ITF Round Tables

International Transport Forum

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ITF Roundtable Reports present the proceedings of ITF roundtable meetings, dedicated to specific topics notably on economic and regulatory aspects of transport policies in ITF member countries. Roundtable Reports contain the reviewed versions of the discussion papers presented by international experts at the meeting and a summary of discussions with the main findings of the meeting.

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Privatisation and Regulation of Urban Transit Systems

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23 Oct 2008
9789282102008 (PDF) ;9789282101995(print)

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Urban public transport services generally run at a large deficit. This has led public authorities to seek efficiencies, notably through private sector involvement. Support for the sector traditionally seeks to provide basic mobility services to all segments of society, including low-income users. Intervention is also required to manage the natural tendency towards concentration and market power in the provision of these transport services. Policy towards urban public transport is increasingly aimed at managing congestion on the roads and mitigating CO2 emissions by substituting for travel by car. 

Achieving coherent transport networks that are efficient and financially sustainable is a challenge for any public authority. This Round Table examines experience in integrating private management and capital with public transport policy objectives in a number of developed economies. For network operators, the Round Table concludes that innovation is the key to surviving the rapidly changing policy and regulatory environment.

Also available in French
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  • Summary of Discussions
    The Round Table to assess reforms of urban transit systems, entitled "Privatisation and regulation of urban transport systems", took place in Paris. It was chaired by Mr. Yves Crozet of the Laboratoire d’Economie des Transports (LET), based in Lyons (France). The background reports were by Dr. Rosário Macário (Instituto Superior Tecnic, Lisbon Technical University, Portugal), who focused primarily on the broad trends driven by urban transit reform; Mr. Matthew Karlaftis (National Technical University of Athens, Greece), who looked more closely at the cost implications of reform initiatives; Prof. Martin Wachs and his co-authors (Rand Corporation, Los Angeles and University of California, Berkeley, United States), who focused on changes in labour relations stemming from regime change in transit activities; and Mr. Rainald Borck (University of Munich and the Deutsches Institut fürWirtschaftsforschung, or DIW, Germany), who shed new light on how the relative importance of socio-economic categories shape the urban transit reform process at the local level.
  • The Political Economy of Urban Transit
    In most countries, the public sector interferes in the operation of urban transit in many distinct ways. In the past, public transit systems have usually been operated by the public sector itself, with pricing and investment decisions directly under political control. Many countries have begun to privatise transit companies, but even then, regulations of pricing and investment decisions usually remain. One specific aspect is that public transit is usually heavily subsidised. According to the American Public Transit Association (2006), total fares in several thousand public transit authorities in the US accounted for only 33% of operating costs and 23% of total operating and capital costs, while for Europe corresponding figures show fares cover about half of operating costs (APTA, 2005). Urban transit is obviously heavily subsidised through general tax revenue. Interestingly, automobile travel too, often does not cover the full costs of road construction and usage (let alone environmental and accident costs). Indeed, in the US, user fees (including gasoline taxes, licence fees and other charges) accounted for only 60% of total highway expenditures (Brueckner, 2005). In Europe, higher petrol taxes suggest that subsidies to automobile travel should be significantly lower. These subsidies obviously have repercussions on individual commuting choices. For instance, subsidising automobile travel may provide incentives for individuals to move further out from the city centres into the suburbs.
  • Contracting for Public Transit Services in the US: Evaluating the Tradeoffs
    The research reported upon in this study was supported by the Center for Labor and Employment of the University of California, the California Policy Research Center, and the University of California Transportation Center. The authors are grateful for this financial support. The opinions and conclusions expressed are those of the authors alone, and do not represent the views of their employers or of the research sponsors.
  • Privatisation, Regulation and Competition: A Thirty-year Retrospective on Transit Efficiency
    The past few decades have seen transit patronage decrease in all Western countries, including Europe and the United States, lagging far behind the substantial growth in mobility that has occurred during the same period. Among the more important factors offered by many authors to explain the observed reductions in public transit have been the rising levels of real income and decreasing relative costs of private travel. Combined, these factors have led to significant increases in automobile ownership and population shifts from central cities to suburbs, both of which reduce the demand for public transit. An important implication of the changing land-use patterns is the need for public transit to adapt their operations – including routes, service frequency, work rules and fare structures – to meet the changing needs of their customers and to provide more efficient transit services. Yet, throughout the past thirty years, public transit systems have either been reluctant or unable to significantly alter their operations.
  • Towards a Reform of Urban Transit Systems: Topics for Action
    The concept of "urban living" encompasses a number of interrelated dimensions, among which: population size and density; spatial, economic and social organisation; the variety of functions and institutional interactions; the social values of the population or degree of "civility" (often also referred to as "urbanism"), etc. In addition, the spread of inter-urban connectivity, that is to say, the growing conurbation effect over the past few decades, has made it necessary to redefine the concept in order to emphasize interactions and functional relations instead of geo-morphological criteria. As reported by Hall (1969, pp. 408-435) and Hart (2003, pp. 102-123), much of the movement that a few decades ago was considered at the regional level is now viewed in terms of growth in urban agglomerations which, in some cases, can even cross national boundaries, as in the case of urban areas between Belgium and The Netherlands or between France, Germany and Switzerland.
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