Profits Soar for Bus Companies in Brazil

By Maria Lopez Conde, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Just two months after protests over an increase in bus fares led to a widespread demonstration movement across Brazil, numbers from the Secretariat of Transportation in São Paulo have shown that bus companies that operate lines in that city have seen their net profits increase by up to 2,056 percent between 2011 and 2012.

For one firm in the large metropolis, Viação Santa Brígida, as O Globo reported based on statistics from the Municipal Secretariat of the Transparency and Social Control Forum of São Paulo, financial statements from the two years showed net profit had risen from R$340,735 in 2011 to R$7,346,690 in 2012.

Viação Campo Belo, which services area seven of São Paulo, had an 896 percent increase in profits, rising from R$3,981,603 to R$39,680,300 in 2012. Transpass, in area eight, saw its net profit grow by 165 percent in just one year. For Cidade Dutra, which operates in area six with Santa Brígida, 2012 net profits went up to R$2,507,074 from R$1,065,093 in 2011.

In São Paulo, an sprawling city with over eleven million people, public transportation bus lines are operated by government concession holders and supervised by São Paulo Transportes, known as SPTrans, an autonomous organ that coordinates mass transit on wheels in the city. In Brazil’s financial capital, up to six million passengers ride the city’s buses per day, says the mayor’s office.

In São Paulo, the system is operated by sixteen consortia, formed by companies and cooperatives, responsible for the operation of 15,000 buses and more than 1,300 lines. According to SPTrans, these companies’ profit margins are around R$400 million per year.

These startling statistics come amid concerns over the cost and quality of public transportation in major Brazilian cities. In June, outrage over a R$0.20 hike in bus fares in São Paulo, Rio de Janeiro and other cities across the country sparked a wider demonstration movement calling for proper mass transit offerings, as well as adequate health care and education.

In that same month, São Paulo’s city council discussed the creation of a Parliamentary Commission of Inquiry, or CPI, to investigate bus concessions and determine the origin of bus companies’ profits, as well as their actual costs. At the time, the mastermind behind the bus CPI, Ricardo Young had said the “black box of concessions needs to be open” so that the government could delve into the “vices” of the system.

In Rio de Janeiro, the implementation of a CPI into buses has been marred by incessant protests, controversies over its leadership and arrests, with demonstrators occupying the city council in Centro for over ten days.

Mayor Eduardo Paes, who has said to be “neither for or against” the CPI and has been criticized for his political party’s heavy representation in the commission, vowed to abide by its conclusions.

“I have already participated in CPIs as opposition, and even if there are councilors on your side, the CPI is an instrument that allows us and everybody to access confidential information. If there is wrongdoing or corruption, that can be open. I’m going to respect the council’s decision,” Paes said last Thursday.

Some of the irregularities, according to an O Globo report, might stem from the fact that the operation of public transportation in half of Brazil’s capital cities is not distributed through a formal bidding process. Mass transit in 26 cities, including Brasília, is controlled by companies which gained authorization to operate decades ago, but never went through a public auction.

Their study also revealed that 49 bus line companies and seventeen businessmen that operate bus lines have around a R$2.8 billion debt with Brazil’s federal government, which have not prevented them from obtaining further bids.