4. Results and Discussion
4.3 Operator Judgments
Figure 14 Professors and Consultants Judgments
4.3 Operator Judgments
The last group in the evaluation of sustainable subsidy schemes for Panama, is formed by five members of the private company responsible for providing the public transport service. The evaluation of this group allows us to balance the government opinions with the needs of the
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operators. The judgments made by the operators in the first step; where the objectives (subsidy cost-effectiveness, subsidy equity, service effectiveness, service quality, environmental sustainability, governmental financial sustainability and operator financial sustainability); were evaluated with respect to the Goal (Sustainable Subsidy Plans for Panama). The results can be presented (See Figure 15) as follows: government financial sustainability (26.1%), operator financial sustainability (17.9%), service effectiveness (17.6%), service quality (11.4%), environmental sustainability (10.7%), subsidy equity (9.4%) and subsidy cost-effectiveness (6.8%).
Figure 15 Goal-Objective Assessment: Operator
The results demonstrate that for this group, the three most important criteria are: government financial sustainability, operator financial sustainability and service effectiveness. This prove that the most important element in the evaluation of the subsidy schemes for the operator is the level of subsidy provided by the government. The reason is that, the subsidy amount affect the profit of the operator and therefore the development of the operations. The level of subsidy will determine, the amount of help received by the government and if is enough to bail them from the financial struggles. The second important element in the priority is the operator financial sustainability. The subsidy schemes proposed must consider this as an important fact, operators choose a subsidy scheme that would represent a benefit for their financial stability, and this includes the levels of subsidy and farebox revenue. The third objective; that this group has selected is service effectiveness. The group formed by the operators is concerned about the
0.068
0.000 0.050 0.100 0.150 0.200 0.250 0.300
Subsidy Cost-Effectiveness
49
impacts of the subsidy schemes implemented. The subsidy scheme selected can affect performance and development of the system and these impacts can be negative or positive.
Therefore, their opinion is based on the most suitable plan for the scenario of Panama.
The following evaluation conducted by the operator are the criteria with respect to the objectives. The nine criteria were prioritized as follows (See Figure 16): total subsidy (26.1%), operator profit (17.9%), passenger trip per day (17.6%), CO2 emissions (10.7 %), subsidy per passenger (6.8%), frequency (6.6%), out-of-pocket expenses (5.1%), integration (4.8%) and affordability (4.3%).
Figure 16 Objective-Criteria Assessment: Operator
The three main criteria for this group are the: Total subsidy, operator profit and passengers trip per day. These results reflect that the judgments made by the members of this group, placed much of its priorities in the level of subsidy provided; an important matter to consider when designing a subsidy scheme. The total subsidy, allows the decision-maker, distribute the right amount of subsidy to each category and by subsidy type (supply side and demand side); it also determined the amount of operating subsidy provided to operator. Operator profit, the second criteria in the priorities, reflects that operators gave importance to a subsidy scheme that would not affect their returns, but that it represents a benefit for their financial status. The last element, passenger trips per day, represents patronage achieved; how well the system is performing with the implementation of a new subsidy scheme.
0.068
0.000 0.050 0.100 0.150 0.200 0.250 0.300
Subsidy per passenger
50
The assessment of the criteria with respect to the schemes shows that the scheme 1 receive the highest weights in the criteria operator profit (41.6%), followed by scheme 3 (35.8%) and scheme 2 (22.6%). Scheme 3 presented the highest weights in eight of the nine criteria;
affordability (62.1%), frequency (57.2%), integration (55.4%), out-of-pocket expenses (49.2%), CO2 emission (44.5%), subsidy per passenger (42.5%), total subsidy (40.5%) and passenger trips per day (37.3%). The results reflect that for this particular group the scheme 3, is the plan that provides more benefits. See Figure 17 for more details.
Figure 17 Criteria-Scheme Assessment: Operator
The results shared above, shows that the ranking of the subsidy plans for this group is distributed as follows (See Figure18): scheme 3 (42.8%), scheme 1 (32.7%) and scheme 2 (24.5%). For the group of operators the best subsidy scheme is plan 3 and the worst is plan 2. This demonstrate that this group, selected the subsidy scheme with the conditional operating subsidy, flat fare and discount for students and the transfer subsidy. Bases on their judgments we can conclude that this scheme represented more benefits in terms of: affordability, expenses, integration, total subsidy, frequency and subsidy per passenger.
0.353
0.000 0.100 0.200 0.300 0.400 0.500 0.600 0.700
Subsidy per passenger
Scheme 3 Scheme 2 Scheme 1
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Figure 18 Alternative Preference: Operator
The results and the priorities of this group are presented in Figure 19. Every stage is represented with its respective weights, based on the judgments made by the five operators. The opinions of this group is similar to the one, made by the professors and consultants. Operator are more concerned in a policy that would benefit both sides. As it was mentioned earlier, this plan represents a more cost efficient option and it would help them to overcome their financial situation and enhance service quality
Figure 19 Operator Judgments
0.327 0.245
0.428
0.000 0.100 0.200 0.300 0.400 0.500 Scheme 1
Scheme 2 Scheme 3
Subsidy Schemes
Subsidy Schemes
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After the evaluation of each judgment, the result of the three groups are combined to obtain the best subsidy scheme for Panama. In this part of the study the results of each group along with the combination of the results are compared, to find similarities or disagreements in the opinions made by each expert. As it was described for each group, the first step, which consist on the pair-wise comparison of the objectives based on the Goal “Sustainable Subsidy Schemes for Panama”, reveals the following results: government financial sustainability (21.7%), service effectiveness (21.6%), service quality (16.7%), operator financial sustainability (14.1%), environmental financial sustainability (10.9%), subsidy equity (9.1%) and subsidy cost-effectiveness (5.9%). The graph in Figure 20 presents the distribution the weights for the objectives.
Figure 20 Goal-Objectives Assessment: Combined results
The combined results demonstrate that the most important objective for the experts in the evaluation of the transit subsidies proposed for Panama, is the government financial sustainability, followed by the service effectiveness and the service quality. In the evaluation of the criteria with respect to the objectives, the result of the weights are: total subsidy (21.7%), passengers trips per day (21.6%), operator profit (14.1%), CO2 emissions (10.9%), frequency (9.8%), integration (7%), subsidy per passenger (5.9%), affordability (4.8%) and out-of-pocket expenses (4.2%). The results are presented in Figure 21.
0.059
0.000 0.050 0.100 0.150 0.200 0.250 Subsidy Cost-Effectiveness
53
Figure 21 Objective-Criteria: Combined results
A comparison of the results obtained from each group in this stage, shows that the three top criteria selected presented a similar patron; some only vary in the position. For example, the criteria passenger trips per day, was selected in each group, however the position of the priorities change by discussion group; placed first on both groups, government and professors and consultants and last in the operator group. Another criteria listed as a priority in all the groups is total subsidy; this criteria is positioned as a first priority for the operator group and second for the other two groups. Is important to mention that the government group gave more importance to the frequency (service quality) than to the operator profit; which was placed as a priority for the operator and professors/consultants groups. This show the little importance that authorities give to operator profit rather than the effectiveness and quality of the service; which reflects their main concerns. The comparison of the results for this stage is presented in Table 13.
Table 13. Comparison of results, Criteria Criteria Government Professors/
Consultants
0.000 0.050 0.100 0.150 0.200 0.250
Subsidy per passenger
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Affordability 5.5% 4.4% 4.3% 4.8%
passenger trips per day
24.1% 22.3% 17.6% 21.6%
Frequency 15.7% 8.1% 6.6% 9.8%
Integration 9.6% 6.8% 4.8% 7.0%
CO2 Emissions 9.8% 11.2% 10.7% 10.9%
Total subsidy 16.3% 22.2% 26.1% 21.7%
Operator Profit 8.4% 17.3% 17.9% 14.1%
The evaluation of the criteria with respect to the subsidy schemes shows that, for the combined results, the scheme that presents more acceptance in most of the criteria is the plan 3, which obtain the highest weights in eight of nine elements. This suggest that if we combine the three groups, the results would show the preference for the scheme 3, followed by scheme 2 and the worst option scheme 1. Scheme 2 obtained the highest weight in the criteria, passenger trips per day (40.4%) over, schemes 3 and 1 respectively (34.5%) and (25.1%). However scheme 3 obtained the best weights in 8 criteria over the other subsidy plans: Affordability (50.3%), total subsidy (50%), CO2 emissions (45.8%), integration (44.9%), subsidy per passenger (42.4%), frequency (40.5%), out-of-pocket expenses (37.6%) and operator profit (36.9). The interpretation of the outcomes suggest that subsidy scheme 3 presents the best benefits in the majority of the elements used to evaluate subsidy schemes and it will provide the best results after its implementation. The graph in Figure 22, presents a description of the discussed results.
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Figure 22 Schemes-Criteria: Combined results
The combined judgments suggest that the best subsidy pan that should be implemented in Panama is subsidy scheme 3. This plan proposes to provide a conditional operating subsidy, based on vehicles per km; to improve service quality, therefore frequency. To continue providing a discount for students and implement a discount for transfers using both systems;
this as a mean to improve integration. The last incentive is directed to cover the operations of the new metro line. The distribution of the priorities for the combined results is given as follows:
scheme 3 (42.1%), scheme 2 (33.4%) and scheme 1 (24.5%).
Figure 23 Alternative Preference: Combined results
For the ranking of the subsidy schemes a comparison of the results of each group was conducted.
As it is shown in Table 14; the group formed by the operators and the professors, shared similar
0.245
0.000 0.100 0.200 0.300 0.400 0.500 0.600
Subsidy per passenger
Series 3 Scheme 2 Scheme 1
0.245 0.334
0.421
0.000 0.100 0.200 0.300 0.400 0.500 Scheme 1
Scheme 2 Scheme 3
Subsidy Schemes
Subsidy Schemes
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views by selecting scheme 3 as the best option. On the contrary the members of the government group selected scheme 2 as the best option. The worst plans for this last group was scheme 1, the same as the professors and consultants.
Table 14. Comparison of results, Subsidy Schemes Ranking Government Professors and
Consultants Operator Combined
1 Scheme 2 (44.1%) Scheme 3 (38.2%) Scheme 3 (42.8%) Scheme 3 (42.1%) 2 Scheme 3 (39.7%) Scheme 2 (35.1%) Scheme 1 (32.7%) Scheme 2 (33.4%) 3 Scheme 1 (16.2%) Scheme 1 (26.7%) Scheme 2 (24.5%) Scheme 1 (24.5%)
The final results of the evaluation of “Sustainable Subsidy Schemes for Panama is summarized in Figure 24.
Figure 24 Final Judgments
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5. Conclusion and Suggestions
The present study was conducted to evaluate the different subsidy programs for transit, to implement in the metropolitan area of Panama. To develop the evaluation the Analytic Hierarchy Process was employed. This commonly used method was selected for its ability to combine quantitative and qualitative judgments in the process of decision making. The AHP allows the stakeholder to issue their opinions, based on their experience about a subject and determine the best option. This method consist of a hierarchical system, where the problem is decomposed in different levels such as Goal to achieve, objectives and criteria used to evaluate the alternatives placed in the lower levels.
To determine the results, a questionnaire was developed, containing relevant information about the three main routs of Panama. Via España, Transistmica and Tumba Muerto, were the routes selected for the evaluation, since they present the largest number of passenger.
Information such as, frequency, trip per day, rout length, etc. were included in the questionnaire; along with the detailed explanation of the method used to evaluate the subsidy schemes. The questionnaire was distributed among selected experts from related, public and private entities of Panama. The experts were divided into three groups: government (from the Ministry of Economy and Finance and the Transit and Transportation Authority of Panama), operator (from the private company MI BUS) and professors/consultants (form the Technological University of Panama and the General Comptrollership of the Republic of Panama).
The experts were required to conduct pair-wise comparison of the selected criteria using the verbal scale contained in the questionnaire. The members of each group were asked to compare the 7 objectives; subsidy cost-effectiveness, subsidy equity, service effectiveness, service quality, environmental sustainability, government financial sustainability and operator financial sustainability, and 9 criteria; subsidy per passenger, out-of-pocket Expenses, affordability, passenger trips per day, frequency, integration, CO2 emissions, total subsidy and operator profit.
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To determine the weights of each element of the hierarchy structure, the judgments of the experts, were evaluated using a multi-criteria software called, Expert Choice. This tool allows the investigator to introduce the opinions made by each group member; based on the value of the priority scale assigned. The weights, are later used to determine the ranking of the alternatives. The results were divided in three categories of assessment: Goal-Objective, Objective-Criteria and Criteria-Scheme. According to the priorities obtained for the government experts, the three main criteria are: passenger trips per day (24.1 %), total subsidy (16.3%) and frequency (15.7%). For the professor and consultants the priorities were;
passenger trips per day (22.3%), total subsidy (22.2%) and operator profit (17.3%). On the contrast the operator group presented the following weights; total subsidy (26.1%), operator profit (17.9%) and passenger trips per day (17.6%). This results suggest that, there were only a few variations in the opinions, but criteria such as; passenger trips per day, total subsidy and total subsidy were selected in more than one occasion.
The ranking of the subsidy schemes for each group presented a variation, while the professors/consultants, placed the scheme 3, first in their priority with (38.2%), the operator placed this scheme first with (42.8%). On the other hand, the government experts, placed scheme 2, as their best option with (44.1%). The selection of the scheme 2 demonstrated, that for the government, the implementation of a transit subsidy that improve social distribution of the subsidy is the best option. However, for both groups; operator and professors/consultants, a subsidy scheme based on a conditional subsidy, discount for transfers, flat fare for public bus and the operating subsidy for the metro line is the best option.
Based on their results, this scheme is considered to provide the best results in terms of:
Affordability, subsidy per passenger, CO2 emissions, integration and total subsidy. While, scheme 2 present the best results in: passengers per trip, out-of-pocket expenses and frequency.
To determine the final results, the judgments made by each group were combined. The combined results, exhibit that the criteria weights for the evaluation of the subsidy schemes are distributed as follows: total subsidy (21.7%), passenger trips per day (21.6%), operator profit (14.1%), CO2 emissions (10.9%), frequency (9.8%), integration (7%), subsidy per
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passenger (5.9%), affordability (4.8%) and out-of-pocket expenses (4.2%). The final ranking for the subsidy scheme is: scheme 3 (42.1%), scheme 2 (33.4%) and scheme 1 (24.5%). With this results, we can conclude that the best subsidy scheme for the metropolitan area of Panama is the plan 3; which include a conditional operating subsidy, discount for transfers and flat fare. It is visible that authorities consider, that the plans implemented in 2011, are no longer effective and must be replaced.
5.1 Managerial Implications
The implementation of the subsidy scheme selected has some managerial implications that are explained in this part of the study. In the first place, the implementation of the subsidy scheme 3, will increase the administrative cost in the following years. The reason is that, subsidy is going to depend on the cost of operating cost, of metro line and the amount of transfers made. Another important implication for authorities, is the need of a proper regulation, to control the distribution of the subsidies among the operators. The limit of the vehicles per km must be set, with an evaluation of the performance. This in order to confirm, that subsidies are achieving their purpose.
The findings reveal that the subsidy plan implemented in 2011, is not an option for the majority of the experts. Since, the combined results demonstrate, that for the experts of all the areas, subsidy scheme number 3 represents the best benefit in almost all the criteria. This decision is contrary to the decision made by government authorities, who selected scheme 2 as their best option. In developing countries, transportation subsidies are granted mostly for their social purpose. Therefore, authorities place more important on the social objectives than on the cost effectiveness of the plans. This can be demonstrated, by the low preference of the criteria, subsidy-cost effectiveness; which describes how effective is a policy into achieving their objectives at minimum cost in term of their fiscal burden and efficiency losses. This means that autorities place more importance to plans that would be suggested to eliminate social exclusion.
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On the other hand, the selection of subsidy scheme 3 as the best alternative for the city of Panama, shows that a change from a passenger per trips to a subsidy based on vehicles per km is the best option to improve the financial performance of the operators and therefore, the quali1 ty of service provided. The implementation of a subsidy based on condictions of performance, reduces efficiency problems. Scheme 3 presented the best results in almost all the criteria, including service quality. If we compare the main objectives of the authorities of Panama, it can be seen that this scheme presents the best results to achieve the collective objectives, instead of focusing on individual objectives such as, social distribution or systems cost.
5.2 Limitations and Recommendations for Future Research
In the development of our research, we came across a series of limitations. One of the main problems was the collection of information. The most important limitations are listed below:
Data Collection: The government of Panama lacks of an institution that provides detail information regarding transportation topics and studies conducted on transit subsidies.
Therefore, finding a study that would provide a more detail description of the scenario in Panama, was difficult. Related studies about the transportation problems of Panama, were not useful due to the time in which they were conducted. In the case of the information from the operators. The company Mi Bus, who is in charge of providing the transportation services, is presenting some legal problems, due to its poor service quality. Therefore, they were unable to provide information regarding: profit, operating cost, farebox recovery ratio, etc. This limited the evaluation of the subsidy schemes in a more quantitative direction.
Studies of transit subsidies: Another important limitation, was the lack of studies that apply AHP in the evaluation of the subsidy plans, this was a problem to set the criteria and the objectives. For future studies, is recommended to distribute the objectives divided into the four groups (Economic sustainability, social sustainability, environmental sustainability and financial sustainability) that were discussed in chapter 3. The main objective of this recommendation is the distribution of the criteria, so that the evaluation of the AHP could be
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clear and the distribution of the weigh among each element would not be affected by objectives with just one measurement.
Survey design: For future works the design of the questionnaire should change and not be too long. This sometimes, respondents complain about the development of the comparison and in some cases seems difficult to answer.
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