Marshutka’s appetite increases by 60%
01 September, 2011
Marshutka’s appetite increases by 60%

Against the backdrop of diminishing of fuel prices, transportation costs grew by about 60% on Tbilisi inbound mini-bus lines. Creation of a monopolist company is supposed to be the reason. 

Transportation costs on Tbilisi inbound transportation lines of mini-buses largely known as ‘Marshutka’ increased by 50-60% by the end of past July [from 40-50 to 60-80 tetri] irrespective of City Hall’s promise that no price hike loomed in prospect.

Transportation costs on Marshutka were predefined to increase after Tbilisi municipality decided to

standardize the sector, held a tender and instead of several petty line owners granted four companies - Tbilisi Minibus [former TbilLine], Capital Group, Tbil-Kari, and Public-Kari with the exclusive right of passenger transportation on Capital’s inbound lines by end of January of 2011. The winner companies assumed obligation to bring 3200 new yellow Ford mini-buses toTbilisi, equipped with electronic bill register and not to increase transportation fees till January of 2012. Gigi Ugulava, Tbilisi Mayor, himself promised in February that transportation costs would not increase and passengers of socially vulnerable category would enjoy better preferences than before.

Part of Georgian experts predicted the transportation price hike as soon as the tender was announced, for they found the tender non-transparent and irrelevant because it did not burden winner companies by investment obligation. Besides it reduced number of market players to four and laid ground to market monopolization that is always a precondition of high prices. Merab Janiashvili, Head of Association of Young Financiers and Businessmen, believes that the four tender winner companies are one and single monopolist body for all four were registered one day by 5 minutes interval  at the same notary. And only one person, Davit Asanidze, Head of Tbilisi Minibus, speaks on behalf of this Big 4.

As a result, the new transportation companies invented a dexterous fund-raising scheme: instead of making any investment, the winner companies will pay-off for new mini-buses gradually through increased passenger transportation costs. Drivers of new mini buses are supposed to pay by installments for the new vehicles [each costs EUR 18 thousand] during 10 years and after covering their cost entirely, the 10-year-old vehicle will pass to their ownership. Moreover, as per daily income schedule, Marshutka drivers have to pay to transportation companies instead of GEL 12 to GEL 20, which a priori translates into higher passenger fares. Transportation companies should introduce new mini buses till the end of this year. Accordingly, promised full comfort and improved service conditions are also supposed to be provided starting the next year.

However, transportation costs have already increased similarly on all Marshutkas; new and old alike. The same shabby mini busses, overcrowded by people, are racing along the Tbilisi streets and nobody seems responsible for it. Tbilisi City Hall assures it cannot interfere in the market price-making policy. Asanidze ascribed price hike to legalization of mini-buses’ income that was “shadowy” before and is taxed in full compliance with the law now. On the other hand, he pointed to the drivers. According to him, part of drivers of old mini-buses also demanded price increase and transportation companies could not resist them. Drivers claim they are not to  be blamed; some of them say in private talks with Georgian Journal that transportation companies had GEL 300 thousand profit per day in accordance with old tariffs and the reason for the recent transportation fare hike is the growth of their bosses’ appetite.

“Can you imagine how big the profit can be now when fares have increased by 50-60%?” – An incognito driver asked. “Even by GEL 300 thousand per day an honest investor could not keep old tariffs and even cut them down. But the new owners want double profit. Nobody cares for the passengers.”

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