September 7 th, 2005 Arjen Stoelinga Tendering in Dutch Public Transport Encouraging Results

07/09/05 Thredbo 9, Lisboa 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)

07/09/05 Thredbo 9, Lisboa 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

07/09/05 Thredbo 9, Lisboa Outline Public Transport in the Netherlands Introduction of Tendering Effects of Tendering Special focus on the Passenger Future of tendering Conclusions

07/09/05 Thredbo 9, Lisboa 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

07/09/05 Thredbo 9, Lisboa Public Transport in the Netherlands Modal Split

07/09/05 Thredbo 9, Lisboa Public Transport in the Netherlands 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%)

07/09/05 Thredbo 9, Lisboa 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

07/09/05 Thredbo 9, Lisboa Introduction of tendering Reality: a bit slower, but steady

07/09/05 Thredbo 9, Lisboa Introduction of tendering 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

07/09/05 Thredbo 9, Lisboa Introduction of tendering 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)

07/09/05 Thredbo 9, Lisboa 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)

07/09/05 Thredbo 9, Lisboa Effects of tendering 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

07/09/05 Thredbo 9, Lisboa Effects of tendering 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

07/09/05 Thredbo 9, Lisboa Effects of tendering 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

07/09/05 Thredbo 9, Lisboa 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

07/09/05 Thredbo 9, Lisboa Special focus on the passenger 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

07/09/05 Thredbo 9, Lisboa Special focus on the passenger 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

07/09/05 Thredbo 9, Lisboa Special focus on the passenger 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

07/09/05 Thredbo 9, Lisboa 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

07/09/05 Thredbo 9, Lisboa 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

07/09/05 Thredbo 9, Lisboa 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 expected  Better fit in new role PT in mobility Principals are able to exert enough influence

07/09/05 Thredbo 9, Lisboa 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