Fixed Cost Intensity and Its Implications on the Operational Performance of the Sri Lanka Transport Board

Abstract

The Sri Lanka Transport Board (SLTB), the state-owned bus operator in Sri Lanka, is found to have effectively served the purpose of social inclusivity and welfare service provision over the years; but, has failed in achieving financial viability, evidenced by its heavy debts. This paper presents the findings of a research in which the fixed cost management of SLTB and its relationship to structural parameters and to bus depot operating performance were studied. An intra-organisational examination was performed using cost data for the year 2014, adopting statistical methods such as trend evaluation, regression, outlier identification, and comparison of deviations. The results confirmed the presence of economies of scale and the possibility of operating at an optimum bus-depot size, worked out to be at around 145 buses. A large majority of depots in Sri Lanka were found to be much smaller than this optimal depot size, likely for political reasons.