Cost-effective jeepney operations at a time of high oil price

July 9, 2008 at 1:43 pm 1 comment

Diesel now costs P54.50 per liter with the jeepney minimum fare at P8; it was P26 when the minimum fare was raised to P7.50.

The cost of diesel increased by 110% while the minimum fare, by 6%. Inflation is now a double-digit figure and the prices of basic commodities are much higher. Ramdam ang kahirapan, never mind that the tarpaulin posters of Arroyo say “Ramdam ang Kaunlaran.”.HTML clipboard Click here for a photo of the poster

Jeepney drivers therefore are hard pressed to make both ends meet. Yet they have to continue plying their routes because that is their means to earn a living and feed their families.

The math of the situation has compelled the drivers in one route to streamline their operations so as to make maximum use of each liter of diesel they put in their tanks. With common sense at their command and without a knowledge of industrial engineering or operations research they came up with an effective plan that has increased their earnings on each liter of diesel..

This is how they did it (I will not mention the name of the route because the operational plan is not compliant with the terms of their franchise).

On his first trip a jeepney driver goes only half of the way, charging the passengers the approved fare rate. On his 2nd trip, he covers the full route, after which he alternates between the half and full routes for the rest of the day..

At the terminal one line of passengers board the jeepney going the half route while a second line of passengers board the jeepney going the full route. Thus both jeepneys have 100% occupancy on their respective routes. The much higher occupancy factor results to an increased revenue per liter of diesel, achieved at no cost to the passengers who have no reason to complain because they pay the same fare.

Unfortunately, it is technically trip-cutting, a basis for cancelling the franchise. The police in the area are aware of it but they understand the situation of the jeepney drivers.

In the meantime, the Arroyo government is still studying whether to suspend, remove or reduce the 12% VAT on oil. The longer it takes to decide, the more billions come in, which is enough reason for it to delay making a decision or making excuses for the status quo..

BTW: for those who are experts in Operations Research and have the time, try and figure out the optimum number of sections to chop up the route to maximize the earnings on each liter of high-priced diesel. Is it 2, 3, 4….?


Entry filed under: 1. Tags: , , , .

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1 Comment Add your own

  • 1. Illubdida  |  August 2, 2008 at 10:45 pm

    Thanks for the post


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