EC published study on Public Service Obligations in Public Transport

The purpose of the regulation is to define the framework governing the means by which competent authorities ensure the provision of public transport services offering higher service frequencies, better quality or lower fares than the market would otherwise provide.

Amongst the conclusions, the following can be highlighted:

The public transport sector of Europe is highly fragmented and whilst it presents some common characteristics, it differs on many crucial aspects. To understand these, requires analysis at a local level, but that in turn presents some difficulty in extrapolating findings at a European level. The environment of public transport in Europe is to a large extent nationally driven and there is considerable variation between Member States in terms of legislation, and approaches to funding, market structure and types of procurement.

There is little consistency between Member States in terms of the capabilities of the competent authorities in the area of public transport as well as the number of competent authorities in a given Member State: they can vary from just one to more than 2,000. There can be clear advantages of having a small number of competent authorities within one Member State, as that can facilitate better access to expert skills and resources and the coordination and dissemination of best practices.

Sources and levels of public funding available for public transport services vary widely across Europe and have suffered in many areas as a result of the 2008 financial crisis. This has forced some authorities to make significant changes to the PSO services, to stop infrastructure improvements or to increase fares paid by users. The proportion of costs paid by users through ticket prices differs significantly across the EU and between networks. In some cases, the sustainability of public transport is probably not guaranteed in an environment with pressure on public finances.

However, the study has identified a number of benefits brought about by Regulation 1370/2007: clearer definition of policy objectives as a basis for specifying service requirements and other contractual obligations, greater transparency particularly of methods and levels of compensation including in the case of direct awards, reduced uncertainty for both the competent authority and the service provider over legal obligations, and a more considered approach to the design of public service contracts (for example in the development of effective incentives on operators to deliver services in line with public sector objectives).

These improvements are likely to contribute to improved economic and financial performance over the longer term and lead to greater cost efficiency, by ensuring that contractual obligations are better aligned with policy objectives, and greater financial sustainability, by enabling transport operators to assess contractual risks more accurately and price accordingly.

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The study is available here: