The Outline for Building China’s Strength in Transportation proposes to strengthen financial security and enhance the ability of sustainable development. For some time, bus enterprises in some areas have experienced operational difficulties, which is worthy of attention and thought-provoking. The sustainable operation of bus enterprises is not a new problem. However, in the context of the continuous COVID-19 pandemic, their fragile cash flow turns even more stretched, which is more prominent and urgent in individual cities. On the whole, bus enterprises in various places share a common characteristic that their cash flow is tight due to insufficient operating funds. Specifically, the situation varies from place to place, and the reasons leading to operational difficulties also vary from place to place, including staged difficulties, policy problems, structural shortcomings and operational deficiencies.

Imperfect dynamic ticket system and fare adjustment mechanism makes it difficult to support the fare income increase

The main sources of funds for bus enterprises are fare income and financial subsidies. At present, these two aspects are facing great difficulties. From the perspective of fare income, first, affected by the COVID-19 pandemic, the conventional bus passenger volume declined seriously. Since 2022, the COVID-19 pandemic has been continuous and recurrent. Thus, the conventional bus passenger volume in 36 central cities in the first half of the year decreased by 23.5% year-on-year, and that in some cities decreased by as much as 57.2%. Second, new modes of travel, especially rail transit, have a great impact on conventional bus passenger volume. For a long time, conventional bus has been the main way to solve urban traffic problems in China. However, since the new millennium, rail transit has entered a rapid development cycle of continuous doubling. By the end of June 2022, rail transit had been in operation in 51 cities. Shanghai, Guangzhou, Beijing, Nanjing, Shenzhen and other cities have successively completed the “role exchange” between conventional bus and rail transit, and more cities are still struggling to move forward in the run-in period. In some cities, due to the lagging concept, lack of mechanism, improper measures and other reasons, the conventional bus and rail transit fall into a zero-sum game, which reduces the citizens’ experience of public transport travel, and even leads to a “double decline” in passenger volume. Coupled with the rise of online car-hailing service in 2012 and the explosive popularity of bike sharing in 2016, more and more citizens have chosen private transport because of the continuous increase of per capita disposable income of urban population in China and the COVID-19-driven increased sensitivity of citizens to safe travel. Third, there is a lack of dynamic ticket system and fare adjustment mechanism and support for fare income increase. An effective and sound ticket system and fare adjustment mechanism is the key to the survival and sustainable development of public transport. The Measures for the Administration of National Urban Bus Construction Demonstration Projects clearly stipulates that a dynamic ticket system and fare adjustment mechanism should be established. At present, many cities in China have not established a perfect ticket system and fare adjustment mechanism, or the mechanism is not dynamic and flexible, which leads to the inability of relevant urban bus enterprises to increase operating funds through fare adjustment to bridge the huge operating gap.

Some local financial subsidies are difficult to be allocated in place in full and on time

From the perspective of financial subsidies, first, local finance is tight, so it is difficult to allocate subsidies in place in fulland on time. Urban public transport is a public welfare undertaking to meet the basic travel needs of the people, and adopts the low fare policy under the guidance of the government. However, the operating costs of enterprises providing public transport services are completely market-oriented. This contradiction of expenditure exceeding income has led to long-term huge policy-related losses. According to the requirements of relevant national policies, local finance departments should grant subsidies and compensation to bus enterprises. However, since the once-in-a-century COVID-19 pandemic and profound changes unseen in a century are intertwined, China’s economic development is under triple pressures of demand contraction, supply shock and expected weakening, and local finances are generally tight. Data show that in the first half of 2022, the local deficit was CNY 5.6 trillion. In this context, local finance departments in shortage of funds have been unable to do what they hope to do. Second, the subsidy and compensation policies of individual cities are imperfect. The Guiding Opinions of the State Council on Giving Priority to the Development of Urban Public Transport clearly states that the urban people’s government is the subject responsible for the development of urban public transport, and that the subject providing subsidies is also local finance departments. In practice, many bus enterprises rely heavily on bus refined oil price subsidies and new energy bus operation subsidies at the national level, and local governments have not established relevant subsidy and compensation policies. With the adjustment of relevant national subsidy policies, relevant cities failed to properly conduct policy cohesion in time, which led to the subsidy interruption of bus enterprises.

Market mechanism needs to beflexible while policy guarantee should be solid

Focusing on their main business, some bus enterprises actively expand income-increasing channels and enhance their “self-hematopoiesis” function. However, most of them have small revenue scale and weak market competitiveness, so they fail to form a strong supplement and support for their main business.

Sustainable development of urban public transport is the common responsibility of government, enterprises and society. To solve the current operational problems facing bus enterprises, it is not allowed to neither rely entirely on government subsidies nor excessively rely on passengers’ payment. It is also not allowed to simply assign such tasks to bus enterprises on the grounds of “market entity” and “self-financing”. It is necessary to have many parties involved, and take multiple approaches and measures simultaneously.

The government should assume the main responsibility and make special transfer payments.Safeguarding citizens’ basic travel needs is an important part of upgrading the modernization of transportation governance system and governance capacity, an important embodiment of practicing people-centered development thought, and an inevitable requirement for ensuring basic livelihood and grass-roots operation. Bus enterprises have difficulties in operation, and even some enterprises have been shut down, which is of great concern and must not be left unchecked and responded negatively. The government’s “tight spending” is a normalized requirement, and its purpose is to enable ordinary people to live a good life. No matter how to streamline projects and save expenses, the financial support for basic livelihood and grass-roots operation should not be reduced or relaxed. The relevant urban people’s governments should assume the main responsibility, establish and improve the government’s procurement of urban public transport services, policy-related loss subsidy and compensation system and other institutional mechanisms, rationally arrange financial funds, and allocate subsidies to bus enterprises in full and on time. In cities with difficulties, the provincial government should, in accordance with the requirements of Guiding Opinions on Further Promoting the Reform of Financial System Below the Provincial Level, strengthen the overall planning of funds, establish and improve the transfer payment system, and make special transfer payments to relevant places in a higher political position. When necessary, the central finance department can strengthen overall guidance to effectively satisfy the basic travel needs of citizens. In addition, in response to the change of citizens’ travel modes, it is required to reshape the positioning of conventional buses, focus on the guarantee capacity and service level, formulate industry service standards, and explore the evaluation system of integrated public transport, which can be used as the basis for financial subsidy and compensation.

Enterprises should play an active role and effectively deal with operational difficulties.Bus enterprises are the first responsible taker to ensure the basic travel needs of citizens and maintain their sustainable operation. They should exert initiative, enthusiasm and creativity, and plan, lay out and act early.

First, minds should be freed. It is necessary to abandon the zero-sum game thinking, establish the positive-sum game concept, and complete active and initiative integration from the overall height of integrated development of various modes of transportation and improved efficiency and level of integrated travel, so as to jointly enhance the citizens’ sense of happiness, gain and security.

Second, income generation should be innovative. First, the main business should be focused. It is required to adjust the role orientation, properly complete relay, supplement and dislocation, actively optimize the network structure, dynamically adjust the models, vigorously develop branch buses, customized buses and characteristic buses, and explore the operation of grid-based non-scheduled buses to meet the efficient, personalized and accurate travel needs of citizens. The second way is to extend the industry and tap the potential. It is required to focus on the industrial chain, value chain and supply chain of the main business, and rely on the advantages of market, business and resources to expand revenue channels and capabilities, such as expanding station development, new energy charging piles, automobile aftermarket, advertising media and other extended businesses. The key point is to strengthen market awareness, give full play to its own advantages, cultivate core competitiveness, and avoid forming new “zombie” and “shell” enterprises.

Finally, expenditure should be reduced properly. We cannot simply do subtraction because of the decline of passenger volume and the increase of cost. Stopping operating lines, reducing operating vehicles and shortening operating time will ultimately sacrifice citizens’ satisfaction with bus travel and reduce citizens’ stickiness to conventional buses. The social recognition crisis of citizens “voting with their feet” is the biggest crisis of bus enterprises. It is necessary to scientifically analyze the impact of various modes of travel, COVID-19 pandemic prevention and control, etc. on conventional buses, formulate targeted plans, and continuously improve the resilient governance ability and level of conventional buses.

Passengers support the bus development and the adjustment of the ticket system and fare in a timely manner.It is the basic condition for the healthy and sustainable development of bus undertakings and bus enterprises to adjust the fare of urban public transport in time within the affordable range of passengers by taking into account the operating costs of enterprises, the supply and demand situation and the level of urban economic and social development. First, ticket system and fare adjustment is the concrete embodiment of implementing the national policy. The Notice of the Ministry of Finance, the Ministry of Industry and Information Technology and the Ministry of Transport on Perfecting the Subsidy Policy of Urban Bus Refined Oil Price and Accelerating the Popularization and Application of New Energy Vehicles clearly points out that ticket system and fare adjustment is one of the important sources to solve the subsidy problem of bus enterprises. Second, ticket system and fare adjustment is inevitable for economic and social development. Data show that from 2012 to 2021, China’s consumer price level increased by 20%. However, the ticket system and fare implemented in many cities have not been adjusted for many years, and the fare level deviates seriously from the operating cost, which forms and aggravates the operational difficulties of bus enterprises. Finally, ticket system and fare adjustment is also an objective need to serve people’s better travel. With the economic and social development, citizens have more new expectations and demands for better travel. Ticket system and fare adjustment is conducive to improving the service capacity and level of bus enterprises, meeting the needs of the masses for high-quality travel services, and establishing a better travel system that meets the needs of urban development and citizens.