The missing piece in public transport reform
The “anti-sardinas policy” recently issued by government agencies penalizes, either through fines or franchise revocation, operators of public utility vehicles (PUVs) that overload passengers. While well-intentioned, this policy fails to address the deeper structural issues of the public transport system.
Civil society groups, such as Move As One Coalition and Commuters for Change, rightly point out that overloading is merely a symptom of a deeper problem: the chronic undersupply of public transport. Penalizing operators without addressing these root causes only punishes a system already struggling to meet demand.
Two key factors drive this persistent supply problem: the flawed business model of public transport operations and the restrictive franchising framework.
First, the prevailing business model relies solely on farebox revenues. Operators earn only from passenger fares, incentivizing them to maximize ridership, even if it means overloading. During off-peak hours or on less busy routes, PUVs often stop operating because running services is not profitable. This leads to overcrowding at peak times and a lack of available service during off-peak hours. The current model fails to ensure a consistent supply because service provision depends on profitability, not public need.
A more sustainable alternative is service contracting, where the government pays operators based on service performance rather than ridership. This guarantees more reliable service regardless of time or passenger volume. Commuters for Change has long advocated for this shift. The Department of Transportation piloted service contracting during the pandemic and continues it with some local government units (LGUs). The challenge now is to sustain and institutionalize service contracting. To ensure viability, proper fare collection must also be integrated.
Second, the franchising system—or securing a certificate of public convenience (CPC)—is outdated and rigid. This is especially problematic for LGUs that seek to provide or oversee public transport. Several LGUs have stepped up, including Quezon City, Pasig, Makati, Davao, Cavite, Iloilo, and Naga.
In my interviews with several LGUs, a recurring challenge is clear: the CPC process is rigid and poorly aligned with the operational realities of LGUs. The requirements are burdensome, limiting LGUs’ ability to formalize and sustain initiatives. Many programs operate only under annually renewed special permits, creating regulatory uncertainty. Some LGU-run services remain fare-free not by choice, but because they lack a CPC to legally charge fares.
The problem persists when LGUs engage private partners through public-private partnerships (PPP). Even after a private partner receives a notice of award (NOA), securing a CPC remains a separate and uncertain process.
Another complication is that franchises are typically tied to specific vehicles. This limits flexibility for LGUs that want to hold the franchise but outsource bus ownership and operations to a third party. The current framework is ill-suited for hybrid service models.
Moreover, under the PUV Modernization Program, LGUs are already empowered to develop route plans. Yet, the authority to issue franchises remains solely with the Land Transportation Franchising and Regulatory Board. This disconnect limits the ability of LGUs to align service supply with local demand, as they remain dependent on national agencies to authorize operations.
These regulatory rigidities contribute directly to the undersupply of public transport. Navigating the franchising process limits LGUs’ capacity to invest in or expand services. When authority is tied to short-term permits or prolonged CPC applications, there is little incentive or capacity to scale up services to meet demand. Without reform, LGUs will remain constrained.
I propose four immediate reforms to the CPC process for LGUs: (1) Exempt LGUs that directly operate public transport services from the CPC requirement; (2) automatically grant a CPC to joint PPP ventures between LGUs and private partners upon issuance of NOA; (3) decouple franchises from specific vehicle units to enable more flexible service arrangements; and (4) delegate CPC issuance authority to qualified LGUs.
If LGUs are stepping up to address the transport supply gap, they should not be treated like private operators bound by outdated regulations. The franchising process must evolve to enable—not hinder—LGU participation. Empowering LGUs through more flexible franchising pathways is the structural reform our public transport system urgently needs.
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Dr. Varsolo C. Sunio is an assistant professor at the University of Asia and the Pacific. He has published works on public transport reform in international journals. In 2024, he was a Fulbright visiting senior scholar at Portland State University. In 2025, he received the SSHN fellowship from the French Embassy to pursue research at Mines Paris-PSL.
