Costing School Transport in Spain

School transport in Spain is conceived administratively as a regular, but special, public transport service financed by the Spanish regional governments through private sector contracts adjudicated by public tendering. As such it has two special features in comparison to systems elsewhere. First, larger operators use conventional buses (rather than special school buses) and these can also be used for regular services during school hours. Second, as these are regional services, often only regional operators bid for these tenders, so contract assignment resembles a bargaining process between operators and administrations, tempering an adequate operation of the market. This problem is common to all Spanish regions. The situation described has generated high costs (i.e. 15% increase in contract costs in the past year although the number of contracts did not vary significantly). For this reason the Government of Cantabria commissioned research to examine the problem. A simple cost allocation model allowed us to detect that school transport costs were, on average, approximately 18% higher than what could be deemed reasonable. This article describes the problem, the reasons why it has occurred and explains the model built to examine it in certain detail. It also shows the immediate consequences of its application (i.e. the reaction of the main operators and their changed strategy) and the steps taken by the Regional Government, based on our results, to ensure a proper operation of the market in the future.