Identifying and Evaluating the Models for Institutionalizing the Service Contracting of Public Transport Services in the Philippines

Abstract

The COVID-19 pandemic disrupted global transportation, with public transport experiencing steep declines. In the Philippines, community quarantines reduced transit ridership and driver incomes. To address this, the government launched the Service Contracting Program (SCP), offering subsidies to transport operators through gross and net cost schemes. Over five phases, Local Government Units (LGUs) became involved in SCP implementation. This study examines LGU experiences with SCP institutionalization. Among six LGUs surveyed, half supported institutionalization, citing potential benefits like financial sustainability and improved accessibility, but flagged challenges such as capacity limitations and funding issues. The study evaluates five governance models for SCP institutionalization: (1) Service Contracting, funded by the national government with LGU monitoring; (2) LGU-Owned Franchise, where LGUs operate or outsource fleets; (3) Fare Collection Oversight, with LGUs managing fares while TSEs retain franchises; (4) Local Economic Enterprise (LEE), allowing LGUs to run transport as a business; and (5) Public Transit Authority (PTA), establishing independent metropolitan authorities. Results show LGUs favor Option 2 for revenue collection potential, while TSEs largely reject it, preferring Option 1 to maintain the status quo. Divergent views underscore challenges in stakeholder alignment, emphasizing the need for tailored approaches to create a sustainable public transport system.