Gustavo Cárdenas
National Chamber of Passenger & Tourism Transportation (CANAPAT)
View from the Top

The Backbone of Mexico´s Connectivity

Mon, 09/01/2014 - 11:39

Q: What prompted the creation of the National Chamber of Passenger & Tourism Transportation (CANAPAT) and what are its main goals?

A: CANAPAT was founded in 1989 but it used to be part of the Chamber of Transport, which included both freight and passenger transport. Due to differences in operations, client base, and products, these two segments were then separated. CANAPAT was created as a result of this separation, in order to specifically tend to the needs of the passenger carrier segment in Mexico. CANAPAT’s objective is to represent all formal companies that are dedicated to this segment, with the purpose of taking all their concerns and projects to the government. This chamber stands as a consulting board where the government can obtain information to determine which projects to develop in the sector. We cover approximately 600 companies, representing a vehicle park of close to 25,000 units. This quantity represents just over 95% of formal companies present in the sector in Mexico, as almost all established entities are part of CANAPAT.

Q: In what ways has the passenger carrier segment been developing?

A: It is a fact that 97% of people in this country use the bus as their preferred mode of transportation. This segment is the spinal cord of transportation in Mexico and represents an intense and massive market compared to other countries that may see trains, cars, or planes in stronger positions. In recent years, the Mexican market has been seeing more vehicles equipped with better technology. There are many companies that started out as SMEs but have now expanded in size. 100% of the companies affiliated to CANAPAT started out as owner-operators. Today, the strong competition that exists within the market has resulted in the introduction of many vehicle modifications that are designed to capture market share. Buses in Mexico have a host of features including but not limited to Wi-Fi, luxury reclining seats, individual entertainment centers, and meals. The level of sophistication and maturity in this market is unique.

Q: What are the main priorities on CANAPAT’s agenda and how do these address the concerns of your members?

A: Our main priority is to help the industry adapt to the implications of the Fiscal Reform, as this has had a strong impact on the segment. The main issue is that we cannot pass the impact of the new 16% VAT onto passengers, as the public is not receiving an increase of 16% in its income. Therefore CANAPAT’s members are trying to become more efficient in terms of technology and training in order to reduce costs. If the brunt of the cost is passed on to the passenger, then companies will lose clients. People will never stop moving, but they will migrate to another mode of transportation and might even opt for informal companies that use unsafe vehicles and do not pay VAT. The Fiscal Reform is almost counterproductive, given what the government wishes to achieve. To an extent, it will allow authorities to gain more control over the market, but many people will opt for alternatives, which in turn will favor irregular companies.

Q: What strategies can be implemented to mitigate the impacts of the reforms?

A: The three main pillars to address are companies’ operational efficiency, costs reductions, and the implementation of technology. Fuel efficiency is a priority, as well as the availability of spare parts for the maintenance of the units. While trends in the automotive industry are focusing on alternative forms of fuel, with regards to passenger carriers there is no fully developed technology that can replace the current form of fuel. This is largely because our segment handles medium to long distances and natural gas is not a viable alternative for that right now due to the lack of infrastructure.

Q: What strategies does CANAPAT implement to push for the formalization of informal companies?

A: An important factor to consider is that the informal market within the passenger carrier segment is double the size of the formal market. This situation will never cease to exist, so CANAPAT must work with the government to let that particular market evolve. We share the same roots and origins as the informal market players, as we all began as single owner-operators. The evolution began when single owner-operators formed groups that then became licensees and then societies. This is the only existing path that will carry these companies from informality to professionalization. The government should offer incentives so that these informal companies discover being formal leads to better business.