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Experiences with Competitive Tendering of Bus Services

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Competition for Public Transport Services

Part of the book series: Contributions to Economics ((CE))

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Abstract

After a long transition period with only a few isolated cases of competitive tendering for public bus transport services in Germany, numerous such procedures have taken place in recent years. The question arises whether the introduction of competitive tendering has produced the desired effects from the PTAs’ perspective and what impacts can be observed for other market participants.

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Notes

  1. 1.

    This Chap. 8 is fully based on an analysis completed in 2009, see Beck (2009e, g and the journal arcticle Beck 2011c).

  2. 2.

    There is considerable overlap between this Section and Sect. 5.4.1. Readers familiar with the latter may skip this Sect. 8.2.1.

  3. 3.

    Nordhessischer VerkehrsVerbund – Verkehrsverbund und Fördergesellschaft Nordhessen mbH (NVV).

  4. 4.

    Additionally the Hessian rural district of Kreis Bergstraße is part of the Verkehrsverbund Rhein-Neckar GmbH (VRN).

  5. 5.

    This agreement is entitled “Eckpunkte für den Wettbewerb”; see HMWVL (2002) for more details.

  6. 6.

    The steps are described for regional bus services. Urban public transport services were allowed to follow later and are not described here.

  7. 7.

    This resolution is the so-called Güttler Erlass I; see HMWVL (2004) for more details.

  8. 8.

    See Rausch (2004).

  9. 9.

    For a more detailed explanation of tendered route bundle contracts in Frankfurt am Main, see van de Velde et al. (2008b, pp. 25–26) and Rehn and Valussi (2005).

  10. 10.

    See http://www.vrn.de/ueberuns/vergabestelle retrieved August 20, 2009 and Winnes (2007).

  11. 11.

    See Sect. 4.4.2 and Sect. 5.3.2 for a more detailed explanation of the Hamburg area.

  12. 12.

    There is considerable overlap between this Section and Sect. 5.3.2. Readers familiar with the latter may skip this section.

  13. 13.

    On September 19, 1996, the first call for tenders was published in the Official Journal of the European Community for route 838 from Fürstenfeldbruck to Dachau, which began operating in January 1997. A more detailed case study on tendering in the Munich area appears in Schenck et al. (2003) and in van de Velde et al. (2008b, pp. 62–64).

  14. 14.

    See Landkreise im MVV (1999).

  15. 15.

    See Arbeitsgruppe Verkehrsverträge und Qualitätsmanagement (2002).

  16. 16.

    Chapter 9 gives the results of a different database II, also consisting of tendering procedures.

  17. 17.

    This study was published as three separate articles: Beck and Wanner (2007), Wanner and Zietz (2008) and Beck and Wanner (2008). These publications are the basis of this analysis. The full version of the study, conducted by Beck et al. in 2006, remains unpublished.

  18. 18.

    Note that of the four studies mentioned only the Beck et al. study is based on full data access provided by PTAs.

  19. 19.

    Interviews were arranged with responsible leaders and/or executive officers in charge of conducting tendering pocedures. The sample of individuals contains representatives of the major PTAs that have conducted numerous tendering procedures, including the HVV, the MVV, the NVV, the RMV, the traffiQ and the VRN, as well as operators and consultants.

  20. 20.

    Special thanks to all individuals and institutions that provided data for this study.

  21. 21.

    Note that in Germany one tender is usually divided into two or more lots to support SMEs. Operators are then able to bid for one or more lots (or batches).

  22. 22.

    The number of lines tendered per batch also serves as a measure of complexity.

  23. 23.

    The dataset is condensed with respect to the low number of observations for the other variables and the correlations shown in Table A.2 in the Appendix Sect. A.1.1.

  24. 24.

    These minimum quality standards are higher than the ones set by national law. From an economic perspective such standards are positive due to their high accuracy with respect to reduced noise and air pollution compared to other regulatory instruments, e.g., increased gasoline taxes (see Brenck et al. 2008, pp. 439–440).

  25. 25.

    Although other aspects, e.g., the scheduled frequency, the level of punctuality or the friendliness of the bus driver, would have been more important to analyze for their impact on the passenger market, sufficient data can only be obtained for aspects directly vehicle-related.

  26. 26.

    In Bavaria (MVV suburban area) these efficiency gains were almost fully reinvested in an increased vehicle kilometers p.a. volume offered to passengers, which might explain the significant increase in passenger figures observed there (see Freitag 2009, pp. 232–238).

  27. 27.

    See Beck (2006, pp. 29–31) for the relevance of winner’s curse in public transport. Recent examples are the termination of a specific contract by Abellio (NedRailways) and the insolvency of several operators such as Werner or Kraftverkehr Kinzigtal due to losses in operations launched as the result of tendering procedures. The Kraftverkehr Kinzigtal case appears in Sect. 5.4.1.

  28. 28.

    This is an analysis based only on gross-costs. Due to the lack of appropriate data, it was not possible to carry out such an analysis on a net-cost basis, where the difference in administrative costs between direct awarding and competitive tendering for PTAs has to be analyzed. This would probably lead to different results.

  29. 29.

    For Hesse, Conpronet (2009) assumes higher administrative costs on the PTA level, while also claiming that these costs are not transparent.

  30. 30.

    As shown for the Dutch market by Hermans and Stoelinga (2005, p. 300), foreign firms obviously prefer to acquire national firms instead of entering the market via direct bidding in a tendering procedure.

  31. 31.

    The development of prices is analyzed in Chap. 9.

  32. 32.

    Each regression is also conducted with the maximum sum of observations (up to n = 113) for the regression-specific explanatory variables, but the results do not show any major differences. The software used is Stata for Windows 9.1. Methods used are the usual ones as explained a.o. by Kohler and Kreuter (2008).

  33. 33.

    This journal article is based on Beck (2010a).

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  1. Berlin, Germany

    Arne Beck

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Beck, A. (2012). Experiences with Competitive Tendering of Bus Services. In: Competition for Public Transport Services. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2802-3_8

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