Imperfect market of AC buses in Dhaka  

Asjadul Kibria     | Published: September 28, 2018 21:54:48 | Updated: September 29, 2018 21:32:47

Air-conditioned (AC) bus for the regular commuters in Dhaka city is not a matter of luxury but a necessity. A good number of regular commuters are ready to pay higher fares to travel in AC buses. But they are yet to find adequate number of such buses. A few intra-city AC buses operated by the Bangladesh Road Transport Corporation (BRTC) cannot meet up the need. Currently Dhaka Chaka, a private company, is operating AC mini-buses in Gulshan and adjoined areas. Green Dhaka is the latest addition to the city's AC pool. These buses are now plying between Mothijheel and Abdullahpur. 

The first AC bus service called 'Premium' was introduced between Mothijheel and Mohammadpur which was gradually shifted to the Uttara-Motijheel route and later on extended to Narayanganj and Munshiganj from Dhaka. Those AC buses also operated on Dhaka-Dhamrai route for long. So disciplined was the system of operation that some commuters even stopped travelling on their private cars to office. But within a short period of time, bus operators started to compromise on the quality of services especially in Narayanganj and Munshiganj routes. The service, however, continued for a decade and finally stopped due to poor maintenance and also some legal complexity.

Nevertheless, the demand for AC buses is always there. A ride in AC buses is hardly taxing for office-goers. Dust-free in the interior, there is no question of sweating. People caring for health and maintaining energy are ready to pay a 'premium' for a comfortable journey.

But service providers not responding to the demand by pressing into service an adequate number of AC buses. Several factors act as a barrier to entry into this potential untapped market.

Unlike non-AC buses, operators require high investment for running air-conditioned varieties. Skilled driver is a must to run such a bus carefully especially in the chaotic roads of Dhaka. Frequent congestions, thanks to unruly traffic in the city, also increase the cost of operation. To meet higher operational expenditure, they have to generate increased revenue by charging the commuters more.

But how much the additional fare should be? Currently Green Dhaka is charging Tk 100 for a trip to Abdullahpur from Mothijheel while a non-AC bus is charging Tk 40 for the same trip.  Thus AC bus is charging at least 150 per cent more or two and half times the rate of non-AC bus.

It is yet to be known whether large primary investment coupled with higher operational expenditure is discouraging transport operators to ply AC-buses in Dhaka. Experiences from Premium AC buses -now out of service -- however, show that it was the monopolistic operation that made the service regular and smooth and obviously highly profitable. Ongoing experience of Dhaka Chaka also validates the point.

Again, Premium AC bus had to compete with non-AC buses to some extent. Green Dhaka and BRTC AC buses are now also in competition with non-AC buses on the same routes. This is, however, imperfect competition. It may even be termed monopolistic because the service those render are similar up to a point but then their target clientele are different. At this point they are not complementary to each other (non-AC is in no way a substitute for AC facility).  The imperfect market structure of AC-bus operation is likely to continue and commuters have to wait long for what they would cherish so much.


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