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Competition for Public Transport Services pp 17–50Cite as

The Distinction Between Commercial and Non-Commercial Bus Services

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Abstract

The institutional framework of the German public bus transport system is structured around a fundamental distinction between commercial and non-commercial services. Most legislators seem to view this distinction as unambiguous, since – in their thinking – local conditions (population density, land use patterns, etc.) mainly determine the costs and revenues of public transport bus services. For example, the revenue potential of an urban bus line will usually be higher than that of a rural one. Conversely, costs per vehicle kilometer will usually be lower in rural districts than in cities due to the higher average speed.

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Notes

  1. 1.

    This is my conclusion after more than 5 years of consultancy work in the German public transport system on behalf of KCW, BSL Management Consultants and civity Management Consultants, and from numerous discussions with foreign researchers and practitioners.

  2. 2.

    This Chap. 4 is based largely on Beck (2009b and Beck 2012).

  3. 3.

    Thanks to numerous experts interviewed for market insiders’.

  4. 4.

    As the legislative body has not yet agreed upon an adjustment of the legal framework, this framework is still in place, although the new (EC) No 1370/2007 is valid from December 3, 2009. So far, in practice no significant alteration has been observed with respect to the distinction between commercial and non-commercial services and other major regulations described here.

  5. 5.

    See Hickmann (2004, p. 34), Sterzenbach (2008, pp. 75–104) and Wissenschaftlicher Beirat beim BMVBS (scientific council at the federal ministry of transport) (2008, pp. 82–86) for a detailed explanation of the financing structure in Germany.

  6. 6.

    See SCI (2006) and Wissenschaftlicher Beirat beim BMVBS (2008, p. 84).

  7. 7.

    See §§ 1 and 2 GVFG and the Demerger Act (Gesetz zur Entflechtung von Gemeinschaftsaufgaben und Finanzhilfen, also known as Entflechtungsgesetz – EntflechtG). Note that data on the quantitative volume of further instruments of public co-funding is usually not published and even making estimates is difficult.

  8. 8.

    Under § 45a of the Passenger Transport Act and §§ 145 ff. of the Ninth Code of Social Law.

  9. 9.

    See van de Velde et al. (2008a, p. 53) for a short explanation of the German Verkehrsverbund. For a more detailed explanation on the Verkehrsverbund as a typical German association that coordinates fare levels and systems, sales and distribution, timetables and passenger information in one geographic area and splits fare revenues among its participants see Pucher and Kurth (1996).

  10. 10.

    See Sterzenbach (2008, pp. 97–101).

  11. 11.

    According to Gerrit Landsberg, lawyer at BBG und Partner, the main focus is on awarding concessions and includes very weak instruments to withdraw these authorizations (licenses) or impose fines if operators do not deliver services as promised (see also §§ 25 and 61 PBefG).

  12. 12.

    Lawyers continue to discuss the extent of this form of exclusive right; see Werner (2004, pp. 91–96).

  13. 13.

    These rules effectively establish an exclusive right granted via a license (see § 13 [2] PBefG and BLFA 2006, p. 2).

  14. 14.

    See Forsthoff (1938, pp. 36–37), and European Commission (2001) for the classification of public transport (PT) services as services of general interest.

  15. 15.

    If a new application to operate a bus line competes with existing public transport services, and the operators of the existing lines claim convincingly that the profitability of these services is jeopardized, the licensing authority must reject the new application. In reality this has resulted in a status of exclusivity for holders of existing licenses (incumbent operators).

  16. 16.

    Estimation based on BSL Management Consultants database.

  17. 17.

    The database for this analysis of the German market is presented and discussed in detail in Chap. 5 as well as in Part III and Part IV.

  18. 18.

    Note that (EC) No 1370/2007 became effective on December 3, 2009 after I finished the analysis. Nevertheless, the regulation provides a clear, unambiguous definition of the extent of a public service contract on a general level that is accepted by all EU Member States, making it appropriate to include its main definitions for contracts here.

  19. 19.

    See also International Association of Public Transport (2005, p. 10).

  20. 20.

    This case study was presented in detail by van de Velde et al. (2008a, p. 53) and (2008b, pp. 34–35).

  21. 21.

    This case study was presented in detail by van de Velde et al. (2008a, p. 54) and (2008b, pp. 49–52).

  22. 22.

    A detailed description of the other aspects of this case appears in Sect. 5.4.2.

  23. 23.

    This case study was presented in detail by van de Velde et al. (2008a, pp. 67–68) and (2008b, pp. 22–24).

  24. 24.

    This case study was presented in detail by van de Velde et al. (2008a, p. 48) and (2008b, pp. 27–27). Other examples of the high number of constructive contractual relationships for non-commercial services within Germany are the tendering documents for the suburban area of Munich (see MVV 2009) and for regional bus services in the greater Frankfurt on the Main area (see RMV 2005).

  25. 25.

    This section on frameworks in Europe is based on van de Velde et al. (2008a); for details on this issue in other parts of Europe, see van de Velde (1999) and (2005).

  26. 26.

    The database for this analysis of the German market is presented and discussed in detail in Chap. 5 as well as Part III and Part IV.

  27. 27.

    Although some disputes between the LA and the PTA have been published, both authorities usually closely coordinate their decision-making process in reality.

  28. 28.

    As explained above, this market mechanism differs from open market regimes such as in Britain outside London, which are characterized by competition within the market.

  29. 29.

    See Richter and Furobotn (1999, pp. 172–176) and Fees (1997, p. 585 and p. 588) for the normative principal-agent theory.

  30. 30.

    See Krishna (2002, p. 5 f.) and Laffont and Tirole (1993, p. 318).

  31. 31.

    Since revenue risk is not explicitly addressed in this model, gross-cost contracts are basically equivalent to net-cost contracts if subsidies are redefined accordingly.

  32. 32.

    Treasurers, for example, are able to “optimize” q m with the aim of minimizing SDS(q m ) before any tendering procedure for non-commercial services has to be initiated.

  33. 33.

    E.g., for a specific concession area instead of organizing a quality competition in a CCL.

  34. 34.

    Such a regulation can be seen, e.g., for British railway franchises (see Nash and Smith 2006, p. 3 and p. 9), where operators pay a franchise fee to the PTAs for commercial services.

  35. 35.

    See Sect. 4.4.2 for more details on the level of freedom.

  36. 36.

    See Sect. 4.4.1 for the pros and cons. See also van de Velde et al. (2008a, pp. 72–80) for an overview of possible contractual instruments, regulations and case studies.

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    Arne Beck

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Beck, A. (2012). The Distinction Between Commercial and Non-Commercial Bus Services. In: Competition for Public Transport Services. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2802-3_4

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