Monday, July 21, 2014

Portfolio concept for unprofitable routes

I am a little irritated recently when I read that some are still talking about profitable/unprofitable transport routes, and that unprofitable routes need to be removed to make the transport system sustainable. I disagree. Profit has to be taken in totality and a portfolio concept should be taken.

For anyone who invests, I believe you understand the portfolio concept, having a mixture of assets/investments to balance out each other in different situations, so as to achieve a target growth.

How can we look at public transport system in terms of selective profitable / unprofitable routes? Does that mean if a certain route is very profitable, we should tax that route higher because taxpayers' monies are being used?

For a public transport system to be efficient, you should never put profit into the equation. That's because the nature of business is to make as much profit as possible. Public transport system is not meant to be wildly profitable, which is why some people are saying why the operators running this system is for-profit.

Instead, you have to look at the whole business in totality. For example, as a result of running the public transport system, they have access to bus terminals or MRT stations which they could use to develop into shops or areas for advertisements. This must be taken into account in the total profit the operator makes because the operator would not have made this profit if they were not given that particular route to run for example.

Looking at the profit generated for a particular route should not even have been considered. If it is, then we must insist that we should tax more for particular routes that are wildly profitable. That's only fair. Taxpayers monies are being used after all.

No comments:

Visit Rhinestic's Knick Knacks @ Etsy for handmade goods and supplies!

Related Posts Plugin for WordPress, Blogger...