Wednesday, June 18, 2008

Source of public transport inefficiency: Organda?

Organda is the Organization of Land Transportation Owners. Recently they issues a new decree on increasing taxi fares. However, the taxi company not directly follow the decree. The taxi company still postponed the new fares. In my opinion, Organda decision to increase taxi fares immediately is lack of arguments and seems useless. Aco said it ridiculous.

The interesting story behind taxi operators' delayed decision is their simple argument,
"I've lost several passengers already due to the fuel price increases. The new fares will just make it worse,"
That argument is simply acceptable. The taxi driver quite understand that they have been forcing to accept that their passengers unwilling to take taxi for a moment due to adjustment process after fuel price hike. How come Organda never think that consumer need some adjustment first before willing to pay new fares? Speaking to that kind of query, I have sort of stupid conclusion up until now that the source of public transport inefficiency in Indonesia, particularly Jakarta, is Organda. Why?

Organda is the source of inefficiency because they set up transport fare by creating an concensus among operators. That means the operators (producers) control the market. To some extent, they can set up fares above the market equilibrium that possibly lower then their concensus fares. Moreover, they also have power to decide how many buses or transport mode allowed to operate in particular route.

The last event that lead me to this findings is when Organda refused public tenders for Busway operation. They refused the tenders because Organda demand that PT Primajasa and PT Lorena - neither of which belong to Organda group - not to be included in busway operations. In fact, both company offer lower cost of operation.

"Primajasa offered a rate of Rp 9,536 (approximately US$1) for every kilometer its supplied buses traveled on Corridor 4 (Pulo Gadung, East Jakarta, to Dukuh Atas, Central Jakarta), and Rp 9,371 per kilometer on Corridor 6 (Ragunan to Kuningan, both in South Jakarta).

Lorena submitted a bid of Rp 16,661 per kilometer to operate busses on Corridor 5 (Kampung Melayu, East Jakarta, to Ancol, North Jakarta) and Rp 9,443 on Corridor 7 (Kampung Rambutan to Kampung Melayu, both in East Jakarta)."
If that fact correct, than it is obvious that efficient company undoubtedly could serve at least the same quality as Organda groups did but with lower fares. That means Organda possibly charge a bit higher fares because they intended so. From consumers point of view, we could pay lower fares as if efficient operators or organization operates as such an efficient way.

How come nobody realize that we support non-efficient organization to serve us in transportation sector - such as Organda? Why we should accept such unfair situation?

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