Local governments and private bus operators can work together to improve public transit services and increase productivity. Photo by Mariana Gil/EMBARQ Brasil.

Over the past few years, demand for buses has been declining in major Brazilian cities. How should city and transport leaders respond to this alarming trend? One possible solution is to improve the quality and productivity of bus service. To achieve this, smart regulations can play an important role by establishing terms and conditions for private operation, assigning responsibilities to key actors, and creating a necessary tool for ensuring communication between managers and operators.

There are a variety of effective instruments for regulating public transport services. In some countries, services are assigned based on performance criteria. The success of these contracts depends on transparency, trust between the parties, and the control and evaluation mechanisms agreed upon in the contract. In Brazil, federal law stipulates that public transport services have to be assigned through a bidding process.

Regardless of the way in which operators are chosen, the quality of public transport services depends on strategic decisions. This includes the distribution of risks among managers and operators, the duration of contracts, the organization of service provision, and the determination of salaries and tariff policies. Many Brazilian cities are pressured to make bids, but find themselves with little time to think strategically about what to include in contracts.

Because the success of a transport system depends on people and organizations, transport managers and operators as well as city leaders play an important role in improving service quality and increasing productivity. This was a key finding of EMBARQ Brasil's Seminar on Sustainable Urban Mobility: Practices and Trends held in São Paulo in the second half of 2014.

First, governments and public agencies should invest in technical training for preparing well-structured grant programs that are aligned with the strategic objectives of the cities, promote transparency when assigning service contracts, and maintain strong dialogue between parties. Second, private operators should be able to propose operational changes to improve transport services, given their expertise and on-the-ground experience. Third, control agencies that actively participate in the bidding process should communicate regularly with those involved in the bidding to facilitate their understanding. Finally, third party organizations should be able to engage in discussion, provide education and training, develop technical studies of international standards, and catalyze collaborative exchanges of information and experience.

Looking globally, there is no universal model for assigning contracts. Transport leaders and officials must analyze each city's public transport system within the local context and study their idiosyncrasies in order to guarantee the best economic and social returns. This begins with local governments defining key, strategic objectives—such as expanding access to low-income users, strengthening user loyalty through programs, and enhancing the reliability, connectivity, speed, and security of the system.

This article was originally published in Portuguese on TheCityFix Brasil.