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Should a Public Service Make a Profit?

15th November 1963
Page 53
Page 53, 15th November 1963 — Should a Public Service Make a Profit?
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Which of the following most accurately describes the problem?

Keywords : Fare, Pricing

"IT would he stupid to disguise the

complexity of the problems which face transport managements in all parts of the world, but I am convinced that the way to sound solutions is to prevent wholesale and wasteful competition between them over the same field, and to encourage each to co-operate with the others wherever practicable ". Thus commented Sir John Elliot, chairman of Thos. Cook and Son Ltd., and former chairman of London Transport, in a paper read to the Institute of Travel Agents in London last week.

Sir John said it was a strange and disturbing fact that many quite distinct social changes in recent years had all tended to emphasize the peak-hour operation problem either by shortening and thereby intensifying peak-hour traffic movement, or by reducing profitable off-peak travel. Referring to the claim often advanced that fares were too high and caused hardship to those with low incomes, he said that if this was the case the country's economic system was at fault.

If people were encouraged to use public transport by fixing fares below the true cost, this would involve a waste of costly resources which no sane economy could afford. Business efficiency suffered when the incentive to avoid duplication and wasteful competition was blunted.

On the subject of subsidies, Sir John felt they were a last resort only to be adopted if all else failed. Transport operators should not be prevented by political action (which was nearly always short term) from ensuring that the true costs of transport services to the community were made public; and they should not be prevented from ensuring that fares and freight rates were enough to provide for adequate annual charges against revenue for renewals, as well as covering true operating costs. In other words, said Sir John, "let everyone pay his whack, and all will be healthier thereby and in the long run will get the best service into the bargain ".


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