Comment/Patrick Massey: Bus competition in the Republic has worked. For more than 20 years, private bus operators, operating as travel clubs, have provided regular daily services between Dublin and various parts of the country.

A report carried out for the Department of Transport by consultants SDG estimates that journeys on such services are equivalent to 20-25 per cent of the number of journeys on Bus Éireann's expressway services.

It also shows that private bus operators hold licences for 71 routes, of which 25 are in respect of daily services to Dublin. Private bus companies also operate many local bus services without any State subvention. Such operators have invested their own money to purchase buses and many of them operate modern fleets.

There are two private-sector operators competing with Bus Éireann on the Dublin-Galway route, which has 26 services daily. Bus Éireann's fare on this route, in terms of cents per mile, is lower than on the Dublin-Cork route, where it is the only operator.

But opponents of bus competition claim that it has been an "unmitigated disaster" in Britain. Is this the case?

The conventional view of the British experience is that passenger numbers declined, services proliferated in an ad-hoc fashion, with buses in urban areas racing to stops in a battle for passengers, while many rural areas were deprived of services. Local bus services in Britain had experienced a continuous decline in passenger numbers since 1950. This trend continued in the early years of liberalisation but, over the past decade, passenger numbers have stopped falling.

In London, passenger numbers have risen since liberalisation. Bus passenger numbers in Scotland have also been rising since early 1998.

Since liberalisation, bus operating costs have fallen in real terms, as have Government subsidies, while bus services have increased. British department of transport figures reveal that the proportion of households within 13 minutes walk of a bus stop with an hourly service increased from 77 per cent in 1992-1994 to 89 per cent in 1999-2001. Operators in a number of centres outside of London have introduced integrated ticketing systems without state intervention.

Claims that transport liberalisation in Britain have been an unmitigated disaster have tended to ignore the positive aspects and greatly exaggerate the problems, which in some instances have been due to misguided regulatory interventions rather than competition.

It is often overlooked, however, that transport competition is by no means a policy that has been limited to Britain. Throughout the world, competition in the bus industry has had positive results.

SDG said that international experience indicated that liberalisation of long-distance bus routes could increase travel on such routes by up to 50 per cent. It also pointed to "a massive increase" in the level of such services in Scotland in the five years following deregulation.

In the case of urban bus services, international experience indicates that public monopolies are, almost always, less efficient than competitive regimes. The debate internationally is no longer about whether liberalisation is desirable but, particularly in the case of urban services, about the form that liberalisation should take, i.e. whether it should involve full on-the-road competition, as happened in most of Britain, or whether it should involve franchising, as in London.

Competitive tendering of urban bus services has been introduced in cities throughout the world from San Diego to Melbourne. SDG reported that a study of 30 EU cities found that franchising was superior to on-the-road competition. In the US, urban bus services, which are predominantly public sector monopolies, were found to perform poorly, while cities such as Las Vegas, San Diego and Denver, which had introduced competitive tendering, recorded considerable improvements in services. Competitive tendering was also found to have produced major improvements in Copenhagen and Stockholm.

Competitive tendering has certain shortcomings. In some cases, most notably London, it has involved establishing a large and expensive bureaucracy to oversee services. It has also proved to be highly inflexible, making it difficult for operators to alter routes and timetables in response to changes in passenger demand. It also means that cutting costs is the only way operators can increase profits, which can give rise to underinvestment and lead to poor-quality vehicles being used. (In contrast, with on-the-road competition, innovation and marketing allow operators to increase revenues as with any other product).

While it avoids some of the short-term problems associated with full liberalisation, whether competitive tendering constitutes a better option over the medium term is another question.

We need to avoid climbing on the decrepit ideological bandwagon on the road to nowhere advocated by those opposed to the introduction of competition in bus services. Competition on long-distance routes is already working in the Republic and should be encouraged. It can also work in the case of urban services.

Pat Massey is a former member of the Competition Authority