LOCAL PUBLIC TRANSPORT: PRELIMINARY SYNTHESIS REPORT ON THE EXISTING MATERIAL

1. "SERVICES OF GENERAL ECONOMIC INTEREST IN EUROPE: THE CASE OF LOCAL PUBLIC TRANSPORT, WATER AND WASTE"CIRIEC's Scientific Commission "Public Services/Public Enterprises"Paris , April 30, 2010 LOCAL PUBLIC TRANSPORT:PRELIMINARY SYNTHESIS REPORT ON THE EXISTING MATERIAL Andrea Zatti Dipartimento di Economia Pubblica e Territoriale Università degli Studi di Pavia Research carried out with the contribution of the Italian Ministry of Education, University and Research (MIUR) – PRIN 2008

2. Foreword • The aim of the project is to evaluate if the recent evolution of different models of organisation and supply in local public services has influenced the capacity to pursue the general interest • Topics to be investigated: • If and which new organization and governance modes emerged in case studies • The evolution of the main sectoral indicators in the last two decades (cost-recovery ratios, tariffs, accessibility, quality, etc) • If a trade-off between profitability and efficiency vs. general interest arose • Need to exploit the uniform framework established by the research project

3. The EU Umbrella: White paper-September 2001 • Summarises the main objectives of the EU Commission in the transport sector: • “to guarantee safe, efficient and high quality passenger transport services through regulated competition, guaranteeing also transparency and performance of public passenger transport services, having regard to social, environmental and regional development factors, or to offer specific tariff conditions to certain categories of traveller, such as pensioners” • Main underlying elements: • - passenger transport services are considered a service of general interest where the economic performance should be outweighed with social, environmental and regional development factors; • - regulated competition is envisaged as a key opportunity to meet all the (potentially conflicting) objectives of passenger transport services: efficiency, reliability, affordability, etc.. • - distortions of competition should be avoided in awarding excusive rights to public service operators.

4. The EU Umbrella: Regulation 1370/2007 (1) • Provides clear definition about “public service operators”, “direct award”, “public service contracts”…. • Openly recognises the “general interest” in transport services since “many inland passenger transport cannot be operated on a commercial basis. Thus competent authorities of the Member States must be able to act to ensure that such services are provided. The mechanisms that they can use to ensure that public passenger transport services are provided include the following: the award of exclusive rights to public service operators, the grant of financial compensation to public service operators and the definition of general rules for the operation of public transport which are applicable to all operators”.

5. The EU Umbrella: Regulation 1370/2007 (2) • Recognises that “the introduction of regulated competition leads to more attractive and innovative services at lower cost and is not likely to obstruct the performance of the specific tasks assigned to public service operators” • But • Permits freedom of choice (unless prohibited by national law) for local authorities among three organisational forms: • Internal department • Legal distinct entity over which the competent local authority exercises control similar to that exercised over its own departments (“in house” Judgement Teckal, 50, but 100% ownership is not a mandatory requirement) • Competitive tendering to a third party

6. The EU Umbrella: Regulation 1370/2007 (3) • Makes direct award possible even (if national law permits) for • Railways • “De minimis” < 1M€ or < 300.000km of service • SME (< 23 vehicles) < 2M€ or 600.000km of services • “Urgency” • Limits the action of the in-house operator within the territory of the competent local authority • Applies detailed rules on compensation according to the Altmark criteria (C-280/00) • Enters into force in December 2009 and with a long transitional period (10 years)

7. Available national reports BELGIUM

8. Available national reports AUSTRIA

9. Available national reports ITALY

10. Available national reports SPAIN

11. Available national reports FRANCE

12. Legal framework

13. Definition, planning of services: main findings • Public administrations are in charge of providing urban public passenger transport services in all the national experiences considered: strategic responsibilities are therefore still in the hands of public authorities and no full liberalisation process occurred in case studies considered • Private transport companies can take the initiative and apply for a license as far as profitable (i.e. not subsidized) interurban links are concerned in Italy and Austria, but without jeopardizing established transport operators • Increasing attribution of organizational and financial responsibilities to regional and local authorities, while national governments still retain an important role to finance the social goals of services as well as large infrastructures • Development of cooperative arrangements (Public Transport Authorities in Spain, Transport Associations in Austria, Agglomeration in France, Transport Agencies in Italy) to integrate transport services and to guarantee administrative coordination

14. Cooperative arrangements in selected countries AUSTRIA. Local and regional public transport in Austria is organized nationwide into Transport associations. A transport association is a contractual, supra-local cooperation of territorial bodies and transport companies. Territorial bodies on the one hand negotiate founding and funding contracts among themselves and on the other hand enter into transport service contracts with transport companies operating in the respective area. FRANCE. Only 21,2% of the urban organising authorities are communes working alone. The other organising authorities are mainly made up of several communes(agglomeration). The urban public transport is one of the most important topics of intercommunity cooperation. SPAIN. an increasing role is acquired by “Public Transport Authorities” as an instrument trying to overcome the dysfunctions generated by the current pattern of distribution of responsibilities among different authorities. Public Transport Authorities have emerged , on the basis of inter-institutional dialogue, as transport management independent agencies in the main urban agglomerations of the country. Partners are mainly local authorities, but the presence of regional governments is also very wide. The number of PTA increased from 4 to 18 between 1997 and 2007. ITALY. In several urban areas intercommunity cooperation has been voluntarily developed so that a single service provider covers numerous municipalities. There are still some cases (Rome, Genoa) where only the main municipality is served.

15. Organizational forms AUSTRIA

16. Organizational forms BELGIUM

17. Indirect tendering in the Flemish region An alternative to competitive tendering?

18. Organizational forms FRANCE

19. Organizational forms SPAIN

20. Organizational forms ITALY

21. Trends in liberalisation and privatization

22. Organisational forms: main findings (1) • Formal privatization and the adoption of public service contracts (public service obligation) have been substantially completed everywhere: providers are now commonly stock-option companies tied to the competent local authority by a contractual scheme that define the obligations with which they are to comply and the amount of the resulting compensation • Coverage of regulated competition has been highly incomplete (France out Ile de France, 20% of the Italian network) • Direct award to public owned companies is still the prevailing organizational forms in all the main urban areas considered: Wien, Bruxelles, Rome, Milan, Paris. • Presence of private operators relevant only in France (out of the Ile of France) and as subcontractors in Belgium

23. Organisational forms: main findings (2) • The separation of roles is still weak and opaque Il y a ici un conflit d’intérêts qui pourrait nuire au souci de la performance dans l’exécution des tâches de service public et à l’autonomie de développement de la société. Ce double rôle du gouvernement lui donne la possibilité, en tant que propriétaire de l’entreprise, d’intervenir dans les décisions et la gestion de l’opérateur. Si cette intervention dans les affaires de l’exploitant venait à se manifester réellement, le contrat de gestion perdrait à nouveau son caractère incitatif. (Goethals p. 8) Tendering by steering committees is problematic, as local territorial governments are usually the owners of both the steering committee and the transport companies. Conflicts between the owner and principal function (Loser p. 7) The incentive to effectively manage contractual arrangements can be strongly weakened by the confusion of roles between the controller and the controlled, typical of a situation where the former is still the owner of the latter (Zatti, Osculati p. 26) The too local approach to regulation, frequently influenced by the strict existing relationship between the buyer/regulator and the incumbent provider (the former special enterprise transformed into a stock option company), has undermined the credibility of auctions, making difficult for most efficient operators to expand beyond their regional (and even national) borders (Zatti, Osculati p. 28).

24. Organisational forms: main findings (3) • Continuous differences both in the structure as well as in the regulation of public services in the five countries included in our comparison • It’s hard to speak about liberalization and marketisation as far as LPT is concerned • Prevalence of local monopolies and very low territorial mobility of providers (not in France) • Two other emerging features from case studies “corporatization”: i.e “a systematic shift in the legal form of public-service companies. While previously part of the public administration and then autonomous public companies, most of them have been converted into private-law companies” (Italy, Austria, Belgium). “economisation”: i.e. changes in funding schemes and stagnating or only slowly growing public budgets (harder budget constraints and increasing opportunity cost of public funds)

25. Production efficiency Few and limited data in the national reports • Unitary costs and revenues/veh-km regarding urban bus servicesin Spanish metropolitan areas are available (2007) but with no temporal trends • A single value (km/employee) is included in the French report for a single year • Increasing supply with decreasing employment in Wien (qualitative information) • Declining productivity in Belgium since 1997, but: “On peut supposer que la productivité exprimée par Equivalent Temps Plein est restée relativement stable dans le temps »

26. Production efficiency: Italy

27. Employment and wage bargaining (1) • Austria • 13% of employment reduction in Wien from 1996 to 2007 • Privatization of public employment with the corporatization of former public entities • Different forms of employment within the same public company ran under private law • New employees who are no longer employed under public law have to accept wages which are about 13% lower than those of their co-workers hired before the spin-off • Publicly owned companies incur 30% to 50% higher labour costs than private companies

28. Employment and wage bargaining (2) • Spain • Number of employees in land sector in 2006, but without a temporal trend • % of temporary employment in the same year • Belgium • Increasing number of employees from 1996 to 2007 in the three main providers (La reforme n’a donc pas eu d’effets en termes de reduction du personnel) • Increasing number of part-time employees • Trade Unions have mostly been able to guarantee similar working conditions for employees at the incumbent and the new competitors through the established systems of sectoral coordination (PIQUE PROJECT). “The personal of the private operators [sub-contractor] has the same statute as the personnel of “De Lijn” [public monopolist]

29. Employment and wage bargaining (3) • Italy • Number of employees decreased until 2003, but started to grow again in the period 2003-2007 • Wage and time flexibility for new workers employed have been exploited to limit labor costs • In the case of a change of public service operator, it is required to the new provider to give (“however viable”) the existing staff the right to a job and under the same contractual conditions as before • Disparities between public and private enterprises wage costs (around 10%) are mainly due to the different salary schemes of existing workers and not to different labor costs of the same workers • Public owned companies (in house) have been recently obliged to hire new employees through open competition

30. Financing (1)

31. Financing (2)

32. Financing: Italy Minimum ratio of 35% required by the national law

33. Revenues (€ x1000 seats-km) Costs (€ x1000 seats-km) Fares and commercial revenues/ operative costs Productivity 1000 seats-km/ employee Total (a) Public subsidy (b) (b)/(a) Operative costs (c) Labor costs (d) € % tot costs Genova 39.7 21.4 53,9% 37 29.9 77 49.6% (+13) 1,469 (+25.7%) Firenze 35.8 20 56% 36.3 25.5 70.1 47.5% (+3) 1,673 (+13.6%) Bologna 43.1 22.2 51.6% 42.2 21.8 51.7 57.9% (+9.4) 1,749 (-7.5%) Milano 30.3 13.5 44.8% 30.3 17 56.1 61.5% (+4.7) 2,600 (+2.1%) Brescia 36.2 19.1 55.3% 35.6 20.3 57.2 49.7% (+6.6) 2,079 (+13.8%) Torino 34.3 20.3 59.3% 32.6 23.8 73 55.1% (+11.6) 1,744 (+2.5%) Napolib 54.5 44.2 81.1% 67.4 42.5 63 16.4% (-2.5) 993 (-10.2%) Romab 37.3 23.2 62.1% 40 23.9 59.8 40.7% (+2.8) 1,752 (+1.2%) Av. 2003 33.2 19.8 58.6 36.1 21.9 60.1 43.4% 1,897 Av. 2007 36.2 20.9 57.8 37.8 23.2 61.4 49.2% 1,968 (+3.8%) a Data for 2007. Between brackets: difference 2007/2003. b Data refer to all the operators of the transport basin. Financing: Italy

34. General accessibility

35. General accessibility: Belgium

36. SUPPLY DEMAND National data Variation % of seats x km 1995/1990 Variation % of seats x km 2006/1995 Variation % of pax x km 1995/1990 Variation % of pax x km 2006/1995 Buses Of which Urban buses Interurban buses -2.1 -8.8 +4.6 +10,1 +18,2 +3 -6.7 -10.9 -3.9 +11,6% +13,6 +10,8 Trama -5.2 -9,4 -27.4 -5,5 Metrobc +29 +21,1 +58.3 +21.4 Case studies Variation % of veh x km 2007/2003 Variation % of pax x km 2007/2003 Genoa Total -5.4 (-1.7 seats x km) +5.8 Florence Total +26.8 (+29.6 seats x km) +11 Bologna Total -0.7 (-2.7 seats x km) +4.7 Milan Total +5.1 (+5 seats x km) +4.3 Brescia Total +26.2 (+15.7 seats x km) +22.4 Turin Total +10.9 (+9.2 seats x km) +8 Rome Total +5.4 (+1.8 seats x km) +14.7 Naples Total -16.6 (-23.2 seats x km) -5.3 All case studies Total Surface services Buses Tram or similar Metro +4.6 (+3.4 seats x km) +1.7 +7.4 +17.8% +10.5 General Accessibility: Italy

37. General accessibility: main findings • Even in a period of restraints in public spending and of selectivity in the field of intervention, there is no overall evidence of public authorities withdrawing from the provision of LPT; on the contrary, a moderate increase in supply (Italy and Belgium), which has reversed the trend previously experienced, can be observed • Even demand trends show some encouraging signals, with a turnabout in pax-km in the new decade with respect the previous period • A Structural recovery in modal split by LPT is still far away and needs more convincing Traffic demand measures The combination of “pull and push actions”is to be seen as a necessary feature for urban transport policies to be effective and, at the same time, acceptable “on voit ici la necessitè de penser la mobilitè da maniere globale” (Goethals p. 16)

38. Fares and social accessibility (1)

39. Fares and social accessibility (2)

40. Fares and social accessibility (3) • The recent trends in some cases (Italy, Spain, Bruxelles) do not apper to be completely consistent with the social role attribuited to LPT. • But prices do not emerge as the main critical element in LPT attractiveness, while social issues can be largely met by special tariffs According to the Eurobarometer Survey on Services of general interest (European Commission, 2007), a large and increasing majority (82% in 2006 against an EU25 average of 78%) of Italian LPT users considers services within towns to be affordable, while only 11% of them says that prices are excessive. An analogous finding is obtained by a national survey (ISFORT, ASSTRA 2008), where it is highlighted that prices are at present considered the second most satisfactory characteristic of LPT services (after staff behavior), reaching an average evaluation above 6 (in a scale from 0 to 10), well above those of other attributes as frequencies, information, personal security, punctuality, comfort and cleanness.

41. Territorial and spatial accessibility (1) • Important evolution of the institutional setting in Austria, Spain and France, where territorial coordination has acquired a growing role • Some (mainly qualitative) evidences about the concentration on more profitable routes and penalizing marginal and off-peak links in Austria and Italy, but an opposite evidence emerges in Flanders where a concept of minimum service supply has been developed • Development of Demand responsive transport systems (DRTs), can be an important opportunity to face the challenge of combining a high level of territorial accessibility together with financial sustainability • Wide spreading of fare integration(“Jump ticket” in Belgium made easy by the presence of three public monopolists) • Spotted situation of intermodal opportunities Les deux facteurs explicatifs sont : - une augmentation de la fréquence de passage via l’établissement d’une fréquence minimale associée à des temps d’attente maximaux aux arrêts (variable selon le type de zone à desservir, selon les jours et selon le moment de la journée) ; - une desserte plus étendue grâce à l’imposition d’une distance maximale entre le domicile et l’arrêt de bus (variable selon la zone considérée).

42. Quality of provision (Mainly Italian data) • User satisfaction and perception of quality of services not positive • Deep territorial disparities • Accessibility/flexibility and time reliability are the prevailing factors of dissatisfaction • Gradual Improvement of the vehicle fleet • Low and generally decreasing speed of services , directly influenced by the insufficient degree of priority given to mass transit • Positive implementation of quality management instruments, but with the need to enhance their effectiveness and ability to generate feedbacks (e.g.lack of independence of the reporting initiatives)

43. 2007 Surface transport 2006 Metro 2005 2004 2003 2002 Quality of provision: User’s perception Surface transport 62.1 69.4 68.3 75.1 76.9 76.1 North-East 6.71 - Metro 83.5 83.2 81.1 78.7 83.4 84.0 North-West 6.21 7.55 Centre 5.71 6.68 South and Isles 5.46 7.19 Total 5.96 6.25 • In an European framework (EU25) where urban and extra-urban transports are the services with which consumers are, in general, more critical, the percentage of satisfied Italian LPT consumers(33.7% for urban services) is in fact well below the average (44.5%) and represents the fifth lowest in absolute (IPSOS INRA,2007) Percentage of satisfied consumers in urban transport (% of ratings 6-10) Average satisfaction concerning urban transport services in different areas

44. Further steps • Require an additional effort to fill in gaps of the common indicators grid • Require some (few) specific integrations to national experts (list of answers?) • Gather new national reports (Sweden, Germany?) • Exploit some cross-country available studies (as the PIQUE project or Eurobarometer) to fill in some of the gaps • Present results in the autumn meeting • Conclude the sectoral report within the end of the year