The Jeepney Phase-out Explained

The PUV Modernization program and why jeepney drivers and operators oppose it

INIGO ROCES

AT A GLANCE
● The Jeepney Phase-out is a major overhaul of how PUV franchises are granted and routes
are organized. The Jeepney Phaseout is just a small step in a larger plan called PUV
Modernization.
● It is a program that involves several phases: from phasing out old vehicles that are no
longer road worthy and emissions compliant; to scrutinizing and reorganizing routes,
franchises, and roles of the vehicles involved; to introducing new systems and standards
for vehicles that will serve the public.
● From the wide variety of public utility vehicles, it hopes to consolidate them into just four
standardized classes.
● Drivers and operators must form cooperatives or corporations and register with the
LTFRB to be granted a franchise. Each cooperative must have at least 15
● units of PUVs.
● The government has even prepared a financing package, called 5-6-7-8: 5-percent
downpayment; 6-percent interest rate; 7 years to pay; and a P80,000 subsidy per unit.

Over the past weeks, jeepney drivers, operators, and the government have been at odds over the
planned Jeepney phaseout in favor of more
modern public utility vehicles (PUVs). Originally conceived in 2017 and for implementation in
2020, the government initiative has been delayed numerous times due to multiple strikes from
the transport sector, the COVID-19 pandemic, and several reviews from the government.

Some critics think the problem is simply that the government is requiring jeepney drivers to pony
up for the new, more modern jeepneys. However, it’s not a simple matter of economics. It goes
much deeper than that. The program is a major overhaul of how PUV franchises are granted and
routes are organized. The Jeepney Phaseout is just a small step in a larger plan called PUV
Modernization. To get a better understanding of how it’s supposed to work, we detail all sides of
the issues here.

Why are jeepneys being phased out?

Jeepneys have been in operation in the Philippines for nearly 80-years now. Not surprisingly,
these vehicles have become an institution and are practically synonymous with the country,
serving as a cultural icon and symbol of ingenuity.
However, these vehicles are based on a nearly 80-year old design. Jeepneys were originally
adapted from World War II Willys General
Purpose vehicles (GPs: Jeeps) left by the American military during their occupation of the
country. It is derived from a portmanteau of the words, jeep, and jitney (vehicle that carries
passengers), hence the name. After the war, with much of the country in shambles and ruin,
enterprising Filipinos modified these vehicles to carry passengers, and serve as public
transportation, charging a small fare for a specified route.

The Jeepney has been in service in the country since the 1940s, and while many are no longer
built from original Willys Jeeps, the design has endured, with their chassis, body and
components adapted from different surplus truck parts. Its body panels are made from stainless
steel,
often embellished with decorations, murals, and the signature horses on the hood and visor and
crown over the windshield.

The only changes since the ’40s have been lengthening the vehicle to accommodate more
passengers and more complicated decorations.
However little else was done to make them more efficient, safer, or even more comfortable for
passengers. In addition, these jeepneys are run on individual franchises (one jeepney, one
franchise) that make them difficult to regulate and control.

As part of the government’s plan to provide better public transport, a new program was launched
to design and mandate the replacements.
Called the Public Utility Vehicle Modernization Program (PUVMP), it is a program that involves
several phases: from phasing out old vehicles that are no longer road worthy and emissions
compliant; to scrutinizing and reorganizing routes, franchises, and roles of the vehicles involved;
to introducing new systems and standards for vehicles that will serve the public. It was hoped to
be implemented nationwide by 2020.

PUV Modernization Program

The PUV Modernization Program is a government initiative designed to streamline and organize
the country’s public road transportation system.
Launched in June 2017, the program seeks provide safer, more-efficient and more
strictly-regulated means of transport for the riding public. Though commonly associated with
jeepneys, the PUVMP actually covers all modes of road-going 4 to 6-wheeled passenger
transport.

Why change?

It doesn’t take a genius to note that the current system is not working as efficiently as it should
be. Our roads are plied by a wide variety of public transport vehicles, many of which overlap in
terms of route, franchise, and service. At the very bottom end of the spectrum are the multicabs,
serving as mini-jeepneys and carrying many passengers over short distances. Then, there are the
jeepneys which serve a variety of routes
throughout cities in the country, be it from the farthest settlements to the nearest town or from
city to city. UV Express vans, which started as point to point transport services, have begun
operating like jeepneys, sometimes picking up passengers along the way. Higher up are the mini
buses which connect city to city, and for longer routes, sometimes across bodies of water are the
large buses.

Jeepneys have drawn a lot of ire from the government because of their poor maintenance, poor
safety record, and little to no recompense for
affected passengers if they get into accidents.

Dated design

The Jeepney, in its current form, features an extended wheelbase, now common practice in order
to accommodate some 18 to 26 passengers. The vehicle is boarded from behind with steps built
into the body in order to climb on board. These put passengers at risk of being hit by
vehicles from behind. Passenger seats are arranged facing each other, with no delineation for
personal space. It is difficult to stand upright inside. As such, passengers may have to bend to
walk toward the front. Often times, the jeepney is seen carrying far more than what it was
designed for. They are typically powered by surplus or second-hand Japanese diesel engines,
many of which are not very efficient, nor were they designed to meet modern vehicle emissions
standards. The fare is passed on by fellow passengers until it reaches the driver. As a result, the
driver typically juggles both driving, calculating fare, and returning the change, all at the same
time.

Boundary-motivated drivers

Because drivers earn on a boundary basis (meeting a target amount each day), many of them wait
to be filled before going on their route,
dramatically increasing the travel time for other passengers. This is exacerbated by the
driver-operator system where an operator (owner of the
jeepney) charges a daily rent or boundary that the driver must pay. Anything earned beyond the
boundary and fuel cost is the driver’s to keep. As a result, they often pile up on busy stops, yet
are hardly around to serve less popular stops or passengers further up the route. The fight for
passengers can also lead to drivers competing with each other, often racing from stop to stop to
pick up passengers, leading to accidents. Finally, because franchises are granted per driver and
vehicle, it becomes difficult to monitor how many vehicles are plying a route at a given time, let
alone catch those with forged or fake franchises.

How will it be fixed?

Many of these problems have been brought to the government’s attention, and as such, it has
banded together the concerned agencies: DoTR,
LTO, LTFRB, and DTI to come up with a solution. That solution is the PUVMP.

Standardizing shape and form

First of all, the PUVMP plans to organize the many modes of public transport. From the wide
variety of public utility vehicles, it hopes to consolidate them into just four standardized classes.
The DTI’s Bureau of Philippine Standards (BPS) together with the Truck Manufacturer’s
Association (TMA) has come out with a Philippine National Standard (PNS) for PUVs: PNS
2126:2017. It specifies dimensional limits for PUVs with strict limits on the seating arrangement
and capacity, as well as maximum mass. Also included in the dimensional limits are the vehicle’s
overall height, width and length, wheelbase and even front and rear overhang, cabin, seat and
seat layout, step board, service door and emergency exit. There is also an age limit that states no
part of the vehicle can be older than 15 years. In essence, these new PUVs have strict size and
capacity limitations, and the most efficient form within those limitations is a mini-bus.

These were formed so that PUVs will have a uniform size, prevent overloading, as well be
equipped with the standard safety features expected of a public transport vehicle.

Class 1 is intended to replace multicab passenger vehicles. Typically plying smaller cities around
the country, this class limits the size of the vehicle to nothing more than the average car,
requiring a side-loading entrance and limits the passenger capacity to just over a dozen.

Class 2 is intended to replace the jeepney, allowing for a maximum of 22 passengers on

side-facing seats, enough headroom for passengers
to stand in, and appropriate bars and handles to hold on-to. It too will require a side-loading door.

Class 3 is intended for inter-city transport, and is touted to replace the minibus. All passengers
must be on forward facing seats with restraints.

Class 4 is intended to connect rural towns to larger cities. It should have provisions for cargo, as
well as forward facing seats for all passengers.

Besides the class-specific requirements, all of them must be powered by a Euro-4 emissions
compliant (or better) engine or electric motor
powered by onboard batteries. With Euro-4 engines alone, TMA members have proven that their
prototypes are already 43-percent more efficient than the traditional Jeepneys. They should also
be equipped with dash cams, speed limiters, CCTV cameras and an automatic fare collection
system (so that the driver doesn’t have to manage giving change).

Consolidating franchises
To better control the number of vehicles plying a particular route, the government is instituting a
‘one route, one franchise policy.’ Drivers and operators must form cooperatives or corporations
and register with the LTFRB to be granted a franchise. Each cooperative must have at least 15
units of PUVs. No lone PUV operators are allowed.

The government is already in talks with several LGUs in order to scrutinize the current routes,
come up with new routes if necessary, as well as streamline any of the current ones.

This method has several benefits. First of all, the franchise holder is given a monopoly over a
particular route, without competition. By limiting the franchise to a group or coop, the number of
vehicles servicing that route can be limited and monitored. As such, any vehicles not part of the
coop that are plying the route can easily be identified and caught. In addition, it can also provide
additional jobs. Coops will not only need drivers as staff, but also a fleet manager, passenger
assistance officers, an HR officer, service technicians and a dispatcher.

Drivers are required to be salaried instead of earning through the boundary system. This way,
there’s very little incentive to wait for their PUV to be filled before proceeding. The driver is also
not allowed to drive for more than 12 hours to cut down accidents resulting from driver fatigue.
The coop can also organize stops and schedules, ensuring a PUV will arrive for passengers at a
particular stop at a particular time.

Distributing the workload

With a coop, the acquisition and maintenance of the PUVs can be taken on by the group. This
can dramatically reduce the financial burden of
acquiring a new vehicle as they can pool funds. The group can also take on the required
maintenance, quickly addressing problems when they happen. Any vehicles being repaired can
easily be replaced by another, ensuring the route continues to operate. Through this system, the
coop can practically double the amount of drivers, assigning 2 to 3 to a vehicle. However, any
violations with regard to the vehicles will be levied against the coop. As such, this gives the coop
an incentive to monitor its members and ensure its drivers are disciplined and the vehicles are
maintained. Finally, this fleet management method allows the coop to more closely monitor its
earnings. It can easily monitor how many vehicles are
plying a route and either hold or dispatch more vehicles when necessary. The electronic fare
collection system in the PUVs allows all the participants to share in the profit, regardless of their
shift. The coop can also earn additional income with advertising on their vehicles. Another
requirement asked of the coop is that they purchase or lease a plot of land of a certain size. This
lot will serve as their base of
operations, vehicle barn, service area, and parking when the vehicles are not in use. This is so
that these vehicles are not parked or repaired on the streets or sidewalks and end up clogging
roads. Through this system, the driver’s duty is to simply drive the vehicle, reducing the amount
of distractions and the risk of an accident. He is also monitored by a speed limiter, dashcam and
GPS tracking. Duties like collecting fare are done by electronic fare collection systems.
Passenger Assistance Officers at designated stops ensure the vehicle does not exceed capacity
and passengers are comfortable.

Easing the transition

The government was originally eyeing to have modernized buses, jeepneys, and public utility
vehicles across the country by 2020.
However, it has clearly been delayed. With regards to jeepneys alone, that’s a staggering
180,000-270,000 units according to various estimates, with 70,000 just within Metro Manila. In
addition, vehicles older than 15 years are no longer allowed to register as PUVs, ensuring a
steady stream of new and up-to-date vehicles. It hopes that by streamlining system, the PUVs
will complement the current modes of transport offered, reduce traffic, and consequently reduce
the need for private transport, modern public transport services like TNVS, and any colorum
transportation operations. To ease the acquisition of these vehicles, the government has allotted
the third slot of the Board of Investment, and Department of Trade
and Industry’s Comprehensive Automotive Resurgence Strategy (CARS) Program for PUV
Modernization. This allows the government, with the help of financial institutions, to grant loans
at low interest to those that wish to acquire the new vehicles.

The government has even prepared a financing package, called 5-6-7-8. It requires the Jeepney
coop to register with the LTFRB and show proof
of being a recognized cooperative. From there, they will be required to pay 5-percent
downpayment. Payments will be kept at a 6-percent interest rate, and take 7 years to pay. The
vehicle’s warranty is also hoped to be extended to 7 years long pending talks with PUV
suppliers, however it is currently at 5 years. Finally, the government will offer as high as an
P80,000 subsidy per unit.

There will be no single official PUV per class. It will depend on their use case. Since they are
standardized, the vehicles can be acquired from any of the participants of the PUVMP. This
ranges from big name manufacturers like Isuzu, Fuso, Hino, Hyundai, and Tata to coach builders
like
Centro, Santarosa and Almazora. The government is even open to proposals from small scale
builders, provided their vehicles can meet the standards outlined by the DTI.

Why the resistance?

Naturally, this plan is massive in scale and very complicated in nature. First of all, it overhauls
the very system with which drivers and operators have become accustomed to.

Price
Current drivers and operators are already being urged to surrender their franchises as soon as
possible. In return, the government will provide them financial assistance to acquire a new
vehicle or even support them if they plan to seek a different profession.

The PUVs themselves can be quite expensive, ranging from P1.6 million, to as much a P3
million. The claimed P2.6M price tag is for a battery electric version, which is also approved, but
not required. However, these vehicles are already compliant with the government regulations and
will easily pass any inspections required of them. Granted it’s a lot of money, but the new
vehicles are made with all brand-new parts instead of used or surplus material. They are also, by
comparison, leagues more efficient and reliable than the original jeepneys they are replacing.

The government is also studying a ‘Cash for Clunkers’ program, similar to what was instituted in
the USA, granting those who volunteer their old PUVS for scrapping to earn a certain amount to
buy a new vehicle. However, because of the dilapidated nature of some of the jeepneys, there is
little that can be offered above their scrap value as much of the parts cannot be re-used anymore.

Another issue is acquiring the physical plot of land for the coop. Since this needs to be near or
within their area of operations, the lot can get quite expensive if the coop operates in a very
developed area where land values are high.

Paperwork

Perhaps the toughest resistance is from PUV drivers and operators in this occupation for several
generations, and used to the one franchise per operator system. In many cases, the jeepney has
been passed down from father to son, serving not only as a means of livelihood but as a family
heirloom as well. This is well and good for personal vehicles, but is problematic for a public
transportation vehicle that has to meet safety and emissions standards, as well as an age limit of
15 years.

Forming a coop is also challenging for these drivers and operators. The LTFRB requires
paperwork like incorporation papers and a business plan, of which many of them have little
knowledge of how to create and plan. Like any corporation, this requires the selection of a board
of directors, roster of members, shares, regular meetings, minutes of those meetings, and proof of
accounts and funds. Thankfully, some PUV suppliers are
already going the extra mile and assisting them with the paperwork in order to meet orders.

Those forming a coop have been finding trouble getting their loans approved by banks because
of a lack of a viable business plan that will ensure the coop will be able to pay back the loan. In
addition, the banks require that the coops do not have drivers or operators with problematic or
even criminal records in their board.
Once granted a loan, some coops are opposed to the idea that the bank will collect the earnings
first, subtract its payments, allot the budget for vehicle maintenance, and then disburse the
salaries last.

How can they afford it?

With the burden of purchasing both the vehicles and lot put on the cooperatives, it’s easy to see
how the amount can be daunting for those who want to make the switch. It can easily amount to
tens of millions to meet the requirements. However, besides acquiring loans from banks, there
are many ways to supplement this massive cost.

The government is allowing advertising on these vehicles. As such, coops can approach
Out-of-Home or Below-the-line advertising agencies for
some possible funding in exchange for advertising rights on their vehicles. These provide the
advertising companies with rolling billboards while the coops can have additional funding to
acquire the vehicles and maintain them.

The coops can also approach property developers such as SM, Ayala, Megaworld, and the like,
or their LGUs and find a way to lease a small parcel of land on their large commercial
developments to serve as terminals. After all, terminals attract foot traffic and many of these
passengers may be encouraged to shop at the nearby malls before or after their ride.

There are also angel investors and corporations who may see investing in transport cooperatives
as a viable investment or CSR program. However, some cooperatives may not be favorable to the
idea of an individual or corporation having a seat at the board of their coop and influencing some
decisions.

Endure old jeepneys or upgrade?

Granted, it’s unfortunate that jeepney drivers and operators are made to bear this massive
reorganization, but the safety of the commuting
public is of primary importance. The Jeepney Phaseout / PUV Modernization has already been
delayed by years, forcing commuters to continue to endure these vehicles longer than initially
planned.

It is a long a bumpy road, and with the continued resistance against the Jeepney Phaseout this
year, it appears there’s still a long way to
go. Nonetheless, the prospect of a more organized, efficient, and possibly even greener means of
transport is already on the table.

Are the government’s requirements too much? Do you believe the resistance to the jeepney
phaseout is justified?