Incomplete contracts for bus service during the covid-19 pandemic

Abstract

The COVID-19 pandemic poses serious challenges for the public bus service. The fall in demand due to social distancing measures, the intensification of hygiene procedures, the acquisition of personal protective equipment, and restrictions on vehicle capacity threaten the financial viability of Brazilian public transportation. The COVID-19 pandemic may be characterized as a force majeure event, giving rise to an economic-financial balancing of public bus service contracts. However, this solution must be built by the public administration and transport companies to guarantee the interests and needs of both parties. Therefore, this article offers strategies to continue operating the service during the pandemic and to achieve economic and financial equilibrium protecting the public interest. Overcoming the uncertainties and consequences caused by the pandemic requires relationships of trust and mutual support between the private sector (operators) and government.