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Introduction

The Manila Light Rail Transit System, popularly and informally known as
the LRT, is a metropolitan rail system serving the Metro Manila area in
the Philippines. The system is operated by the Light Rail Transit Authority (LRTA), a
government-owned and controlled corporation under the authority of
the Department of Transportation and Communications (DOTC). Along with
the Manila Metro Rail Transit System (MRT-3, also called the new Yellow Line).

Quick and inexpensive to ride, the system serves 2.1 million passengers
each day, it is 33.4 kilometers (20.8 mi) of mostly elevated route forming two
lines which serve 31 stations in total. LRT Line 1 (LRT-1), also called the Green
Line (formerly Yellow Line), opened in 1984 and travels a northsouth route. LRT
Line 2 (LRT-2), the Blue Line (formerly Purple Line), was completed in 2004 and
runs eastwest. The original LRT-1 was built as a no-frills means of public transport
and lacks some features and comforts, but the new LRT-2 has been built with
additional standards and criteria in mind like barrier-free access. Security guards
at each station conduct inspections and provide assistance. A reusable plastic
magnetic ticketing system has replaced the previous token-based system in 2001,
and the Flash Pass introduced as a step towards a more integrated transportation
system. As of 2015, the plastic magnetic tickets were replaced with the Beep, a
contactless smart card, was introduced to provide a common ticketing to 3 rail
lines and some bus lines

Many passengers who ride the system also take various forms of road-based
public transport, such as buses, to and from a station to reach their intended
destination. Although it aims to reduce traffic congestion and travel times in the
metropolis, the transportation system has only been partially successful due to
the rising number of motor vehicles and rapid urbanization. The network's
expansion is set on tackling this problem.

Market structure analysis (MASS TRANSPORT: LRT/MRT)

A. Definition

The mass transport in the Philippines specifically, the railways include


three networks namely; Manila Light Railway Transit System ( LRT-1 and
LRT-2 ) and the Metro Rail Transit ( MRT-3 ) Being the first railway system
in South-East Asia, LRT 1 and 2 are owned and operated by the
government. MRT on the other hand was constructed by the Metro Rapid
Transit Corporation ( MRTC ), but is operated by the government under a
build-operate-transfer agreement. Hence the railway system in the
Philippines exhibits a natural monopoly market structure. Natural-Local
monopoly is a distinct type of monopoly that may arise when there are
extremely high fixed costs of distribution; such as exist when large-scale
infrastructure is required and exists in a local area or region. Therefore,
railway system belongs to the Natural-Local Monopoly since the high
costs of laying track and building or leasing trains would prohibit or deter
the entry of a competitor and is located in a particular area.

In naturally monopolistic markets, competition is uneconomical


because multiple producers are unable to completely utilize economies
of scale and this results in unit costs above the lowest possible values
and thus higher prices. In other words, a natural monopoly uses the
economy's limited resources more productively than multiple competing
firms. By this logic, it is preferable for a government to allow
monopolization of the market.

In order to maximize profits the natural


monopolist would charge Q, and make
super-normal profits. If unregulated,
and privately owned, the profits are
likely to be excessive. In addition, the
natural monopolist is likely to be
allocatively and productively inefficient.

A public utilitys losses could be dealt with in a number of ways,


including:
Subsidies from the government and Price discrimination, whereby
additional revenue can be derived by splitting the market into two or
more sub-groups, and charging different prices to each sub-group.

B. Classification ( Bases )

1. Pricing Mechanism
Fare structures of the railway system are distance based. Fare levels
are also known to be low compared to other systems in the society.
Through the employment of the debts of the government-owned and
other corporations to the annual allocation in the government budget,
low fares are set and the subsidizing of operations of railway systems
occurs. LRT should be priced at a level where the people are willing to
pay. The subsidies given should also uphold the improvements of
services.

LRT Line 1
The table above shows that for every distance or the number of inter-
stations, a particular fare has been imposed. According to the website
of Light Transit Authority, passengers using Single Journey (SJ) tickets
will be charged PhP12.00, Php15.00 or Php20.00 depending on the
number of stations travelled or whether Balintawak or Roosevelt
(opened October 22, 2010) station is part of their trip, while Stored
Value(SV) ticket holders will be charged from Php12.00 to Php20.00
depending on their trip length or whether Balintawak or Roosevelt
Station is part of their trip.

LRT 1 Tickets:
Single Journey Sold for Php20.00 each.
1 Ticket Can only be used once.
[Brown] Valid only on the date of purchase
Single Journey Sold for Php12.00 each.
2 Ticket Can only be used once.
[Green] Valid only on the date of purchase.
Single Journey Sold for Php15.00 each.
3 Ticket [Red] Accepted at all LRT Line 1 Stations.
Can only be used once.
Valid only on the date of purchase.
Stored Value 1 Sold for Php100.00 each.
Ticket [Blue] Accepted at all LRT Line 1 Stations.
Multiplerides.
With LastRide Bonus (i.e. ticket is still valid for one
more ride even if the remaining balance is less
than the minimum fare and at least P0.50)
Valid for six (6) months from date of first use.
Stored Value 3 Sold for Php80.00
Ticket Accepted at all LRT Line 1 Stations.
[Orange] Available only to senior citizens or disabled
passengers upon presentation of valid ID at the
ticket booth.
Multiple rides.
With Last Ride Bonus (i.e. ticket is still valid for one
more ride even if the remaining balance is less
than the minimum fare and at least P0.50)
Valid for six (6) months from date of first use.

LRT Line 2
A

distance related fare structure is currently being used for Line 2.


Passengers will be charged Php12.00 for the first three (3) stations,
Php 13.00 for four to six (4-6) stations, Php14.00 for seven to nine (7-
9) stations and Php15.00 for ten (10) stations.

LRT Line 2 Tickets:


Single Journey Ticket [Violet] Sold for Php12.00, Php13.00, Php14.0
Php15.00 each.
Accepted at all LRT Line 2 Stations.
Can only be used once.
Valid only on the date of purchase.

Stored Value 2 Ticket [Red] Sold for Php100.00 each.


Accepted at all LRT Line 2 Stations.
Multiple rides.
With Last Ride Bonus (i.e. ticket is still
valid for one more ride even if the
remaining balance is less than the
minimum fare and at least P0.50)
Valid for six months from date of fir
use.
Stored Value 4 Ticket [Pink/Orange] Sold for Php80.00
Accepted at all LRT Line 2 Stations.
Available only to senior citizens or
disabled passengers upon presentatio
of valid ID at the ticket booth.
Multiple rides.
With Last Ride Bonus (i.e. ticket is still
valid for one more ride even if the
remaining balance is less than the
minimum fare and at least P0.50)
Valid for six (6) months from date
first use.

2. Market Power

The Department of Transportation and Communications (DOTC),


Light Rail Transit Authority (LRTA), and Metro Rail Transit III (MRT-3)
presented a proposal to increase fares for the LRT and MRT lines, at
the one-time public consultation conducted at the LRT-2 Depot in
Santolan, Pasig City. The DOTC, LRTA, and DPWH has the market
power to increase or decrease the price of LRT and MRT based on the
expenses and needs of the employees, as well as the expenses
needed for the trains and power supplies.

As a background to the proposal, the transport agencies


explained that the LRTA and the MRT-3 are both operating at a loss,
requiring the national government to subsidize much of their
expenses. These include daily operating expenses such as the
overhead, power supply, and salaries. They also include costs for
repairs and replacement of train and rail parts, and for the payment of
existing debts.

Based on their 2012 financial records, the LRTA had a deficit of P


4.704 Billion, while MRT-3s deficit was at P 7.250 Billion. The average
cost per passenger for LRT 1 and 2 was at P 34.74. 59% of this, or P
20.46, was shouldered by the government, and only 41%, or P 14.28,
was actually paid by the commuter. In the case of MRT 3, the average
cost per passenger was P 53.96. 77% or P41.46 was subsidized by
government, while only 23% or P12.40 was paid by the passenger.

Part of the reason why the national budget subsidized these amounts
is because there has been no rail fare increase since 2003. In fact,
only LRT-1 has raised its fares over the course of its existence. LRT-2
has charged the same rates since it began operating in 2002.
Meanwhile, MRT-3s fares went down by more than half the original
rates from 1999 to 2001, and they have never been raised.

3. Entry / Exit Barrier

As for the capacity of these railways to provide the best service to the
people, entry and exit barriers may arise. Since the current demand of
LRT and MRT is high, problems are reflected and the need to solve
these includes possible entries from other corporations. According to
Ganiron Jr, commuters find problems on these railways systems
regarding outdated engines, which provide slower service and few
trains to be utilized. In addition to these concerns, a past incident had
resulted to a damaged train and injured citizens. Therefore in order to
increase the overall benefits of LRT and MRT, the government
together with different organizations should provide more stations and
trains for a lower average travelling time and safety. And since
railways are considered as a substitute to other forms of
transportation, it is indeed essential to frequently update the system
and utility of these trains for the production of more profit and to
lessen the heavy traffic in the city.
C. Consumers Behaviors

According to a study, a consumers preference, perception, choice


and situational constraints are ways to integrate the system and design to
increase consumer acceptance of public transportation. Each day, millions
of commuters used the Light Rail Transit (LRT) and Metro Rail Transit (MRT)
in order to avoid the traffic, which is caused by the lack of resources, and
roads that are provided in the Philippines. In metro Manila, our traffic rules
and regulations are weakly imposed, resulting in undisciplined drivers and
traffic gridlocks, which forced many commuters to use the LRT and MRT as a
way of transportation since it will be faster for them to arrive in their
destination or intended place.
Research shows consumers prefer their own car when it comes to
travelling since they can dictate their own time when it comes to going from
one place to another especially when they are travelling by land and less
time will be consumed. Also when it comes to urban areas a consumers
choice would be walking and LRT/MRT since they can avoid traffic, but its
downside is that many people also wants to avoid traffic so they would also
use LRT/MRT which caused a line to be formed and the train would also be
late which causes the people who would ride the train to accumulate and
overcrowding is also one of its major downsides.

Recommendations
Among the countries in Southeast Asia, the Philippines is considered
to be a developing country. However, its mass transportation and railways
are still underdeveloped and needs improvement. Here are the list of things
needed to be improved. The following things listed are from frequent
passengers of this kind of transportation..
1. lower fare fee
2. bigger, faster, more trains
3. train safety and cleanliness
4. PWD sections
5. Corruption inside LRT/MRT
6. Improved Service of Personnel

REFERENCES:
Online sites
https://www.oxfordbusinessgroup.com/overview/steady-progress-under-
wayphilippines-transport-sector
https://www.adb.org/sites/default/files/institutional-
document/33700/files/philippines-transport-assessment.pdf
https://www.climate-
eval.org/sites/default/files/evaluations/429%20philippines08.pdf
http://www.dlsu.edu.ph/conferences/dlsu_research_congress/2013/_pdf/LCCS/LCCS
-I-003.pdf
http://www.lrta.gov.ph/index.php/2014-05-21-01-06-51/2014-05-22-02-02-41
http://www.gov.ph/2013/12/13/dotc-lrt-mrt-fare-hike-to-bring-better-train-services-
allow-more-projects-outside-metro-manila/
http://www.extension.iastate.edu/agdm/wholefarm/html/c5-200.html
http://www.sersc.org/journals/IJAST/vol74/2.pdf