (3), 98-103.
• Mohamed, Z., Shamsudin, M. N., & Latif, I. A. (2013). Measuring Competition Along the Supply Chain of the
Malaysian Poultry Industry. International Conference on Social Science Research. Penang, Malaysia.
• Mohaptra, S. (2012). IT and Porter's Competitive Forces Model and Strategies. Information Systems Theory,
265-281.
• Nicolas, E., Andres, G.-L., Ramon, M.-R., & Tomas, S. (2007, December). Policy Research Working Paper 4440.
Affordability and Subsidies in Public Urban Transport: What Do We Mean, What Can Be Done? Latin America
and the Caribbean Region: The World Bank.
96
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
• Pandey, I. M. (2010). Financial Management. In I. M. Pandey, Financial Management (pp. 110-130). New Delhi:
Vikas Publication.
• Porter, M. E. (1979). How Competitive Forces Shape Strategy. Harvard Business Review , 21-38.
• Porter, M. E. (2001). Strategy and the Internet. Harvard Business Review , 62-78.
• Porter, M. E. (2008, January). The Five Competitive Forces that Shape Strategy. Harvard Business Review, 1-17.
• Raible, M. (2013). Industrial Organization Theory and Its Contribution to Decision-making in Purchasing.
Enschede, The Netherlands: Faculty of Management and Governance, University of Twente.
• Rothaermel, F. (2008). Competitive Advantage in Technology Intensive Industries. Advances in the Study of
Entrepreneurship, Innovation & Economic Growth, 201-225.
• RTO Gujarat. (2015, January 3). RTO Gujarat. Retrieved May 14, 2015, from RTO Gujarat Website:
http://rtogujarat.gov.in/documents/notifications/radio_call_taxi.pdf
• RTO Gujarat. (2015, February 5). RTO Gujarat. Retrieved May 10, 2015, from RTO Gujarat Web site:
http://rtogujarat.gov.in/documents/notifications/AHMEDABAD_CITY_TAXI_SEVA.pdf
• Slater, S., & Olson, E. (2002). A Fresh Look at Industry and Market Analysis. Business Horizons, 45 (1), 15-22.
• The Times of India. (2014, November 10). BRTS fails to make inroads in passenger traffic. Retrieved May 4,
2015, from The Times of India Website: http://timesofindia.indiatimes.com/city/ahmedabad/BRTS-fails-tomake-inroads-in-passenger-traffic/articleshow/45096884.cms
• The Times of India. (2014, October 23). Gujarat mulls 6-month ban on fresh auto registrations. Retrieved June
29, 2015, from The Times of India Web site: http://timesofindia.indiatimes.com/city/ahmedabad/Gujaratmulls-6-month-ban-on-fresh-auto-registrations/articleshow/44913321.cms
• The Times of India. (2014, January 17). Home, City: The Times of India. Retrieved May 4, 2015, from The Times
of India Web site: http://timesofindia.indiatimes.com/city/ahmedabad/Metro-route-will-run-parallel-toBRTS/articleshow/28913741.cms
• Thurlby, B. (1998). Competitive forces are also subject to change. Management Decision, 36 (1), 19-24.
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
97
Annexure 1: Various Concession Schemes by AMTS
S.N.
Name of the Concession
Scheme
Particulars of the Scheme
1
Students’ Concession Scheme
Term pass - Rate of Rs. 300/- per month for any distance travelled in
the city.
2
Concession for the blind
Free journey
3
Concession for Deaf and Dumb
50 percent discount on the regular bus-fare
4
Concession for the
Handicapped
Defects up to 50 percent and with monthly income less than Rs.
1000; such applicants can travel any distance by paying minimum bus
ticket fare.
5
Concession for mentally
challenged children and their
Wards
Such children are eligible to obtain free pass only for going to and
coming back from their school. Their parents or wards also get such
pass to accompany their child to school at the concessional rate.
6
Concession scheme for senior
citizens (aged between 65 and
75years)
Holder of the pass can travel for any distance and as m any times as
he wants. He has to purchase the ticket at 50 percent discount
on the existing rates.
7
Concession scheme for senior
citizens (above 75 years of age)
Holder of the pass can travel free of cost.
8
Concession for Sportsmen
They can travel in AMTS buses paying minimum fare for any distance
9
Monthly Pass Scheme
The pass-holder can travel for 30 days by paying the fare for 15 days
10
“Travel as you like” monthly
pass scheme
Under this scheme, a monthly pass is issued at the cost of Rs.900 for
a month. The pass-holder can travel any time, in any AMTS bus, as
many times as he wishes.
11
Free - Pass Travelling Scheme
Applicable to:
· Press-reporters
· Municipal Councillors and members of the School-Board
· Union post-holders
· Freedom fighters and their widows
· Elderly people staying in old-age homes
Source: AMTS official website. http://www.amts.co.in/SitePage.aspx?id=60.
98
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
Annexure 2: Expenditure pattern of Bottom 40% and top 20% of urban population, 2004-05 and 2009-10
Item
2004-05
2009-10
Value of
bottom
40% (INR)
Value of
top 20%
(INR)
Bottom
40%
(%age)
Top 20%
(%age)
Value of
bottom
40% (INR)
Value of
top 20%
(INR)
Bottom
40%
(%age)
Top 20%
(%age)
Food
281
762
58.4
31.9
446
1254
53.6
29.6
Non Food
200
1627
41.6
68.1
387
2979
46.4
70.4
-Fuel & Light
62
186
12.9
7.8
89
250
10.7
5.9
-Clothing and
Footwear
13
136
2.7
5.7
61
243
7.3
5.7
-Education
12
153
2.5
6.4
31
511
3.8
12.1
-Medical
0
57
0.0
2.4
33
261
3.9
6.2
-Durables
3
184
0.6
7.7
15
336
1.8
7.9
-Conveyance
14
208
2.9
8.7
25
336
3.0
7.9
-Rent
12
174
2.5
7.3
20
365
2.5
8.6
Taxes &Cess
3
19
0.6
0.8
6
40
0.7
0.9
-Other Items
81
510
16.8
21.3
107
638
12.9
15.1
Total
481
2389
100
100
833
4233
100
100
Source: NSSO (2006 and 2011).
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
99
Annexure 3: Subsection 3 (a) of Section 73 of the Indian Motor Vehicle Act, 1988
The Regional Transport Authority, if it decides to grant a contract carriage permit, may, subject to any rules
that may be made under this act, attach to the permit any one or more of the following conditions, namely:
i.
that the vehicles shall be used only in a specified area or on a specified route or routes;
ii.
that except in accordance with specified conditions, no contract of hiring, other than an extension
or modification of a subsisting contract, may be entered into outside the specified area;
iii. the maximum number of passengers and the maximum weight of luggage that may be carried on
the vehicle, either generally or on specified occasions or at specified times and seasons;
iv. the conditions subject to which goods may be carried in any contract carriage in addition to, or to
the exclusion of, passengers;
v.
that, in the case of motorcabs, specified fares or rates of fares shall be charged and a copy of the
fare table shall be exhibited on the vehicle;
vi. that, in the case of vehicles other than motorcabs, specified rates of hiring not exceeding specified
maximum shall be charged;
vii. that, in the case of motorcabs, a specified weight of passengers luggage shall be carried free of
charge, and that the charge, if any, for any luggage in excess thereof shall be at a specified rate;
viii. that, in the case of motorcabs, a taximeter shall be fitted and maintained in proper working order,
if prescribed;
ix. that the Regional Transport Authority may, after giving notice of not less than one month,-
x.
a)
vary the conditions of the permit
b)
attach to the permit further conditions;
that the conditions of permit shall not be departed from save with the approval of the Regional
Transport Authority;
xi. that specified standards of comfort and cleanliness shall be maintained in the vehicles;
xii. that, except in the circumstances of exceptional nature, the plying of the vehicle or carrying of the
passengers shall not be refused;
xiii. any other conditions which may be prescribed.
100
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
Mahesh Chaudhary has research interest in management and efficiency of infrastructure projects. He
has published research papers in international conferences and peer reviewed international journals. He
serves Gujarat National Law University (GNLU), Gandhinagar since August 2013 as Assistant Professor
of Management. Before joining academics, he was associated with a management consultancy,
Coordinates Infrastructure Consulting, consulting to local/ State/ Central Governments and private
sector clients in India on projects in a variety of PPP formats. He has experience in planning, structuring,
bid process, financial modeling, and financial and economic analysis of PPP projects in the areas urban
transport and urban infrastructure. He can be reached at [email protected] or
[email protected]
Yogesh C. Joshi is Ph.D. in Economics, M.A. (Gold Medal) from University of Jodhpur. He has been
teaching Business Economics in the faculty of management, Sardar Patel University, Vallabh Vidyanagar
for more than 20 years. Before joining Sardar Patel University, he had worked on research projects with
ICAR, ICSSR, Ministry of Welfare, Government of India, other universities and at IIM, Ahmedabad. He
has published and presented more than 70 papers in various research journals and national and
international conferences (including conferences in Norway, Scotland, Bhutan, Maldives and the
Netherlands). He organized a panel of research papers on "Fulfilling Millennium Development Goals
(MDGs) Institutional Responses in South Asia" at the 19th European conference on Modern South Asian
Studies held at Leiden, Netherlands. His research interest involves issues on Development Economics,
Infrastructure, Sustainable Development, and public policy. Recently, he has completed a major research
project funded by UGC on "Institutional Changes and Poverty alleviation programmes in Western
India”. He has been a resource person for All India Management Association (AIMA) and preparation of
District Human Development Report for Government of Gujarat, UNDP for various districts in Gujarat.
He can be reached at [email protected]
ISSN: 0971-1023 | NMIMS Management Review
Volume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:
A Case of Ahmedabad, Gujarat in India
101