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Transport market characteristics
We work in a variety of different environments, and we have a wealth of experience of different transport markets and their characteristics.
The following market summaries were produced in May 2011.Czech Republic
Bus market
Direct award of contracts and concessions is common. Competitive tendering is limited but is expected to increase.
The market is very fragmented following privatisation. Regional governments control concession awards, licensing and maximum fares, while individual cities are responsible for urban public transport.
Cost-plus subsidy contracts are operated with each having different validity periods.
As old agreements finish, the first signs of tendering are appearing. To date this has been in areas outside our operation.
Around 250 bus companies currently operate in the market, many of which were formed in the 1990s as part of privatisation.
Rail market
The Czech Republic rail market is dominated by the state, with the state also responsible for rail provision and funding.
State-owned rail operator, Ĉeské dráhy (CD) operates 100 per cent of the long distance market, and the majority of regional services. In 2009, the state extended the majority of CD’s contracts for a further 10 years, however tendering opportunities are expected to emerge from 2011.
Denmark
Bus market
The bus market in Denmark is a regulated, mature market. Tendering is well established and approximately 90 per cent of the market is tendered.
Six passenger transport authorities have responsibility for public transport services, with funding provided by local authorities.
Contracts are typically gross cost and an average of six years in length, with quality and service incentives and/or penalties.
Rail market
The Danish rail market is regulated, having opened to public tendering in 2000. The Danish parliament is responsible for the regulatory framework for transport provision and setting fares. Contracts are typically net cost, with bonus and/or penalty regimes for punctuality and customer satisfaction.
The market is dominated by the public sector, with Danish State Railways operating approximately 75 per cent of train kilometres in Denmark, under direct award from the Ministry for Transport.
Hungary
Bus market
Contracts with exclusive rights may only be awarded to an operator selected by a tendering procedure. However, the Volan companies, the 24 state-owned regional operators, dominate the market. There are also six municipal operators.
The national government is responsible for regional public transport, covering suburban and intercity operations. Services are provided by the Volan companies under contracts which extend until 2016.
Municipalities are responsible for local public transport. Contracts are typically gross cost or cost-plus, and are generally entered into once a year, although this can be longer in some areas.
The city of Budapest is planning to competitively tender a number of bus contracts in the city.
Rail market
There is no competitive tendering in the Hungarian rail market as yet.
Rail is the responsibility of the national government and is funded by the state.
Italy
Bus market
The opening of the bus passenger transport market is slow, and competitive tendering is not yet commonplace.
Bus services are currently highly subsidised, with low fares. Provincial or municipal local authorities are responsible for bus provision and setting fares (inside a general framework provided by the region), and public transport funding is provided nationally by the state. In some regions public private partnerships have been set up.
Where contracts are in place they are typically net cost.
There are a large number of local operators, mostly owned by regions and municipalities.
Rail market
Early attempts at competitive tendering in the Italian rail market failed.
In 2010, Trenitalia, owned by Italian state railway Ferrovie dello Stato (FS) signed six-year service contracts for regional services in many areas, with six-year extension options.
Some regions, including Piemonte, have been considering market opening and Arriva will continue to monitor any market entry opportunities.
The current open access system is being challenged, potentially bringing change and opportunity.
Malta
Bus market
The transport system in Malta was previously operated by independent bus owners. The Maltese government has put in place a significant market reform, moving from a 1950s system to modern day - from an emerging liberalisation stage to mature - in one step change.
The national government is responsible for public transport, including network and service provision, and maximum fares and fare structure.
The public transport contract awarded to Arriva is the first of its kind in Malta. The 10-year contract for the exclusive operation of scheduled services is highly specified to meet the government's requirements for a new bus network.
Arriva is delivering this reform at the same time as providing significant savings to the Maltese government, compared to the previous transport system.
There is no rail market in Malta.
Netherlands
Bus market
Around half of the market is competitively tendered, outside of the major cities. Amsterdam, Rotterdam and the Hague are yet to put concessions out to tender.
The 11 regional authorities have had responsibility for public transport since January 2001, when the Passenger Transport Act 2000 came into force. Regional authorities are obliged to organise public transport into concessions, which are periodically put out to tender by open procedure. Tenders typically focus on quality and the environment in addition to price.
Contracts tend to be net cost and of eight years duration on average. Contracts can include specified fleet requirements, for example maximum bus age.
Rail market
Very little of the rail market has been competitively tendered to date and only around six per cent of the market is operated by the private sector.
Regional authorities have responsibility for regional rail services. Contract conditions differ widely between the regions, and by contract.
Contracts are typically net cost and up to 15 years in length.
Poland
Bus market
Regional authorities can award bus contracts by tender or direct award, with competitive tendering not commonly used outside Warsaw.
State-owned companies operate rural, inter-urban and long distance services. Municipal bus operators run buses in towns and cities.
Some cities are moving towards the creation of tendering authorities.
Contracts tend to be gross cost in city operations, ranging from two to six years, whereas regional services operate on a commercial basis.
The market is dominated by 167 state-owned companies and 140 municipal operators.
Rail market
The rail market in Poland is dominated by state and region-owned operators, however it is opening slowly to competitive tendering.
Regional rail provision has been devolved to the regions, while state-owned PKP remains responsible for mainline rail operations.
Przewozy Regionalne (PR) is owned by the 16 Voivodships (provinces), which decide whether to direct award rail services to PR or put services out to tender in their regions.
Contracts are typically net cost contracts. Where previously they were between one and three years, there has been a recent move, in some regions, towards longer 10-year contracts.
Portugal
Bus market
There is limited competitive tendering in Portugal. The inter-urban bus sector operates as a commercial market under licence. Concessions are typically long, ranging from 10 to 30 years, and have exclusive rights.
In Lisbon and Porto bus services are state owned. Bus services in other major cities are still municipally owned, with municipalities responsible for allocating routes by awarding licences to independent operators or delivering services directly. Fare increases are set by the government.
Metropolitan authorities have been established in Lisbon and Porto, with a view to introducing competitive tendering for bus contracts.
Rail market
There has been only one instance of a concession awarded to a private operating company to date (Fertagus), and there are early signs of further moves towards competitive tendering.
Urban and regional rail services are operated under concessions allocated by the state, to state-owned Comboios de Portugal (CP). State funding provides for loss-making regional and urban services.
Slovakia
Bus market
Competitive tendering is underway in this market, with tendering opportunities expected to emerge in 2011. Less than five per cent of the market has been competitively tendered to date.
The regions are responsible for public transport provision and funding.
Contracts are gross cost and between one and 10 years in length, with exclusive rights.
The competitive landscape is dominated by 17 SADs, which operate in different regions. All SADs are partially privatised, with public stakes, typically of 40 per cent. There are also five municipal/city-owned operators.
Rail market
Tendering opportunities are arising in regional rail. The central government is responsible for rail provision and funding. Passenger rail services are provided by state-owned Slovak Railways.
Spain
Bus market
The Spanish bus market is a concession-based market, with revenue risk and exclusive rights.
The urban bus market is operated by private and city-owned companies, while inter-urban and long-distance concessions are typically operated by private companies.
In Spain there are 19 autonomous regions, with legislative powers, including for transport. Long concessions, ranging from eight to 25 years have typically been granted, with exclusive rights. The regions set maximum fares and monitor the delivery of concession requirements by operators.
Where contracts are in place, in Madrid for example, they are currently gross cost with incentives and/or penalties. These are, however, moving towards passenger growth driven models.
The market is diverse and fragmented, with more than 4,000 small operators accounting for around 70 per cent of the market.
Rail market
There has been no competitive tendering for rail in Spain, and the state railway company Renfe continues to operate all passenger trains.
The 19 autonomous regions are responsible for rail provision, with state funding providing for loss-making regional and urban services across the five regional and urban rail networks. The state has invested significantly in high speed lines. Private operators are beginning to become established in the rail freight market.
Sweden
Bus market
Deregulation commenced in the 1980s and competitive tendering is now well established.
The 22 passenger transport authorities have responsibility for public transport services in the regions, including determining ticket prices, timetables and contract duration.
Contracts are typically gross cost and an average of eight years, with quality and service incentives and/or penalties.
Rail market
The rail market is completely deregulated with no exclusive rights for tendered or long distance services.
Responsibility for regional rail passenger transport has been devolved to the regional authorities and there is widespread tendering of regional contracts in Sweden.
Regional rail contracts are typically gross cost and between seven and 10 years, with quality and service incentives and/or penalties. Inter-regional services tend to be net cost and longer, between 10 and 15 years in duration.
Rolling stock is normally provided by the contracting authority, with the operator responsible for employees and maintenance.
UK
UK bus market has two different operating environments. Outside London it is deregulated, having been privatised in the mid 1980s. Bus companies operate on a commercial basis, providing services where relationships are directly with the passenger, and operators bear the revenue and cost risk. Where there is deemed to be a social need for services, local authorities may contract out services to operators on routes that would not otherwise be commercially viable.
In London the bus market is regulated, and is contracted out by the city's transport authority, Transport for London (TfL). Contracts specify the required routes, vehicles and timetables and are closely monitored to ensure high quality services, with TfL bearing the revenue risk under gross cost contracts.
The UK rail market is competitively tendered, with companies bidding for franchises of set timescales and service provision. UK rail franchises are generally much larger than their equivalents in mainland Europe.
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