The challenge of sustainability is taking many forms around the world. But, a broadly consistent element is the need for more use of shared transport, and particularly, a focus on making public transport efficient, effective, and attractive, if not a compelling option in cities as well as more suburban areas. This is absolutely at the core of public policy across most of Europe and was globally evidenced in the recent UN Climate Action Summit in New York City at the end of September.
But, is price of access a key barrier to making public transport a more compelling proposition? Can lower prices, or free public transport, transform usage and address the challenges of sustainability and the commitments to CO2 reduction versus climate change? A number of European cities and countries are coming to this view and significantly lowering fares to spur usage.
The cost of transport
Public transport costs vary widely across Europe for many historical, economic, and business design reasons. Certainly, my home country of the UK has some of the highest public transport fares in Europe. And, while London’s costs for public transport have declined recently, costs in the provincial cities of the UK, let alone rail fares generally, remain high — and can be shocking to Londoner’s traveling outside of the capital, let alone visitors from other countries. In general, costs are lower for public transport in other European countries and this has certainly become more transparent following the introduction of the euro. Across the continent, most cities have developed a somewhat comparable model of local public transport, which includes frequent daytime buses, modern light rail systems in medium to larger cities, or plans for such systems, heavy rail systems in the largest cities, and suburban rail services to the main city center rail hub. Also, cycling, as well as ride-sharing systems, are seen as part of the overall public transport mix, even if they are not integrated in the overall fare model.
Price has always been a barrier to use, but subsidies are widespread and very few public transport systems cover their costs, or anywhere near their costs. London had tried the model of full-cost recovery in the early 1990s. The privatization of the UK’s bus industry, outside of London, was meant to make these services cost neutral to the public purse, although subsidies are still required to maintain coherent networks.
Free public transport has been an offer for many years in selected cities, and certainly in many North American cities, as a means of city center distribution, economic development of dense urban cores, or sometimes airport terminal distribution. Examples include: Portland, Ore., which ran a free downtown service until 2012; Salt Lake City’s free downtown services since 1985; Buffalo’s MetroRail downtown free fare zone since the 1980s; Denver’s FreeMallRide and FreeMetroRide services since the 1980s; the new Kansas City KC Streetcar, which has opened as a free service along its 2.2-mile route; and the Miami MetroMover, which has been fare free along its downtown loop since 1986, as well as the northern Florida city of Jacksonville, which made its 2.5-mile SkyRide automated metro free fare in 2012. There are also a few examples of this type of service in northern England including Manchester city center’s MetroShuttle.
This free transport was often supported by urban realm improvements or even new transport services using “heritage” or low-emission vehicles or new light rail schemes.
Operations, funding in UK
These types of city center distribution services are less common in Europe. Primarily, I would suggest, because public transport is more commonly considered a service for the wider urban area and not solely for city center distribution. Also, the popularity of park-and-ride services precludes the solely local distribution model for city center public transport.
However, there is a new and wider trend in terms of free public transport in Europe. What is new is the attempt to rebalance the use of fares as means of supporting public transport versus the wider social and environmental goals that society is trying to achieve, as well as versus accepting that service quality and network expansion are still key elements of making the public transport system attractive to a wide set of users.
Public transport due to the efforts of the sustainability lobby; “green” politics and politicians; and effective local, national, and supranational lobbying by groups such as UITP, the International Transport Forum, and Polis in Europe are creating a wider debate about the whole cost model of public transport. Should the end user face any cost barrier at all?
It should be noted that with the exception of the UK, the vast majority of local European public transport services do not cover their operating and certainly not their capital costs. Furthermore, they are simply not expected to cover these costs. Effective and comprehensive public transport is largely deemed a public good like policing and, in European terms, health care. Services should be funded within the tax and transfer capabilities of local, or regional, government. As well as a tool of social policy, public transport is also now delivered as a key sustainability tool.
It should also be noted that many public transport systems in Europe are “open” in design — that is do not have fare barriers or gates and operate by proof of payment. This is particularly common in Germany. Thus, fare collection and distribution equipment are often quite limited.
This has led to a number of trends. Cities such as Vienna, Austria have decided that fares should not be eliminated, but should be minimized as a barrier to use. Thus, in 2010 following a change in the composition of the city council but building upon a long tradition of affordable public transport, Vienna City’s council reduced the costs of annual network season ticket to $400 per year. For comparison, a zone 1 to 4 annual travel pass in London would cost $2,500. These reduced-fare decisions are not considered economic “madness,” but are considered policy to grow public transport demand, and in Vienna’s case, have been implemented alongside substantial expansion of the metro (subway), new public transport vehicles, and investment in heavy rail stations. Over half of the residents of the city use public transport for travel to work.
It should also be noted that Vienna and Austria are quite wealthy and economically robust locations and thus, numerous and other sources of public income exist to fund services. Vienna is also regularly quoted as having amongst the highest quality of life in the world. As a visitor to the city, I can say that public transport is a comprehensive, efficient, and well used means of transport. In particular, the extensive tram network is excellent. Cities across Europe, and particularly in Germany, continue to consider the Viennese approach to public transport fares.
The follow on of this model of “low fare” public transport is “no fare” public transport. An early example of this policy was in Aubagne in southern France (a suburb of Marseilles). This policy was implemented in 2009. Public transport use in the city has markedly increased, but this is not necessarily a good example of the thoughts in this article as Aubagne is also known for having some of the highest per capita public debt of any local authority in France, as well as an oddly short 1.6-mile tram route. The policy doesn’t seem to necessarily be based on long-term public economic sustainability. The small town of Hasselt, Belgium also ran a free fare public transport system from 1997 to 2013 when it was abandoned due to affordability.
A more recent example is in Tallinn, Estonia in Eastern Europe. Estonia is a country of 1.3 million people bordering Russia and south of Finland. The capital and by far largest city is Tallinn, which is also a major tourist draw for its historic center. As the most prosperous of the former Soviet states on the Baltic Sea, the government clearly felt confident that a bold move in public transport could be afforded and would be transformative. Fares were removed in 2013 for residents of Tallinn following a referendum. Visitors, including tourists, continue to have to purchase tickets. All users validate their correct “fare” via a smartcard system when boarding a vehicle. Paid fare tickets are still quite inexpensive with smartcard tickets costing only about $1. The transport system in Tallinn is largely bus, trolley, and tram-based. Public transport use increased by over 10% in the year following the removal of fares, and evidence suggests that socially disadvantaged residents have improved accessibility. Service quality has also been maintained, however, there are increased issues of service crowding. While supporting a sustainability agenda and social policy goals, the scheme has perhaps not transformed urban mobility. The national government is nevertheless planning to offer free bus public transport nationwide.
Another more recent example is pending in Luxembourg. A relatively small country of approximately 600,000 people sitting between Belgium, France, and Germany, the country is generally rural and centered on the capital of Luxembourg City, which is a major finance center, as well as one of the bases of the European Union’s institutions. The prosperity of Luxembourg City, as well as its high housing prices, has created substantial commuter flows from Belgium, France, and Germany, and this has led to major traffic congestion on the motorways in the south of the country and across its borders.
Luxembourg is a very wealthy and prosperous country.
As a result of a change in the political control of the country in 2018, the decision was made to remove public transport fares nationally from 2020. The country is currently in the midst of major investment in national rail services, essentially commuter rail services into Luxembourg City, as well as building a major 10-mile light rail scheme across the city.
As a visitor to Luxembourg a number of times, it should be noted that public transport is again excellent, pending the new light rail scheme, which is clearly needed to improve the quality of the link between the European institutions and the main rail station. The rail service from the capital to often quite small secondary towns in the country is remarkably frequent and well utilized. This is also in comparison to the immediately adjacent areas of northern France and eastern Belgium. The cost of public transport in the country is also remarkably low. Following the example of Austria, fares are already a minimal barrier to use. An all-day pass for all forms of public transport in the country currently costs only about $4.40.
It remains to be seen whether, with costs already so low, the free fares will result in substantially higher public transport use, lower road congestion across its borders, or create a degree of system instability for the transport operators in the country. It will, however, release these operators from the cost of distributing, collecting, and verifying payment of what is already relatively low fare revenue.
Another form of the fares debate is also occurring in Germany. In late September 2019, as part of a package of measures to reduce the environmental impact of (air and road) transport services, the German government announced that it will substantially alter the rates of the VAT sales tax on rail fares in 2020. By substantially lowering this rate from 19% to 7% for journeys longer than 30 miles, effectively almost all rail fares will drop by 10% next year. This is also being linked to a substantial increase in the already substantial budget for Deutsche Bahn (DB), the former state and still dominant rail operator in the country, which is expanding its fleet of high-speed ICE trains by one-third.
Is free public transport the end of service quality? An increasing set of experiments in Europe is proposing that it is the enablement of changing the role of public transport in the sustainability debate and part of substantially lowering emissions and improving air quality. It could be suggested that even low-fare revenue could be better used to further improve the quality of public transport services, or at least generate improvements more quickly than would otherwise occur. However, a number of cities and countries are taking the view that public transport investment is adequately assured and that this is not a reason to continue with the fares model. Most importantly, cities are finding that efficiencies can be immediately gained by removing the cost of collecting and policing fares.
Giles K. Bailey is a director at Stratageeb Ltd., a London-based consultancy assisting businesses think about their strategic vision and innovation.