Institute of Transport Studies, University of Leeds
Abstract
EXECUTIVE SUMMARY
This Final Report covers the results of the EU-funded research project FATIMA (Financial Assistance for Transport Integration in Metropolitan Areas) which had the following objectives:
(i) to identify the benefits to the private sector of optimal urban transport strategies, and the potential for obtaining private sector funding to reflect those benefits;
(ii) to determine the differences between strategies optimised using public funds and those optimised within the constraints imposed by private funding initiatives;
(iii) to propose mechanisms by which private sector funding can be provided so as to achieve appropriately optimal transport strategies while maintaining quality of operation; and
(iv) to use the results to provide more general guidance on the role of private sector funding for urban transport in the EU.
The project adopted an approach which involved the application of the same study method to nine cities, chosen to reflect a range of urban transport policy contexts in Europe: Edinburgh, Eisenstadt, Helsinki, Merseyside, Oslo, Salerno, Torino, Tromsø and Vienna. This method involved specifying appropriate policy objective functions against which transport strategies could be assessed, and finding the specific strategy that optimised each of these functions. The objective functions covered a range of differing regimes with respect to constraints on public finance and the involvement of the private sector.
It was found that, in a majority of the case study cities, optimal socio-economic policies could be funded by road pricing or increased parking charges, considered over a 30 year time horizon. Such measures would typically be used to make it feasible to increase public transport frequency levels or decrease public transport fares. In general it was found to be important that the city transport planning authority had complete control over all transport measures, affecting both private and public transport.
However, such strategies are likely to require significant levels of investment and, given current attitudes towards constraints on public spending, it might be politically awkward for the public sector to raise such finance. There is thus a potentially useful role for private finance to be used to help overcome such (short term) financing problems. However, it must be appreciated that the private sector will expect to make a profit on such investment. In cities where optimal policies are funded by travellers, the private sector can be reimbursed by travellers. In cities where it is unfeasible for travellers to fund all the costs of optimal policies, it will be necessary for the private sector to be reimbursed from public funds (raised from taxes). An important issue here is that the use of private finance should not be allowed to replace optimal policies with sub-optimal policies.
Whether or not the private sector is involved in financing a strategy, there may be interest in private sector operation of the public transport service. However, evidence on the scale of benefits or losses from such operation is unclear. If, though, a city authority decides that private operation is beneficial, it should use, where legally possible, a franchising model in which it specifies optimal public transport service levels and fares. On the other hand, if a deregulation model is required (in order to comply with national law), private operators should not be given complete freedom to determine the operating conditions which meet their profitability target, even if the level of profitability is itself constrained as a result. There are typically a number of combinations (e.g. of fares and frequency) which achieve a given level of profitability, and not all will be equally effective in terms of public policy objectives
