Here is another case of private gains but socialized losses.
The Star reports that some bus operators wanted the government to bail them out. They reasoned that they would go bankrupt. Fares “that they collect can no longer cover costs.”[1]
That is nice, is it not?
When things go awry, get somebody to pay for you. When the going is good, keep the money for yourselves.
Without any doubt, I prefer bankruptcy to bail out. In fact, bankruptcy is likely to be good for these bus operators.
One, if they face competition along the routes that they serve, then some of them will be out of business, which then grants the surviving operators monopoly power. The fares can be raised after that, subject to other constraints, like train services, cabs or private cars. The government of course should refrain from the temptation of regulating those fares. If they cannot compete with these other means of transportation, then clearly the market does not appreciate the bus service, and thus, no need for this type of bus service.
Two, these bus operators will stop losing money once they are bankrupt. That is the point of bankruptcy, anyway. Coupled with limited liability, bankruptcy can do wonders. Of course, some banks in Malaysia demand individual guarantee, which makes limited liability irrelevant. Still, that is a different issue that requires solution that I cannot think of right now.
Apart from that, the Pan Malaysia Bus Operators Association president Ashfar Ali reasoned that the “government is no longer our proponent, but our competitor.”
This is the only hard point to counter.
I however prefer the government to privatize some of the services instead, like that belonging to Mara, i.e. Transnasional. For others like RapidKL and RapidPenang, I wonder how many of these private bus operators actually compete with RapidKL and RapidPenang?
[1] — PETALING JAYA: Hit by escalating cost of operations, stage bus operators nationwide have asked the Government to take over their businesses and liabilities.
Pan Malaysia Bus Operators Association president Datuk Ashfar Ali has sent a memorandum to Land Public Transport Commission (LPTC) chairman Tan Sri Syed Hamid Syed Albar proposing that the Government buy over their assets. [It’s bailout or bust, bus firms tell Govt. Teh Eng Hock. The Star. February 21 2011]