Profitability of public transport: the right rate of return for the bus mode

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The topic of rate of return or profitability for the public transport sector has drawn some interesting discussions within practitioners and researchers. Particularly when seeking to assess what the admissible or reasonable level of profit allowed in public transport operations is, for instance in different regional contexts.

To assess various approaches to understand the rate of return and the impact of different regulatory contexts under which bus systems operate, UITP has published a Report titled, The profitability of public transport: the right rate of return for the bus mode.

It is noted that the rate of return is relevant regardless of the operator, or how the sector is regulated. It is important to highlight that the required rate of return may change depending on the form of regulation adopted.

The Report uses a combination of setting out the relevant principles when considering the rate of return and case studies from a number of different market arrangements, allowing to illustrate the key principles. Discussions relevant to this study concentrate on bus services as the main area of its investigation, in order to assure comparability.

Among the main conclusions, the report highlights the role of rate of return analysis to be a powerful tool. It needs, however, to be undertaken carefully, being sensitive to the form of contract between the client body and the operator, and the type of market being served.

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