There two kinds of transportation system public and private. In the West, mostly public transport systems are operated by public agencies. That is why the public transportation system tends to enjoy a marvelous wage structure, benefits and retirement plan.
In order to bring down cost, most public transportation owners or agencies contract the work to private operators. There are two kinds of contractual projects.
Private company runs the operations whereas public company provides the service
Under this heading it is public company which will tender the request for proposals and in turn, the private companies will bid on those transit services. For the public companies which own more than one mode of transportation, different private companies cater to different modes of transportation.
For some cities, public transport owners tend to divide bus routes to be tackled by different private operators. Under this arrangement the transit authority owns the vehicles and thus, instructs the private owner about the routes and schedules they wish to operate on.
The biggest advantage the public transportation giants have is that in this way, they save on money. But while it may be true for the public companies but the large part of the state healthcare and retirement benefits are then offered to these contracted employees.
On the other hand, the disadvantage this arrangement carries (supposedly) is that employees are which work under private companies are not as equipped as their public company counterparts. The reason is that former lacks in rigorous HR practices as well as lower remuneration rates but if all that were true there would be more accidents and complaints lodged against the private company service providers than public ones.
But when this belief/hypothesis was put to use, it could not be proved due to lack of any such evidence under a varying transit modes including where these were contracted out as well as self-operated.
Private company both runs and plan/execute the service
This arrangement is more synonymous with countries other than the US such as Australia, Japanese used car dealers and England. Private companies plan and devise strategies to execute transit routes. The competition, however, becomes cut throat as each private entity battles for supremacy.
Here all the government does is offer subsidies to facilitate service to areas which are otherwise uneconomical to serve. The advantage of having the service operate in this manner leads to private companies providing it efficiently.
What happens is that political interference or influence on occasions prevent public companies from providing the transit service or let it run as a business. Private Service providers can play around with routes, schedules, and most importantly fares without the need for legalities (public hearings or political approvals).
Another advantage that private transporters have is of low operating cost since they pay their employees less as well as offer low fringe benefits. But it is not all advantages but also some disadvantages. When businesses such as private entities seek to run transit networks they do so to make profits which means serving only routes which are profitable in nature. See, that is how the private owner’s mentality works, maximize profits and try stuffing as many people as possible in the bus.
This usually brings confusion to passengers as fares increase and since the transit network is fully owned by the private business, passengers will be unable to find any reason as to why. A private company will never reveal the reason or anything about what the rivals are offering. Hence the customer is left with commuting through the only option available.
How the privatization of the transportation does looks like?
A lot has happened over the last decade or so especially since the recession much of the finances have went down the drain in the quest to try to improve transportation networks. Consequently, a lot has occurred such as raise in prices, service cuts, and hybrid of aforementioned. This is all proves that privatization is indeed going to continue and move on at a faster pace.
But public transit systems are needed for the poor to commute as more privatization means a common man or the middle class earner cannot afford to travel through the transit networks on a routine basis due to increased fares and clutter.