ISET Economist Blog

Yellow Moving Saunas in the Streets of Tbilisi: A Tragedy
Friday, 19 July, 2013

Tbilisi public transportation resembles a classic Greek tragedy. In those pieces, usually, the gods interfere with human affairs and create a big mess. In Tbilisi, marshrutkas were operating in a competitive market and state intervention led to the creation of a monopoly. In Greek tragedies, once the fateful events have started, the tension increases more and more until the story reaches its climax – the showdown between the hero and his adversary. In the Tbilisi marshrutka business, the prices increase more and more and, while the quality of service remains insufficient, also here the conflict between the two protagonists reaches its climax. The main protagonists are the passengers and their drivers: their relationship oscillates between hatred and sympathy. Why? Because it is the marshrutka driver’s decision whether the air-conditioning is switched on or not, and he has strong incentives to leave it switched off.


In 2011 Tbilisi city hall decided to intervene in the working of the public transport market. It announced a public tender for the right to transfer passengers within administrative boundaries of the city for the next 20 years. Four companies prevailed in this competition and divided the city’s territory among themselves. Yet after one week, all four companies had transferred their concessions to one company – Tbilisi Minibus, creating a solo player in the market.

Before 2011, Tbilisians enjoyed a competitive market with low service quality but even lower prices. Routes were established based on demand, private individuals were owners of the routes which were freely tradable in the market. Costs of marshrutka tickets were varying from 30-50 Tetri, and these prices were stable across many years. Product quality in most cases was miserable, with conditions inside the minibusses like in Hades. But the offered product corresponded to the price. It was just a price-quality trade-off.


Once the government had acted, a sequence of fateful events took place. First of all, the previous minibusses were replaced by new yellow ones. Then the prices went up to 80 and 40 tetri, depending on the route length. Routes were abolished and combined, so the overall quantity of different routes went down. All this was justified by the representatives of Tbilisi city hall and Tbilisi Minibus with quality and safety arguments. Tbilisians really witnessed an improvement in the quality of transportation, but does this outweigh the price increase?

Casual observation exposes that passengers are more and more dissatisfied with the traveling conditions. Paying so much creates an expectation for appropriate quality. There are a couple of problems, like drivers who let too many passengers enter their marshrutkas. Particularly sharp disputes mainly arise about the air-conditioning. Passengers demand it, while some drivers refuse to turn it on, complaining that it requires much more fuel. Some turn it on and some, who are lazy to engage in arguments, just tell that the air-conditioning is defective. When minibus drivers complain about their high costs, people become sympathetic towards them. You travel for 40 minutes in a yellow moving sauna, while they are in this oven for the whole day, and yet they prefer to leave the air conditioning switched off. Their everyday earnings must be really small!

What does Tbilisi Minibus do in order to ensure high quality? First of all, they claim that during the summer the daily fees drivers have to pay are decreased because additional fuel for air-conditioning is taken into account. Moreover, by their regulations, drivers are obliged to turn to air-conditioning when customers demand it. If the company receives complaints from passengers about a particular minibus driver, indicating the route and the number of the minibus, the driver will be reprimanded. If this happens repeatedly with the same driver, he loses his job. Yet these incentives seem to fail. Passengers are not informed about the complaint channel, and only a few customers are willing to make additional efforts to search for the company’s hotline and complain. And some are just sorry for the drivers and do not want them to lose their jobs.

Recently, Tbilisi Minibus started to place its hotline number in some minibusses. So people can directly call the hotline with their mobile phones when caught in overheated marshrutkas steered by a stubborn driver. It is interesting to track if this new policy helps. According to casual observations, drivers who have this number displayed next to them do not refuse to turn on air-conditioning.


There is no doubt that the monopolization of the market came along with some positive changes as well. Now Tbilisians can pay with plastic cards which are convenient, the time loss during the payment is reduced, and there are even some discounts. Also, the information on the marshrutka routes is now centrally provided – one can visit the website of Tbilisi Minibus and find information on the routes and their working hours. Yet are these positive changes enough to compensate for higher prices?

Tragedies do not have happy ends, and responsible is the unresolved air-conditioning problem. Whatever measures Tbilisi Minibus has implemented so far – the air conditioning is switched off in too many marshrutkas. Tbilisi Minibus does not find it necessary to spend extra money for setting up a functioning monitoring system. The message brought across by this tragedy is that killing competition kills incentives to develop.

The views and analysis in this article belong solely to the author(s) and do not necessarily reflect the views of the international School of Economics at TSU (ISET) or ISET Policty Institute.