The Tongli Bus Co Ltd has decided to cancel three of its four bus routes in Vientiane , saying it cannot afford to run the buses without passengers.
The company introduced the bus service in October 2007 with the assertion that it was prepared for low profits for the first six months, and that in time more passengers would become familiar with the service.
But this declaration turned out to be premature, as the company's director said yesterday that it would have to cut back on its routes just five months after opening.
Company Director Ms Singkham Vongxay said on Tuesday the company had decided to run only the Dongdok bus route; the rest have been cancelled due to a lack of passengers and the rising cost of petrol.
She said the number of passengers using the bus service was lower than expected, which meant the company had to come up with a new business strategy.
“We are thinking of new ways to encourage more people to use our buses in Vientiane ,” she told Vientiane Times yesterday.
She admitted that the old business model had not been effective, and that she was considering leasing the buses to individuals to run on city routes to reduce the responsibility of the company.
This system is similar to that used by the Vientiane Public Transport Company; the borrower or driver can earn money on routes during the day and has to pay the company a fixed amount each day. The driver can pocket any surplus or subsidise any shortfalls.
With this system, the Tongli Bus Co Ltd would be able to generate a fixed income, regardless of passenger numbers.
Ms Singkham confirmed that she had no plans to sell the buses, as the main purpose of importing them from China had been to operate a service in Vientiane .
She also said her company would abide by the agreement it had entered into with the Vientiane Public Works and Transport Department.
Department Director Thongdam Xayphakatsa said yesterday that the company would face legal ramifications if it attempted to sell the buses.
According to officials, any company can import buses at a low tax rate if they want to run a bus service, but the import tax levels are higher for those importing buses to sell.
Some companies in the past have claimed from the outset that they plan to run a bus service as a way of avoiding large tax payments, but later claim the company has failed, before selling the vehicles.
The Tongli Bus Company opened for business in 2002 and has developed into one of the most successful long-distance bus services in the country. Earlier 2007, it announced the 7 billion kip deal to buy 36 buses from China .
This new venture was decided on after the Vientiane Public Transport Company confirmed it had earned zero profits in Vientiane over the past decade, while another company, the Laody Bus Company, which was established in 2000, went out of business.
It's a sad news for the service provider. Previously, we complained about the lack of public transport in the city. When the private company has operated their business, the public have not used the service as expected.
I think that one thing is the culture or behaviour of Lao people who dont want to wait a long time for the bus and dont like to plan their schedule for going out. They prefer tuk tuk more.
