In a regulated bus system operated by private companies, pecuniary incentives can be of primary importance to ensure the quality of the operation and the level of service, especially when there are only a few companies and basically no competition among them. The case of Transantiago, in the capital city of Chile, provides a good example of this. The very ambitious Transantiago project, implemented in 2007 in Santiago, integrated the bus and the subway systems, changing the route structure of the bus services, introducing a common and integrated fare system and electronic payment device, and tendering the operation of approximately 4,600 buses (which by the launch of the system in February 2007 had increased to 5600) to 10 private companies replacing some 4000 small operators which owned 8000 buses. In the beginning, the system faced huge difficulties. Operators' revenue formula basically consisted of a fixed payment, which changed slightly with the actual patronage. This quickly turned out to be a problem, and as technological support became available (several months after the launch), compliance measures were implemented, directly affecting the operators' revenue. The first measure considered the seat/standing places per hour of the buses in operation, for each company, and compared it to the theoretical figure. As a result, buses operating during peak hours increased from 4600 to 5600 in just two months. Subsequent indexes included service frequency and regularity, as well as effective bus-km, aggregated by company first and later by service. This paper shows how the successive implementation of these performance indexes had an impact on the operation of Transantiago in the first years, discusses the difficulties faced to implement them and highlights the importance of technological support to make possible the application of adequate compliance measures.
