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Chapter I Introduction
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CHAPTER-I
INTRODUCTION
Public Road Transport system for the movement of passengers over short and
medium distance is essentially based on bus services. It is a basic infrastructure and a
public utility service that meets the travel needs of the general public connected with work,
education, social purposes and entertainment purposes. Now buses even compete with the
Railways in some long distance routes with convenient and comfortable services
throughout day and night. Passenger road transport sector is dominated by publicly owned
State Road Transport Corporations or Undertakings in some states like Andhra Pradesh,
Maharashtra, Tamil Nadu, Karnataka, Gujarat, Utter Pradesh etc, while in some other
states like Kerala it is dominant only in certain areas of the state. About 80% of the land
passenger transport needs in India is met by the bus transport system (Kulkarni, 2000).
These transport undertakings as public enterprises are conceived and organized to function
as commercial enterprises engaged in economic activity involving huge outlays of public
investment. Social and economic objectives of providing efficient and economical
transportation facilities to the masses have been the prime consideration for bringing the
passenger road transportation system under the umbrella of the state which was sought to
be achieved by the Road Transport Corporation Act of 1950 of Indian Parliament which
paved the way for the nationalization of the passenger road transport to a large extent
leading to the formation of State Road Transport Undertakings or Corporations in almost
all States in India. In this context this is a case study of bus-based public passenger
transport system in Kerala.
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1.1. STATE ROAD TRANSPORT UNDERTAKINGS
Passenger road transport services in India are operated partly by public sector and
largely by private sector in the proportion of about 29% and 71 % respectively. The extent
of nationalisation of public passenger transport in different states also varies considerably
with the highest being about 70% in Maharashtra State. The public sector passenger road
transport system in India is operated by 71 passenger Road Transport Undertakings owning
1,13,370 buses with individual fleet strength ranging from 5 to 17000 buses among these
organisations under single management(Kulkarni, 1998).
There are twenty bus transport undertakings having more than 1000 buses in their
Fleet, as on 31-3-1997. The largest among these are ‘Maharashtra State Road Transport
Corporation’ and ‘Andhra Pradesh State Transport corporation’ with about 17000 buses
each. The organizational form for public sector bus transport also varies from state to state;
the most common being that of the ‘statutory corporation’ form under the provisions of
the Road Transport Corporation Act, 1950. There are 21 such corporations, while 31
undertakings are formed under Indian Companies Act, 1956. Urban bus transport systems
are being operated by 10 Local Municipal Councils and the remaining 9 undertakings as
part of government departments.
Based on the passenger-kilometer produced, the STUs are classified as in the
Table 1.1, which gives an idea of the operations and productivity of different transport
undertakings and their ranking on the basis of output produced (Singh, 2000).
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TABLE – 1.1
Classification of Passenger Road Transport Undertakings
( Mean values/annum during 1983-‘84 to‘96-’97)
Category
Name of STU/
RTC
Pass-Km (out
put) produced
(million/annum)
Bus Km
million
Route
Km
(‘000)
Ranking
(output
based)
Large Andhra Pradesh 52725 1310 735 1
“ Maharashtra 49430 1243 1040 2
Medium Karnataka 33047 809 670 3
“ Gujarat 31444 788 879 4
“ Uttar Pradesh 20641 567 456 5
Small Kerala 12999 284 181 6
“ Rajasthan 12668 323 355 7
“ MadhyaPradesh 7945 210 258 8
“ Punjab S.T. 7853 199 166 9
( Source: Singh S.K, 2000)
1.2. KERALA STATE ROAD TRANSPORT CORPORATION
Erstwhile princely-states like Hyderabad and Travancore had been the fore-runners
of the process of nationalization even before the RTC Act. In 1937 Travancore
Government had nationalized the major road transport route and formed the State
Transport Department following the pattern of the London Transport System, under the
leadership of Mr. Salter, brought from London Passenger Transport Board as the
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Superintendent. The Transport Department started operations in 1937 with 60 imported
23-seater bus chasses and indigenously built bus bodies(www.ksrtc.com). Eventually this
department was reshaped into the present KSRTC in 1965 to give a commercial orientation
as laid down in the RTC Act. It was then considered essential to provide a cost-efficient
service to maintain a self-supporting passenger transport system without much reliance on
state subsidy.
In 2001 the RTC in Kerala had a fleet strength of about 4300 buses of which
about 3430 were running and operating about 4126 schedules. It had about one-third of
the share of total passenger transport in the state and the remaining was with the private
operators. Generally the performance of KSRTC has not been quite satisfactory in terms
of commercial and service yardstick. The accumulated losses of KSRTC stood at about
Rs.80 Crores, on a paid-up capital of Rs. 43 crores as of 1983-‘84, while the operating loss
alone in 2000-‘01 was Rs160 crores against a paid-up capital of Rs 122.69 crores (Annual
Report of KSRTC, 2000-01). The financial losses are written off by government regularly
to facilitate commercial standing of the Corporation and to enable it to borrow from
financial institutions for buying new buses and other capital expenditure.
In this aspect, most of the RTCs in India, except a very few undertakings like
those in Karnataka, U.P, Orissa and Sikkim are operating on profit as their cost of
operations was lower than their revenues from operations(CIRT,2006), while the
operational revenues of KSRTC was only about 86% of the cost of operations in 2000-01
(Annual Report, KSRTC, 2000-01).
The total revenues of all the State Transport Corporations during 1996-‘97 was
about Rs.100.88 billion, with traffic revenues of Rs.95.94 billion and other revenues of
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Rs.4.94 billion. The total cost inclusive of personnel, materials, taxes, interest,
depreciation and others came to Rs. 115.02 billion during that year. All the STCs/STUs
together had incurred a net loss of Rs. 14.14 billion (Rs. 1.70 billion, before taxes) during
the above year. This is about Rs 2.66 billion in the year 2005-’06. Karnataka, U.P, Orissa,
Sikkim and Bangalore Metro: Transport Corporations are the only ones which had made
profits in 2005-06 (CIRT, Pune,2006). The overall cost recovery index is only 88% for all
the STUs, put together. The undertakings mainly operating in rural areas could recover up
to 91% of their total costs, while for urban area STUs it is 69% and for those in hill
regions it is 76% of their total costs. The operating cost consists of material cost (fuel,
tyres, spares etc.) and the personnel cost i.e. towards salary, wages, fringe benefits, pension
and superannuation-payments. Thus, the overall operating costs of State Transport
Undertakings constituted 82% of their total revenues. The overall spending on their
‘personnel’ alone went up to 46% of their total operational income at the aggregate level
for those operating mainly in rural areas while in urban transport undertakings, it is as high
as 70% in 1996-97(Kulkarni,1998). In Kerala, this figure is around 51.64% in 2000-01.
The personnel cost index with reference to the base year 1987-88, had gone up by more
than 250% over a period of 10 years. Similarly the spending on ‘materials’ went up to
36% of total revenues. The total financial burden to State Transport Undertakings on
various concessions and subsidies provided to different classes in the society during 1996-
97 worked out to be about Rs. 400 crores (Kulkarni 1998).
A study by Singh S.K.(2000 b) shows that that the cost curves of STUs follow a
‘U-shaped’ pattern with a pronounced absence of any ‘economy of scale’. Evidence of
higher costs in a non-competitive scenario( Mishra et.al,1991) together with decreasing
returns to scale suggests that breaking up of larger undertakings into smaller ones to cater
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to different market segments and to smaller geographic markets may help to operate these
more economically and efficiently. Efficiency wise smaller undertakings are seen to be
better than larger ones and the relative efficiency and size of the undertakings is indicative
of an inverse relationship. Further the longer the route length per bus, the better the
productivity and a higher level of utilisation of buses and their capacity leads to higher
productivity. Management efficiency also plays an important part in this especially on the
personnel(HRM) and materials side with the result that the undertakings with better supply
side management achieving better efficiency(Singh 2000) in operations.
Passenger Bus Transport nationalization process is only partial in Kerala. The
share of KSRTC fleet in the State’s total stage carriages is only about one-third as
mentioned. But KSRTC has dominance in the districts of Trivandrum, Quilon, Alleppy,
Wynad and Kottayam. In the Districts of Palghat, Kozhikode, Malappuram, Cannanore
(Kannur) and Kasargode, private bus operators are dominant. However, in the long
distance routes, i.e., route lengths of about 150 KM and more KSRTC has a fair monopoly
in the State, with their Fast Passenger and Express Services, which have a higher fare
structure than the moffusil or Ordinary services. Because of poor financial performance
and the general dissatisfaction at the quality of the services of KS RTC, the extension of
nationalization to more routes in the States in the near future appears to be difficult.
Generally the public also do not view this proposition favorably, presumably because of
the lower quality of service rendered by the KSRTC compared to others.
. In an appraisal of the Planning Commission , the performance of Kerala RTC is
far behind, with Haryana and Tamil Nadu-RTC undertakings(combined) standing at the
top in Fleet Utilisation, load factor and vehicle productivity(1983). The statistics on this
indicate that the operational costs are comparatively high for Kerala RTC as per their
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annual reports published (1997-2001). This is partly attributed to the gruelling road
conditions in the State with uneven surfaces and pot-holes during most months of the year.
There is dense population on either side of most of the roads, as villages and urban areas
are almost in a single continuum in the state. The top surface of the roads are mostly rough
and bumpy because of flood-damages occurring due to five to six months of heavy rains
every year. All these affect the operational conditions and consequently the smooth
running of the buses are fairly difficult on most of the roads in Kerala, especially along the
district and lower grade roads. The age of the fleet is also a significant contributor to the
high operational costs. Of the 4413 Buses as on March 2001, about 50% were more than
5years old which required higher maintenance costs apart from the huge capital investment
to replace them in a phased and planned manner.
This appears to be an all-pervasive phenomenon in this country and the situation in
many of the developing and developed countries are not different, affecting the Public
Passenger Bus Transport systems adversely. None of the 43 major transport undertakings
in Europe recovered their entire cost of operations from their ticket revenues(Rao,1979).
The percentage of expenditures met from traffic revenues ranged from 13% in Italy to 70%
in the UK. In the USA also the urban public transport undertakings are in similar shape
though the environs and objectives in these countries are different from India. For example
in Europe and North America, the main objective is to reduce the use of car by
encouraging the use of public bus transit systems(Wright,2000). Thus in the case of
transport undertakings in the countries abroad, the reasons for lower revenues may be
attributable to factors which are not exactly comparable to the conditions prevailing in this
country. In this perspective, this study focuses on the bus-based passenger road transport
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system specific to Kerala and is a case study focusing on two representative routes in the
central part of the state.
1.3. TAMIL NADU STATE TRANSPORT CORPORATION (CBE-DIVISION) LTD.
The public Transport Corporations in Tamil Nadu had been showing a better
performance over the years, in spite of the non-hiking of the bus fares commensurate with
frequent hikes in Diesel prices in the past few years and as such Tamil Nadu has been
having comparatively lower bus fares. Among all the STUs in Tamil Nadu state, which
once had reached 21 nos., the Transport Corporation based at Coimbatore (formerly CTC;
now TNSTC-Coimbatore Division) has been showing consistently good performance. In
Tamil Nadu the public passenger transport undertakings were directly under the state
Government till 1972, which were then reorganized into various Corporations under the
Companies Act. Thus C.T.C(Cheran Transport Corporation Ltd, Coimbatore) was
incorporated in February 1972 and started operations from March same year with 110
buses taken over from ABT Ltd., Pollachi. Subsequently it took over 120 buses from 19
private operators in and around Coimbatore, Erode and Nilgiris in 1973. C.T.C. was
bifurcated and Jeeva Transport Corporation Ltd, with 1204 buses, for Erode district was
formed in 1983 and again in 1994 when Mahakavi Bharathiar Transport corporation was
formed with 1438 buses. Thus by 1997 there were about 21 Bus Transport undertakings,
all formed under the Companies Act, in TN state. In order to reduce the overheads of so
many corporations and to reduce the losses which had been mounting year after year these
were reorganised into 7 transport undertakings* in 1997 with the generic name of TN State
Transport Corporation and the name of the Head-Quarters city in brackets, except for
‘State Express Transport Corporation Ltd’. and ‘Chennai Metropolitan Transport
Corporation Ltd. The former runs long distance ‘Express’ and ‘Luxury’ bus services and
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the latter the City/Urban services in Chennai(formerly Madras). Thus C.T.C was renamed
as ‘Tamil Nadu State Transport Corporation,(Coimbatore Division) Ltd.’ or TNSTC(CBE
Dn.). But this was popularly being referred to as ‘CTC’ in the subsequent few years also.
Hence ‘TNSTC-CBE Dn.’ and ‘CTC’ are interchangeably mentioned in this study.
During 2000-01, TNSTC(CBE Dn.)(formerly, Cheran Transport Corporation Ltd or CTC)
had almost 1600 buses and had serviced the Districts of Coimbatore and Nilgiris and also
the City of Coimbatore. In 2007 it had about 2800 buses, 39 Branches and about 17000
employees and had carried about 29 lakh passengers/day. The erstwhile CTC had been
consistently paying dividend to Government and higher bonus to its employees in the
1980’s. It had been named the best State Transport Undertaking in India in
1980(www.tnstccbe.com). TNSTC(CBE Dn.) has also been running some services to their
neighbouring districts of Palghat, Trichur, Cannanore, Wynad and Kozhikode (Calicut) in
Kerala on a reciprocal arrangement. The average age of their fleet in 2000-01 was 4.78
years and the fleet utilization was 95%, while that of KSRTC was 79%. The
manpower/bus was 6.86 for TNSTC-CBE. (*The other TN State Transport undertakings
are: TNSTC(Villupuram),TNSTC(Madurai), TNSTC(Salem), TNSTC(Kumbakonam),
SETC and Chennai MTC).
1.4 STATEMENT OF THE PROBLEM
1.4.1 Nature of Public Passenger Bus Services
Passenger road transport services having been only partially nationalized in
Kerala, that too gradually to the extent of about one-third of the total routes, private bus
operators are dominant in the northern and central districts. There is a broad-gauge
railway line along the whole length of the state which attracts a good share of the
passenger traffic as the fare is lower, apart from the additional advantage of more comfort
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and speed. Total nationalization of the bus routes in the state is not a possibility in the near
future as the Planning Commission and Central Government have been emphasizing on
giving priority for improving the efficiency of the existing network of bus services for
striking a healthy balance between the operating costs and revenues to keep the public
transport undertakings commercially viable. Partial nationalization is assigned to be one
of the major causes of dismal economic performance of KSRTC as it has to face
competition from other operators in about two-thirds of the total routes in Kerala.
1.4.2 Competition
Competition is an important factor which affects the performance and revenues
of KSRTC. As nationalization is only partial and as there are other operators, KSRTC
faces competition in the routes studied in this. Private operators with better fleet and
flexibility attract a major share of the passenger traffic even though the fare structure is the
same and the number of buses and trips are regulated by the State Transport Authority and
the Regional Transport Authority as per the statute. This in turn affects the load factor and
revenues of the KSRTC adversely which is stated to be the major reason for their heavy
losses in some routes. But from the users’ or consumers’ point of view, competition is
good as it enables them to choose the service which is perceived as comparatively better
and which gives the most value to their money and more satisfaction. In fact, competition
should help the operators to identify potential opportunities before them and to develop
and to offer a better product(service) with the maximum value to the passengers and the
operator alike, satisfying the needs and wants of the user/market that it serves.
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1.4.3 Marketing Orientation in Management
Marketing is essentially the analysis, implementation and control of carefully
formulated programmes designed to bring about voluntary exchanges of values with target
markets for the purpose of achieving organisational objectives(Kotler,1977). This relies
heavily on designing the organization’s ‘offering’ in terms of the ‘needs and desires’ of the
‘target market’; here, the passengers and the public at large. The basic reason why any
firm/organisation should be committed to formal marketing principles is that it will enable
the organisation to be more effective in achieving its objectives.
Organisations in a free society depend upon voluntary exchanges of values to
accomplish their objectives. A marketing orientation in management helps in that: as it is
the technical knowledge about how various marketing variables perform separately and
together in influencing the target market of the organization which it aims to service.
Marketing orientation gives the organisation the skills for regulating the level, timing and
character of demand of a product, service, place or idea and it equips the organization to
face different demand situations which it might encounter, such as conversional marketing,
stimulational marketing, developmental marketing, re-marketing, synchro-marketing,
maintenance marketing, de-marketing and counter-marketing and to plan accordingly as
each demand situation calls for a particular set of psychological and behavioural concepts
and marketing strategies to cope with (Kotler,1977).
Thus a company offering a product or service in such an environment will have
to tailor-make its ‘offerings’ in such a way that it satisfies the needs and wants of the
consumer or user of that ‘offering’. For this, the pre-requisite is to understand the
users/customers and what they are looking for in the product or service to satisfy their
needs and wants. This will require a systematic assessment and analysis of the
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consumers/users comprising the target market, by monitoring and understanding the
perceptions, attitudes and impressions of the consumer towards the service on a continuing
basis to help in initiating appropriate management actions to match with the changing
market scenario. This requires that the organisation be responsive to the needs and desires
of their target market and implements the ‘marketing concept’ in its management process
which essentially is ‘marketing orientation’. The ‘Marketing Concept’ holds that the key to
achieving organisational goals consists in determining the needs and wants of target
markets and delivering the desired satisfaction more effectively and efficiently than
competitors (Kotler,1990).
1.4.4 Responsiveness of the Organisation: .
Marketing orientation implies that the organisation is willing to design its
‘Product/Service/Offerings’ in terms of the needs and desires of the target market. Thus it
responds to the customers’ needs and desires. An organisation which is termed a ‘highly
responsive’ organisation is that which shows concern and interest in learning about the
needs, perceptions, preferences and satisfaction of its customers and relies on systematic
information collecting-procedures and in sifting incoming information and taking positive
steps wherever necessary to adjust its products/services/offerings and organisational
policies and procedures. On the other hand, an ‘unresponsive’ organisation is one which
does not bother to do anything to measure the needs, perceptions, preferences or
satisfaction of its constituent public with the changes in time and the environment in which
it is functioning and it becomes increasingly maladapted to its environment. A responsive
organisation grows and prospers with time as it is able to meet the needs of its customers
with the changes in time, demand and preferences (Kotler,1977,’90). So the ‘degree of
responsiveness’ is an indicator of how much an organisation is marketing-oriented or
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adopts a marketing approach in the management of its activities which in turn determines
the effectiveness of that organisation. The service (product) of the transport undertakings
is not one that can be stored over a period of time and sold later. If it is not used as soon as
it is made available, it is left out and it is irretrievably lost that is, it has only ‘time value’.
Hence the success of any undertaking depends on how well it is able to judge the
requirements of its ‘Product’ (service) in terms of time, place and volume(frequency). This
brings out the necessity for planning the transport operations such that it will be customer-
oriented and market-responsive. Such an undertaking which is highly responsive can be
termed a ‘marketing oriented organisation’ or following the current usage, as ‘Market
Oriented’ as proposed by Kohli & Joworski (1990) and Narver & Slater(1990),
emphasising on ‘market intelligence’ and ‘dissemination’ of the same across the
departments of the organisation and their ‘responsiveness’ to customers’ needs and
preferences which is elaborated further in the following chapter.
1.4.5 Assessing the Service Features, Responsiveness and Profile of the service
Passenger Road Transport having been nationalized only partially in Kerala,
there is the option of other modes to the travelling public in a large geographic area of the
state, to some extent. This presents a competitive market scenario to KSRTC and other
bus service operators as well. The studies which were done and recommendations made
had centered mostly on the operational aspects of bus services. From the initial exploratory
studies it was apparent that the public in the state at large were not satisfied with the
services of KSRTC and so they tended to prefer other modes where ever such options are
available as in the central and northern districts of Kerala. So this scenario needs to be
looked at in a comprehensive manner, taking the KSRTC, its publics, its competitors and
external environment into consideration.
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In any enterprise, firm or organisation, marketing is intended to achieve certain
corporate objectives such as the targeted level of sales and profitability (Kotler,1977) by:
a. Identifying and defining the needs and wants of customers
b. Translating these requirements into product and service specifications, by
c. The formation and implementation of demand influencing policies and delivering
the resulting products and services to the firm’s various markets.
Thus the organization’s marketing programme needs to be based upon the information
about its present and potential(future) market, the number, type and location of customers
involved, the economic, social, competitive and other environmental factors which
influence their responses and choice behaviour. Viewed in this perspective, the questions
that arise are whether a ‘marketing approach’ or ‘market orientation’ as is currently being
termed would enable KSRTC to respond to the needs and wants of the travelling public
and whether it would lead to the development of a management strategy and organisational
adaptation aligned with the consumers’ needs, and be sensitive to the opportunities and
threats posed by the external environment and whether this would help KSRTC to become
effective, efficient and commercially viable organisation. Thus the main research question
is whether the gauging of the perceptions about and the rating of the bus services of
KSRTC in terms of the service attributes or features vis a vis the other services in the
routes would help to identify the weak and vulnerable aspects of the services of the
KSRTC and whether that can guide the management actions required to be adopted to
improve the services and the RTC as a whole by such adoption of a marketing oriented
management approach in the KSRTC.
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1.5. OBJECTIVES OF THIS STUDY
The background of this research study is given in the preceding sections and the
main focus is on evaluating and comparing the bus services of KSRTC with the services of
other operators along selected routes in Kerala. So this study involves, first the
identification of the major features or attributes of the passenger bus service as perceived
by the travellers/passengers and the ‘determinant’ nature of these features in the actual
selection of a particular service for their travel, and then the ‘rating’ of different bus
services including that of KSRTC on these attributes/features by the passengers which
would in turn provide a ‘profile’ of these services/operators on these service parameters as
perceived by the passengers in each of the bus route studied. The Bus passengers as a
macro group are heterogeneous in their travel needs and the perceptions and needs of
different sub-groups or segments of this group say, short-distance travellers, non-peak hour
travellers, work-related travellers, non-work related travellers and the like may be different
and their desired level of service attributes or features might accordingly be different. As
such the image of different services and their rating by different segments of the travellers
and consequently the service profiles evolving out of this might accordingly vary. The
level of importance that the travellers attach to the major service features and the ratings of
the competing bus services on these parameters might thus indicate the performance of
different operators in the routes in terms of load factor, passenger revenues, etc., which
could be corroborated with the actual operating data of these services. This in turn will
help to suggest the management approach and actions needed from the operators for
improving their services, wherever and in whatever aspects such improvement is found
necessary. In this perspective the objectives of this research study are:
1. To identify the major services attributes or service features that the passengers look
for and evaluate in a public bus transport service when they decide to travel.
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16
2. To assess the degree of responsiveness of KSRTC to the passengers’ needs and
perceptions on the above attributes and parameters and the comparative
responsiveness of other competing services like TNSTC(Coimbatore Division)
(formerly Cheran Transport Corporation or CTC) and Private operators in the same
routes.
3. To suggest guidelines within the constraints of prevailing fare structure for
improving the responsiveness of KSRTC and for better efficiency and management
effectiveness, taking this as a case study of Kerala.
The scope of this study is limited to two routes in the central part of Kerala State, viz.
Palghat-Coimbatore which is an inter-state route of length 51 Km and Palghat-Calicut an
intra-state route of 140 Km passing through three districts in central Kerala. These routes
have been selected after an exploratory research and study covering four routes in the
initial stage. The data collection is mainly from passenger surveys along these routes,
supplemented by secondary data from published annual reports and records and registers.
The main limitation of this study is that this had to be limited to two routes of the
state and so the analysis and inferences had to be based on that only. This could have been
done deeper and more exhaustively covering more routes and with a larger volume of data
but for the resource and the time-constraints of an academic work. However there is scope
for further research in this on the aspects of determinance of service attributes and
‘segmentation’ of the passenger market utilizing cluster analysis and multivariate
techniques, more exhaustively.
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1.6. THE RESEARCH QUESTIONS & HYPOTHESES
1.6.1 The Research Questions
In this back ground and in the theoretical premises of this study as described
above the research questions which arise here are:
Research Question 1:
How a service-offering like ‘passenger bus transport’, unlike a physical
‘product-offering’ is selected by the customers when there are competing services and
multiple choices available to the passengers in a given route/sector in a state like
Kerala, where bus-route nationalization is only about one-third of the total and along
which Kerala State Transport Corporation, other state RTCs and private firms operate
bus services ? In such a scenario what probably are the criteria considered by the
passengers when selecting a particular bus service for his/her travel and what are the
attributes/features of the bus service which is being evaluated or considered by the
passengers and whether all attributes are considered equally important or in varying
degrees of importance in making such a choice of service, and to what extent these
attributes are ‘determinant’ or ‘truly decisive’ in the bus or operator-choice decision of
the passengers? In such a situation will some of the service attributes be more
important than other attributes which could be different for different bus routes?
Research Question: 2
The needs, desires and expectations of the bus passengers about the service
attributes influence their decision to select a particular operator or service for their travel, it
is assumed. The ability, readiness and the management actions of different service-
operators to meet these needs, desires and expectations of the passengers is reflected in the
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18
manner the operators respond to these. In that case, can the ‘degree of responsiveness’ of
different service operators to the customers’ needs, wants and desires be gauged and can
this measure be used to indicate the physical performance of the operators in the particular
route and as an aid to effective management of the firm with a marketing orientation?
Proposition: 1
Public bus transport services may have some service features or attributes which
a passenger may consider and evaluate while making a decision on selecting a bus
service for his/her trip where such an option is available. Among numerous such
attributes which may be there, some may be more important than others and some may
be ‘determinant’ attributes in arriving at decision about the choice of a service by the
passengers. Hence there may exist an ‘ideal’ or ‘desired’ level of importance for each
of these service attribute to the passengers.
Proposition: 2
Though the bus passengers as a whole group may have some characteristics in
common, it may be possible to segment that macro market into smaller sub-groups or
market segments with fairly homogenous characteristics based on some criterion like
nature of travel, usage rate, distance travelled, purpose of travel, the day and the time
of travel and the like and these market segments may have different degrees of
importance for each of the service features, the evaluation of which may influence
their decision in the selection of a particular bus service for their trip. This in turn may
have implications for the bus service operators in designing their service-offerings and
formulating their management strategies.
Chapter I Introduction
19
Proposition : 3
Once the major service attributes or features of the passenger bus service in a
particular sector or route are identified based on their importance to the passengers and
their determinant nature in selecting a particular service for travel and the responsiveness
of different operators to these are gauged and an appropriate index is developed, it can be
used to indicate(and predict) the actual performance of different operators in operational
and financial terms like load factor, revenues etc. In other words the responsiveness as
reflected by this Index may indicate the comparative performance of different operators in
each route.
Proposition - 4
Once it is understood what are the service features or attributes which the bus
passengers as customers of the service consider and evaluate when deciding on the
selection of a bus service or bus operator for travel and the level of importance of each of
the major attributes and their determinant nature in the bus-choice decision, the
operational and management strategies for improving the responsiveness of a particular
operator could be developed with reference to the other operators by a systematic
collection and the dissemination of market intelligence across the departments in the
organisation and with appropriate management actions.
Proposition – 5
Once the ‘responsiveness index’ or the indicator for each operator for each segment
of passengers is computed, some possible correlation of this index to the choice of the
service of a bus service/operator for travel by each segment of the travellers/passengers
could be established, whereby it could be a predictor of the physical performance of the
operator like the load factor, revenues etc, which in turn would be a management tool for
Chapter I Introduction
20
the bus operator/undertaking in managing their bus-fleet operations to achieve better load
factors and revenues.
Proposition - 6
Once it is understood what are the service features or attributes which the present or
potential passengers of the bus service consider and evaluate while deciding on their
particular choice of a bus/operator for travel and the level of importance of each the major
service features/attributes and their determinant nature in the bus/operator-choice decision,
it can lead one to develop guidelines for the management and operational strategies for
improving the responsiveness of an operator with reference to other operators by
continuous and systematic collection and dissemination of market intelligence followed by
appropriate actions for effective management of the undertaking.
1.6.2 . Hypotheses:
From the above research questions and propositions as explained above, the
following hypotheses are formulated for testing of their statistical significance:
Hypothesis - 1
There is significant difference between the bus passengers travelling along the route,
Palghat – Coimbatore( PGT- CBE) which is an inter-state medium distance route and
Palghat-Calicut ( PGT-CLT) which is an intra-state long distance route, in terms of the
desired level of importance of major service attributes or features identified. .
Hypothesis -- 2
For the bus passengers travelling along both the routes ( PGT-CBE & PGT-CLT)
‘Convenient timing’ is more important than ‘Economy in fare’.
Chapter I Introduction
21
Hypothesis – 3
For the passengers travelling along both the routes ( PGT-CBE & PGT-CLT)
‘Punctuality’ is more important than ‘Travel Comfort’.
Hypothesis – 4
For the bus passengers travelling along both the routes, ‘Safety of travel’ is more
important than ‘Convenient Timing’.
Hypothesis – 5
For the bus passengers travelling along both the routes, ‘Safety of travel’ is more
important than ‘Speed’.
Hypothesis – 6 .
The ‘determinant’(truly decisive) nature of the major service-attributes identified are
different for Palghat-Coimbatore(inter-state) and Palghat-Calicut(intra- state) routes. That
is the non-determinant nature of the service attributes are also different for these route.
Hypothesis – 7
The bus passengers as an aggregate and heterogeneous market may be sub-divided
into more homogenous market segments based on the nature of their travel and travel
purposes, and as such the desired level of the importance of the major service attributes
identified varies significantly between these segments of bus travellers along different
routes. .
Hypothesis – 8
There is significant difference in the service attributes between different passenger-
clusters identified in the Cluster Analysis done for segmentation in the inter-state route of
Palghat –Coimbatore.
Hypothesis – 9
Chapter I Introduction
22
There is significant difference in the service attributes between the passenger
clusters identified in the Cluster Analysis done for segmentation in the intra-state route of
Palghat-Calicut. .
1.7. NEED FOR THIS STUDY
The earlier researches and studies done on State Transport Undertakings (STUs)
had been mainly on the operational aspects of the undertakings, looking from the
‘product’ angle such as vehicle utilisation, load factor, planning of the fleet and routes,
vehicle productivity and various associated costs. The Kerala State Transport Corporation
had been working in an oligopolistic environment, where there were other operators also in
two-thirds of the total bus routes in the state who were faring much better than KSRTC in
terms of profit. The average load factor was fairly high for KSRTC at 86.8% as per the
latest Annual Report(2000-01) published. But this was composed of a very high load
factor of 100 to 102% in the City and Moffusil services in Trivandrum and of some fully
nationalized sectors like Wynad where it was 90% to 92%. In Palakkad it was about 80%
while it was as low as 73% in some sectors, where there was competition from private
operators as in the northern and central districts. The cost of operations was high and the
net loss in 2000-01 was Rs. 160 crores i.e., about Rs 4.66 lakh per vehicle on road and in
use then.
Reducing the operating costs or increasing the fares might prove to be a short
term solution only, as seen from earlier experiences. The expenses on tyres and fuel
cannot be brought down very much for the bad condition of the roads, topography and
climatic conditions unique to this state as explained in the preceding pages.
Reducing the ratio of “employees per bus” also is not feasible in a single stroke,
because of political and trade union pressures. Though the employee/bus figure of about
6.8 as given in the Annual report 2000-01 compares well with the national average, it
Chapter I Introduction
23
appears that this does not take into account the contract/casual drivers/conductors, termed
as ‘Empanelled workers’ who man a good number of services. The hiking of the fares,
which is regularly done after a considerable hike in diesel prices, causes severe
repercussions and public resistance, as the quality of the services of the KSRTC is
generally regarded not up to public expectations and the travelling public at large are
mostly not satisfied with the services, while the private operators generally give better
service at the same and at lower fares. The result is that KSRTC incurs heavy losses every
year. But state government is not able to pump in more funds, due to the financial crunch
faced by government. Further, for availing institutional finance it is necessary that the
KSRTC performs better on sound commercial principles to improve the economic
viability of the corporation.
So a long-term solution is necessary for ensuring stability and growth of the
corporation, which needs a comprehensive look at the problems, taking the organisation,
its markets, consumers and the external environment. That is the Corporation needs to be
highly responsive to the needs of the market it serves. This needs a marketing orientation
of the organisation, which in turn will contribute much to make the RTC commercially
viable, as brought out in some research studies already done on similar industries/sectors
and enterprises as detailed in the literature survey in the following chapter.
For achieving this, the bus operator/organisation should have adequate data and
information(market intelligence) about the ‘market’ it services in terms of the requirements
of its main constituents i.e. the travelling public. The passengers travelling along a
certain route in a bus might be expecting a certain ‘desired level of service’ to satisfy their
needs in terms of the features or attributes of the bus service. This information could be
systematically gathered by studying different types of passengers and their needs and
Chapter I Introduction
24
desires and how much importance they attach to each of these service attributes and which
of these attributes are “determinant” or truly decisive in preferring a particular bus service
over the others. This information and the passengers’ perceptions of the Bus Service as
regards the service features can lead to an assessment of the “Perceived Image” and also
the “Service Profile” of the operators. This would in turn help to evolve the management-
strategy and approach needed to adapt the service to the needs of the market. Hence this
research has been done with focus on ‘marketing approach’ to Passenger Road Transport
Management.
In contrast to most of the earlier research studies on Passenger Road Transport
undertakings, done focusing on operational parameters, efficiency and operations planning,
this study has focused on the management aspects of the passenger transport services
considering the consumers of the services or the passengers, their perceptions, needs,
wants and desires looking through the users’ angle and current level of responsiveness
of different operators to these. So this study essentially centres on the principles of
‘marketing management’ as applied to Passenger Bus Transport services as a “Product” of
the transport service operators in a competitive environment, where other similar services
are available for the user( from competitors) of these services other than from the RTC.
This study places emphasis on service features/attributes of Passenger Transport
Service and the users’/passengers’ perceptions about the services vis a vis their
expectations and desires. Thus it is imperative that this covers competing services of
similar nature in the same routes where a meaningful comparison can be made of the
different operators based on some dominant service attributes and parameters. Hence the
bus routes for this study were selected in such a way that there are similar services
available to the passengers from different operators. The public passenger bus transport
DENDOGRAM ( CLUSTER ANALAYSIS - FOR SEGMENTATION ANALYSIS )
Chapter I Introduction
25
service that is well organized and dominant in the state, with the largest network is that
of KSRTC, a public sector enterprise and being a statutory corporation, directly under the
control of state government. A similar public passenger transport corporation in the
neighbouring TN state and also operating in the routes selected for this study is TNSTC-
CBE Division (formerly Cheran Transport Corporation-CTC) based at Coimbatore, which
also operates services in some routes in Kerala on reciprocal arrangement. Except in the
southern-most districts in Kerala, the private operators are dominant especially in the
central and northern districts of Kerala, whose services are regulated by law as regards
routes, fare structure, number of buses permitted and their trips and trip-timings. Hence
this study has been done along the bus routes in the districts of Palghat and
Kozhikode(Calicut) where all the above three services are operating.
Thus this study has been done along the routes of 1) Palghat – Coimbatore and 2)
Palghat – Calicut, after conducting initial exploratory and pilot surveys of passengers in
some other routes also. As this study leans heavily on the services features/attributes of
bus services and the passengers’ perception and rating of the bus operators on these
service parameters, the emphasis was on primary data generation by survey of the
passengers on board the buses of different operators at actual travelling conditions to
develop the service image/profiles of the operators including KSRTC. The secondary data
available from records and publications on their operations, revenues, expenditure etc.,
have also been collected to assess their physical performance to compare, corroborate and
analyze the data for inferring the implications on the management of the services, with
reference to the service-image as perceived by the users, using the principles of ‘marketing
of services’.
Chapter I Introduction
26
1.8. CONTRIBUTIONS OF THIS STUDY
The principal contribution of this research study is the application of the concept of
‘Responsiveness’ of organisations to the ‘needs and wants of the users’ and to identify the
parameters for improvement of the service of a Public Passenger Transport Organisation.
This will help the organisation to initiate appropriate management action for improving the
service to achieve the functional goals of the organisation, in terms of income, stability and
growth. This is thus the application of marketing principles to the management of
Passenger Road Transport service.
An Index viz. ‘Responsiveness Index’ of the Transport Service has been developed
from this study, which is a quick indicator of the responsiveness of an operator of the
service to the needs of the passengers, which is turn has a direct bearing on the revenues
and profitability of the organisation. This index can be used by the Transport industry as an
indicator of the quality of a bus service and in turn, its load factor and revenues
An approach for segmentation of the market for passenger transport services has been
developed, adaptable to the conditions prevailing here. Segmentation is the process of
identifying the homogenous sub groups of users of similar characteristics of a product or
service from the heterogeneous macro or whole group having diverse use patterns and user
characteristics.
For projecting the image or profile of the service, the concept of “Semantic
Differential” is applied here, based on rating of the service features/attributes of different
operators of the service, by the user. This method of developing the “Service Profile” is
applied, perhaps for the first time for the passenger transport services in indigenous
conditions.
Chapter I Introduction
27
It is also illustrated in this study how the above Indices/ indicators and approaches
which are basically user/customer-oriented, can be applied for efficient, effective and
profitable management of a Passenger Bus Transport organisation, at all levels and spheres
of its activities, unlike earlier studies which had focused mostly on physical and financial
parameters of operations. So this study is unique in that it focuses on the users’ needs,
wants and desires and the organization’s responsiveness as a management tool for better
management of the public passenger transport organisations.
1.9 ORGANISATION OF THE THESIS
This is organized into 7 chapter in total with the first giving introduction to the work,
general background, objectives, scope and limiations and the contributions of this work.
Chapter 2 explores the available literature on the topic with the details of the studies
already done. Chapter 3 describes the methodology of research which mainly consisted of
the collection of primary data by passenger survey in the buses in the selected routes and
secondary data collection from the records and reports of the RTCs.
Chapter 4 is devoted to the analysis of data, both primary and secondary data, and
the analysis has been done route wise and passenger segment wise also. Chapter 5
contains the method of computing Responsiveness Index of the services / operators and
plotting their service profile on a Semantic Differential Scale.
Chapter 6 discusses the inferences from the analysis in detail passenger segment wise
and the also determinance analysis of the service attributes. This also contains the
guidelines developed for the effective management with a marketing orientation.
Chapter 7 is the concluding chapter outlining the contribution of this study, its
limitations and suggestions for the future research in certain areas.