I had asked this question at the TransInnova/ BMLTA summit yesterday, and didn't get a good answer, most likely because nobody had a number handy. Local urban transportation is a "problem", and problem equals "opportunity". Why is it that private players are not taking enough interest in lobbying to get access to this market? Policy hurdles would be one reason, but I am curious if the size of the market is being underestimated here. Lets do some numbers, simple and basic.
Assume Bangalore's population is 70 lakhs. Assume that 60% of these people have a need to commute daily. You get 42 lakhs. More spread the city (suburbia), bigger the percentage. Younger (so more workers) the population, more the need. Housewives, retired folks, those living close to work, still-at-home toddlers wouldn't need daily commutes and would be infrequent users, perhaps day time users of transportation services. Leave the details, assume simple number, 60% of 70 lakhs = 42 lakhs.
Pick a per kilometer cost these folks would be ready to pay, and would create sustainable businesses. Lets say 3 Rs per km. Now, lets pick a number for average travel distance for daily trips for 42 lakh people. 10 km, 5 up, 5 down would be a conservative estimate. That gives you a daily spend of Rs 30 per person.
42 lakhs x 30 = 12 crore per day = 300 crore a month (assume 25 work days) = 3600 crores an year.
Now, to add to this, assume usage level from rest of population would be 20% compared to the commuters. 2 km a day, 3 Rs a km, for 28 lakh people = 1.7 crores a day. x 30 x 12 = 612 crores.
We are talking Rs 4200 crores an year for Bangalore alone, and with conservative estimates.
What else? Not included the consumer durables these commuters would buy (snacks, drinks). Not included the services commuters could consume (phone, internet, rest rooms) at transit points. Not included the value of advertising on buses and transit points.
Now, whats BMTC's turnover? Rs 1000 crores, they predict for 2008, and not all of it from transportation services, mind you.
Conclusions later. Let us make our numbers a bit better, un-simplify them a bit.
- We can assume a high usage level of public transport, and change this into addressable public transportation market.
- Can compare this to other markets that have drawn private parties and investors - say cable/DTH, cars itself. And then see if its too small to get their attention.
[PS: Usual disclaimers apply - This is work in progress, numbers are naive, many assumptions, I am no expert, etc etc. But some searches and extrapolations, and we can get numbers to be better]
[picture credits -Bus crowd - sapna10@flickr, Bus - kumar_08@flickr]
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Comments
how about floating population?
Too simplistic?
The numbers probably represent a potential to grow for public transportation. The 60% needs to be reduced by about 60% to account for the private vehicle population.
Here and here are two articles that give the number of private vehicles equal to 2.5 million (or 25 lakhs).
Add the following to that -
Many private vehicles (esp. 2 wheelers) are "overloaded" with 2 or more people on it. In the 60% number are included school-going kids many of whom are dropped/picked up by their parents on the way to work or back from work.
Some of the remaining 40% again utilize the private vehicle (say, to go shopping in the evening).
Pilferage is not a trivial thing.
Quite a few number of heavy users use passes.
- and the reduced numbers may make sense.
Wiki has some numbers (citation probably needed ;-) )
With the metro starting in the next few years, there may not be much incentive to operate in the city. Where the private players thought they could make money, they are providing services - like maxi-cabs for short-haul routes around Bangaluru and private buses for long-haul routes. Not that they are a solution; overloading and stoppages at too many locations are rampant problems but that is a topic for another day.
n - opportunity is a simple function of need
I was trying total possible size by calculating only from consumer point of view. Situation on ground today is what you are getting to. But the easier way to look at city's needs is how much travel everyday, and at what cost. But you are right - this is the potential, but with very conservative estimates on avg distance of commute and transportation fares (bus, carpool, metro - whatever). so yes, assuming 30% of people will be on private vehicles no matter what, the 'practical' size will be 70% of that guesstimate.
The market is fragmented today. Besides BMTC, where else is the money going?
About multiple people in most private cars, a good percentage will be drivers. Average Rs 4000 per driver. 4 lakh cars in the city, assume 10% are driver driven, 40000 * 4000 = 16 crores a month ~ Rs 200 crores. Mis-deployment of resources if you ask me.
The system is generating a lot of jobs, though of low skills - private drivers, auto-drivers etc. 40K + 40K (car drivers + ricks) = 80k is that rough number we built here. If 3 is the avg family size, you see that our fragmented transportation market could be sustaining 2.5 lakh lower middle to poor folks in our city.
Even if its 3000 crores a city, 15 such cities mean 45000 crores, thats a big size for private players to get interested, isn't it? I think this will soon get into organized retail vs mom-and-pop stores discussion.