1. Public Transport Organisation and Policy: summary of year three findings Laurent Franckx UTBI, Final conference, 16 June 2006

2. Launch workshop year three Working group decided to pursue three topics: Diversification of revenue sources Fare Policy Strategies to reduce costs of operations Approach: less important to focus upon the collection of the data and the comparability of quantitative indicators pursue exchange of good practices use each site visit to focus upon one of the three issues include information about good practices from outside the group

3. 1st meeting (Rotterdam, 5-6 January 2006): Fares policy and ticketing system Decision making process regarding fare policy? Objectives of fare policy? Criteria used for the fixation of fares (with distinction by mode if applicable)? What is the fare structure (geographical, modal, by operators)? What is the level of integration or differentiation between modes? (How) are revenues shared between modes and operators? Plans concerning the use of smart cards?

4. Decision making process Completely free, but with some supported routes Operator proposes, authority has final say : Local Both local and central Central government only

5. Objectives Mostly vague (“increase market share for PT”, “preserve balance revenues/costs”) Germany: PT is both economic service and service of general interest Northern Ireland: move from maximising of revenue to maximising of patronage

6. Fare integration Full integration across modes and operators (Brussels) Gradual move to fare integration (Bucharest) Germany: – most organizing authorities have integrated fares for all modes of PT –objective: nationwide system Why not full integration: –Dublin: cost issues… who pays (operators, Gov, fare increases) – Northern Ireland: differing fare structure policy of 3 companies – Merseyside: competition law (Single/return tickets) but fully integrated season tickets

7. Fare structure Zonal systems (most German systems/Merseyside season tickets) Flat fare, limited in time (Brussels) Flat fares with zones (Belfast) Distance traveled (Ulsterbus, Dublin, single/return tickets in Merseyside) Different systems according to operator (Northern Ireland, Merseyside)

8. Smart cards Advantages: – Possible solution to the problem of revenue allocation – Important input to management information –Fare dodging – allows for a differentiated fare policy –Security reasons Most cities have implemented system or have concrete plans Nationwide system is being implemented in Netherlands Germany and UK: discussion on nationwide system

9. 2nd meeting (Berlin, 13-14 March 2006): alternative sources of revenue Revenue sources (subsidies, compensation for public service obligation, tax exemptions, earmarked taxes, land value capture, advertising, supply of services) Funding of exploitation versus funding of investment Public-Private Partnership Government funding: conditionality rationale Coherence with regulatory responsibilities? Debt finance

10. Public subsidies In all networks discussed: –For PSO requirements –Compensations for concessionary fares (in Germany: not considered to be subsidy) In some networks: capital grants Can be implicit: –Fuel tax rebate –Government guarantee for borrowing Particularity in Germany: only for new investment, not maintenance

11. Earmarked taxes No earmarking of taxes at all Several operators and OA are in favor Congestion charging: Even if not earmarked, leads to increase of speed of PT (and thus improved attractiveness)

12. PPP Not widely used Possible advantages: –Technical efficiency –Avoids annual budgeting –Risk transfer Disadvantages: –Higher cost of borrowing –Binding long run contracts

13. Other sources of revenues Land value capture: Used in UK (very limited –section 106) and Ireland (but not Northern Ireland) Cross-subsidies: important in Germany Advertising Services: car parking, hire of busses, car maintenance, use of PT infrastructure by telecom firms European Regional Development Fund (Merseyside) Borrowing (very limited): Bucharest: EIB Translink: no bank loans/bond issues but overdraft facility Merseyside: prudential borrowing can be used

14. 3rd meeting (Brussels, June 6): cost reduction strategies For organising authorities : –How to provide incentives for cost reduction without affecting other desirable objectives (environmental performance, public service obligations, quality, safety,...) –main obstacles to innovation –How to measure cost efficiency –Use of incentives based on comparative performance For operators: impact of costs of: –human resources management –fleet management, and in particular maintenance –energy costs –Information technology –main regulatory obstacles

15. Authority’s viewpoint Commercial network relies on competitive pressure to drive down costs BUT: problems with market imperfections: high barriers to entry Contract can provide quality incentives and leave revenue risks to operator With vertical disintegration: track, signalling not controlled by operator Authority could impose technological innovation (smart cards, light rail material on heavy rail infrastructure, BRT)

16. Issues in tendering Open market tendering for concessions should improve cost efficiency BUT: –High cost of tendering; few candidates –Cost accounting: measurements methods, definitions, –Information sharing with decentralisation and tendering

17. Sources for cost reduction Transport Operator factors –Minimise staff levels without adverse affect on quality –Sub-contracting –Performance Monitoring Drivers' training (quality) –Reduce Absenteeism –Multi Tasking (especially in engineering) –Keep average fleet age low (6 years?) –Warranty policy –Focus on accident and third party claim reductions –Budget meeting and strict policy on price comparisons –Benchmark to other Operators Operator and Authority Factors –Improve bus speeds (Quality Bus Corridors and BRT) –Faster Passenger Boarding –Seasonal schedules to reflect changing speeds, demand

18. General conclusion Wide variety of approaches, highly dependent on regulatory context There is no single best approach Best practices should suit local requirements However: –some potential has remained untapped –Ongoing informal dialogues between practitioners is essential for dissemination of experience –Change is a long-term issue