september 7 th, 2005 arjen stoelinga tendering in dutch public transport encouraging results

September 7th, 2005

Arjen Stoelinga

Tendering in Dutch Public Transport

Encouraging Results

07/09/05

Thredbo 9, Lisboa 2005 2

Introduction

Major changes in Dutch Public Transport organization:

• Regional PTA’s responsible (1998)– Before: national or city-level)

• Operators ‘at distance’• Possibility of tendering of operations

(2002)

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Introduction

Tendering

• Concerns bus, tram and metro services– And secondary railway lines

• In Public Transport Act 2000• To be mandatory in 2006/7

– Depending on Parliamental approval– Based on evaluation of first effects of tendering

• Evaluation results and conclusions in this presentation

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Outline

• Public Transport in the Netherlands• Introduction of Tendering• Effects of Tendering• Special focus on the Passenger• Future of tendering• Conclusions

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Public Transport in the Netherlands

• Netherlands: small country (41,000 sq. km.; 16 million inhabitants)

• Congestion in larger urban areas, possibilities for extending road network limited

• Main goals Public Transport:– Facilitate access larger cities– Facilitate participation in society, for those who

can’t provide for their own mobility

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Modal Split

mode mode share mode sharetrips trip kilometers

car 49% 75%train 2% 9%bus/tram/metro 3% 4%walking/cycling 45% 10%others 1% 2%

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Key figures:

• Train trips: approx. 1 million a day• Bus, Tram and Metro trips: 3 million a

day

• Turnover BTM: € 1,740 million– State subsidies € 1,090 million (63%)– Passenger revenues € 650 million (37%)

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Introduction of tendering

Public Transport Act 2000:• Operations based on a concession, not

a contract• Tendering possible as from 2002• Goal: 35% turnover tendered in 2004• Temporary exception for PT in larger

cities (50% of total turnover)• Reciprocity: city-operators not allowed

to bid elsewhere

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Reality: a bit slower, but steady

0%

20%

40%

60%

80%

100%

%-age betw istbareomzet aanbesteed

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Operators:

• Three large operators– State owned Connexxion, 60, now 50% market

share– Arriva (UK), took over northern operators– Connex (France), took over southern operators

• Plus a group, related to city-operators• Plus about 10 smaller operators

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Operators:

• Operators may loose their concession– 8 of 26 concessions were lost

• No foreign bidders– Concessions too small? (upper limit turnover €15-30

mln) – Difficult system of passenger income and subsidies

• Only a few bids of small operators– Concessions too big? (usually turnover at least € 5

mln)

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Effects of tendering

Findings in the evaluation studies:• Improvement of level of service

– Higher frequencies, more routes, longer opating times)

• Slight improvement of quality of service• Static level of traveller satisfaction• Neutral development of patronage• Improvement in efficiency• No influence on cost coverage (yet)

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Improvement of level of service• Sometimes asked for, and specified bij

the PTA• Beginning: increasing amount of service

schedule hours (at non-usefull moments)• Last tenders more improvements:

– More service schedule hours at usefull moments– Dynamic travel information– Attractive fare rates, guaranteed seats– Connecting services in cases of delays

• New, low floor buses

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Improvements in efficiency

• Estimate: 10-20% cost reduction ‘per unit’, immediate

• Compared to 0-10% in cases without tendering, only negotiations, step by step in about 5 years

• Three main causes:– More efficient deployment of staff, within borders of

Labour Agreements– Supply better attuned to demand: sometimes smaller

buses– Smaller buses driven by ‘cheaper’ bus-, or even taxidrivers

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Consequences for staff: no forced redundancies

• Public Transport Act: winner of a concession has to take over all staff involved in that concession!

• More efficient deployment of staff: less staff needed

• More taxi-, less bus drivers• Extension of services: more drivers needed• Together with natural wastage

(retirements etc.): no forced redundancies

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Special focus on the passenger

• Higher level of service• Improved quality of service

– Measured with random tests in tendered concessions

• No decrease of customer satisfaction

• But still no choice for the traveller, wishing to make a journey

• Operator is still a monopolist

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In order to protect passenger’s interests:

• Operators are to consult consumer groups when changing services schedules and fares

• Operators have to take part in the national information system

• Operators have to set up easily accessable arbitration boards

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And PTA’s have to

• Follow a public procedure, when preparing the programme of requirements

• Ask advise of consumer groups, when granting or changing a concession

• Incorporate some specific topics, relevant for passengers, in concession-conditions, such as:

– Attuning schedules with other services– Fare rates– Provision of information

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Developments:• Consumer groups in most areas• don’t always represent all passengers • work together in Regional Consultation

Bodies, • still searching for their role• A national platform, OPC, is set up to support

the consumer groups and Consultation Bodies

• Operators sometimes involve consumer groups more than they are obliged to

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Future of tendering

• Parliament approved obligation in June 2005

– Based on evaluation results, and scores on indicators in Public Transport Act 2000

• Starting date of obligation shifted to 2007

– To spread out remaining tenders

• Maximum operating time of concession prolonged (6 8 years)

• Possibility of exemptions introduced:– 1 or 2 years, for transitional situations– 1 full maximum period, in case of innovations

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Future of tendering

Greater cities with municipal owned operators:

• Market has to be opened– More attractive for current and new operators

• Bus in 2009– Or 2012, when interest in operators are sold before

2007

• Tram and Metro 2017– Or 2012, if PTA’s didn’t take adequate steps toward

market conformity and tendering

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Conclusions

• Original goals not (yet) achieved:– No growth in use– Operators mainly focussed on PTA’s, not on passenger– No improvement of cost coverage

• Nevertheless: big steps forward– Reduction in price ‘per unit’– Lessons learned: no focus on total production– New tenders: better use of more product

more patronage to be expectedBetter fit in new role PT in mobility

• Principals are able to exert enough influence

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Conclusions

Recommendation of the researcher:• Give space to entrepeneurs

• Incorporate other mobility services in the concessions

• Continue improving the tendering system, to be able to pick the fruit

september 7 th, 2005 arjen stoelinga tendering in dutch public transport encouraging results

Documents

mln slide

presentation slide

steady slide

mobility slide

outline public transport

effects of tendering

citylevel operators

southern operators