#172 Autopax loses R344m while competition with minibuses turns violent

The long distance passenger transport market in South Africa is not only competitive, but depends heavily on keeping one’s operations. Large, smaller operators, new entrants and smaller vehicles (like midi and minibuses) compete for scattered commuters who in many cases make trips often. 

While bus companies have labour unions, minibus taxi associations represent drivers and operators (owners) within a formal set of rules, unified or fragmented. However, in the broader market, operators compete with entities which run their businesses with large fleets, and complex value chains over long distances. Violence erupted between long distance taxi associations and Autopax services, a subsidiary of the Passenger Rail Agency South Africa (PRASA). The transport ministry’s response is to open “broader discussions going forward, wherein the future of the taxi industry as well as the Integrated Transport System will be addressed”. However, this is not consistent with the core issues at hand.

Firstly, the Single Transport Economic Regulator (STER) has the authority over “tourist” services, which could lean into the long distance market as a lower hanging fruit, given the circumstances. One of the Bill’s propositions is that competitive practices between transport services needs to be regulated, and between the Provincial Regulatory Entity in the Eastern Cape, KwaZulu-Natal and Limpopo, and the Integrated Transport Plans, there should be evidence which indicates the extent to which the long-distance minibus/midibus taxi route. Given the Competition Commission’s Inquire on land public passenger transport, there is an impetus to intervene in the regulation of public passenger transport across the board: is this what the Minister refers to as ‘Integrated Transport System’?

Long-distance passenger transport conflicts 

Secondly, it is not the first time such a confrontation occurs. As recently as July last year, routes between Eastern Cape and the Free State were intervened upon in court: “Judge Mageza interdicted both the Ngcobo and Butterworth Uncedo branches and the people engaging in unlawful conduct from threatening, harassing, intimidating and obstructing Autopax drivers, passengers and buses from operating freely”.

This time around, the conflict is associated with routes between Eastern Cape, Limpopo and KwaZulu Natal, and has resulted in one death, significant labour union pressure on PRASA to raise security and the transport ministry to take action— or else Autopax staff may not return to work. In the same breath, the minibus taxi association involved in this impasse does not have the labour or regulatory backing to support their long-distance transport ambitions other than a permit.

Lastly, little over a year ago South African bus drivers embarked on one of the biggest public passenger transport strikes which went on for more than 7 days, and caused chaos in the public transport space. Minibus taxi services could not cope with the demand; rail transport services were already saturated and the Commuter Bargaining Council made little public contribution to the situation. When writing about the “right to strike, but wrong to do so” I highlighted that there was a deep contradiction in the idea that labour unions had to choose a side between their drivers’ needs and commuter needs. The National Union of Metal Workers of South Africa (NUMSA) articulate this tension quite clearly: 

“The only language these ruthless bosses understand is when their profits are hit hard.We wish to once again express our apologies to the commuters for the inconvenience caused by the strike. We were forced into striking because it is the best weapon we have to force these cold-blooded bosses to treat workers like human beings. We hope the sacrifices we are all making will not be in vain.”— Irvin Jim

Autopax has made a R344 million loss this year

Autopax is not fairing well at all, it reported rising operating losses for the 2018/19 financial year to the tune of R 344 million (1.3bn cumulatively over the past few years). In the meeting report Autopax cited human capital as the core problem in terms of governance and leadership which resulted in them missing 71% of their targets. Meanwhile, according to the Parliamentary Monitoring  too argue that “Autopax had a capital and labour intensive operation, and functioned in a highly competitive environment where passengers were very price sensitive, and taxi intimidation was prevalent in most provinces.” The financial position of Autopax reflects the loss in passenger volumes, which declined from 2.5 million trips to 1.8 million between 2016 and 2018. Moreso, the fleet upgrade in 2010 has vehicles with an 8 year lifespan, which implies that another upgrade is due while the company’s finances linger on a thread. The long-distance operator’s competitive position is fading, and PRASA as the sole shareholder makes the business model even more at risk as the broader company is loosing its footing in the passenger transport market. Competition is rife, and winners take all. 

Long distance passenger transport market study

The Ministry’s position that an “Integrated Transport System” is the solution highlights significant lack of clarity on the transport and labour economics which inform the matter. Instead, as with the response to the Road Freight Industry protests, a task team comprising of law enforcement, immigration and other authorities detached from the core issue may be formed. This was terribly difficult. Instead of leaning into the the current economic regulator, and fast tracking the Single Transport Economic Regulatory (STER) entity, the focus may well remain on the policy statements. If however the STER comes forward, there is certainly much more room to intervene with the right appointments, budgets and associated projects. 

At the heart of cutting the long-distance passenger market short is a lack of an integrated strategy which focuses on long-distance mobility and access in South Africa. This lapse and closed cohort form of engagement, leads to toxic appointments which rot an entire organisation. The conflict between Autopax and the minibus taxi industry is only a small symptom of the non-decision making at the forefront of many of the passenger transport issues in South Africa. A leadership that is not proactive (acting before issues emerge), nor reflective (looking at issues that have existed before) may find itself looking ahead, without tying its laces. 

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