Transport economics

What is transport economics?

The first financing source for public transport is fare collection. However, pricing policies are often defined by public authorities and are designed to meet different objectives than profitability.
One of the consequences is that the structures of fares do not necessarily reflect full commercial costs.

The second financial resource for public transport networks is charging third parties for services such as advertising or property rentals (particularly shops in and around public transport stations).

The amount of expenditure covered by these two sources of revenue varies from one system to the other but in any case they do not fully cover functioning and infrastructure costs.

In recognition of this situation, public transport financing also includes public funding. These compensations need also to take into account that public transport faces the competition of private road transport which does not incur the full costs it generates for society (infrastructure, wear and tear, pollution, noise, congestion, accidents) and which is not accessible to all.

Developments and trends

Public-private partnerships (PPP) have now also become a familiar tool to fund large infrastructure works. Compared to traditional public funding of infrastructure, PPPs are characterised by the relatively long duration of the relationship, involving cooperation between the public partner and the private partner on different aspects of a planned project (design, completion, implementation, funding).The public partner concentrates primarily on defining the objectives to be attained in terms of public interest, quality of services provided and pricing policy, and it takes responsibility for monitoring compliance with these objectives.

Finally, instead of funding public transport from the general public budget, it is also possible to use earmarked taxes imposed on the beneficiaries of public transport supply (employers, retailers, real estate owners). It is also possible to earmark revenues through the establishment of systems such as congestion charging, parking charges and fuel taxes which may fulfil the double objective of discouraging the use of private transport and finding new resources.

See the UITP Transport Economics Commission

Read more

Assessing the benefits of public transport
Congestion charging UITP workshop, Stockholm, 11-12 May
Potential cost savings from grouped orders of light rail vehicles
Cost reduction and resource maximisation in the urban bus industry
The Financing of Public Transport Operations
Pricing and Urban Mobility
Ecology and Economy: the fuel choice debate

Next events

COMMISSION 85th Transport Economics Commission meeting 16 & 17 May 2012, Madrid, Spain 16 May: 85th TEC meeting 17 May: Seminar

UITP Transport Economics Commission

Missions and issues    List of members  Working groups  Information for members -

Introduction

The Commission on Transport Economics (TEC) deals with the economics of urban transport and provides the basis for discussions and efficiency developments in the sector. Mobility issues, quality development and public transport funding are some of the core tasks of the TEC.
The members are representatives of operators as well as public transport authorities. Each year the Commission decides on a number of issues to deal with in depth by smaller working groups. The TEC meets biannually in one of the member cities.

The current Chairman is Giampaolo Codeluppi, Director for Strategic Planning, Azienda Trasporti Milanesi (ATM), Milan, Italy

CONTACT: Jérôme Pourbaix ; Mary Parra

Missions and Issues

Mission statement
The General Commission on Transport Economics will provide UITP and its members with factual analysis and informed opinion on issues affecting the transport costs for the community as well as the economics and efficiency of public transport.

The General Commission will:

• provide the basis for an informed discussion and development of the efficiency and effectiveness of the public transportation sector within the commission itself and through its activities with UITP members;
• make recommendations on UITP policies on matters affecting urban transport economics.

Issues
Public transport and sustainable mobility:

• the economics of urban transport (individual and public) and the effects of the regulation and pricing of the automobile use on demand for an efficiency of public transport and on transport costs for the community;
• the contribution of public transport activities and services to transport efficiency, economic activity and environmental quality;
• economic, social, demographic and land use factors affecting the demand for public transport (in conjunction with the General Commission Transport and Urban Life);
• external factors affecting the efficiency, effectiveness and financial performance of public transport operations.

Improving the effectiveness and quality of public transport:

• the effect of service levels, fares and tariff structures on the demand for public transport;
• the economics of public transport operations including such matters as labour, materials, technology, taxation, ownership structure, etc.;
• the regulation of public transport operations and different organisational and contractual arrangements.

Funding of public transport:

• the development, improvement and application of economic evaluation techniques to public transport operations;
• public transport funding (notably the new funding methods, the public/private partnership, value capture).

The General Commission will attach priority to work in these areas, which is of widespread application and draws on the international experience of the membership of the UITP.

Working programme

The Transport Economics Commission is in the process of developing a toolbox on public transport financing. The purpose of this toolbox is:

To inform and inspire public transport professionals about innovative revenue strategies and funding streams for public transport;

To help public transport professionals make the case for public transport schemes by demonstrating value for money, securing affordability and public acceptability;

To help public transport professionals engaging with financing institutions, public and private investors, and urban developers.

The public transport financing toolbox will be made of two elements:

a synthesis document which provides an introduction to the issue of public transport financing and an inventory of revenue and funding streams (to be published in September 2011);

a web-portal with detailed information on each revenue and funding stream, including information digest, good practice case-studies, technical and advocacy tools, and general references (to be launched in November 2010). 

The toolbox will address the following revenue and funding streams:

Revenue
̉ Demand forecasting
̉ Fare policy and revenue strategy
̉ Secondary revenue

Public sector sources
̉ Compensations, grants, loans
̉ Earmarked taxes, charges and levies
̉ Land Value Capture (leveraging public land)
̉ Cross subsidies

Private sector sources
̉ PPP and SPV
̉ Debt financing
̉ Land Value Capture (engaging with private developers)

Information for members

The Terms of Reference of UITP Divisions and Commissions are only available to UITP members. Please enter your login and password here and click on the section ‘Working bodies’ in the menu.