About the International Transport ForumThe International Transport Forum at the OECD is an intergovernmental organisation with
54 member countries. It acts as a strategic think tank with the objective of helping shape
the transport policy agenda on a global level and ensuring that it contributes to economic
growth, environmental protection, social inclusion and the preservation of human life and wellbeing.
The International Transport Forum’s Research Centre gathers statistics and conducts cooperative research programmes addressing all modes of transport. Its findings are widely
disseminated and support policymaking in Member countries.
This research also contributes to the International Transport Forum’s annual summit, whichbrings together Ministers and leading representatives from industry, civil society and academia
to engage in focused debate about strategies for transport in the 21st century.
The Presidency of the International Transport Forum rotates among member countries. Norway
holds the presidency in 2012/13. At the 2013 Summit, the Presidency will pass to France for2013/14. Past presidencies have been held by Finland (2008), Turkey (2009), Canada (2010),
Spain (2011), Japan (2012).
The International Transport Forum was created under a Declaration issued by the Council of
Ministers of the European Conference of Ministers of Transport (ECMT) at its Ministerial Sessionin May 2006 under the legal authority of the Protocol of the ECMT (signed in Brussels on 17
October 1953), and legal instruments of the OECD.
Further information at www.internationaltransportforum.org

About this Compendium
This compendium of case studies on urban public transport funding was developped as an input
to the 2013 International Transport Forum Summit on Funding Transport (May 22-24, Leipzig).
It serves to illustrate a variety of urban contexts, public transport service services and funding
mechanisms in a selection of International Transport Forum countries. It was jointly developed
along with the International Association of Public Transport (UITP). The compendium was
researched and written by Haoran CHU (Ministry of Transport, China), Philippe CRIST (ITF),
Sangjin HAN (Korea Transport Institute), Jérome POURBAIX (UITP) and Yuichiro KAWASHIMA(Ministry for Land, Infrastructure, Transport and Tourism, Japan).

Funding Public Transport for the Urban Century
Cities are tremendously and enduringly popular – at present more than half of theworld’s population lives in urban areas, many of them in very large urban conurbations thoughmedium-sized cities are growing rapidly as well. Despite, and possibly because of, crowding,more and more people are expected to move to cities in the years to come. The reasons forthis popularity are multiple and they generally involve reaping the benefits of agglomeration –e.g. wide access to jobs, opportunities, people and ideas. However, crowding can grow to thepoint where the benefits of cities are eroded by their dysfunctions – and nowhere is this clearer
than in urban transport systems. Congestion on roads and in public transport systems can growto intolerable levels reducing the ability for cities to deliver on their promise. No single mode
can handle the mass of trips required for a city to function – especially at peak hours. However,
because they can efficiently handle large masses of travelers, public transport systems, are afundamental component of successful cities. Providing these services comes at a cost and in thefollowing pages we review how a selection of urban areas meet this financing challenge.
What is clear is that no single financing model emerges, reflecting the great diversity of
local situations and needs. It also appears that there is no silver bullet for the funding of public
transport and that combining funding from different sources increases the resilience of thesystem. These urban areas do face different tensions but nearly all find that ensuring the longterm financial stability of public transport operations remains challenging –which is true for alltransport modes. The particular challenges faced by public transport operators and authorities
largely rest on the cost structure of providing public transport services and infrastructure andthe nature of the various mechanisms that ensure revenues, namely relying on taxpayers,
users and beneficiaries. The economic outlook highlights a paradox: public transport plays avital role in keeping the economy running and supporting its recovery, but the funding of public
transport is affected by current economic circumstances.
Some urban regions, especially in large ones Europe and North America, have relatively
mature public transport networks whose operation and upkeep requires significant revenue.
Large, dense cities like London and Paris have been able to more-or-less keep up with costs
and have deployed significant new services – but they have done so because of a large andgrowing customer base. This customer base is somewhat guaranteed via demographic
dynamics, active land-use planning policies and other measures such as the London congestion
charge that ensure a sustained public transport market. Other cities like Chicago experience
more difficulty and financial sustainability remains tenuous and has come in part at the cost ofasset-value sapping maintenance deferral.
The Asian cities covered in these case studies have had to, in the case of Tokyo, or arepresently in the process of building extensive regional rail-based public transport systems inorder to handle a huge influx of population. Early build-out of these systems in less-developedor developing urban zones ensures that land, labour and construction costs are kept relatively
low but even so, costs remain significant and are often much higher than projected. Early buildout also ensures that land development is channeled in corridors that can be supported byhigh-capacity rail services but achieving financial equilibrium may be elusive, especially until
demand grows. In some cases, cities are deploying high-volume bus rapid transport systems

and protected bus lanes to more rapidly and flexibly handle strong growth in some corridors,
this is the case for Shenzhen and Beijing.
Fares generally do not cover the cost of providing high quality public transport services
in the cities examined here. In some cases, fares are regulated in order to allow lower income
households to benefit from access to public transport and are not set at cost-recovering levels.
For instance, social considerations played a key role in the setting of fare levels in Madrid
during the last decade. This leads to a system of compensation payments made by authorities
to operators which may be vulnerable to changes in scale and scope with the vagaries of publicfinances change over time. Public transport is a service to all travelers and one that thetravelling public generally is willing to pay for in return for quality – keeping fares artificially low
to meet equity goals may not be the best way to ensure the long-term financial performance of
public transport or to achieve social objectives as there are other more suited mechanisms to
do so.
There seems to be a shared view that public transport services provide value to theurban region as a whole and this is reflected in several operational and capital funding
approaches. On the assumption that employers benefit from efficient access to a large and wide
labour pool, Paris and Portland have put in place a “benefiter-pays” approach that levies apublic transport tax on employers (and the self-employed in the case of Portland) on the basisof payroll mass. The allocation of the income of congestion charging to public transport
improvements, as it is the case in London, is also a way to acknowledge that car users benefits
from better traffic conditions thanks to public transport. The benefiter-pays approach is also(indirectly) evident in Chicago where a regional sales-tax increment helps to pay for public
transport operations. Paris and London derive revenue directly from employers via businessand office real estate taxes in order to cover the capital costs of system expansion. Thisapproach has been relatively successful but has the downside risk of being tied to regional
economic performance and in times of crisis, revenue shortfalls can be significant even though
the costs of public transport service provision remain nearly the same.
Tokyo is a special case where the largely private public transport operators are
profitable and only require grants from the government in exceptional capital investment
projects. Nonetheless, fare revenues fall far short of covering the costs of service provision andTokyo-region public transport operators derive the lion’s share of their revenue frommaximising the return on their extensive real-estate asset base. In this business model, it isalmost as if the public transport network’s main purpose (from the operator’s perspective) is toensure an elevated and steady flow of customers to the operators’ shops, hotels, health clubs
and other commercial undertakings. The funding model of large bus interchanges in Madrid isbased on similar assumptions. This of course has the added benefit of ensuring efficient andrapid public transport-based mobility throughout the urban region. Value-capture approaches
such as this one should be an integral part of the public transport financing equation.
None of the models presented here are universally applicable. Many are most successful
in very large and dense urban regions – the Paris model is not as successful in other cities inFrance and the same is true for the Tokyo model in other Japanese cities. However, manyaspects of these models can be implemented in other regions and, crucially, in fast-growing
medium sized cities. Successfully providing effective urban-wide public transport services will
require cost-containment on the side of operators – this may mean focusing on improving thestandard and quality of bus services before investing in high-prestige but high cost rail
networks. It will also require developing a diversified and sustainable revenue base that allows
for less-constrained fare-setting and reduces vulnerability to sudden and unpredictable changes
in income.
National governments may play an important role in supporting resilient funding architectures
for public transport by:•

Giving high priority and support to urban public transport investment programmes,(including well defined eligibility criteria and solid economic appraisal procedures);•

Strengthening institutional arrangements to improve urban mobility: empower local
governments (notably by matching competences with resources) and enhance private
sector participation;•

Mainstreaming urban mobility in national economic and social policies and programmes – tooptimize mutual benefits;•

Integrating public transport into territorial planning and development policies - to reconcile
connectivity and sustainability;•

Supporting innovation in policy and technology – to support new public transport businessmodels, increase efficiency and attractiveness.

Note on Sources and data:
All land area, population and gross regional product were sourced from the OECD Territorial Development database on
Functional Urban Areas with the exception of Beijing and Shenzhen.
Sources:•

Beijing: Beijing Municipal Government and the Ministry of Transport, China.

•

Chicago: FTA Transit database and CTA, Metra and Pace publications and annual reports.

•

London: Transport for London publications and annual reports, UITP•

Madrid: Consorio de Transportes de Madrid, UITP

•

Oslo:

•

Paris: Syndicat des Transports Région Ile-de-France, RATP, SNCF, and French Ministry of Transport.

•

Portland: FTA transit database and TriMet publications and annual reports.

•

Seoul: Seoul Metropolitan Government and KOTI.

•

Shenzhen: Ministry of Transport China and Shenzhen Municipal Government•

Tokyo: Ministry for Land, Infrastructure, Transport and Tourism, Tokyo Metrpolitan Government.

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org and Natural Earth Modis 500 data

Beijing
Key Numbers

Beijing capital region, China

Dynamic growth and ambitious responses
Beijing has grown tremendously in recent years now reaching a
population of more than 20M people. At the same time, increased
wealth has led to higher car-ownership rates which have severely
strained the region's road networks with an estimated 5 million (andgrowing) cars. Every day more than 29M trips take place within
Beijing's 6th ring road (not accounting for walking)
To meet the challenges brought on by growth of travel demand, thecity has built about 240km of new metro lines since 2008. It has alsosought to develop multi-level bus services to match new travel
patterns. Crucially, the city has, like other large cities in China, sought
to relieve traffic congestion by actively managing car ownership via alicense plate lottery and implementing zone-based parking charges.

Beijing

Key Actors
GovernmentThe national government is responsible
for guiding the strategic development ofpublic transport including establishing public
transport laws, policies and standards,
developing
national
publictransport
development strategies and planning andmonitoring the road transport market. There
has been a general effort to prioritise public
transport
in
response
to
the
rapid
development of major urban centres. In
December, 2012, the national government
issued a position statement emphasisingpriority to be given to public transport

Mode share (all trips, 2011)

development. Though authority for operatingurban public transport resides largely at themunicipal level, several National Ministries

excluding walking

and bodies of the central government play arole in public transport development. These
includethe
National
ReformandDevelopment Commission (NRDC) which has
a role in setting strategic priorities, theMinistry of Transport (MOT) which has
responsibility for overseeing public transport
operations and the Ministry of Housing and
Urban Development (MoHURD) which hassome responsibilities for building urban
publictransport
infrastructure.
Actions
include the exoneration of purchase taxes for
new
buses
through
2015
and
the
implementation of the National Transit
Metropolis plan under the oversight of MOT
through which 30 cities will receive grants
to develop public transport hubs, intelligent
transport systems and deploy low-carbon

Beijing

Municipal
governments
haveoverall
responsibility for the supply of transport
services throughout local administrative
areas. Specific responsibilities relating tourban railway or bus transport are allocatedto different departments such as theMunicipal Commissions of Development andReform, State-owned Assets Supervision and
Administration, Transport, Planning, financeetc. Though many municipal governments
have sought to develop high-prestige (andhigh-cost) subway networks as noted above,
several are now turning to bus rapidtransportation corridors as a lower-cost,high-volume public transport option where
demand is insufficient to warrant subway
systems.

Municipal Transport Authority

BeijingMunicipal
CommissionofTransport(BMCT)
organises
andcoordinates the supply of public transport in
the Beijing region. It sets priorities for anddevelops the overall plan regarding transport
infrastructure construction. It proposes theannual programme of transport expenditureand has responsibilities for management andsupervision. BMCT is also responsible for the
implementation and supervision of urban railand bus concession projects and proposes
tariff rates to the Beijing Municipal
Commissions of Development and Reform(BMCDR) which has responsibility for setting
public transport fares.

+63%

growth in number of public transport
trips, 2006-2012

OperatorsThere are two bus operators and two
urban railway operators in Beijing.
Beijing Public Transport Holdings, Ltd. (BPT)
is a state-owned enterprise responsible forbus system construction, operation andmaintenance. BPT operates more than 700
lines and accounts for more than 13M trips
per day (95% share of all bus passengers).
Beijing Xianglong Bus co., Ltd is also a stateowned company operating 25 lines andcarrying 630 thousand passengers per day.
Overall, 68% of all public transport trips inBeijing are by bus.

Regarding urban railway transport, there arethree kinds of companies which respectively
take charge of investment, construction andoperation, and these companies give rise tomoderate competition in construction andoperation. Beijing Subway Operation co., Ltd
is a state-owned company that operates

Urban rail structure

public transport systems. The nationalhas
also
approved
thegovernment
construction of multiple subway systems
throughout China and the country boasts
more subway kilometres than North America
and Europe together. However, several
systems, especially in relatively smaller
cities, have struggled to achieve financial
sustainability.

Beijing

391.5km of routes and 14 lines.
This
operator carried 85% of urban railway
passengers in Beijing in 2012.
The second urban rail operator, Beijing MTR
Corporation (BJMTR), is a public-private
partnership whose shareholders include Beijing
Infrastructure Investment Co. Ltd (BII, 2%),Beijing Capital Group (BCG, 49%) and MTR
Corporation (MTR, 49%).
BJMTR isresponsible for investment in (and operationof) signal control systems, rolling stock, andother support systems. BJMTR will lease
access to subway tracks, tunnels andstructures from the municipal government.
The private company will operate Beijing MetroLine 4 and the Daxing Line whose combined
distance is 50.5km – these lines are expected
to carry about 15% of urban railway
passengers. BJMTR also plans to develop nonrail sources of revenue from real estatedevelopment and commercial concessions instations. BJMTR’s initial concession for line 4
and the Daxing line is for 30 years.
The only regional commuter rail line is line S2
operated by the Beijing Railway Bureau. It hasa length of 77 km with 7 stations from city
centre to suburb and carried about 10 thousand
passengers per day in 2012 – including many
visitors to the Great Wall in Badaling.

Funding
Operations

L

imited information is available on thecost and revenue structure of urban
public transport in Beijing. Fares are not set
accordingtomarketconditions
andoperators
incur
substantial
revenueexpenditure shortfalls for which they arecompensated from the government.
Beijing Subway Operation co., Ltd’s 14 lines
all receive a subsidy except for the airport
line. Payments are made by the municipal
government and are split into three parts
covering operational losses, depreciation andgrants for equipment purchase.

Loss-covering payments also feature heavily
for bus operations – in 2011, BPT’s total
farebox revenue accounted amounted toonly 22% of total costs with the municipal
government making up the nearly USD
2100M difference.
These payments are significant and are inpart due to low regulated fares. Municipal

governments have no dedicated transporttaxes and make these payments out ofgeneral revenues whose source is largely
based on land sales and other local sourcesof revenue. Sourcing general revenue fromland development rights poses a challenge
since the release of new land fordevelopment will also ultimately increase thecost of providing public transport service atthe urban boundary.

Capital InvestmentThe region's total urban railway capital
investment budget was USD 30200M in
2008-2012. Urban rail investment projects
areimplemented
bytheBeijing
Infrastructure
Investment
Co.,
Ltd.
Accordingtomunicipal
government
guidelines, 40% of urban rail-related capital
expenditures are to be covered by local
government sources with the remaining 60%
covered via external financing, often throughspecial-purpose investment vehicles.

Beijing
For bus facilities, the Beijing Finance Bureau

directly by the BMCT. BPT is responsible forfunds projects planned for by the BMCDR.
Maintenance of bus facilities is paid forthe actual construction and maintenance ofbus facilities.

Opportunities & Challenges
GovernanceBeijing has experienced tremendous
population growth in recent years which
has strained the road traffic system despite
relatively
low(butrapidlyrising)motorisation
rates.
In
response,themunicipal government has set out anambitious congestion reduction plan which
outlines 28 specific measures in four broad
areas. These are the accelerated deploymentofnewtransport
infrastructure,astrengthened priority for public transport inmunicipal plans and investments, a car plate
lotterysystemandimproved
traffic
management. Specific actions include theconstruction of three new subway lines
extending the regional network by 36km,
managing car ownership via a licence plate
lottery and putting in place a zone-based
parking price system. In 2011, the increasein car ownership had slowed to 4% and, forthe first time, the share of cars in all trips
dropped (by - 1.2%). Public transport now
accounts for 42% of all trips in Beijing.
These and other policies have had asignificant impact on congestion levels.
Beijing recorded a 50% year-on-year drop in
average daily congestion from 2010 levels
resulting in an daily average of 75 minutes
less congested. Workday peak hour travel
speeds have also increased by 10% and13%, respectively in the morning andafternoon.

Public transport service

W

hereas total travel (excluding walking)within the 6th ring road dropped by
1.1% in 2011, combined bus and subway

trips increased by 4.6% over the same
period – led by growth in subway travel(+18%). Most public transport trips inBeijing are by bus and and bus route
coverage is extensive -- 97.6% of the city
center within the 3rd ring road was within
500 meters of the closest bus station and
85.2% of the city within the 5th ring road
had the same level of coverage. The
extension of the separated bus lane network(324.5 km in 2011) has also contributed toincreasing average peak hour bus speed to
9.9km/h. Bus operators have introduced
several new bus services for commuting
passengers. Examples include rapid bus
systems connected large residential areas
with busy business or financial districts andneighbourhood mini-buses feeding subway
stations in order to resolve the transport
problem of the last kilometre.
High levels of peak hour subway travel havelead to increasing congestion – the busiest
line registered 50 000 passengers per hourat peak or a load factor of approximately
150%.

Practice and Expansion of PPPs

F

aced with significant new planned
investments, the Beijing region will likelyseenewpublic-private
partnershipagreements beyond BJMTR’s operating
concession for subway line 4 and the Daxing
line. In 2012, the Beijing municipal
government created a dedicated PPPnegotiating
team
which
includesrepresentativesofrelevant
local
administrations including BMCT, BMCDR,
Beijing Financial Bureau and the Office ofBeijing

Legislative Affairs. This team completed its
first negotiation with an additional PPP
agreement with BJMTR who will invest USD
2,426M and in return will obtain part ofconstruction permission for subway line 14
and its total operation concession for 30
years.
Nonetheless,reachingthemunicipal
government target of a 664km subway
network by 2015 will place considerable
financial burdens on public transport actors
in the region -- even if this burden is shared

via PPP agreements. The overall cost of
meeting the target has been estimated to be
USD 39,600M for the years 2012-2015 – oran average of USD 9,900M per year. In the
period of 2010-2015, the government may
consider greater involvement of equity
sourced in open markets. Two existing lines
may be concessioned via PPPs (lines 6 and
8)
and
three
new
lines
(7,
16,
Haidianshanhou) will involve some form ofconcession and private capital. The projectedamount of equity financing for future Beijing
urban rail projects is USD 8,088M.

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org, CTA and Metra

Chicago
Key Numbers

Greater Chicago region, USA

Channelling development and managing an
ageing network
The Chicago region boasts an extensive rail and bus network that is
one of the largest in the United States. This has helped mitigate thechallenges posed by lower density growth at the periphery of theregion by providing a strong backbone on which core regional office
and residential developments can be based. The rail network,
especially the elevated metro, is ageing however and the region faces
a considerable backlog in maintenance and infrastructure spending thatcompromises existing and future services. Financial sustainability has
been allusive as well and the current system based largely on fare andsales tax revenue will struggle to keep up with growing expenses.
Regional authorities recognise these issues and are seeking strategies
to ensure long-term, high-quality public transport services in theregion.

Key Statistics
ChicagoKey Actors
GovernmentT

he State of Illinois provides somematching funds for public transport in
the greater Chicago region via the Public
Transit Fund (PTF) as well as compensation
for fare discounts mandated by State laws.
Various levels of government are present in
the governing boards of operators and the
RTA, whose board must be approved byeither the Governor or the Mayor of Chicago.

Regional Transport Authority(RTA)

Mode share (all trips, 2008)

The RTA is a planning, funding and oversightgovernment agency set up in 1974 in orderto oversee, coordinate and partially fundpublic transport services in the greater
Chicago area. RTA reviews, approves andadopts the annual budgets for the threeprincipal public transport operators in theregion. It also reviews the financial andoperational performance of these carriers
who have an obligation under Illinois Statelaw to collectively recover at least 50% of
operating costs from farebox and othersystem revenues. RTA centralises anddistributes earmarked sales tax revenue tothe three regional carriers and operates
some grant programmes. RTA is governedby a board appointed from the six-county
region.

Chicago
Chicago Metropolitan Agency for
Planning (CMAP)

$18.5

C

MAP, is the official regional planning
organization responsible for guiding
long-term transportation, housing, economic
development, open space, environmental
and other quality-of-life issues. It does so
via the comprehensive regional plan -- GO
TO 2040. CMAP also houses the regionaltransport metropolitan planning organisation– the MPO Policy Committee – that
establishes
regional
project
andprogrammatic priorities for federal transport
funds.

OperatorsO

perators have responsibility for the dayto-day operation of their respective
networks, including setting fares, andundertaking capital improvements under thecoordination of the RTA with input from the
MPO policy committee.
The Chicago Transit Authority (CTA)
CTA is an independent government agency
and is the principal public transport operator
in the greater Chicago area. CTA accounts
82% of all regional public transport trips(74% of all rail and 91% of all bus trips).
The CTA service area covers the urban coreof Chicago and suburban Cook county.
Compared to other regional operators, CTA’strips are shorter but include many non-work
trips. CTA is governed by a 7-member board,
four of whom are nominated by the Mayor of
Chicago and the remaining 3 by theGovernor of Illinois.

billionestimated capital investment
maintenance backlog

and

Metra
Metra was formed in 1983 to operate andcoordinate regional commuter rail services
under the oversight of the RTA. Metra’s 11
suburban rail lines account for 11% of all
regional public transport trips and 24% of illregional rail-based public transport trips.
Metra owns tracks and operates trains on 4lines, operates trains on freight railroad
operators’ tracks for another 3 lines andcoordinates commuter rail services for an
additional 4 lines operated by freightrailroads on their own tracks.
Pace
Pace is the third-largest regional public
transport operator providing fixed-route bus,
demand-responsive and van-pool services
within and between the outlying counties in
the region and the urban core. Pace isgoverned by a 13-member board drawn frommunicipal
government
representatives.
Other bus-based public transport operators
also provide some services within theneighbouring counties of northern Indiana.

Key Statistics
ChicagoFundingT

he financial viability of the Chicago
region's public transport networks hasremained fragile despite a relatively high (forNorth American cities) level of use. Public
transport
governanceandownership
structures have undergone several reforms
and the financing framework has been
modified several times (most recently in2008) in order to ensure a more sustainablefunding base.
For the region as a whole, farebox and otherself-generated funds account for the largest
single category of revenue though the
combined revenue from local, state andfederal governments accounts for the
majority of operational revenue. At present,
the three main operators (CTA, Metra andPace) have four principal operational
revenue streams.
The first consists offareboxandothernetwork-generated
revenues which according to RTA rules mustaccount for at least 50% of the operators’
collective operational revenue. The second
largest source of funding is a regional sales
tax increment dedicated to public transport.
This tax is allocated to operators by the RTA
largely according to formula. The State of
Illinois matches 30% of regional sales tax
revenue via the State Public Transportation
Fund (PTF). PTF funds are budgeted on anannual basis from general revenue which, inturn, is largely based on sales and income
taxes. The State of Illinois also directlycompensates operators for losses due tomandated reduced or free fare programmes.
CTA benefits from a tax increment for realestate transactions levied in Cook County
which is also matched at 30% by the State
via the PTF. Finally, operators receive
funding from the Federal government via
FederalTransit
Administration(FTA)
operational grant programmes, the largest ofwhich is the Urbanized Area Formula
allocation. FTA funds are set according to thenational transportation funding law –currently “Moving Ahead for Progress in the
21st Century” (MAP-21) – which isprovisioned largely from a national trust fundthat centralises federal fuel tax revenue.

Chicago

Nearly half of all 2011 capital funds for
public transport development in the region
came from FTA-managed capital grant
programmes mandated under MAP-21.
These funds are largely defined by formula
and ultimately come from federal fuel tax
revenues. Locally-raised capital (via taxes,
bonds and other instruments) accounted forthe second largest source of capital funding
in the region. Nearly half of all capital
expenditure went to purchase and upgrade
rolling stock in the region though there is asignificant and growing backlog of unfunded
infrastructure-related capital requirements
related to the old age of rail-based public
transport networks in the region.

Opportunities & Challenges
Public transport service

Governance

C

T

MAP’s
regional
development
plan
foresees a nearly 30% increase inpopulation by 2040 which, under present
trends, will considerably strain the region’s
already congested roads. Public transport
development, both in quantity and in quality,
is seen as essential in order for the region to
grow and retain its competitiveness with theregion’s US and global peers. In addition,
present demographic trends towards anageing society highlight the need for anaccessible public transport network thatallows older citizens to remain mobile. CMAP
development goals, though not mandatory,callforchannelling
futureurbandevelopment into zones more easily coveredby public transport services. Operators,
especially those under RTA authority, plan toincrease use of the existing system bydeveloping off-peak travel for leisure use
and by enhancing customer experience via

better service performance, technology
enhancements and customer information.
Critically, however, no major new capital
investment projects are planned and muchof the focus will be on enhancing theservices provided by the existing but ageing
network.

he greater Chicago region does not havea single authority governing public
transport though the three main public
transport operators, CTA, Metra and Pace,
are under the authority of the RTA. Despite
RTA oversight, the three main operators
retain considerable autonomy which hasstymied operational and fare coordination todate. There is a recognition that customers
would benefit from a united public transport
front (in terms of fare structure and identity)and efforts are underway to improve thesituation. The Illinois State Assembly has
mandated that a universal fare collection
system be put into place for RTA operators
by 2015. Already in 2013, CTA and Pace will
introduce a single fare payment card(“Ventra”) though fares themselves remain
differentiated. Regional and public transport
governance seems to be improving in the
Illinois portion of the Chicago region but
coordination with public transport authorities
and operators in the Northwestern Indiana
counties abutting Chicago remains lessstrong, especially on a strategic level.

Key Statistics
ChicagoFinancing continued services andexpansionThe Chicago area public transport rail
network is among the oldest in the
country and has suffered from considerable
underinvestment
inmaintenanceandupkeep. Furthermore, many of the region’s
rail and bus rolling stock are old, subject tobreakdowns and in need of replacement.
Current capital expenditure falls short ofcovering
normalmaintenanceandreplacement needs and does not evencontribute to reducing the RTA operators’
estimated $18.5 billion capital investment
backlog. New sources of federal funding in
MAP-21 such as the “State of Good Repair”
capital investment programme fall short ofneeds, especially as general transportation
funds allocated by the State of Illinois havebeen falling and sales tax revenue (a major
source of operational funding at the Stateand local levels) has been under pressure

due to the economic crisis. It is not at all
clear that the current funding model willallow the region to meet its public transport
aspirations. Indeed, even under the most
optimistic
scenario(inflationary
fare
increases, high ridership and sales tax
growth), RTA operators will not avoid afunding shortfall by 2021 and under the basecase (no fare increases, business as usual
sales tax and ridership growth), and RTA
operators will collectively face a $1.3 billion
shortfall.

Innovative fundingThere is considerable interest regardingthepotentialfornewfunding
instruments to become a durable source offunding for regional public transport (e.g.
road pricing, land value capture) but there isno mandate at present to put these into
place and planning has not much advanced
beyond the discussion phase.

Chicago

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org and Natural Earth Modis 500 data

LondonKey Numbers

Greater London area, United Kingdom

Dynamic growth delivered by a leading authority
London transformed the challenge represented by the expected fast
growth in population and jobs in the next 20 years into an opportunity
for establishing public transport as key driver of economic development
and attractiveness of the city. This opened the way to ambitious
programmes of development and modernization of public transport in
London. This is supported by a combination of funding sources,
involving not only users and different levels of government, but also
the beneficiaries of improved public transport in London, as well as
innovative third-party funding arrangements.

LondonKey Actors
Transport for LondonTransport for London (TfL) is theintegrated statutory body responsible forLondon’s transport system. It came into
existence in July 2000 as a result of theGreater London Authority Act 1999. It is afunctional body of the Greater London
Authority and reports to the Mayor of
London. Its role is to implement the Mayor’s
Transport Strategy and manage services
across London, for which the Mayor has
ultimate responsibility. It is directed by a
Board whose members are appointed by the
Mayor of London, who chairs it.

Mode share (all trips, 2011)

TfL is responsible for the planning, delivery
and day-to-day operation of the London’spublictransportsystem.
Itmanages
London’s buses, London Underground, theDocklands Light Railway, London Overgroundand London Tramlink. It also runs London
River Services, Victoria Coach Station, andthe Emirates Air Line.
In addition, TfL regulates taxis and theprivate hire trade, runs London’s Congestion
Charging scheme, manages a 580km
network of main roads including all ofLondon’s 6,000 traffic signals, and promotes
cycling and walking initiatives. It also works
to improve road safety and encourage
people to make sustainable travel choices.

LondonLondon boroughsT

he London boroughs are the highway
and traffic authorities for 95 per cent ofroads in London. They work in partnershipwith the Mayor to deliver the aspects oftransport
strategy
relevant
to
theirresponsibilities. They are required to develop
and implement Local Implementation Plans
detailing their proposals for carrying out thetransport strategy in their borough. The
Borough councils receive funding from TfL
for local transport schemes.

Note: The UK Department for Transport(DfT) has responsibility for national railroutes in London (except London Overgroundservices).
TfL operates some of the public transport
services under its responsibility throughsubsidiaries (e.g. London Underground
Limited). The operation of other services isdelegated to private sector companies.

1million

numbeer of jobs a Londoner canaccess in 45 minutes

In particular, most bus services in London
are run by private operators who have been
awarded a contract by TfL. All applicants
have to tender for any service they would
like to run. A small number of bus services in
London are run commercially and are notpart of TfL's competitive tender process.
Serco Docklands operates and maintains the
DLR network as part of a franchise
agreement.
Rail operations on national rail lines are also
run by private train operating companies.

Funding
Transport for London’s Business
PlanT

fL’s Business Plan describes how it will
implement
theMayor’s
Transport
Strategy and sets out sources of revenue tocover operating expenditure and financial
charges for the financial years 2012/13 to
2014/15. The business plan also identifies
sources of revenue to cover its capital
expenditure over the same period. The
current business plan is a departure fromprior ones and so we describe the current
plan and not previous ones here. Under theBusiness plan, Transport for London’s
activities are funded from six main sources.

Central government grants
The
Transport
Grant
comprises
aninvestment grant, which supports delivery of
the investment programme, and a general
grant, to support operating activities.
Additional grants are also received from the
Department for Transport, notably tosupport London Overground services.
Business taxes
TfL will receive a proportion of its funding
through a locally-retained share of London’sbusiness rates.

LondonFares and congestion charging
scheme
The actual fares decision foreach year is taken by the
Mayor based on a number ofconsiderations, including theneed to ensure that fares makeappropriate
contribution
antowards the cost of operating
and investing in London’stransport services. The Mayor
keeps
the
level
of
the
Congestion
chargeunder
review, with changes being
subject to consultation.
Prudential borrowing
TfL borrows from a variety ofsources,basedonconsiderations such as the costofborrowing,
marketconditions and the level offlexibility offered.
Commercial developments
TfL seeks to maximize income
from advertising and property
rental and development, as
well as innovative new retaildevelopments. It also seeks
commercial
sponsorship
opportunities, building on the
successofexisting
arrangements such as Barclays
Cycle Hire and the Emirates Air
Line. TfL can also sell property
that is no longer required for
operation.
TfL makes also use of third
party contributions for a variety of specificprojects.

LondonOpportunities & Challenges
Public Transport Service•London’s transport network is very busy,
particularly during peak times, withgrowth in population and employmentmaking conditions worse. Over the next 20
years the city’s population is expected toincrease by almost one million people andemployment by more than 600,000 jobs.
Transport for London has many schemes
under way to address this challenge,
including:•

Crossrail, which will deliver a 10 per centincrease in rail-based network capacity
in London;•

A rolling programme of Tube upgrades
which will provide more than 30 per centadditional capacity;•

The investment in cycling and walking
making alternatives to motorised travel
more desirable;•

Maintaining London’s bus services andintroducing the New Bus for London to
make boarding and alighting faster ;•

Addressing London’s road congestion
through initiatives including the London
Permit scheme, the Lane Rental schemeand traffic-light optimisation schemes.

synthesis,
Transport
for
London’s
In
Business Plan addresses three broadrequirements for the city:•

Driving
London’s
population growth

employment

It ensuring that TfL’s investment is built
aroundtherequirementsofits
customers by providing a safe, secure,reliable service where personalised andconsistentcustomer
serviceisparamount.
•

Making life in London better for all
It creates an environment in London thatmaintains its position as the world citywhere people want to live, work andvisit.

Risks
Transport for London’s operations andongoing investment programme are subject
to a number of risks, including:•

The future performance of the economy
and its effect on fares and secondary
income. Weaker economic growth could
have an impact on passenger demand. A
further risk would be a sustained periodof high inflation or a marked increase in
the cost of borrowing.

•

The need for continued grant beyond thecurrent
Government
settlementto2014/15.

•The £7.6bn of efficiencies and other costsavings up to 2017/18 that are assumed
in the Business Plan. This includes
significant underlying initiatives involvingorganisational change and restructuring.

•

Delivery of milestones set out in TfL’s
Spending Review settlement to cost and
time.

•

TfL’s plans to sell property and otherassets. These are dependent on market
conditions.

and

It identifies the investment required toensure the city can reliably support the
expected increase in residents and jobs
over the next 20 years.

Putting customers at the heart of thebusinessLondon•Unexpected events or acts of terrorismthat could have a larger impact that thereserves included in the Business Plan tocover such attacks.

Funding for CrossrailCrossrail is the responsibility of Crossrail
Ltd, a wholly owned subsidiary of TfL,
and is jointly sponsored by TfL and the DfT.
Crossrail is fully funded within TfL’s Business
Plan. The remainder of the construction cost
will be met by third-party finance, includingfrom Network Rail.
As part of the Spending Review, more than
£1bn in project savings was identified
throughstationandengineering
improvements and the adoption of a more
efficient construction timetable.

The Mayor introduced a Business Rate
Supplement in 2010/11 of two pence on
every pound. This tax increment will support
the cost of servicing £3.5bn of debt raised by
the GLA, as well as providing a directcontribution to the project during theconstruction period.
The Mayor is also expecting to raise almost£600m in contributions from property
development, through a new Section 106
policy implemented during 2010, as well asfrom the Community Infrastructure Levy to
be applied to developments across the
Capital, primarily in central London andDocklands.
A total of £445m is expected to be raised
through sale of surplus land and property
developments on top of the new stations.

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org and Comunidad de Madrid

Madrid
Key Numbers

Comunidad de Madrid, Spain

Delivering on ambitions despite austerity
After 15 years of fast development, which provided Madrid with a worldclass public transport network, new challenges lie ahead. The economiccrisis has called for adjustments in the funding mix – in particular farepolicy - and the close examination of alternative funding sources.
Mobility management and the application of new technologies are partof the priorities of the Regional Government – both areas represent
opportunities for strengthening Madrid’s public transport businessmodel.

Madrid

Key Actors
Consorcio Regional de
Transportes de MadridT

Mode share (all trips, 2008)

he Consorcio Regional de Transportes deMadrid (CRTM) was founded by the
Madrid Regional Government in 1986. As anautonomous
body
of
the
Regional
Government, the responsibilities of the CRTM
cover the provision of public transport
services to the inhabitants of the entire
Madrid Region and associated municipalities.
Its board is made up of members from anumber of public and private bodies,including representatives from the Region ofMadrid, associated towns and municipalities,
the Spanish government, private transport
operators, trade unions, and user andconsumer associations.

The CRTM has authority over bus, metro,and light rail services. It has no authority
over suburban train services, although there
is an agreement over the use of the Travel
Pass.
The functions of the CRTM include:●

The planning of the public transport
infrastructures(metroextensions,interchanges, bus lanes, etc.)●

The planning and coordination ofservices and programmes for theoperation of all transport modes.

●

The establishment of an integrated fare
framework for the system.

●

The creation of a global image of thetransport system in which the CRTM
leads the relation with users.

Madrid

CRTM’s position as a regulating andcoordinating body helps create a stable
framework for financing the Region ofMadrid’s transport services. It enters into
agreements
andcommitments
withauthorities at different levels in order tomeet investment and operation fundingneeds which are not covered by farerevenues. In particular the “Contract
Programme”, signed between the General
Administration of the State and the CRTM,
determines the respective contribution of thenational
government,theregional
government and the local governments tothe funding of public transport operation andinvestment.
For its part, the CRTM must cover:●

operating expenses and, as the casemay be, investment expenses of the
public companies that are part of it;●

railway concessions;●

compensations to private suburban bus
companies;●

travel on suburban railway lines madeusing Travel Passes.

Operators
The public transport system has various
operating companies, both public andprivately-owned:

100%

number of bus and light rail stations
accessible to all●

Metro de Madrid, S.A., which operates
the underground system, is a publiccompany owned by the Region ofMadrid.

●

EMT, which operates bus services in thecity of Madrid, is wholly owned byMadrid City Council.

●

30 private companies
suburban bus services.

●

Cercanías-Renfe, a public company
dependent on the Spanish Ministry of
Public Works, operates suburban rail
services.

●

Transportes Ferroviarios de Madrid (TFM)
is the company awarded the tender forthe extension of Metro line 9.

●

Thecompany
MetroBarajas,
S.A.,
concessionaire of the connection within
the airport.

●

3 light rail concessionaires: Metro Ligero
Oeste S.A., Metros Ligeros de Madrid
S.A. and Tranvía de Parla S.A.

operatetheMadrid

FundingT

he total costs of operating public
transport services placed under the
responsibility of CRTM were about 2,200
million EUR in 2011. These costs were split
as follows (in 2010):
Bus, Madrid (EMT)
428M€
Metro
944M€
Suburban and regional
services (bus, light railand commuter rail)
729M€
CRTM operation
46M€
Other
65M€

19%
43%

33%
2%
3%

Required funding for public transport
operation in 2011 was covered by public
transport fare revenue (978M€ - 44%) andcontributions
frompublicauthorities(1,246M€
56%).
The
respective
contribution of each level of government was
as follows:
City of Madrid
Region of Madrid
Central State

10%
39%
7%

The sources of funding for public transport
infrastructure development have included
theRegionofMadrid,theCentralGovernment, and the private sector throughinnovative
funding
schemes.
Fundingarrangements are set out in successive
Infrastructure Plans.
The Metro and Light Rail Extension Plan
2003-2007
includedadministrative
concessions for the construction andoperation of some transport infrastructures,conferred to a successful bidder, for instancefor new Light Rail lines and an extension of
the metro network. The Plan also included aprivate contribution from the land value
capture generated by a new urban

development affected by the new transport
infrastructure, for example for the Parla
tramway.
The Public Transport Infrastructure Plan
2007-2011 aimed to keep the Regional
Government’s
commitment
topublictransport and to improve the integration of
Metro and Railway networks. The Plan
initially included investments of 708 million
EUR for Metro extensions and 519 million
EUR for Railway developments.
The Madrid Suburban Railway Infrastructures
Plan 2009-2015 is a joint initiative of Central
State and Region of Madrid to upgrade rail
network for Madrid with an initially expected
investment of 5,000 million EUR including
infrastructure construction programmes (network extension by 115km, capacity
enlargement, building of new stations) andprogrammes to modernize the network
broken down as follows:
Network enlargement
2,950M€
Capacity enlargement
620M€
Stations and interchanges 650M€
Network modernization andimprovement programmes 780M€
Total
5,000M€
Finally, the Madrid Interchange Bus Stations
Plan relied on an innovative approach for thefunding of the interchanges (cf. infra).
Public transport in Madrid is funded fromdifferent sources:•

Fares: most of the fare revenues arecollected by CRTM. Fares were kept at a
relatively low level for most of the last
decade.
Someincreases
wereimplemented in the last years.

•

The Region of Madrid covers a share ofMadridlight rail lines in Sanchinarro, Pozuelo de
Alarcón and Boadilla del Monte, themetro extension of line 8 to the new
airport Terminal T4, and previously, theTFM concession of metro line 9 to Rivas
and Arganda del Rey.

public transport operation expenditureandmultiannual
publictransport
investment plans.
•

The Central State also covers a share of
public transport operation expenditureand supports investment, mainly insuburban railways.

•

The City of Madrid, and to a lesser
extent, other cities in the region cover ashare of public transport operation
expenditure.

•

Private investors
agreements.

•

Revenue from land value capture.

througha private contribution from the land
value capture generated by a new urban
development affected by the newtransport infrastructure. As examples,
the Parla tramway or the extension of
metro line 1 to a new residential area
called PAU de Vallecas.

•

Collaboration with private companies,
supporting part of the infrastructure
which connects their activities areas. For
instance, Telefónica funded one stationof Metronorte, called Ronda de laconcession•
Collaboration with private companies,
which support part of the infrastructure
which connects to their activities’ area.
Private funding channels include:••

Administrative
concessionsforconstruction and operation of thetransport infrastructure conferred to a
successful bidder, for instance for the

Comunicación.
Funds for rolling stock renewal come directlyfrom public operators.

Opportunities & Challenges
Innovative funding :MadridInterchange Bus Stations Plan

M

adrid
has
developed
aninnovative model of publicprivate partnership for the financingof large interchange stations, buildingon the successful experience of the
Avenida de America interchange in
2000. Under the Interchange stationsplan
2004-2008,
four
newinterchange stations were built with a
total budget of 369 million EUR.
These are 30 year concessions forthe construction and operation of
infrastructures, which occasionally
include adjoining car parks, where

privatepartners
recover
their
investment by means of collecting afare from each regular bus passenger
that on or off at the interchange. This
also includes the operation of retail
outlets, advertising areas, vending
machines, etc.
Madridinterchanges
received
numerous awards including the joint
ITF-UITP award for best innovation in
public transport in 2010.
Mobility management and IT

After more than a decade of fast public
transport infrastructure development,
the Madrid Regional Government is nowMadrid

focusing on mobility management andapplication of new technologies to improve
public transport provision. In this new stage,
one of the main challenges identified by the
Regional Government is the Modernization
Plan of suburban buses, involving more than
2,000 buses in the Region, which would
provide high technological solutions for
information, operation and coordination

issues. Another challenge is the introduction,by the end of 2013, of new public transport
contactless cards. Given constraints on
public budgets, securing a sound financial
framework for the whole system, seeking
new funding sources and partnership, arealso part of the challenges identified by the
Regional Government.

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org and MLIT, Japan

Oslo
Key Numbers

Greater Oslo area, Norway

Commitment to public transport-led growth
Oslo has successfully taken up the challenge of increasing the modal
share of public transport in a fast growing region. The allocation of asignificant share of the revenues of the road toll to public transport,
supporting both capital investment and operations, played an
important role in the rapid delivery of the public transport development
agenda.

Oslo

Key Actors

Mode share (all trips, 2008)T

he responsibility for providing local
public transport services in Norway liesat the county level. Ruter AS is the
responsible public transport authority for the
Region of Oslo, made of the City of Oslo andthe surrounding County of Akershus. It is
owned by the City of Oslo (60%) and theCounty of Akershus (40%).

companies in 2009: Unibuss (privately
owned) with 40% of the market, Concordia
Buss (privately owned), Veolia in Akershus(privately owned), Norgesbuss (privately
owned) and Netbus (state-owned company
owned by Norway’s national railway, NSB).
Ferries are operated by the privately-owned
Tide Sjø AS.

Ruter AS is in charge of strategic planning,tendering, and awarding public transport
services, a well as coordinating the various
publictransport
services,
includingscheduling.

The metro and tram operations are awarded
directly. The operator Oslotrikken (tram) andOslo T-banedrift (metro) are independent
units of the Kollektivtransportproduksjon AS
company which is owned by the City of Oslo.

Bus
and
ferry
serviceshave
been
competitively tendered since 1994. Local andregional bus services were provided by five

NorwegianState
Railway(NSB)
responsible for the heavy rail network.

is

Oslo

FundingE

xpenditure on the operation of public
transport
servicesunderthe
responsibility of the Ruter AS amounted toabout 710 million EUR in 2011. This
expenditure was split as follows:Bus
Metro (T-Bane)
Tram (Trikke)
Others costs (incl.
RUTER AS operation)

276M€
146M€
79M€

39%
21%
11%

210M€

29%

Revenue sources to cover public transport
operation expenditure include:
Fare revenue
Olso City/Akershus reg.
Olsopakke
Others

380M€ (54%)
236M€ (33%)
372M€ (10%)
19M€(3%)

Investment expenditure in local public
transport in the Oslo Region in 2012 was 184
million EUR, including 127 million EUR fromthe Oslopakke 3 scheme (that is, about
70%).
The funding of local public transport in
Norway is the responsibility of the counties.
Ruter AS coordinates the different sources offunding for public transport in the Oslo
Region.

Public transport is funded through a
combination of fare revenues, contributions
from public authorities at different levels,and support from the Oslopakke 3 scheme.
Fares are collected by RUTER AS. A common
electronic ticketing system for the region,
named Flexus, was introduced in 2009. The
fare zone system was simplified in 2011
from 77 to 11 zones.
The City of Oslo and the County of Akershus
contribute to public transport operation andinvestment expenditure. The Central State
provides additional funding for infrastructure
investment and as compensation forconcessionary fares.
The Oslopakke 3 scheme, based on the car
toll in Oslo, plays an important role in thefunding of public transport operation andinvestment in Oslo Region. The share of the
car toll revenues dedicated to public
transport has increased compared toprevious
Oslopakke
schemes.
Anotherinnovation from previous Oslopakke schemesis that it contributes to cover part of public
transport operation expenditure. All in all,about 60% of the revenues of the Oslopakke
3 scheme are allocated to public transport.

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org and Natural Earth Modis 500 data

ParisKey Numbers

Ile-de-France Region, France

High quality regional transport and new
expansion plans
The greater Paris region enjoys high levels of public transport services,
especially for relations serving the core of the region. Networks are
relatively well maintained and a durable funding mechanism based onthe "benefiters-pays" principal -- the employers transport tax has
served well to keep pace with increasing demand for services. Regional
growth patterns are changing and in response, efforts are being madeto better service periphery-to-periphery trips with a high quality
standard of service. This will be challenging as the costs of developing
this new orbital network are significant..

ParisKey Actors
Government

N

Mode share (all trips, 2010)o longer the dominant actor it once was
the National government nonethelessstill sets national objectives for public
transport
throughthepluri-annual
development
framework
contract
itnegotiates with the region – the Contrat deProjet Etat-Region (CPER) which sets acommon programme for capital investment
and allocates funding responsibility between
National and Regional governments. The
National government also remains the sole
shareholder in the two main public transport
operators in the region – the RATP and the
SNCF. In addition, framework laws governingor relating to public transport service
provision are set at the national level. These
include the recent framework law on theorganisation and regulation of rail transport(ORTF) which sets out
conditions forcompetition and ownership of rail-based
public transport in the Ile-de-France (IDF)
region.
The Regional government has responsibility
for coordinating the supply of transport
services
throughout
theregion.
This
responsibility has been delegated to theregional transport authority Syndicat desTransports d’Ile de France (STIF).
The
region negotiates the CPER with the National
government
thus
establishing
publictransport investment priorities and is also
responsible for the legally mandated regionaltransport planning document (Urban Mobility
Plan – PDU) that guides land-use andtransport decision-making for subordinate

Paris1/2levelsofgovernment.
Départmental
governments in the IDF region participate in
the governing board of the STIF and may set(and fund) public transport fare subsidies for
low income or other target populations.
Municipal governments elaborate local PDUs
which help define land use and transportconditions and establish goals relating to
public transport service provision. Local
governments may also directly negotiatewith public transport operators to establish
target service levels and coverage in theircommunity – especially as regards bus
services. Paris is a special case as it has
broader oversight powers and sits on thegoverning board of the STIF.

Regional Transport Authority (STIF)S

TIF organises, coordinates and finances
the supply of public transport in the IDF
region. It defines general operational andservice level targets, sets fares andnegotiates performance-based contracts withpublic transport service providers. STIF also
coordinates and helps set the regional public
transport infrastructure investment plan in
conjunction with the national government. In
addition to new infrastructure, STIF also cofinances with operators the purchase or
refurbishment of equipment, rolling stock
and/or stations. In 2009, the ORTF law split
ownership responsibilities for rolling stock
and infrastructure between STIF and RATP
with STIF becoming owner the former. The
president of the IDF region sits at the headof STIF’s governing board which is composedof elected representatives of the Regionaland Départmental Councils, the Council of
Paris, as well as from the regional chamberof commerce and a local grouping ofmunicipalities.

public transport trip mode share in
surrounding towns is one half that of Paris

Operators

R

ATP (Régie Autonome des Transports
Parisiens) is the historic public transport
operator for the city of Paris and is a stateowned commercial and industrial enterprise(EPIC). RATP carries 54% of all public
transport passenger kilometres in the region,
principally via the underground metro
system and RATP-operated regional rail.
RATP enjoys a monopoly on existing Parisbus, metro, tramway and regional rail
services though this is set to end in 2024(bus), 2029 (tramways) and 2039 (Metro).
In line with the 2009 ORTF law, RATP owns
all of the infrastructure necessary to carryout its mission (rail lines, stations, buildings,etc.). Most, but not all, capital investment
programmes are coordinated with STIF andthe national government.
SNCF (Société Nationale des Chemins deFer), also a State-owned company, operates
mainly heavy rail-based public transport
services in IDF through its wholly-owned
subsidiary Transilien. SNCF carries 40% of
public transport passenger kilometres in theregion. Also a monopoly, SNCF’s Transilien
services are set to be opened to competitionin 2039.
OPTILE is a grouping of 83 inter and intraurban
bus
operators
serving
IDF
communities outside of the city of Paris. The
OPTILE network accounts for 6% of all public
transport passenger kilometres in the region
but 40% of total bus travel and 82% of thetotal bus network. Among the key bus
service providers within OPTILE are both
Veolia and Keolis (a subsidiary of SNCF).

ParisFundingI

n 2010, nearly 40% of the IDF region’s
public transport operating revenues camefrom the “versement transport” – adedicated transport tax levied on employers
and based on payroll mass. Farebox
revenues accounted for another 40% -- thisincluded fares paid by passengers as well as
revenues from legally mandated travel card
reimbursements to employees by employers.
It also includes social fare subsidies granted
by departmental governments.
About halfof total public transport revenues are passed
through
the
STIF.
Local
authorities
contribute to STIF’s operational revenues on
the basis of statutorily set contributions,payments for covering non-profitable lines
and contributions to cover fare subsidies for
low income and other vulnerable public
transport patrons. The national governmenttransfers some funds to STIF for schooltransport and, on an exceptional basis,covers some costs related to national
mandates.

2010 PT funding, IDF

Disbursements are contractually set between
STIF and public transport operators -- RATP
absorbs half of STIF-disbursed operational
revenues and SNCF another third leaving
slightly more than 10% for bus operators
outside of the city of Paris. The IDF region’s
2010 public transport investment budget
was €2 188 M.

The IDF region’s 2010 public transport
investment budget was €2 188 M. Nearly
60% of the budget came from self-financing
operations/loans and an additional 14%
came from the regional transport authority –this contribution largely sourced from nonrecurrent reserves and the 50% share ofroad traffic fines the region receives.
Investment requirements are set to increaseas the region seeks to catch up for underinvestment in past years and as it embarks
on an ambitious capital investment plan. The
region foresees an investment of €7 Billion

Parisfrom 2012 to 2017, much of it for tramways.
An additional investment of €24.5 billion. has
been announced in the context of the “Grand
Paris Express” project which calls for theconstruction of 200km of extended or new
rail and Metro lines linking 72 new stations
meant to reinforce connections amongst

peripheral growth centres. Most of the newfunding will come from a re-allocation ofexisting tax-based revenue streams –principally tax on office space. A small shareis expected to come from increased
government contributions.

Opportunities & Challenges
Public transport serviceI

le-de-France generally enjoys a high levelof public transport accessibility. The
supply and quality of service is mostelevated within the city of Paris and onroutes leading to the core of the region.
Service quality drops off in the periphery
where lower density and more dispersed
settlement patterns complicate the task ofproviding public transport. A result of historicurban and planning policies, the current
Paris-centric model is currently being tested
by rapid development at the periphery of theregion and a rise in new mobility patterns
that are centred on urban areas outside of
the city of Paris. This gives rise to a dual
need to reinforce traditional radial links tothe centre to accommodate population
growth and answer the growing demand fortrips between and within peripheral urban
areas. Significant capital investments – morethan €34 billion by 2030 -- will be required
to meet these dual challenges and ensurehigh service quality.

GovernanceT

he IDF region has a single authority
responsible for setting public transport
service
objectives,
negotiating
servicecontracts with operators and setting tariffs at
a regional scale. Authority and responsibility
for delivering public transport services in the
IDF
regionare
clearlydefinedandestablished within a robust regulatory
framework – at least in theory. Though thenational government has largely withdrawn
from the direct management of public
transport in the region, it retains asignificant role as the sole shareholder in thetwo main historic operators (SNCF andRATP). Tensions between these operatorsand the STIF -- where regional and local
authorities preside -- remain as was seen in
the recent re-negotiations of public service
contracts between STIF and SNCF and RATP.
They are also evident in the development of
the Grand Paris Express plan – especially as
national and regional governments weregoverned by different political parties.
Advances have been made to better define
the responsibilities of all actors – e.g. as in
the recent allocation of rolling stock to the
STIF and infrastructure to operators -- andthe STIF and operators have ultimately beenable to achieve important compromises on
risk-sharing for new investments.

Financing continued services andexpansionT

he ultimate burden for funding public
transport operations in the IDF region
has principally fallen on those that benefit
from the supply of extensive and high quality
public transport services - e.g. employers
and public transport users themselves. The
funding set-up also has encourages public
transport use via mandated employer

Parisreimbursement of travel cards. Sources ofoperational revenues are diversified which
reduces exposure of revenue streams tochanges in the priorities or funding
capacities of public authorities. Revenues
are, however, vulnerable to a drop-off ineconomic activity (which impacts transport
tax revenues via a drop in employment). The
transport tax may also represent a burden to
employers in times of crisis.
The current funding model is at risk under
new demands for improving existing services(new rolling stock, frequencies, IT services,etc) and to make up for years ofunderinvestment. This has led STIF to seek
funding on equity markets for the first timein 2012. There is concern that the monopoly
position of RATP and SNCF will slow efforts
to realise productivity gains that could
moderate funding requirements. The capital
expansion plan underpinning the Grand Parisis set to be met mainly via the re-allocationof the office space tax (ultimately paid byemployers).
However,large-scale
infrastructure projects such as the Grand
Paris often go over budget and it is not clear

what additional revenue sources could be
mobilisedshouldthishappenhere.
Ultimately,
National
andRegional
governments may have to increase their
participation should this happen.

Innovative fundingT

he transport tax was an innovation when
it was first introduced in 1971 though it
remains largely unique to France. A
proposed project to establish a direct rail link
between Charles de Gaulle Airport and Parisis also an innovation, at least for Paris, inthat it is planned tobe built without any
government aid or subsidy. Finally, the Cityof Paris has developed several innovative

funding schemes for quasi-public transport
services – the first being the Velib public
bicycle sharing network financed largely via
advertising spaces that complement user
charges. Another innovative funding scheme
is the Auto’lib station-based electric carsharing service established public service
concession and financed solely by theoperator on the basis of user charges.

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org, Natural Earth Modis 500 data and TriMetPortland
Key Numbers

Greater Portland (OR) region, USA

Renewed efforts required to maintain leadership
Portland has built its reputation as one of the most liveable cities inNorth America. Innovative public transport funding and the creation ofa regional light rail system and an extensive bicycle network have been
the hallmarks of sustainable transport in the Portland region. However,Portland is facing a challenge of how to overcome financial constraints
linked to the economic crisis to maintain this system. Ensuringcontinued cost recovery despite a downturn in the regional employergenerated tax revenue and escalating pension and labour costs will
require renewed effots from the regional government in coming years if
Portland is to retain its lead position.

Key Statistics
PortlandKey Actors
GovernmentThe Federal Transit Administration (FTA)of the US Department of Transport
provides financial assistance, manages
approved grants, and provides technicalassistance, oversight and information for
public transport. FTA programmes include
the New Start Program, which provides
funding for new rapid transit projects as well
as for rehabilitating existing lines, and theJob
AccessandReverseCommutes
programme which provides funding to assist
the poor in accessing jobs in underserved
communities. FTA also provides operating

Mode share (all trips, 2011)

subsidies to public transport agencies andoperators in areas with a population of fewer
than 200,000.

The
OregonState
DepartmentofTransportation helps with state-wide public
transport planning via its Public Transit
Division (PTD). This division undertakes
state-wide coordination and planning for
public transport services, provides education
technical
assistance
to
local
and
communities regarding public transport
services and operations and helps coordinate
access to various state and federal funding
streams.

Metro

M

etro is the elected regional government
for the greater Portland area and isalso the designated Metropolitan Planning
Organisation (MPO) in charge of strategic

Portland+4.8%

and capital investment planning for transport
and is responsible for land use planning in
the region. It assists in the improvement ofpublic transport services via facilitating
integrated land use and transport planning.
MPO staff work with urban public transport
operators to provide planning and technicalassistance. In addition, Metro may use
locally-controlled
Surface
Transportation
Funds (STP) to finance public transport
capital needs in the region. Metro prioritises
projects and programmes to be funded with
FTA funds via the regional Metropolitan
Transportation Improvement Program.

growth in public transport passenger
kilometres of travel, 2005-2011

Other regional operators
Several other operators provide public
transport services in the greater Portland
Tri-county area;●

C-Tran,●Canby CAT offers fareless, fixed routeservice six days a week, flag stops, ADA-

Oregon Transit Association
The Oregon Transit Association (OTA) is a
non-profit association whose membership is
made up of public, private for-profit andnon-profit public transport operators, andpublic transport industry providers such as
equipment
suppliers.
The
association’s
mission is to assist members in thedevelopment and improvement of efficient,safe, and convenient transportation services,
techniques,
methods,
facilities,
andequipment. The Oregon State Public Transit
Division Administrator is a voting member of
the OTA Board.

accessible buses, bike racks on all
buses, and a lift available for qualified
applicants.
●

SMART provides bus service in the
Wilsonville area and passengers ride forfree! SMART Options program provides
free assistance to employers in setting
up transportation programs.

●

Ride
Connectionisanon-profit
organization
offering
assistancetopersons with disabilities and seniorcitizens in Clackamas, Clark, Multnomah
and Washington counties.

●

Sandy Transit offers fareless fix routeservice six days a week, flag stops, ADAaccessible buses, bike racks on all
buses, and a lift available for qualified
applicants.

●

There are also some shuttle services
providing express connections between
neighbouring communities and Portland.

Operators
TriMet
TriMet is a municipal corporation providing
tramway, light rail, commuter rail and bus
services in the urbanised areas of the tricounty Portland metro area. It has broad
powers to provide public transportation in
the district. It levies an employer payroll tax
and as well as a tax based on net earnings
from self-employment and can issue and sell
general obligation and revenue bonds.

Clark County Washington’s
public transit provider, has 26 busroutes, C-Van curb-to-curb service forpeople who cannot access regular routeservice, carpool and vanpool services, abike and bus program and more.

Key Statistics
PortlandFunding
Operation Funding 2011 (TriMet)

T

riMet is both the principal public
transport operator in the region as wellas the regional government with taxation
authority. The TriMet operational budget islargely paid for via a payroll tax similar innature to that in place in the Paris region.
Employers pay a portion of their employees’
gross wages to TriMet (7.02USD per
1,000USD). Self-employed workers mustalso pay this tax which is calculated on their
Farebox revenue accounts forearnings.
25% of the total operation funds. Combined
payroll tax earnings and farebox revenues
makeup
TriMet's
directly
generatedrevenues which cover 86% of operational
expenditures.
The
remainderissupplemented
through
FTA-administered
grants and local sources.

Capital Funding 2011 (TriMet)Three-fourths of
TriMet’s
USD 114.5
million capital expenditures in 2011 were
paid for by the State of Oregon via special
public transport capital grants. These grants
covered the extension of light rail and tramroutes and the cost of new and refurbishedrolling stock. Remaining funds came fromFTA grants at the federal level (11%) andlocal governments (14%).

Portland

Opportunities & Challenges
Challenges

P

ortland has been recognised as one of
the leading cities in USA in terms of thequality and use of its public transport
network. People in the Portland area use
public transport more than in many larger
US cities and public transport ridership hasgrown faster than both population and car
vehicle kilometres travelled.

Nonetheless, the recent economic crisis has
placed burdens on regional public transport
operators – especially as the payroll tax
which constitutes their principal source ofrevenue has been vulnerable to theslowdown in economic activity. This had led
to cutbacks including the cessation of a fareless public transport service in the heart ofthe city – the“Fareless Square”
programme. While the provision of freepublic transport in the epicentre of the city
was seen as innovative and arguably
boosted overall ridership, it was no longer
tenable in light of decreasing revenues andsustained costs. Monitoring the financial
effects of the discontinuity of this free-ride
service should provide useful lessons
regarding the impacts of fare-less public
transport services.
Pressure also stems from a reduction in theamount of formula disbursements given by
the FTA local public transport operators.
TriMet is expecting a reduction of thisfunding by up to 4 million USD in fiscal year
2013 which may require an increase in faresaswellfurtherinternal
cost-saving
measures. Implementing the latter are seen

as a core part of the systems long-term
financial viability, especially as regards
labour costs and pension which are set toincrease significantly in coming years.

OpportunitiesT

he region will is expected to grow by afurther one million new residents incoming years according to the Region 2040
Growth Concept, a long-range plan in themetropolitan area adopted in 1995. The
Regional Transportation Plan sets out anaspirational goal of tripling the combined
public transport, walking and cycling modeshare by the end of the plan period. Thisobviously requires an increase in public
transport services, but the increase was lessthan half way to the goal from current levels.
Achieving this mode share is also important
for the region in order to meet thegreenhouse gas reduction target is imposedby the Metropolitan Greenhouse Gas
Emission Target Rule.
There is a call for housing development to belinked to public transport development andnew cycling and walking infrastructure inorder to ensure that the projected population
growth does not swamp the roads and erode
Portland’s competitivity.
TriMet’s 2012
Transit Investment Plan calls for the
expansionofpedestrianandbikeinfrastructure to increase overall connectivity
within the community. It also calls for zoning
regulations that promote transit-oriented
development (TOD) in the implementation ofregional development plans.

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org, Natural Earth Modis 500 data and Seoul Metropolitan Government

SeoulKey Numbers

Seoul Metropolitan Area, South Korea

A region meeting challenges with innovation
The Seoul Metropolitan Area accounts for approximately half of the
Republic of Korea's total population and produces half of the country's
economic output. The city of Seoul itself is surrounded by several cities
of a million or more inhabitants, including Incheon, Suwon, andSeongnnam. Collectively, these cities make up the Seoul Metropolitan
Area.
The Seoul Metropolitan Area is well served by public transport including
an extensive subway network, regional rail services and bus routes.
The region has been particularly innovative with the latter and is wellknown for its pioneering bus services. These include median bus lanes,
e-ticketing with credit card and a successful real-time bus information
platform that allows, for example, customers to reserve bus seats orcall on-demand buses to their location.

SeoulKey Actors
GovernmentThe national government is responsiblefor developing a national public transport
master plan and monitors local public
transport policy. The central government canfund public transport infrastructure projects
including urban railways and Bus Rapid
Transit (BRT) at the local level. The national
government also plays a central role in
improving interchangeable public transport
operation through its funding support for thenational public transport card. However,most large-scale public transport projects
are initiated and managed by the Seoul
Metropolitan government.

Mode share (all trips, 2010)

The

Seoul

excluding walking

regionhasaMetropolitan

Transport Association (MTA) consisting of
local governments including tose of Seoul,
Gyeonggi, and Incheon. This association
mainly coordinates conflicts between local
governments related to public transport
policy including conflicts regarding route
location and fares. The association has
limited authority and not all conflicts are
satisfactorily resolved by the MTA leading tofrequent
arbitrationbythenational
government.
The Seoul municipal government owns public
transport-related
infrastructure
includingurban railways BRT corridors and has ageneral responsibility for the construction
and management of public transportsystems. Management and operation of theSeoulSeoul metro and some urban railways arecarriedout
through
special-purpose
corporations that are wholly owned by themunicipal government. Bus services, on theother hand, are almost all operated byprivate companies under public service
contracts with local governments. These
contracts set conditions for routes, frequency
and the number of buses. Local governmentscompensate private operators for operational
lossesasdeterminedbycontract
arrangements.
Both national and local governments haveprovided some assistance to private bus
operators in order to purchase low-emission
and low-floor buses.

Operators
Seoul Metro (SM)
Seoul Metro operates subway lines 1, 2, 3,
and 4 covering 137.9km with 120 stations. It
was first established in 1981 and is wholly
owned by the Seoul municipal government.
Seoul Metro transports 4 million people daily
accounting for 45% of total subway riders.

42

minutesaverage commute time

partnership in 2009. The private operator is
responsible for the management andoperation of this 25.5km metro line.
Other regional rail operators.
Other urban rail operators in the Seoul
region include the national rail company,
Korail, which operates approximately 270 kmof regional rail services within and beyond
the larger Seoul area. Korail also is aprincipal shareholder in the 58km Incheon
International
AirportExpress(AREX)
connecting Incheon airport to central Seoul.
Incheon city also has its own Metro line
operated by municipally owned company.
Three other operators – NeoTrans, Yongin
Rapid Transit and Uijeongbu light rail areresponsible for another 60 kilometres ofroutes.

Seoul Metropolitan Rapid Transit (SMRT)

Association of Seoul Bus Operators

SMRT
operatesthemostextensive
metropolitan subway system in Korea. It
runs subway lines 5, 6, 7, and 8 covering
152km with 148 stations. It was firstestablished in 1990 as a separate entity fromthe then-sole operator, Seoul Metropolitan
Subway Corporation (now Seoul Metro) inorder to introduce competition between
metro operators. SMRT is also wholly ownedby the Seoul municipal government. It now
serves for 2.7 million passengers daily.

There are 66 private bus operators serving
409 routes in the Seoul metropolitan area.
These buses are divided into four categories
according to the type of route they serve andthe service they provide. These categories
are: Trunk Line Buses, Feeder Line Buses,
Inter-City Rapid Buses, and Circular Line
Buses. Operators share revenues by being amember of the Association of Seoul Bus
Operators. Bus operators can openly bid for
new routes. The Seoul bus system is ineffect a quasi-public service since, in returnfor carrying out public service contracts, bus
operators are supervised by local authorities
and may receive payments from theseauthorities to cover operational deficits.

Seoul Metro Line Number 9
The most recent Seoul subway line, line
number 9, was developed as public-private

SeoulFundingSeoul MetroSeoul Metro’s 2012 total operating
expenditure was €851M whereas total
revenue was €735M, 83% of this coming
directly from fares. To cover up the €116M
shortfall (14% of total expenditure), Seoul
Metro issues public bonds and borrows
money from the public funds of Seoul
Metropolitan government. Details of the
breakdown of these funds are not publicly
available.

Seoul Metropolitan Rapid Transit(SMRT)S

MRT’s 2012 revenues of €394M (97%coming from fares) generated an evengreater shortfall than Seoul Metro since 2012
expenditures were €650M. To make up the€256M
difference
(39%
of
total
expenditure), SMRT received subsidies of€38.4 from both national and metropolitan
governments and issued €47.8M worth of
public bonds. SMRT borrowed the remaining€169.7M.

Metro Line 9Though Metro line 9 is operated by a
private operator under a PPP agreementwith Seoul Metropolitan government, therearesomeconcerns
overincreasing
contractualy-stipulated
loss-recovery
payments made by the municipality to theoperator to cover up the difference between
the expected fare revenues and the actual
fare revenue in practice.

Bus Operating Costs

T

here is no official data regarding bus
operating costs in the Seoul region.

According to some recent estimates though,total revenues of bus operators were around€754M in 2009. Direct farebox revenues
accounted for €724M and an additional€17.5M came from advertisement. Local
governments
distributed about €8.8M ofcentral government revenue to help coverfuel costs. According to these figures,operator-generated revenues accounted forapproximately 97% of operating costs but
these data seem to lump together losscovering subsidies from Seoul Municipal
government within fare revenues.
These
loss-covering payments made to operators
are set according to standard guidelines.
According to these, in 2009, Seoul
Metropolitan government spent €193M tocover bus operator losses. These payments
account for about 27% of fare revenues, andthus 26% of total revenues.

Capital Investment

Current plans call for the expansion of theSeoul metro. The construction of the 3rdphase of Metro 9 (9.14km) is underway andis budgeted at €747.5M by 2016. These
costs are bourne by the private operator andinvestors as covered in the terms of the
public-private partnership. Another publicprivate arrangement is helping to finance the€431M required for the construction of alight rail link between Ui and Sinseol(11.4km) which is set to be completed in2014.

According to the Seoul region’s Public
Transport Master Plan (2012-2016), theSeoul Metropolitan government is planning
to invest €33.5M to subsidise the purchaseof
low-floorbuses,
€3.5M
for
the
development of a Public Transit Mall, and€29.8M for development of the IT-based Bus
Information System.

SeoulOpportunities & Challenges
Public Transport ServicePublic transport in Seoul is well used asreflected in its high modal share.
Nonetheless,concernforsystem-wide
efficiency and revenue-generation has led tosome calls to reorganise the overall
operational system --particularly for buses.
One issue is that there is considerable
overlap between some bus and metro lines
leading to revenue erosion for all operatorsconcerned. Additionally, the concessioning
system for bus services seems not to favour
new entrants or competition as it rare to see
new operators despite years of competitive
bidding. Most long-distance bus operators
are suffering from insufficient fareboxrevenues due to fares being set too low by
local governments.
Changes in growth
patterns and a continuously-spreading urban
region is leading to changes in public
transport service requirements. For instance,
demand for long-distance bus services
linking central business districts in Seoul tosatellite cities is on the rise as population
increasingly settles at the edge of the urban
area. This trend has seen a rise in popularhigh-quality long-distance bus services, e.g.
the ‘M bus’ which guarantees seats once
boarded and allows fast access to central
Seoul (maximum 6 stops for all routes).

GovernanceCo-operation between different local
governments in the Seoul Metropolitan
area has allowed the introduction ofanintegrated fare-revenue sharing system. MTA
has worked to coordinate the establishmentof the system but some have pointed outthat its powers are too limited to effectively
coordinate conflicts between different local
governments. In effect, MTA does not have
key functions such as taxation powers,
budget allocation oversight responsibility for
operators,
directrouteorservicecontracting with operators, etc. required to
be an effective co-ordinating organisation
These functions are the responsibility of
individual local governments. As such, MTA
has largely been
engaged in arbitrating
conflicts between operators over fares,
routes, and frequency. Even here, central
government intervention has often beenrequired to reach agreement. The lack of astrong public transport organising authority
will
likelycontinue
unlesscurrent
institutional arrangements are reformed.

Innovative FundingSeoul Metropolitan government imposes acongestion charge in one tunnel whichconnects the central business district withthe southern business district. It also levies
a traffic inducement charge to owners ofcertain large scale buildings, which are likely
to generate high volumes of traffic. Theserevenues are used to improve public
transport facilities and services.
Recently, on-demand bus services havebeen introduced in the region. This is a
special service for commuters between
certain satellite cities and Seoul which allows
travellers reserve their seats online. This
new service requires no further outlay fromoperators and may allow the latter to tap
into new high-value markets.

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org and Natural Earth Modis 500 dataShenzhen
Key Numbers

Beijing capital region, China

Managing fast growth in a mega-region
The Pearl River delta, including Shenzhen, will eventually make up oneof the world's largest metropolitan areas harbouring over 40 million
people. Accommodating that growth while enabling a high level ofmobility and access requires early action on the part of authorities toensure that high-quality regional public transport is in place to help
channel this growth. For this reason Shenzhen has, like many otherlarge Chinese cities, embarked on an accelerated subway development
phase. This is expensive, requires new funding models and costrecovery may be elusive in early phases but the potential pay-off may
be large. Shenzhen is also ensuring the continued development ofprotected bus lanes and regional bus systems to help orators delivercompetitive bus services though low fare mandates imply significant
cost-recovery payments from the municipality to cover losses.

Shenzhen

Key Actors
National government

T

Mode share (all trips, 2008)

he national government is responsible
for guiding the development of public
transport, including laying down public
transport laws, policies and standards,
issuing
national
publictransport
development
strategyandplanning,
monitoring road transport market etc. Manyefforts have been made on priorities ofurban
publictransport.
Thenational
government issued guidance of urban public
transport priority in December 2012 andcarried out a policy of relieving purchasetaxes of bus by 2015. In addition, a big plan
was proposed by Ministry of Transport tocreate National Transit Metropolis and it will
select thirty cities, given the subsidies on

excluding walking

transport hub, intelligent transport system
and low-carbon public transport.

Regional GovernmentPlans have been announced to merge thecities of the Pearl river delta –Dongguan, Foshan, Guangzhou, Huizhou,
Jiangmen, Shenzhen, Zhaoqing, Zhongshan
and Zhuhai – into one mega-urban region.
This conglomeration will cover 14,000 square
kilometres and have a population of 42
million. It will cover much of China's dynamic
manufacturing zones in Guongdong Province
and include several of the world's largest
container ports. Regional transport networks
based on 29 inter-city rail lines will help theurban hubs connect to each other and toShenzhen
Hong Kong. Some cities, such as Shenzhen,
arealready
anticipating
regional
development plans by building out subway
and bus rapid transportation corridors to
help channel future growth. At this stage, it
is not clear what role the regional mega-citygovernment will play in the organisation andfunding of public transport networks andservices.

Municipal GovernmentThe Shenzhen municipal government has
the overall responsibility for the supplyoftransport
services
throughout
theadministrative
areas.
Specific
responsibilities relating to urban railway andbus transport have been allocated todifferent local commissions such as Municipal
Commissions of Development and Reform,
State-owned
AssetsSupervision
andAdministration, Transport, Planning, financeetc. In 2008, the municipal government
issued guidance regarding the subsidies tobe made to concessioned bus operators

which clearly and transparently delineates
financial operating conditions for bus
companies, including the calculation of losscovering payments to operators by the
Municipal government.

33.5
trips per day, 2011programme of public transport expenditureandimplements
management
andsupervision. SMCT is also responsible for the
implementation and supervision of urban railand bus concession projects.

Operators
There are three major Bus operators andtwo urban railway operators in Shenzhen.
●

Shenzhen Metro is a large state-owned
enterprise, responsible for urban rail
finance, construction, operation andmaintenance, etc.

●

Shenzhen MTR Corporation is a private
partnershipwhich
isgrantedconstruction and operation rights for an
urban railway system via a BuildOperate-Transfer (BOT) arrangement.

●

Shenzhen Bus Group is a large stateowned enterprise with a long history
which is mainly responsible for theoperation of bus services It owns 318
bus lines accounting for 5022 km ofroutes. It accounted for 50% of regional
bus transport in 2010.

●

The other two bus companies also arestate-owned enterprises in charge ofanother half of the passenger volume.

Municipal Transport Authority
The Shenzhen Municipal Commission ofTransport (SMCT) organises and coordinates
the supply of public transport in theShenzhen region. It defines the generalplanning of public transport infrastructure
construction,
proposestheannualmillionShenzhen

FundingL

ittle information is available regarding
the operational budget of Shenzhen
subway operators. Shenzhen Metro must
report on its financial performance –including operational losses to be covered bygovernment subsidy -- to the local Stateowned
AssetsSupervision
andAdministration Commission but these reports
are not publicly available. The same is thecase with Shenzhen MTR.

Rules regarding loss-covering payments by
the municipality to bus companies are
relatively more transparent. In 2010, SMCT
along
with
the
Shenzhen
Municipal
Commission of Finance issued rules relating
to the financial evaluation of concessioned
bus operators. These rules include reporting
requirements for operators and set out theterms of government subsidies to the latter.
These are set such that operators areguaranteed a 100% coverage of theiroperating costs plus an additional 6%
operating profit (that is, if an operator's
revenues are below operating costs, thesubsidy will cover the total operating loss
plus an additional 6%). If operators return aprofit on operations (e.g. if revenues are

greater than costs), then the government
retains 70% of the operating profit above
the aforementioned 6%. These profitguarantee subsidies are in addition to otherrelating
to
fuel,
low
fare
subsidies
compensation, etc.
In 2011, the total amount of total subsidy
from the Municipal government to bus
operators was 7 billions USD broken out asfollows:
Fuel
USD2.1 billion
Fare compenation USD1.1 billion
Profit garantee
USD3.6 billion
Other payments
USD0.2 billion
The first five lines (178km) of the Shenzhen
Metro network cost USD 139.4 billion tobuild, USD 9.7 billion which came from
Shenzhen MTR Corporation to build
theLonghua line (16km). The next stage of
construction of the urban railway network
will include lines 6,7,8,9,11. The constructionof these lines along with two integrated
transport hubs is expected to cost USD 213
billion.

Shenzhen

Opportunities & Challenges
Regional Characteristic andchallenges

I

ntegration of the Pearl River delta region
is improving spurred by regional andnational planning initiatives. Shenzhen's
immediate agglomeration will likely continue
to expand strongly and the city's job andcommuting
basin
will
soon
cover
neighbouring cities such as Dongguan and
Huizhou. One potential outcome is anincrease in regional road traffic whichauthorities plan to mitigate with a dense andfar-reaching public transport network. In
some ways, early build-out of the current
metro system is seen as an investment toboth channel and hedge against the traffic
impacts of future growth. This has been a
successful strategy in other cities but comesat the cost of operational losses until
demand builds. Regional rail is also being
developed andexisting intercity bus
services are being improved in terms of
quality and frequency.

Public transport serviceAt present, the bus system in Shenzhen
is still the leading public transportmode. This will likely change as new metro
lines are completed – e.g. lines 6,7,8,9,11 ora total of 170km of new urban railway with95 stations that are planned for 2016.
Expectations are these efforts will lead to anincrease of the mode share of public
transport to 56%
by 2015. To facilitate
arriving at this target, other measures arealso envisaged, including the construction ofbus terminals and stations, the proliferationof separated bus lanes, and the developmentof new bus services. These efforts are
significant – for example, plans call for the
780km of separated bus lanes allowing 85%
of all bus lines to operate without being
subject to congestion.

FinancingT

he Municipal government is concerned
about the subsidy framework forcompensating operators' losses. There areplans to revisit the terms of these payments
and to set a more reasonable, fair andtransparent framework to cover the policy-

related losses stemming from mandated low
fares and free tickets and low-return public
service commitments. Bus operators who
invest in efficiency, energy savings andpollution reduction will get additional
payments from the municipal government.
The constructing line 7,9 and 11 (107km) of
the Metro will adopt Build-Transfer (BT)financing for a USD 132 billion total
investment. The government is also actively
exploringpotential funding models for
additional
andaccelerated
metro
construction in order to keep up with rapid
population growth. Another potential sourceof funding may be linked to the developmentof multi-modal transfer hubs that have thepotential to generate commercial profits
from ancillary station-based shops andactivities.

Map data: OpenStreetMap Open Database License (ODbL), www.openstreetmap.org, Natural Earth Modis 500 data and MLIT, Japan

TokyoKey Numbers

Greater Tokyo area, Japan

A public transport mega-city
Tokyo is a large city with high population density and a broadly
spreading urbanised area beyond core administrative boundaries. The
condensed residential area widely extends toward suburbs with noclear boundary. The greater Tokyo region includes the city of
Yokohama, Kawasaki, Chiba and Saitama, each of which have morethan 1 million inhabitants. Although the commuting area is generally
defined as a circle of 50 km, the residential area spreads beyond thecircle and even high speed rail is used as a commuting tool.
The rail network covers all the region and is heavily used by residents,
carrying 40 million passengers a day. IT systems, including IC tickets
and mobile phones, are highly developed for public transport and makedaily mobility smooth and efficient. Public transport in Tokyo is reliable
in terms of safety and frequency and serves as a fundamental
infrastructure to support the economic development of Tokyo.
Challenges will include adapting to lower demographic growth and anageing society.

TokyoKey Actors
Government

Railway and bus operators are regulated
from a safety and consumer protection
point of view by the national government incompliance with the Railway Business Act or
the Road Transportation Business Act. Whenstarting
operations,publictransport
operators must seek approval from theauthorities and must adhere to relevant
regulations during their operation. These
regulations pertain to a number ofoperational issues including inspection andsafety checks of infrastructure, vehicles androlling stock.

Mode share (all trips, 2008)

Fares are regulated by the national
government which approves the maximum
fare for rail and bus services. Approval of theupper bound of public transport fares ismade with input from a standing fareregulation committee consisting of six expert
members. The committee’s findings are notbinding but are typically respected by theregulatory authorities. Operators are notbound to seek approval for fare changes
within the maximum statutory bounds but
must notify the government of thesechanges.

OwnershipWithin the Tokyo region, some public
transport networks are owned by thegovernment. Tokyo Metro operates subway
and bus networks and is a is a publiccompany which is owned by both thenational
government
and
the
Tokyo

Tokyometropolitan government. Another subway
operator, Toei Subway Company, is a publiccompany fully owned by the Tokyo
metropolitan government. Both companies
must follow specific regulations, particularly
withregardtotheirfinanceandmanagement. There are a also a few publiccompanies operating surface railway or bus
services that are owned by other local
governments in the greater Tokyo region.

Monetary support
Although many of the rail and bus companies
in Tokyo are profitable and do not receiveanyoperatingsubsidiesfromthegovernment, there are several cases when
the government may provide monetary
support.
These
includecases
whereoperators make major capital investments,
e.g. renovation of stations, rearrangement ofrailwaylines,
capacity
expansion.
Government support may also be extended
to operators to help cover the costs ofdeveloping barrier-free facilities – e.g. byinstalling elevators and escalators. In somecases,
operators
owned
by
local
governments may receive loss-covering
payments.

Private PT operators

The principal public transport operators in
the Tokyo region are private companies.
These include JR-East, which used to be partof the national rail carrier Japan Rail, andseven major private carriers, whose railway
lines extend from central Tokyo to its
suburbs. These operators own land andinfrastructure – railroad tracks, stations, carsand other facilities. They also are fully
responsible for maintenance and renovationof their asset base. Many of the major bus
operators in the region are also privately
owned
–
many
of
them
by
the
aforementioned rail operators.

186

billionrail passenger kilometres, 2008

Business models and competition
There are 30 different rail companies and 48
different bus companies in the greater Tokyo
area. Although their service areas generally
do not overlap they can be seen as indirectlycompeting against each other, especially as
the size of the public transport market is
expected to decline in line with lower
population. Rail-based providers have avested strategic interest in retaining theattraction of their facilities which is an
essential part of their business plan. They
make efforts to ensure the convenience of
their transport services, invest in making
their facilities and the surrounding area
attractive, refurbish or renew rolling stockand stations in order to guarantee a steadyflow of customers to their non-transportbusinesses and services. Passengers benefit
as they are provided a wide choice ofservices and opportunities to shop, learn,
and otherwise stay in the operators’ facilities– as well as travel.
Collaboration
Private companies also collaborate with eachother, especially in order to ensure regionwide system interoperability for travellers.
Regional public transport cards and passes
allow travellers to use buses, subway andregional rail irrespective of the carrier eventhough the cards themselves are issued andmanaged by different operators. Revenue
from card and pass use is allocatedautomatically to each operator according tonegotiated region-wide agreements.

TokyoAnother form of collaboration involves
sharing rail networks by different andcompeting operators. For instance, somecommutertrainsfromthesuburbs

directly on Metro lines allowing travellers toreach city centre destinations without having
to change trains.

run

Funding
OperationsT

he underlying business model for public
transport companies in Tokyo is basedon a fundamental synergy between transportand non-transport operations. These privatecompanies own not only their entire track
infrastructure, stations, rolling stock andfeeder bus services, but – crucially – theyown significant interests in surrounding
areas including real estate, shopping
facilities(including
supermarkets,convenience stores, and department stores),as well as apartment complexes, hotels,
sports clubs, child care facilities, storage
space,
schoolsandresortfacilities.
Operators also seek to maximize commercial

revenue streams from services locatedwithin their stations – the so-called Ekinaka
approach where companies maximise use of
their assets to generate more revenue.
Transport and non-transport businesses
benefit each other; non-transport businesses
attract
more
passengers
while
more
passengers bring more revenue to nontransport business.
On average, 70% of these operators’
revenue comes from non-transport services
and only 30% from ticket and pass sales.
This business model is found elsewhere in
Japan as well but has been most successful
in the greater Tokyo region, in part due tovery high population density. Many urban
public transport operators outside ofthe largest cities in Japan face moredifficulty in ensuring the financial
sustainability of their operations.

Capital investmentM

any of the now-private urban rail
operators acquired land and built
their networks at their own expense in
the post-World War II reconstruction
period when land prices and labour
rates
were
relatively
low.
The
acquisition and construction costs ofthese private networks is largely
amortised at present. Now, however,land, labour and construction costs are
extremely
high
and
new
rail
infrastructureoften
requiresgovernment support to alleviate highTokyoinvestment costs. This support, covering up
to two-thirds of total costs, is available inspecial cases e.g. when large station or line
renovation projects are undertaken. Also,

Tokyo Metro has a special funding scheme
allowing national and local governments tocover up to 70 % of total construction costs.

Opportunities & Challenges
Population decline and aging
societyJapan faces two mega-trends regarding its
demography – an ageing society and low
birth rate. While Tokyo continues to be thelargest metropolitan area in Japan, andtherefore still attracts people and business ,itis expected that the region's will decrease byaround 3.5 million (9.3%) in the next 30 to
40 years while the number of people aged
65 years and older is expected to climb to 11
million, or approximately 35% of the region’s
population in the future.
Population decline in Tokyo will inevitably
affect public transport in the region. Though
operators are currently profitable due tostrong demand in the metropolitan region,
this may be less the case as the market
shrinks and changes structurally due to anageing population. Competition will increase
and some operators are already starting totake a strategic approach to adapt to thesedemographic trends by providing bettertransport and non-transport services andparticularlybypromotingyounger
generations’ relocation to the area aroundtheir facilities.
On the government side, the primary
response to these demographic trends withregard to public transport policy has been toincrease accessibility and convenience of theurban public transport system, especially for

elderly people. “Barrier-free” is a key word inthis context, and in 2012, the national
government adopted a capital improvement
plan seeks to render barrier-free public
transportation facilities used by more than
3,000 passengers a day.

Disaster risksJapan is exposed to many kinds of natural
disasters–
earthquakes,
volcanic
eruptions, typhoons, heavy snow falls, etc.
The Tokyo region is no exception and alarge-scale disaster striking the capitalregion will no doubt inflict severe damage
and disruption. To minimise these risks
operators in Tokyo have designed theirfacilities to be earthquake-resistant withsupport from both national and local
governments.

It is should also be noted that post-disasterrecovery of transport networks is an
essential part of disaster response plans.
Currently, the government and public
transport operators are working together toimprove continuity-of-service contingency
planning in the event of a large-scaledisaster and to ensure rapid and extensive
post-disaster recovery. This planning also
addresses contingencies for widespread
power shortages as experienced after the
East Japan Earthquake.

GlobalisationT

he national government has made it apriority to boost Japan’s attractivenessto overseas tourists. As part of this strategy,
the government is seeking to ensure that
touristsfindpublictransport
both
comfortable and convenient. One of theimportant projects in this regard is toimprove accesses to and from international
airports. Narita airport, located 60km east ofcentral Tokyo has both regional and expressrail access but travel times are still relatively
elevated. Haneda airport, located near
central Tokyo, has seen a return ofinternational flights – mainly at night – thus
requiring late public transport services.
Efforts have been made to ease thereadability and navigability for foreign
travellers of Tokyo’s extensive public
transport networks.
Public transport

operators provide multilingual support for
their services, including maps and signs.
They also introduced a line-numberingsystem – each station has its own number,instead of Japanese station name -- so that
foreign visitors can easily and situatethemselves and recognise their destination in
the complex rail networks.

CongestionE

asing rail and bus congestion is arecurring and ever-challenging theme
for Tokyo’s public transport networks.
Thoughthesituationhas
improvedconsiderably, passengers on some railway
lines still suffer from extreme crowding at
peak periods. Operators take measures toincrease transport capacity at those times
and to carry out joint campaigns with thegovernment
toencourage
off-peakcommuting.