Roman Khmil: How We are Changing the Rules on the Market of Bus Services In Ukraine

Roman Khmil 23 October 2015 10:42

"We have recently begun receiving more and more complaints from businesses. As it turns out, carriers are increasingly encountering abuse of the monopoly positions of owners of bus stations," Roman Khmil, the head of the department of motor transport at the Ukrainian Ministry of Infrastructure, wrote in an exclusive column for the CFTS portal.

When buying a bus ticket, you are unlikely to know that 12-15% of the cost of the ticket is used to pay for the services of bus stations. That is regardless of whether you use their services or not. Constant dialogue with market participants shows that more passengers are booking their tickets online and going to the places of departure of their buses without visiting waiting rooms or using toilets, left-luggage offices, and other facilities. That notwithstanding, everyone traveling within Ukraine - and not only within Ukraine - continues to pay this 12-15% bus station charge in accordance with Ukrainian law. Bus stations essentially have a share in the business of a carrier. The fact that this does not suit carriers is understandable.

We have recently begun receiving more and more complaints from businesses. As it turns out, carriers are increasingly encountering abuse of the monopoly positions of owners of bus stations. In the absence of competition, the bus stations are attempting to dictate conditions during signing of agreements: on ticket sales via bus stations, the cost of entry for buses, and the percentage of a bus-station charge in the cost of a ticket bought by a passenger. Carriers have no choice but to agree because that is a requirement of the law.

You may ask, “Why not amend the legislation?” The legislation can be amended, but its amendment will not happen as fast as one would like. Realizing that the procedure of amending the legislation will take at least nine months, the Ministry of Infrastructure has decided to prepare draft amendments to the relevant Ministry of Transport order issued in 2010 with the aim of introducing a fixed bus-station charge of UAH 1 and abolishing the bus-station charge eventually.

The reasoning behind this is simple: reduction of the amount of the bus-station charge, in our opinion, will facilitate not only reduction of the cost of tickets, but also development of services at bus stations. Bus stations will not disappear or go bankrupt, as some armchair activists have claimed in their accusations against us. In such circumstances, bus stations will be forced to offer better services and fight for customers. This is fair, considering the fact that most of these services are already paid services, which means that the customer is paying twice. It is significant that the concept of bus-station charge does not exist in Europe, to which we are aspire and emulate so much. There, bus stations earn money from commissions on ticket sales by charging fees for entry of buses, and that is enough for them.

The Ministry of Infrastructure has decided to prepare draft amendments to the relevant Ministry of Transport order issued in 2010 with the aim of introducing a fixed bus-station charge of UAH 1 and abolishing the bus-station charge eventually

What we have long dreamed of - and what we have constantly urged the public to do - happened after the publication of the draft order. We received quality feedback, a number of comments, and suggestions from associations of bus stations and other participants in the motor transport process. After that, we entered into dialogue, held a roundtable, and jointly discussed the pros and cons. We understood that we were a little hasty because such changes need to be implemented holistically in order to avoid adverse effects. This does not change our intention. Bus-station charges should and will be abolished. Moreover, this is not just a whim on our part but one of the European-integration obligations that Ukraine must fulfill by 2017.

In the end, we agreed to first adopt amendments to the law of Ukraine "On Motor Transport" and later adopt amendments to all its bylaws. The draft amendment is ready, and we will publish it on the official website of the ministry next week. It will be a completely new approach – a European and progressive approach – to operations on the motor transport market and operations of bus stations in Ukraine.

We are convinced that the market will regulate all the processes: carriers will be able to select routes freely, buses will be able to depart from places that are convenient to passengers, and people will be able to enjoy the best services at the best prices in a competitive environment. The ministry will retain the essential role of ensuring transport safety and monitoring the quality of transport services, which I hope will reach the level of European services very soon.

Tags: finance, bus, Ukraine