Thursday, March 27, 2008

TARC to lose monopoly for Oaks & Derby-- and then not allowed to compete at all

From Sheldon Shafer in the C-J...

This year's Kentucky Oaks and Derby will be the last for TARC buses to transport tens of thousands of people to and from Churchill Downs.

Though the public bus company received a waiver for this year, new federal rules that take effect April 30 require the track to negotiate with private transportation companies to provide the service next year.

The new rules will cost Transit Authority of River City as much as $200,000 in yearly revenue it receives for busing roughly 40,000 people to Oaks and Derby -- using 90 coaches for Derby and 40 for Oaks.

But if TARC doesn't step aside and let private vendors have the business, it could lose all or part of $12 million to $15 million a year in federal funding, Executive Director Barry Barker said. The only way TARC could participate would be if all the private vendors agreed to that, an agency spokeswoman said.

Multiple-Choice Question:
What's wrong with all of this?

a.) TARC was given a monopoly; others were not allowed to compete
b.) TARC will no longer be able to compete
c.) TARC is subsidized by tax dollars
d.) TARC is subsidized by federal tax dollars to the tune of $12-15 million (on behalf of Louisvillians, I'd like to thank the taxpayers of Wyoming, Vermont, etc. for their assistance)
e.) It's not in the story, but entry into the field of TARC's competitors is also regulated/restricted by the government-- to benefit those interest groups.

Private transportation companies applaud the change, saying they have been unfairly shut out of the chance to provide Derby service for decades.

The new federal regulations are "long overdue," said John Miller, president of Miller Transportation, adding that the new rules "level the playing field."

Yes and no. Why isn't TARC allowed to compete?

The new federal regulations would allow TARC to continue busing track patrons on Derby and Oaks days -- if it charged its usual $1.25 fare. But that would translate into a loss of revenue for TARC and would not be acceptable, Barker said.

Think about what this means. Even when TARC has full buses, they lose money with their regular fare!


At April 2, 2008 at 1:35 PM , Blogger Martina said...

This comment has been removed by the author.

At April 2, 2008 at 1:36 PM , Blogger Martina said...

Are there any cases of public transportation operating with a profit?

At April 2, 2008 at 6:38 PM , Blogger Eric Schansberg said...

I'm not aware of any but it's not an area of any expertise for me either.

From theories of political economy, one would expect the norm to be inefficiencies, subsidies, and so on.

It's also interesting to note that many local private sector markets are restricted (e.g., cabs and limos)-- artificially increasing profits for that interest group.


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