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Public transportation is defined as transportation by a conveyance that provides continuing general or special transportation to the public (Tran & Kleiner, 2005). It excludes school buses, charter and sight seeing service and includes various modes such as buses, subways, rail, trolleys and ferry boats (Ibid)。

CHAPTER 1 LITERATURE REVIEW

1.1 Public Transportation Policy

According to Imran (2009), despite the unquestionable bene?ts that public transport planning and policy can bring to the Pakistan, there have been many shortcomings in the development and implementation of public transport policy namely overstating role of the private sector in public transport, lack of capacity among public transport organizations, negligence in the development of high-capacity public transport and failure to utilize high-density mixed land use patterns. The current transportation problems in developing nations continue to worsen due to the massive spending on urban transport systems, bad planning, lack of governance, and corruption (Masood, 2011). Masood suggest the urban transport problems in Pakistan to be managed by building larger and better roads and need to be part of an over-all transportation plan that includes traffic management and bigger and better transit systems and public transport.

In different setting, the issue of public transportation policy also might be different. For example in a paper written by O’toole (2011) titled “Policy Analysis: Intercity bus, the forgotten Mode”, the issue arisen is about the intercity bus that start to be forgotten due to the concentration of policy planning in developing the rail system. O’toole argued that buses will probably never replace the automobile as the dominant form of transportation in the United States. However, those who want to promote alternatives for low-income people and others who prefer to use environmentally sensitive modes of travel should encourage intercity buses.

At previous time, privatization is considered as an alternative to improve the effectiveness and efficiency of public service. Tiwari (2002) and Pucher et al. (2004) favor privatization of public transport services to generate funds to operate e?cient bus services and reduce government subsidies. Tiwari found that large-scale privatization of buses in New Delhi increased the capacity of public transport while Pucher reported that the privately-run services in Indian cities have higher productivity, lower costs, and higher revenues per bus km of service. However, they concluded that privatization only potentially improve the e?ciency only if accompanied by institutional capacity-building, which ensures an integrated network of public transport services.

1.2 Issues in Public Transportation

1.2.1 Performance under Private Company Operation

According to Masood (2011), adequate funds are needed to finance construction of new transportation projects and maintenance of the old ones. However, since the past until present, public transport in developing countries is generally characterized by a lack of adequate financial resources to fund operational subsidies. It is not an issue in any other country, but