EUROPEAN COMMISSION Brussels,8.11.2017 SWD(2017) 358 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1073/2009 on common rules for access to the international market for coach and bus services {COM(2017) 647 final}



{SWD(2017) 359 final}





The Regulation forms part of a common EU legal framework for efficient, fair and sustainable road transport. Within the framework the Regulation is closely related to the legislation on access to the occupation of road transport operator and social rules for road transport operators (the Driving Time Regulation, Road Transport Working Time Directive, the Enforcement Directive, and the Tachograph Regulation) which together set the legal framework for road passenger transport operators to operate in the EU. This initiative is part of a broader review of the existing legislation applying to road transport. The objective of the review is to update and improve the existing legislation so that it continues to achieve its objectives without undue burdens. Together, these initiatives consider a range of different options, with mutually reinforcing measures, which ultimately should improve the efficiency, fairness and sustainability of road transport. For road passenger transport operations the interaction of this initiative and initiatives on access to the occupation, social rules and the Eurovignette are closely linked. This package is further described in Annex 5. This impact assessment concerns a new REFIT initiative (regulatory fitness and performance revision) of current law that aims to simplify and reduce regulatory costs while maintaining benefits. 2.What is the problem and why is it a problem? 2.1.Policy Context This initiative is closely linked with the Communication of the Commission of 31 May, 'Europe on the Move', which aims to make transport cleaner, more connected and competitive. Bus and coach services have the possibility of contributing to all these objectives by providing better services to citizens The internal market is not yet complete and barriers remain, notably in the area of services. The integration of the European Union (EU) transport market remains low in comparison to other parts of the economy and a genuine EU-wide internal market exists only in air transport, while other transport modes, including road, suffer from different degrees of fragmentation along national borders. The White Paper on transport policy adopted on 28 March 2011 (hereinafter “the 2011 White Paper”) sets out the Commission’s vision for a competitive and sustainable transport system and reiterates the continuing importance of our ultimate aim, to pursue a single European transport area and remove competitive distortions. This will help the EU transport policy remains the creation of a single European transport area, to help the EU stay competitive by optimising the performance of the entire transport sector for the benefit of all while safeguarding safety, security and the environment. It acknowledges that curbing mobility is not an option and that new transport patterns must emerge, according to which greater numbers of travellers are carried jointly to their destination by the most efficient (combination of) modes. In the 1990s, the internal market for bus and coach services was created by two separate pieces of legislation, namely Council Regulation (EEC) No 684/92 on common rules for the international carriage of passengers by coach and bus and Council Regulation (EC) No 12/98 laying down the conditions under which non-resident carriers may operate national road passenger transport services within a Member State. These Regulations were consolidated by the Regulation which provides the conditions for the international carriage of passengers by coach and bus services within the EU by carriers for hire and reward. The Regulation was adopted as a part of a legislative package with Regulation (EC) No 1071/2009 establishing common rules concerning the conditions to be complied with to pursue the occupation of road transport operator and Regulation (EC) No 1072/2009 on common rules for access to the international road haulage market. Together, these three regulations establish the conditions for accessing the profession and for accessing the markets for transport of goods and people by road and aim to support the completion of the internal market in road transport, its efficiency and competitiveness. The scope of the Regulation covers the international carriage of passengers by coach and bus within the EU by carriers for hire and reward in possession of a Community licence or by own-account carriers established in a Member State. The regulation provides for the opening of the markets for the following services: Type of service Definition Regime Regular services Regular services means services which provide for the carriage of passengers at specified intervals along specified routes, passengers being picked up and set down at predetermined stopping points. Typical example: Regular, scheduled service open to all passengers, such as Eurolines services between Member States. Subject to authorisation granted by the competent authorities of the MSs concerned Special Regular Services Special regular services mean regular services, by whosoever organised, which provide for the carriage of specified categories of passengers to the exclusion of other passengers. Typical examples: Regular, scheduled service not open to all passengers, such as: ‐School services serving only those attending a school; and ‐Staff services serving only those working at a location. Not subject to authorisation where they are covered by a contract concluded between the organiser and the carrier Occasional Services Occasional services means services which do not fall within the definition of regular services, including special regular services, and the main characteristic of which is the carriage of groups of passengers constituted on the initiative of the customer or the carrier himself. Typical examples: Multi-day visit or tour requested by a customer or offered by a carrier. Excursion or day trip requested by a customer or offered by a carrier. Local excursion or day trip offered to those already on a multi-day visit. Exempt from authorisations Source: Support Study for Impact Assessment 2016 Steer Davies Gleave The Regulation lays down the provisions to be complied with by undertakings that wish to operate on the international road passenger transport market and on national markets other than their own (known as cabotage operations). Type of service Permitted cabotage operations Regular services The picking up and setting down of passengers within the same MS, in the course of a regular international service provided that: ·It is not the principal purpose of the service; ·It is not a transport service meeting the needs of an urban centre or conurbation, or transport needs between it and the surrounding areas; and ·It is not performed independently of such international service Special Regular Services Liberalised from any specific authorisation if carried out on a temporary basis and covered by a contract concluded between the organiser and the carrier. Occasional Services Liberalised from any specific authorisation Source: Support Study for Impact Assessment 2016 Steer Davies Gleave It includes provisions related to the documents to be issued to such carriers by the Member State of registration (Community licence) and by the authorising authority (Authorisation for a regular service). It sets down provisions regarding the sanctioning of infringements and cooperation between Member States in that context.

The Regulation has the following general objectives: ·To promote coach transport as a sustainable alternative to individual car transport. ·To open the market for international services and for cabotage operations without undermining public service obligations; ·To prevent discrimination on grounds of nationality or place of establishment; and ·To limit the administrative burden to the extent possible No rules have been adopted so far at EU level as regards access to the national markets for regular services by coach and bus (except cabotage operations which are part of an international service) and therefore the operation of national services is otherwise subject to the laws, regulations or administrative provisions of the Member States. This initiative should be seen as complementary to several parallel initiatives in the review of road transport legislation as part of the mobility package. Market and social issues in the road passenger transport sector are likely to become more interdependent because market opening tends to increase competitive pressure on operators and their mobile workers. Addressing these issues requires a holistic approach whereby the social, internal market and posting of workers' rules are considered together to ensure both fair working conditions for drivers and fair competition between operators. It is also closely linked with the road charging initiatives which propose to include coaches in the Eurovignette Directive and contribute to a level playing field in particular with rail. Therefore, this initiative on access to the coach market is part of a co-ordinated response to both the social and market challenges faced. This initiative is in particular complementary to the on-going revision of the Posting of Workers Directive 96/71/EC (PWD), which aims to clarify and update the provisions adopted more than twenty years ago and to ensure that the Directive still strikes the right balance between the need to promote the freedom to provide services and the need to protect the rights of posted workers. The PWD revision deals with general issues, such as broader set of remuneration rules or maximum periods of posting to be applied to all sectors. This initiative is also complementary to the specific rules proposed by the Commission on 31 May 2017 for the application of posting rules to workers in road transport. This proposal addresses the risks of inadequate working conditions for drivers, including terms and conditions of employment, and at the same time mitigating the excessive regulatory burdens on operators and preventing distortions of competition. The overarching goal is to ensure a balance between adequate working conditions for drivers and freedom to provide cross-border services for operators. 2.2. Market Context The international and national markets for inter-urban regular coach services play an important role in passenger transport. Coach is an economical, efficient and sustainable mode of transport which can contribute to reducing emissions from transport and to improving accessibility for citizens on low income or living in isolated and low population density regions with no rail services. In 2014, the bus and coach transport activity (expressed in passenger-kilometre) represented 8.0% of passenger transport and 8.8% of land passenger transport within the EU. Modal split of passenger transport in 2014 Passenger car Powered 2 wheel Bus and coach Railway Tram & Metro Air Sea 72.3% 1.9% 8.0% 6.5% 1.5% 9.2% 0.6% Modal split of passenger transport on land in 2014 80.1% 2.1% 8.8% 7.2% 1.7% Source: Statistical Pocketbook 2016 EU Transport in figures Although the sector’s share of the land passenger transport market has grown by 0.4% since 2009, these high level statistics do not accurately describe the different types of coach and bus services within the scope of the Regulation. The scope, quality and availability of data vary widely across Member States. There are inconsistencies across Member States in the definition of services (regular, international regular, special regular and occasional) and the distinction between bus (usually urban) and coach services (usually inter-urban). Vehicle-kilometres and passenger-kilometres (pkm) are reported in different and mutually inconsistent ways by different Member States. The statistics available at the European and Member State levels frequently refer to all bus and coach services together. While some statistics are available at an aggregate level (and usually conflate both bus and coach operations) there are few statistics available for sub-sections of the market, e.g. medium or long distance coach services. As shown in table 2-4, 14 Member States have some competition on the market for regular services accounting for an estimated 278 billion pkm. However, these Member States often still restrict the scope of inter-urban coach services by reference to a geographical market definition or a distance threshold; or by withholding permission to operate following an analysis of the impact of the proposed service on established operators; or by requiring operators to establish locally; or in some cases they rely on services provided under public service contracts (PSC) to supplement commerically operated networks and protect these PSCs from competition. These will be described further in section 2.5.1. Moreover, as desbribed in section 2.3, restrictions in a broader sense can be exacerbated by discrimination in access to bus and coach terminals (see section 2.3). There are a further 7 Member States with periodic tendering of concessions (competition for the market) accounting for 71 billion pkm and 7 Member States continue to limit competition considerably representing 30 billion pkm. Member State Some competition on the market/ open access services Some competition for the market/ Concessions Continue to limit competition considerably Market size in 2015 (billion pkm) Austria ✓ 6.9 Belgium ✓ 13.3 Bulgaria ✓ 7.6 Croatia ✓ ✓ 3.0 Cyprus ✓ 1.1 Czech Republic ✓ ✓ 15.5 Denmark ✓ ✓ 4.9 Estonia ✓ ✓ 1.5 Finland ✓ ✓ 4.4 France ✓ 34.4 Germany ✓ 45.1 Greece ✓ 13.5 Hungary ✓ ✓ 14.7 Ireland ✓ 5.1 Italy ✓ 77.0 Latvia ✓ 1.6 Lithuania ✓ ✓ 2.4 Luxembourg 0.4 Malta ✓ 0.4 Netherlands ✓ 7.9 Poland ✓ 32.2 Portugal ✓ 5.3 Romania ✓ ✓ 10.6 Slovenia ✓ 1.8 Slovak Republic ✓ ✓ 4.8 Spain ✓ 36.6 Sweden ✓ 4.9 United Kingdom ✓ 26.2 Source: Support Study for Impact Assessment 2016 Steer Davies Gleave.

The international market for regular services is small compared to the domestic market but it appears to be growing. It is estimated that international regular service passenger numbers grew by 40-60% and international coach pkm grew by between 0-40%, between 2009 and 2014. The domestic market in 2014 is broadly similar, and possibly slightly larger, than the market in 2009. The data suggests that the average international coach trip is getting shorter. It is estimated that there are several tens of millions of passengers per year travelling, on average several hundred kilometres each. This stronger growth in international markets relative to the overall market suggests that operators have responded to opportunities provided by international liberalisation. In 2013 there were 43,352 enterprises operating bus and coach services in both national and international markets (not including urban or suburban services) with 497,800 employees. Many coach brands are a marketing alliance or partnership, managed by one operator and operated by several companies or by subcontractors. Many coach companies are domestic subsidiaries of foreign owning groups, and the ultimate ownership of individual coach operators may depend on mergers and acquisitions activity among a more limited number of parent companies including rail companies (e.g. Deutsche Bahn AG and SNCF) and major transport groups (e.g. Arriva and National Express). Coach operators can add and remove routes relatively easily, allowing them to enter markets on a trial basis, or to modify services rapidly as markets change. The provision of the services, and their relative success, will generally depend on the characteristics of the competing modes. International coach services and networks are dynamic, with competition sometimes leading to price wars and subsequent withdrawal of one or more operators. 2.3. Evaluation of the Regulation The ex-post evaluation of the Regulation which was carried out from 2015 to 2017 concluded that the Regulation has contributed to the establishment of a more coherent framework for international services by coach and bus, including cabotage operations. The opening of the international market for regular services has resulted in improvements in the level of service with growth in the number of operators, numbers of passengers and the number of services in the EU. There was substantial growth in certain Member States, notably Czech Republic, Estonia and Poland, over the period 2009-2014 and the only Member State with data available that reported a decrease over this period was Slovenia. However, it has proved difficult to find evidence that directly links increase in activity to the introduction of the Regulation and some of the evidence is largely anecdotal and insufficient to demonstrate a causal relationship. There is conclusive evidence that the liberalisation of national markets by MSs in combination with the liberalisation of international services by the Regulation created a favourable environment for the expansion of coach services at national and international level. The opening of national markets for regular services in countries such as Italy, Germany and France that followed the liberalisation of international services triggered the expansion of some transport operators and enhanced the provision of new international services. It appears that once a national market for regular service is established, operators tend to exploit their national position through offering services to neighbouring countries. The available evidence indicates that the Regulation has not had any discernible effect on the volume of employment. No conclusion could be drawn regarding the evolution of the working conditions of drivers. Despite its achievements, the inter-urban coach and bus sector has failed to grow at a rate comparable to that of other transport modes and its modal share has continued to decline over an extended period. There are different explanations to this but very importantly, as described below; it appears that international services, without competitive inter-urban services, constitute less appealing service offerings to users. The evaluation has shown that the intended modal shift from passenger car to coach and bus services didn’t materialise to the anticipated extent. The anticipated impact was a more sustainable modal mix in passenger transport. The aim was to promote passenger transport sustainability by shifting traffic volumes away from car. These expectations were largely based on an over-optimistic assumption that the promotion of bus alone would change passengers' modal choices. In fact, the coach sector has failed to grow at a rate comparable to that of passenger cars and its passenger transport share continued to decline over an extended period. However, the problems of pollution, congestion and road safety that should have been addressed by the original objective of promoting coach and bus services as a sustainable alternative to individual car transport) still exist and remain valid. Furthermore, the evaluation identified the lack of an attractive mix of affordable alternative transport modes for citizens as a new and – at least - equally urgent challenge. The original Regulation did not aim at integrating national markets for regular services. However, the latter are recognised in the evaluation as a critical factor in the provision of international services. The evolution of the market, in terms of different and divergent rules on access to national markets in Member States, is a problem that was not previously apparent or considered when the intervention was designed. This patchwork of regulatory systems in the EU makes it difficult for carriers to exploit the full potential of operating in an Internal Market, impedes integration and undermines the efficiency of coach and bus services. The scope of the objectives of the original Regulation did not cover the problem of discrimination in access to terminals. Yet, without non-discriminatory access to terminals, bus and coach operators are forced to stop at the road-side, which diminishes the quality of service provided to users. Moreover, terminals serve a vital role acting as a hub in a network enabling passengers to change coach or acting as a multimodal hub enabling passengers to transfer to another collective mode of transport. The evaluation found evidence of discriminatory access to terminals in Austria, Czech Republic, France, Croatia and the UK which distorts service patterns and limits the possibility of operators to adapt services to passenger demand. The accessibility to terminals as well as the extent to which the terminals are linked to other modes of transport is particularly important for international regular services. 2.4.Problem definition Following the ex-post evaluation, further Commission work and stakeholder consultations, two main problems were identified. The main problems are: ·operators are facing obstacles in national markets to develop inter-urban coach services, and ·the low modal share of sustainable transport modes. The effects of these problems for citizens are described in figure 2-1. In non-liberalised markets this contributes to the transport disadvantage of certain groups of citizens. Furthermore citizens in general are faced with a lack of connectivity and non–integrated services. In particular, the ability of citizens in disadvantaged regions that are more sensitive to the price of transport, and to purchase end-to-end tickets from a competitive pan-European operator could substantially improve their access to employment, education and leisure opportunities. The evaluation concluded that operators are faced with a wide range of restrictions on access to national inter-urban markets even in Member States that have introduced different forms of market liberalisation. The date of most recent liberalisation relating to national markets for regular services varies widely, from 1980 in the UK to 2015 in France. Partly as a consequence, both the type of services which have been liberalised and the extent of the liberalisation vary widely between Member States. For example: ·Some create a number of regional concessions competitively, with exclusive rights to operate services (e.g. Spain). ·Some permit commercial operations, subject to rules designed to protect PSC’s (e.g. France) ·Some permit commercial operations carrying passengers beyond a minimum distance (e.g. United Kingdom).

·Some delegate responsibility to regional, county or municipal authorities (e.g. Germany). Figure 21: Problem Tree In these liberalised national markets, restrictions therefore include inter alia the prohibition of services below a certain distance threshold or prohibition of cabotage services or withholding permission to operate due to negative impacts on established operators. Operators encounter additional problems due to the excessive time taken to grant or refuse an authorisation following a procedure with little or no transparency. Some Member States continue to require that operators establish locally forcing them to adopt different business models to overcome this restriction. In the 14 Member States with non-liberalised markets (see table 2-4) there are a wide range of restrictions on access to markets for inter-urban services. These restrictions originated from a variety of different sources including Member States protecting rail, protecting incumbent operators, protecting PSC’s, or putting in place market access arrangements that are considered to better reflect the local circumstances. This means that barriers to market entry exist at a number of levels, ranging from tight national control of services, through regional awards of concessions with exclusive rights (whether directly awarded or competitively tendered), to local requirements for, or prohibitions on, stopping in particular locations. The number and diversity of regulatory frameworks and authorising procedures across the EU imposes excessive administrative costs on operators seeking to provide regular services in more than one domestic market. Furthermore the range of authorising procedures deters coach operators from providing international services as in reality national and international are interlinked and in turn integrated with other modes of transport. Discrimination in access to terminals is a common problem across the EU. A review of a number of cases investigated by competition authorities in different Member States provided information on whether the actions of particular transport and terminal operators were anti-competitive. These cases demonstrate the variety of different problems and their impacts on the services provided by competing coach operators including: ·Refusal to grant access to competitive terms can prevent a competitor from introducing a new service on a given route; ·A decision by a terminal owner to also access to a single preferred supplier can have the effect of displacing even an established competitor; ·A decision by incumbent coach operator to vacate a terminal in favour of a new facility can have the effect of undermining the services of competitors who remain. They also demonstrate that reaching a decision in a case involving abuse of a dominant position and anti-competitive behaviour can take several years. The UK based operator association Confederation of Passenger Transport (CPT) stated during the consultation that terminal access was a major concern. They suggested that there should be an EU-wide regulation requiring Member States to adopt appropriate measures to enhance and manage terminal capacity. Coach services have the potential to provide transport opportunities that match the needs of these disadvantaged groups of citizens, typically without passenger cars, as it can offer low fares and a large network of services. In 2014 passenger cars accounted for 83.4 % of inland passenger transport whilst the more sustainable collective modes of transport (train, coach, bus, metro and tram) accounted for only 16.7%. Over the period 2004 to 2014 the relative importance of the use of passenger cars was quite stable, with its share always within the range of 83% to 83.7%. This indicates that the more sustainable collective transport modes have not been able to reduce the relative importance of the use of passenger cars. The decline in the modal share of coach services has to be seen in the context of the very wide potential for such services. The potential for the development of the network of coach services is linked to the density of the road network in the EU. The greater density of the road network should enable coach operators to develop more extensive and complex networks, to provide services to more cities, and to provide more services to rural areas that are not served by, or accessible to rail, air or maritime transport. Figure 2-2 illustrates that the road density in each MS is much greater than that of the rail network. Source: Adapted from Statistical Pocketbook 2016 EU Transport in figures Expansion of the network of coach services could improve the connectivity of disadvantaged regions and supplement existing bus and rail networks. Figure 2-3 shows the GDP (Gross Domestic Product) per capita (measured by purchasing power rates) in NUTS-2 regions across the EU, with locations served by Flixbus’s network overlaid. Since commencing the expansion of its network beyond its home Member State (Germany) in 2015 Flixbus has developed one of Europe’s largest long-distance coach and bus networks. The figure shows that the expansion has been heavily concentrated in recently liberalised markets (France and Italy) that served as the stepping stone for the uptake of bus and coach services both at national and international level. It also clearly shows that network expansion has been constrained significantly, in countries such as Greece and Spain where national markets are still closed despite the presence of well-established industries in tourism expected to generate significant levels of coach traffic. However it also shows that currently, there are relatively few locations in disadvantaged NUTS-2 regions with GDP per capita of less than €20,000 (e.g. in Poland, the Slovak Republic, Hungary, Romania and Bulgaria) covered by the network of coach services. This suggests that an expansion of the network to the east could improve the connectivity of several more disadvantages NUTS-2 regions and supplement existing bus and rail networks even in Member States with liberalised markets (e.g. in Poland, the Slovak Republic, Romania and Bulgaria). As described above, better and more integrated service offerings to users from disadvantaged regions via the possibility to purchase end-to-end tickets could substantially improve their access to employment, education and leisure opportunities.

Figure 23 GDP per capita by NUTS-2 region and the Flixbus network Source: Comprehensive study on passenger transport by coach, Steer Davies Gleave, April 2016. The Special Eurobarometer Report on Coach Services (hereinafter “the Eurobarometer Report”) survey indicates that the pricing of coach services is an important factor in the mode-choice of both non-users and economically disadvantaged users. More specifically, the socio-demographic breakdown shows a notable difference between the average non-user and non-users from disadvantaged groups. For example, on average 26% of respondents would be more likely to use coach services if fares were lower. This increases to 35% of people with difficulty paying bills most of the time, 31% who have difficulty paying bills from time to time, 36% of respondents still studying and 34% of respondents aged 15-24. Restrictions to the provision of inter-urban coach services in national markets seem to lead to low service quality and higher fares. Table 2-5 describes the impacts on inter-urban coach services in Member States that have recently liberalised their markets to promote travel by coach. The results demonstrate that fares can be as much as 20% more expensive on routes where the provision of coach services is restricted than on routes where there is competition. It also demonstrates that service quality was lower, the number and frequency of services was lower, the size of the route network was smaller (with less accessibility), and less on-board services were provided e.g. less provision of Wi-Fi. Study Member State Impact of liberalisation Augustin (2013) Germany Identified a statistical relationship between level of market concentration and fare offered indicating that actual competition is an important determinant of fare levels. Also, the threat of new entry alone was sufficient to constrain the fares offered by incumbents. Deman France Germany Italy From the customer’s perspective, coach market liberalisation has already improved standards and choice. Increase in number of services and service frequencies. Coach services are now being promoted more actively, with services marketed on the size of the route network, better value for money and the environmental benefits of coach travel. Dürr and Hüschelrath (2015) Germany Open access to routes can have a significant impact on fare competition. It suggests that fares on routes served by three operators are 17% lower than on monopoly routes. Gipp (2016) Germany Gradual decline in tariffs and greater innovation in the interests of passengers (e.g. web-based ticketing & provision of Wi-Fi). Grimaldi et al (2016) Italy New entrants introducing pricing strategies based on airline-style yield management with substantial discounts available for early booking, in contrast to the more rigid, distance based fares strategies that are still pursued by established incumbents. Source: Support Study for Impact Assessment 2016 Steer Davies Gleave In principle, the benefits of opening access described above serve to demonstrate the benefits foregone in Member States in which there is little or no competition between operators. The evidence on the effects of competition to date, coupled with the demonstrable restrictions on market access in many Member States, suggest there is considerable scope for improving the competitiveness of the sector from the perspective of passengers. Greater competition within national markets would result in lower and more innovative fares, more efficient promotion of coach and bus regular services. The 2011 White Paper calls for greater integration of modal networks to provide passengers with better modal choice. Passengers are less likely to use coach services if they do not connect with other coach services or sustainable modes of transport or if the connections provided are not convenient. The range of facilities (such as well-signed interchanges, and relevant and accessible passenger information) and onward connectivity which the majority of coach terminals provide makes them particularly attractive, and important, for passengers. Restrictions on access to terminals are widespread and that they have a material impact on the services provided to operators and passengers. For example, during the targeted consultation exercise the operators National Express and Megabus confirmed the importance of serving terminals that enable interchange with other modes. National Express also highlighted the importance of ensuring connectivity between international and national coach services. The evidence indicates that the provision, standards, ownership and regulation of terminals vary widely between Member States, within Member States, and even within the same city. This variety of conditions makes access to terminals and integration with other modes complex and difficult. The IRU stated that there is a general lack of integrated terminal facilities supporting door-to-door transport and undermining the ability of operators to meet customer’s needs. Other operator stakeholders stated that roadside stops are not appropriate for encouraging multi-modal travel. Fewer than one in six respondents (13%) in the Eurobarometer Report gave good connections with other transport services as a reason for using coach services. The European Disability Forum (EDF) confirmed that multi-modal terminals are particularly important for persons with reduced mobility (PRMs) who rely on being able to transfer between modes easily. The Eurobarometer Report indicates that of the respondents that use coach services one in ten respondents stated they use coach services to travel to or from airports and a further 7% use the services to travel to or from rail stations. Of the non-users of coach services 21% reported they would be more likely to use the services if there was a more extensive network of routes and stations and better connections with other transport modes. Consequences of problems Situations of transport disadvantage, or low levels of accessibility, occur when there is little or no access to public transport or other transport modes, which restricts mobility and access to employment, education and leisure opportunities. This, in addition, disproportionately impacts on certain disadvantaged groups of citizens.

Similarly to inter-urban services, there is evidence that the accessibility to long distance services is associated with income levels . In other words, citizens with high levels of income generally have access to much improved mobility services. The lack of inter-urban mobility for economically disadvantaged groups is a problem because these citizens may not be able to participate in key activities such as education, job, visiting family and friends, healthcare and in general suffer social exclusion. 2.5.What are the problem drivers? As indicated in the problem tree, figure 2.1, there are three underlying problem drivers affecting the two main problems of operators’ facing obstacles in national markets to develop inter-urban coach services, and a persistent low modal share of sustainable passenger transport modes. 2.5.1.Problem driver 1: Restricted access to national inter-urban markets The regulatory frameworks for national coach services vary widely between the Member States. In some cases access to markets is directly restricted through the award of contracts to monopoly service providers. This both eliminates the scope for competition on individual routes and substantially hinders the development of international commercial services and networks. For example, in Greece contracts are awarded directly to operators within KTEL, a jointly funded group of companies and in Spain contracts are competitively tendered, with operators only periodically being subjected to competitive discipline. Restrictions may also stem from interactions with rail services, which Member States in certain cases protect as these are considered to be more environmental friendly. As shown in table 2-4 above, there are 14 Member States who limit competition on their markets accounting for in excess of 100 billion pkm. These Member States can exclude operators entirely from potential markets or award PSCs which favour incumbent operators and prevent potential new entrants from competing on equal terms (e.g. Austria, Belgium, Greece and Spain). By definition, the award of monopoly contracts effectively eliminates the scope for competition on individual routes. It can also substantially constrain the development of international networks. Even where contracts are subject to competitive procurement, the cost and uncertainty of mounting a bid to operate an entire route network will discourage potential market entrants who would otherwise have tested commercial opportunities through more limited market entry. The length of concession contracts also limits the opportunities for new entry. As mentioned above restrictions also occur on liberalised national markets including: a prohibition of services below a certain distance threshold (e.g. France and Germany); withholding permission to operate following an analysis of the impact of the proposed service on an established operator (e.g. Ireland and Estonia); and prohibitions on certain types of services, for example cabotage operations, in Latvia. The application of these different approaches to protect PSCs makes it difficult for operators to plan new services. Operators have reported during the stakeholder consultation that even in liberalised markets they encounter problems due to the excessive time taken to grant or refuse an authorisation and that there is little or no transparency in authorisation procedures especially in the application of mechanisms to protect PSCs. Restrictions on market entry can be exacerbated through the process of awarding PSC’s, which may favour incumbent operators and prevent potential new entrants from competing on equal terms. For example, BusUp, a provider of occasional and discretionary coach services, noted that both existing and new contracts are often tendered on terms that only established operators can meet. It stated that the large size of concessions in Spain resulted in difficulties for SMEs bidding for them. Similarly, the Coach Tourism and Transport Council of Ireland has suggested that the pre-qualification criteria for bidding for recent PSC’s were such as to preclude the majority of private operators. Limiting the number of bidders in this way may mean that new operators are prevented from extending their networks even where they are prepared to operate services under PSC and meet contractual requirements defined by regional and local authorities. Member States that have liberalised national regular services always continue to require that operators establish locally and have not taken the opportunity to decide that the Community licence shall be valid for national transport operations under the provisions of Regulation 1073/2009. This forces operators to adopt different business models to overcome this restriction. The business models include contracting services to local operators and establishing subsidiaries. Operators have confirmed that the costs of circumventing local establishment requirements can be significant, even for large operators. The biggest perceived negative impact of the requirement to establish locally is the associated administrative costs for the carrier. 81% of the 36 carriers that responded to the open public consultation (OPC) identified these costs as having a negative impact. Stakeholders responding to the OPC generally agreed that restrictions on access to national markets for regular services are a problem. Of the 153 respondents, 33% agreed that it is a major problem and 27% stated it is a minor problem. 67% of the 45 operators responded that the restrictions have a negative impact on their ability to expand into new markets and none expressed the view that they had a positive impact. Public Service Contracts Some public passenger transport services that society needs as part of its general interest cannot be run commercially, so the competent national, regional or local EU authorities must be able to make certain they are provided. Competent authorities can do this: ·by awarding exclusive rights to operators running public services, compensating them financially. This usually takes the form of bundling profitable and non-profitable routes together so that the profitable routes cross-subsidise the non-profitable routes, and also ·by defining rules (i.e. public service obligations) for how public transport should be operated. For instance, public subsidies can be granted for the provision of transportation services, particularly for low-density routes, usually connecting rural areas. Such subsidies can be granted both to railway and coach services. As a reference, the total amount of subsidies granted for the compensation of railways PSOs in the European Union in 2015 amounted to EUR 20 billion. Article 14 of the Treaty on the Functioning of the European Union (TFEU) and Protocol No 26 on services of general interest annexed to the TFEU sets out the general principles of how Member States define and provide services of general economic interest. The EU has developed legislation to avoid disparities between Member States in the procedures and conditions they apply to the execution of public service obligations. Evidence from a previous study indicates that there is little consistency across Member States in terms of the size of the area of competence of the competent authorities which organise public transport and PSCs. In smaller or island Member States the authorities tend to be national, whilst in many Member State there can be a large number of authorities. Some states have authorities in charge of transport at a regional level, including Belgium, Germany, Czech Republic, Denmark, Croatia, Italy, Spain, Slovakia and Sweden. There is nothing to prevent authorities of national competence to manage many distinct contracts. However, in the case of Ireland, Cyprus and Malta, there are only a limited number of public service contracts in use.

The opening of access to the national market for regular services would enable operators to provide new services which, if attractive, will both: ·provide welfare benefits to new passengers who would not otherwise have travelled; and ·take passengers from existing services, reducing the revenues of existing operators and incentivising them, where possible, to improve quality and lower fares, reduce costs, or cut services. Where new services effect existing services provided under a PSC, Member States and competent authorities are likely to be concerned if the first effect “generation” (of revenues through newly generated demand for bus and coach services) is small compared to the second effect “abstraction” (of revenues from existing operators). Currently there are a number of different approaches to protecting PSC’s based on restricting or limiting new entry. These are: ·Regulation 1073/2009 requires that international coach services be authorised except on the basis of detailed analysis of their effect on one or more PSC’s. ·Regulation 1370/2009 permits exclusive rights to protect any PSO provided by in particular any land transport mode. ·Directive 2012/34 as amended Directive 2016/2370 requires that international and domestic rail services may be limited to protect the economic equilibrium of a PSC applicable to the same or an alternative route. Each of the options described in section 5 dealing with PSCs will continue to provide Member States with the capability to protect PSCs whilst also providing carriers with transparency together with clear, simple and rapid procedures to address demand. During stakeholder consultation 9 out of the 13 Member States that replied reported that they were concerned about the potential adverse impact on services operated under PSCs. To address these concerns all measures dealing with market access include a measure to protect PSC’s. 2.5.2.Problem driver 2: Excessive administrative costs of entry We have identified extensive evidence that administrative costs incurred by operators can be material and that administrative processes can delay entry. It is also clear that the requirements for the authorisation of national and international regular services can vary significantly by Member State. Operators face excessive costs of entry in national and international markets due to national and local authorisation procedures and requirements including in the case of applications to operate international services under the Regulation. In Germany the application process can take up to four months with different procedures in different Länder. The authorisation procedures for international and national regular services involve protracted paper-based administrative procedures with both large and small operators acknowledging that this process favours larger established operators who are well placed to understand national requirements and processes. Operators also highlighted the importance of language barriers and the need for translators to communicate requirements and complete application forms. Coach operators who carry out international occasional services, such as group tours to holiday destinations, require a journey form. The journey form holds information about the type of transport on the one hand and about destination, route and passengers on the other hand. The journey form generates an unnecessary administrative burden for operators. The REFIT Platform has considered a submission from the Dutch Ministry of Infrastructure and Environment on the elimination of the journey form clearly shows mixed views. The Stakeholder group considers that the journey form has lost its relevance, generates unnecessary administrative burden for many operators, in particular SME’s and recommends its removal. Within the Government group, views are divided. While a few Member States consider that the abolition of the journey form would reduce regulatory burden for both carriers and Member States, the majority of Member States see the journey form as an effective control tool to complement tachographs which needs to be maintained. In the OPC 75% of the 65 companies and 78% of the 27 non-governmental organisations stated that the journey forms serve no useful purpose. Although 12 Member States indicated that they do not support abolishing the form the reasons provided are inconsistent with the experience in Denmark, Finland, Norway and Sweden who abolished the obligation of the journey form for operators that have their business establishment in their countries in 2003 and there have been no negative consequences for road inspections. The estimated administrative burden of market entry for authorisation and journey form are provided in the table below: Process Source of costs Time Comment Authorisation Resources used by operator to complete application Three days Based on stakeholder comments concerning need for translation and consultancy advice The delay in the reply to the application for authorisation Two months Stakeholders have indicated that elapsed time for approval can be four months but that two months would be more appropriate Resources used by national authority to process application Five days Elapsed time of four months suggests significant number of days’ effort Journey form Time taken for operator/driver to complete journey form Less than one hour No reason to modify this estimate based on evidence to date Resources used by national authority on inspection Five minutes – 10% of forms inspected Inspection time proportionate to time to complete the form. Inspection rate of 10% gives sufficiently high likelihood of inspection to encourage compliance Source: Support Study for Impact Assessment 2016 Steer Davies Gleave

Some Member States have taken action to reduce the administrative burden. For example, the abolition of the use of journey forms in Nordic Member States. Operators or national authorities do not record the administrative cost systematically but there is extensive evidence that the costs incurred can be material and that administrative processes can delay entry for operators. 2.5.3.Problem driver 3: Restricted access to key infrastructure Terminals provide connectivity to the network of coach services and serve as a place of interchange between coach services. They also act as an interface between the network of coach services and urban, rail, air or maritime networks. The provision of terminals in the EU is variable. Some Member States appear to expect or require the competent national, regional or local authorities to provide terminals whilst others have no systematic provision of terminals. There are several models of terminal ownership across the EU including ownership by national, regional and local government, by operators, by the railway infrastructure manager, by airports, privately and by other parties. In some Member States the terminal ownership is irrelevant, because the coach market is highly restricted or regulated and new coach services are not allowed to compete with existing services or operators are not permitted to operate domestic regular services. The success of inter-urban services depends largely on the extent to which they connect with other modes of transport and the convenience of the connections provided. Access to terminals is a factor that limits competition in the market. There is evidence (collected during two 2016 studies,) that carriers face restrictions in access to key infrastructure are common and widespread with instances identified in 14 Member States. The issue of equal access to terminals was investigated further during the targeted consultation exercise as there is a particular risk that access to terminals may be a barrier to entry if the company that manages the terminal is vertically integrated with one of the coach operators. Where the terminal operator is independent of the coach operator, it is more likely that they will treat operators equally, although this is not guaranteed and they may still face incentives to protect the largest operator. The evidence indicates that restrictions on terminal access are widespread and that they can materially impact on services. Due to the decline in the coach market over an extended period the amount of terminal capacity has increased particularly in central and eastern European States, where rapidly increasing car ownership has reduced the demand for long distance coach travel. However, there are still issues with access to terminals in other Member States. Experience in Germany, following liberalisation of the market for regular services, suggests that terminal access may become a problem after market opening when a rapid expansion of services puts pressure on available resources. A key issue is, where there are capacity restrictions, how is it decided to distribute slots between operators. This is not always transparent, and coach operators have been refused access to terminals on the basis of capacity restrictions which were very unclear. The following table provides a summary of some of the issues raised by stakeholders including operators, regulators and ministries: Stakeholder Remarks ARAFER Autorité de régulation des activités ferroviaires et routières cited a recent case in which it was required to resolve a dispute concerning access to Beauvais airport. Initially, the terminal operator failed to publish access rules, and while they were subsequently made available, ARAFER considered that they were poorly written and that the objective of the rules was open to question. At the time of writing there is an ongoing procedure, whereby ARAFER is investigating whether the terminal operator has breached its legal obligations. ART Autorità di Regolazione dei trasporti highlighted a general lack of terminal capacity in cities such as Rome and Torino. The terminals that are available are heavily congested and it is difficult for new operators to gain access. ART also suggested that the lack of a clear definition of terminals, setting out minimum standards for facilities, made it difficult to enforce access. Ministry of Transport Greece It is bringing forward a Presidential Decree defining mandatory standards for different categories of terminal to clarify the facilities that should be made available to operators. It also referred to the construction of a new terminal at Elleonas, consolidating the existing facilities at Kifisos and Liosia. This will provide capacity for international services, which are currently not permitted to use the inter-city terminals. Ministry of Transport Slovak Republic Cited a case recently referred to them in which an operator complained that a regional authority had refused to grant a licence because the city centre at one end of the proposed route was congested. The Ministry subsequently confirmed that the licence should be issued, but the example demonstrates how local restrictions can frustrate or at least delay market entry. Ministry for Transport for Baden-Würtemberg Observed that while there is no discrimination in terminal access in Germany, infrastructure designed for local public transport is not necessarily suited to longer distance transport services. The Supreme Building Authority within the Bavarian Ministry of the Interior also noted that local authorities must be permitted to determine how the facilities that they owned were used to further their own transport objectives. Megabus Confirmed that it preferred to use terminals rather than on-street stops, particularly when passengers require inter-modal transport links. It noted that it had experienced difficulties in gaining access to terminals owned and managed by railway operators, citing Trenitalia’s refusal to provide access to the terminal in Padua by way of example. They also observed that there is no terminal in Brussels and that the city centre is reserved for tourist coaches. Ouibus Noted difficulties in obtaining access to terminal facilities as well as on-street stops in some French cities, and indicated that in some cases coaches had effectively been prohibited from operating to city-centre locations. National Express Observed that there are generally insufficient public terminals across Europe, and that several major cities including Amsterdam, Paris and Brussels do not have any public terminals. In Austria, terminals tend to be owned by the rail operator and requests for access can be refused, while in France they are increasingly being located outside of city centres. Competitors are generally unwilling to share their terminals and they are anyway frequently capacity constrained. Source: Support Study for Impact Assessment 2016 Steer Davies Gleave There is considerable evidence that discrimination is a common problem in the EU and occurs where terminal facilities are both privately and publicly owned. Discriminatory behaviour in relation to privately owned terminals is more difficult to challenge from a policy perspective, since the business case underpinning private sector investment may depend on a single operator having exclusive use of the available capacity. Regulations having the effect of providing a right of access to third parties whether set at the European Union or national level could therefore have the effect of discouraging such investment. For this reason, concerns about discrimination relating to privately owned terminals are arguably better addressed through competition policy, whereby the relevant authorities can assess the merits of particular actions on the part of terminal owners’ case-by-case. By contrast, discriminatory behaviour by the operators of publicly owned terminals is more difficult to justify, since the underlying investment is more usually driven by recognition of the importance of providing appropriate facilities to support good quality public transport services within a country, region or city. Moreover, public terminal facilities are often provided to ensure that passengers can interchange between transport modes, an important consideration in the planning of many coach services. The cases above, amongst others, demonstrate a variety of impacts that discriminatory behaviour can have on carriers including: refusal to grant access on competitive terms can prevent a competitor from introducing a new service on a given route; a decision by a terminal owner to allow access to a single preferred supplier can have the effect of displacing even an established competitor; and a decision by an incumbent bus and coach operator to vacate a terminal in favour of a new facility can have the effect of undermining the services of competitors who remain. They also demonstrate that in the absence of applicable rules the time taken to reach a decision on cases involving abuse of a dominant position and anti-competitive behaviour can take a number of years, particularly if challenged in court. In the OPC, 81% of the 32 operators stated that discrimination against new entrants in providing access to terminals is a problem resulting in administrative costs for operators but it has not been possible to quantify the costs. In addition to the evidence gathered during the targeted consultation indicating that the restrictions are widespread and that they have a material impact on the services provided to operators and passengers, operators also reported that the various different structures of ownership and the regulation of terminals across Member States make it difficult for them and cause an unnecessary administrative burden. They find it difficult determine who to contact, how capacity will be allocated, and how they will be charged by the terminal operators across Member States. Finally, there are two other root causes to the driver of restricted access to key transport infrastructure: constrained terminal capacity; and restrictions on access to city centre locations. At this stage, the Commission is not proposing to address these issues as the question to what extent it is competent to do so first needs to be clarified. Transport is a shared competence between the Union and the Member States and subsidiarity considerations may come to play here. The Commission has launched a study on urban vehicle access restrictions (which should be available in autumn 2017) and, based on its results, it will assess whether it is necessary to propose measures in this area or not. 2.6.Who is affected by the problem, in what ways, and to what extent? The excessive administrative costs, restricted access to national inter-urban markets and restricted access to key transport infrastructure have a direct or indirect impact on the following stakeholders: Citizens / passengers: face an inferior offer of services in terms of availability, cost, quality and reliability. Regular services are not always adapted to meet passenger demand. They are not fully benefiting from the affordable mobility offered by inter-urban bus and coach services; in particular those who suffer transport disadvantage suffer disproportionately and are more likely to experience reduced mobility. They are unable to purchase end-to-end tickets to improve their access to employment, education and leisure opportunities across the EU. Where coach and bus services are not available citizens are also affected by worse air quality due to the on average higher emissions from other inter-city passenger transport modes (except electric rail) and in particular from car. Road passenger transport operators: new entrants face a patchwork of regulatory requirements including restrictions or prohibitions on market entry and lose business opportunities. Incumbent operators remain protected and gain business opportunities with little or no incentive to innovate. Terminal operators: may continue to provide specific carriers with discriminatory access giving them a competitive advantage on certain services, preventing effective competition between carriers and constraining the development of an integrated coach network.

Road passenger transport workers: have a key interest in working conditions, pay and employment conditions, health and safety in the workplace, training and professional careers. Public authorities – the problems affect the manner in which national competent authorities interact with road passenger transport undertakings and terminal operators. The problems also affect how public authorities provide for inter-urban passenger transport e.g. commercially or in the general economic interest through PSCs. 2.7.What is the EU dimension of the problem? One of the Europeans Unions main transport policy objectives is to improve travel possibilities across Europe and ensuring high-quality transport services for its citizens. In that context one of the primary objectives of Regulation 1073/2009 is to increase the level of performance of international coach and bus services. There is evidence that the opening of national markets for regular services by coach and bus has created a critical mass of operators who also introduce international services, resulting in a greater impact on the number of international routes and service frequencies than pan-European legislation alone. This suggests that further opening of national markets would strengthen the development of the international market for regular services, quite apart from any benefits for passengers making national journeys. The problem drivers mentioned in the previous section are mainly due to the possibility of Member States to adopt their own rules and restrictions with regard to access to their national market for regular services. The different national approaches and the restrictions in access to terminals constitute a barrier to the free movement of services in the field of transport which is one of the goals of the Common Transport Policy. This affects the effectiveness of the Internal Market in the field of passenger transport by road. Carriers have been unable to compete fully in national inter-urban transport markets. This has limited the sectors ability to grow market share relative to other modes. It has prevented the development of a fully integrated market for inter-urban travel by bus and coach, resulting in poor connectivity from some citizens, particularly those with limited access to a private car or rail services. EU citizens have access to a poorer (in terms of accessibility, frequency, price, comfort) than optimal mobility offer which affects the free movement of persons in the EU. Indeed, while national restrictions on paper only affect domestic transport, in reality domestic and cross-border connections are interlinked and in turn integrated with other modes of transport to collectively constitute the available passenger mobility offer inside the EU. Hence restrictions on domestic coach services and access to terminals have far reaching consequences on the functioning of the passenger transport sector in the whole EU and across all transport modes. In the absence of harmonised rules at EU level, carriers operating in the EU regular services are faced with excessive administrative costs of entry, a patchwork of access rules and in discrimination in access to terminals. Simplifying administrative procedures, removing restrictions on access to inter-urban markets through a harmonised legal framework across the EU and preventing discriminatory access to public terminals would contribute to solving the issues identified and facilitate inter-urban mobility for all citizens by promoting coach travel. 2.8.How would the problem evolve, all things being equal? This section analyses how the problem would evolve, assuming the continuation of existing policies and the implementation of already planned policy reforms. There is no indication that Member States will introduce changes to existing provisions. However, Member States will have witnessed the increase in passengers carried, total passenger km, employment levels and the density of the network of coach services along with lower fare prices in recently liberalised markets for national regular services (e.g. France, Germany, Italy and Poland). In the absence of EU action some Member States may be prompted to liberalise their markets according to different principles to improve efficiency. In the absence of further EU action, Member States may continue to maintain restrictions on market and route access or excessive requirements e.g. the requirement of local establishment. All things being equal and in the absence of any further liberalisation measures at the EU or national level, it is estimated that by 2035, around 26% of the market (equivalent to 108 billion pkm) will be subject to restricted access due to reliance on concessions or direct restrictions on market access. There will also be restrictions to market access for new entrants in the remaining 74% of the market that has to some extent liberalised but continue to impose various restrictions, for example in order to protect public services operated under PSCs. The network of coach services will not expand and develop as operators will continue failing to penetrate into restricted markets. There will continue to be a clear distinction between international regular services and national regular services for inter-urban travel. In restricted markets service frequencies are likely to continue to be low and passengers will continue to have a poor choice of combinations of fares and service quality. Citizens who are sensitive to the price of transport or who live in areas where restricted markets have blocked the penetration of the network of coach services will suffer disproportionately. They are more likely to experience reduced mobility; this is especially the case for those with little or no access to other modes. The reduction in mobility hampers their access to employment, education and leisure opportunities. There are other potential developments described in table 2-8 which could have significant implications for coach travel. It is difficult to quantify the impacts of these developments on the bus and coach sector with any confidence, since their effect depends on a wide range of uncertain factors such as economic conditions across Europe, the extent of cost changes driven by new technology, changing attitudes to the application of technology among both the travelling public and transport employees, and policy responses at the local, regional, national and European level. The table below provides commentary on possible implications for bus and coach services should the technological development be implemented. Technological development Possible impacts Autonomous vehicles ·‘Platooning’ of vehicles on motorways and other major roads could improve efficiency, reducing coach service fuel costs and emissions ·Could enable increase in operational hours of vehicles ·May enhance the attractiveness of travel by private car, for example by relieving congestion and improving journey quality Alternative fuels ·Likely to reduce the carbon footprint of coach operations as well as other forms of road travel ·Could change the relative costs of different types of operation, for example enabling the development of smaller fleets offering on-demand services (based on further development of the BusUp model) ·May strengthen the attractiveness of travel by private car by reducing costs New operating models ·May enable service users to pay a single subscription fee allowing them to access a wide range of transport services, reducing the benefits of a private car relative to public transport ·Analysis of data about user choice and local conditions would allow coach operators to develop more user-focused services, operated to accommodate real time traffic constraints ·Would support improved on-board service offer, including entertainment and services supporting more effective working on the move Integrated transport ·Better real time coordination of coach and other transport services and more extensive availability of integrated tickets/electronic payment Source: Support Study for Impact Assessment 2016 Steer Davies Gleave The developments under current trends and adopted policies (i.e. baseline scenario) in inter-urban coach transport activity, energy use and CO2 emissions, as well as revenues and employment in the sector by 2030 are shown in the table below, assuming the continuation of existing policies. The development of the baseline scenario is described in detail in Annex 4 "Analytical models used in preparing the impact assessment", together with the underlying assumptions. Projections for 2030 Type of national market Total average annual change Liberalised Transition Concessions Non-liberalised Total 2015 – 2030 (%) Passenger km (billions) 99 383 68 39 589 2.5% Vehicle km (billions) 6 16 5 3 30 1.9% Revenue (€ billions) 14 45 8 5 73 2.8% Employment (000s) 181 681 105 51 1018 3.3% Energy use (000 toe) 1,499 3,640 1,121 622 6,882 1.3% CO2 emissions (000 t) 4,203 10,349 3,204 1,763 19,519 1.1% Accident costs (€ millions) 309 517 110 48 985 -1.6% Source: Support Study for Impact Assessment 2016 Steer Davies Gleave

It is estimated that continued discriminatory behaviour in relation to terminal access could unduly constrain terminal capacity supporting some 1.5 billion vehicle kilometres and could result in the suppression of around 400 million vehicle kilometres. As mention in Section 2.5.2, the administrative costs incurred by operators can be material and administrative processes can delay entry. It is clear that even the requirements for authorisation of international services vary significantly by Member State and nothing indicates this will change. It is estimated that the total administrative costs on the coach sector is €884 million in 2015 (with 2/3 falling on operators and 1/3 falling on government and/or regulatory bodies), rising to €1,288 million in 2030. 3.Why should the EU act? 3.1.Legal Basis The right of the EU to act in the field of transport is set out in the TFEU (Treaty on the functioning of the European Union). According to Article 4 TFEU, transport is one of the principal areas where shared competence between the Union and the Member States applies. The competence for this initiative derives from Title VI (Transport) of the TFEU, in particular Article 91 which states, inter alia, that the European Parliament and the Council shall lay down common rules applicable to international transport to or from the territory of a Member State, or passing across the territory of one or more Member States, as well as the conditions under which non-resident carriers may operate transport services within a Member State. The applicability of Title VI to road transport is stipulated in Article 100 TFEU. As far as public service contracts are concerned, the measures considered under different PSC options in this IA are geared towards providing flexibility to Member States. Article 14 and Protocol 26 of the Treaty confirm the place occupied by services of general economic interest in the shared values of the Union. Under Article 106(2) of the Treaty on the Functioning of the European Union (TFEU), companies that provide services that are of general economic interest are subject to the rules of the Treaties, in particular to the rules governing competition. But unlike other economic sectors, this Article does not apply when compensation is paid for public service obligations in land transport. Instead, this type of compensation is covered by Article 93 TFEU as a 'lex specialis' and is applied according to the rules of Regulation 1370/2007 on public passenger transport services by rail and by road. It is not proposed to make any amendment to Regulation 1370/2007 and Member States can continue to act to ensure that services of general economic interest continue to be provided. In this respect, the initiative presented will not go further than allowed by the Treaty and will not impinge upon Member States' right to specify public service obligations underlying to PSCs. 3.2.Subsidiarity In accordance with Article 5(3) of the Treaty on European Union (TEU) any EU action should respect the principle of subsidiarity. This involves assessing two aspects. 3.2.1.Necessity test The necessity test assesses if the objectives of the proposed action can be sufficiently achieved by Member States. The legitimate rights of Member States to take actions which reflect their local, regional or national specificities, must not unduly restrict the proper functioning of the internal transport market. EU transport policy has always focused on overcoming obstacles between Member States and creating a single European transport area with fair competition conditions for and between the different forms of transport. This means not only dismantling cross-border barriers but also integrating national markets in order to complete the internal market for transport. Across the EU there is a patchwork of rules for access to national markets for coach and bus services. Carriers are required to comply with different rules in each Member State in which they operate. These rules include restrictions on access to national inter-urban markets which constrains carriers’ ability to develop services into pan-European coach networks and denies them the possibility to offer integration with other coach services and transport modes. The past has shown that Member States action at the national or lower level (Article 25 of the Regulation enables Member States to agree bilaterally or multilaterally to further liberalise services) has not been sufficient to tackle the identified problems. Furthermore, Member States acting alone cannot introduce or ensure the coherence and coordination of uniform market access rules needed for the emergence of a genuine internal market for road passenger transport. It is therefore necessary to provide rules at the EU level. 3.2.2.EU added value test The EU added value test assesses if the objectives of the proposed action can be better achieved at Union level. Since the 1980s, the EU has elaborated a framework of common rules and procedures intended to open the European road transport market to competition. The approach has been consistent with the objective of developing Europe’s transport sector and the EU is best-placed to lay down common rules for the road passenger transport market that guarantees carriers access to operate throughout the EU without discrimination. The envisaged revision of the regulatory framework will streamline the national differences in market access rules and provide carriers with predictable business conditions throughout the EU, therefore removing distortions of competition and barriers to market access as well as providing the ground to strengthen the internal market. The envisaged revision should have an immediate and strong positive impact on the level of accessibility for EU citizens some of whom will have access to an affordable mobility offer for the first time. Additionally, but over the longer term, it will have a positive impact on the external costs of transport due to the expected modal shift. The beneficial effects of the modal shift from car and air together are greater than the negative environmental impact associated with the generation of new traffic and the substitution of some rail use in favour of coach travel. The performance of coach and rail combined is improved leading to an increase in the modal share of sustainable transport modes. The envisaged revision should lead to an increase in inter-urban travel with the benefit of not having any adverse impact on the environment. It will facilitate the mobility of citizens who otherwise could not afford to travel. It will reduce the negative externalities of inter-urban passenger transport, such as emissions, accidents and fatalities, road congestion as well as to improve the efficiency of use of transport resources. Furthermore, the introduction of measures to ensure a level playing field in the allocation of terminal capacity should lead to an uplift in capacity that is unduly suppressed by discriminatrory behaviour in access to terminals.

The EU is by far the best placed to act to achieve an accessible and competitive inter-urban coach passenger sector and a true internal market for road passenger transport as these cannot be better achieved at national level. The proposal does not aim at total liberalisation of domestic services and Member States may still limit the right of access to national markets for regular services if a commercial service would compromise the economic equilibrium of a public service contract. 4.What should be achieved? 4.1.General policy objective The proposed revision of Regulation 1073/2009 aims to resolve the problems of operators facing obstacles in national markets to develop inter-urban coach services and the low share of sustainable transport modes. The initiative aims at a proportionate response to national obstacles to market entry whilst avoiding excessive intrusion into the national markets. Therefore the 2 general objectives (GOs) of the proposed revision have been defined as follows: GO1: Facilitate inter-urban mobility and connectivity for all citizens GO2: Increase the modal share of sustainable transport modes The GOs cover both national and international regular services, reflecting the potential for operators to provide both kinds of services as part of an integrated European route network. It is in line with the political priority of the Commission for the period 2014-2019 to create a fairer and deeper internal market and strengthened industrial base. It is also in line with the 2011 White Paper which foresees an efficient single transport area for multimodal intercity travel and transport, and recognises the need for the greater use of bus and coaches and the requirement to link the modal networks so they provide better modal choices for passengers. 4.2.Specific objectives To achieve the GO the following 3 specific objectives (SO) have been developed. The SOs align with the three problem drivers defined in section 2.5. SO1: Simplify administrative procedures This SO aims to address the problem of excessive administrative costs of entry, defined in section 2.5.2, by clarifying and simplifying administrative procedures including the procedure for authorising regular services. SO2: Remove restrictions on access to inter-urban markets This SO aims to address the problem of restricted access to national inter-urban markets, defined in section 2.5.1, by removing legal barriers to market access and stimulating competition in the national inter-urban markets. The majority of respondents to the OPC considered that establishing a common framework in the EU for access to national markets for regular services would contribute to improving the market for coach services (65%). SO3: Prevent discriminatory access to public terminal facilities The SO aims to address the problem of restricted access to key infrastructure, defined in section 2.5.3, by requiring Member States to grant operators access rights to public terminal infrastructure on fair and non-discriminatory basis for the purpose of operating regular services. The majority of respondents to the OPC considered that operators should have a level playing field in access to terminals (70%) and the majority of Ministries/Regulators that responded to the targeted stakeholder questionnaire supported establishing common requirements to ensure that access to coach terminals is fair and non-discriminatory. Seven of those responding (35%) supported the proposal. The SOs should be mutually reinforcing, such that interventions designed to ensure that they are met can be expected to improve the competitiveness of the sector through a series of interacting impacts. For example, removing restrictions on access to inter-urban markets could be expected to reduce the administrative costs of entry by simplifying procedures as well as removing direct restrictions on market access.

5.What are the various options to achieve the objectives? The stakeholder consultation, the expert meetings, independent research and the Commission's own analysis have allowed the Commission to identify different policy measures, which served as a basis for the identification of a wide set of policy options. These options have been considered in order to address the problem drivers and the three specific objectives. Although the three problem drivers contribute to the overall problem, one problem driver will be treated separately from the other two. The assessment leading to the choice of an overall policy option addressing the main problems has be broken down into two assessments leading to the choice of two sets of policy options: ·the first set of policy options on market access addressing SO1 and SO2; and ·the second set of policy options on terminal access addressing SO3. Then a separate assessment and comparison of the two different sets of policy options is performed and a preferred policy option from each set of options is selected. Finally, an assessment of cumulative effects for the combined two preferred policy options is performed. The following process was applied for establishing the policy options: ·identify an extensive list of policy measures addressing the problems (considered policy measures); ·as a result of this initial screening, a number of policy measures were discarded from the initial analysis (see Annex 6 for the list of measures and the underlying justification). ·consider policy measures which are retained after a preliminary assessment; and ·identification of possible policy packages. 5.1.Retained policy measures Driver 1 – Excessive administrative costs of entry No. Policy measure Description 1 Standardise the authorisation procedure This measure aims to simplify and standardise the procedure for the authorisation of regular services. There is a standardised authorisation procedure for international regular services but the authorisation procedures for national regular services vary widely across Member States. 2 Abolish the journey forms for occasional services This measure aims to simplify the operation of occasional services by removing the requirement to complete a journey form for occasional international services. This measure will reduce regulatory costs by eliminating the administrative costs for operators and national authorities. Driver 2 – Restricted access to national inter-urban markets No. Policy measure Description 3 Clarify the meaning of “Cabotage operations shall be authorised…”. This measure aims at clarifying how cabotage operations are authorised. 4 Extend the scope of the Regulation to include national markets, subject to authorisation This measure aims to open access to national markets for regular services and simplify the authorisation procedure. Member States would be able to reject an application for an authorisation if the new service would compromise the economic equilibrium of an existing public service contract. During the targeted consultation 6 Member States reported that they did not support this measure and the reasons given were concerns about unfavourable impacts on coach sector employees (in Bulgaria and Estonia), the potential adverse impact on services operated as PSOs (Germany and Ireland), safety (Italy) and inconvenience (Spain). The difference in views of these stakeholders does not appear to reflect the differences in the market liberalisation as described in table 2.4 but rather reflect each Member States unique national regulatory system. 5 Require access to national regular services markets without discrimination This measure aims to ensure that carriers from all Member States be guaranteed access to national markets for regular services without discrimination on grounds of nationality or place of establishment. The fact that a carrier is established in another Member State shall no longer constitute justification for rejecting an application for authorisation. 6 Set common requirements for the protection of PSCs This measure aims to ensure that Member States are permitted to take action to protect all public passenger transport services covered by PSCs from competition. Member States may limit the right of access on services that are covered by one or more public service contracts if the service would compromise the economic equilibrium of a public service contract. 7 Set common requirements for the protection of PSCs meeting the needs of an urban area This measure aims to ensure that Member States are permitted to take action to protect all public passenger transport services covered by PSCs meeting the needs of an urban centre or conurbation, or transport needs between it and the surrounding area. An automatic authorisation procedure shall apply to services carrying passengers 100km or more. Member States may limit the right of access on services that carry passengers less than 100km if the proposed service would compromise the economic equilibrium of a public service contract. Of the 20 Ministries or regulators that replied, five (Bulgaria, Finland, France, Ireland and Portugal) supported a set of common requirements, as this would help to create a more level playing field. All the Member States that supported this measure have already opened national markets. Six (Estonia, Italy, Latvia, Slovakia, Spain and the UK) maintain that the protection of PSOs is outside the scope of Regulation 1073/2009 and should be addressed through Regulation 1370/2007. Although these six Member States share the same view on the protection of PSO’s the regulatory status in each of their national markets is different. 8 Abolish the authorisation procedure This measure aims to abolish the need for an authorisation for regular services carrying passengers over distances of 100km or more. Regular services would be fully liberalised along the same lines as occasional services. This measure would also address driver 1 as the time consuming authorisation procedure would no longer be required and administrative and compliance costs would be reduced. Driver 3 – Restricted access to key transport infrastructure No. Policy measure Description 9 Define a coach terminal This measure aims to provide the meaning of the term terminal. Terminals are not yet defined in EU legislation and a definition would be a necessary precursor to any action related to access to them. 10 Encourage coach terminal operators to provide access This measure aims to encourage coach terminal operators to provide access to carriers operating regular services on fair and non-discriminatory terms. This should be done by guidelines/recommendations. 11 Encourage the publication of conditions of use This measure aims to encourage the publication of conditions of use to provide operators with transparency on how they will be treated by terminal operators. 12 Require the European Commission to report on market opening This measure aims to provide the European Commission with evidence of the scale, incidence and duration of terminal access disputes. It may be advantageous to expand the evidence base before further intervention to specify proposals for the addition of capacity or the resolution of disputes. 13 Require Member States to grant non-discriminatory access This measure aims to require Member States to grant carriers access rights to terminal infrastructure on fair and non-discriminatory terms for the purpose of operating regular services. 14 Require the publication of conditions of use This measure aims to require the publication of conditions of use to provide operators with transparency on how they will be treated by terminal operators. 5.2.Identification of possible policy packages The policy packages have been defined so as to reflect an increasing level of regulatory intervention and entailing an increasing level of expected impacts. They are cumulative, in the sense that all measures in PO1 are also part of PO2, which itself includes further measures, and so on. This is intended to facilitate and structure the analysis of the impacts, given the large number of measures which must be assessed. They have been defined in a way to show the expected outcomes of increasing levels of regulatory intervention.

5.3.Identification of a list of market access policy options The retained market access policy options to address SO1 and SO2 are: PO0 - Baseline The Regulation would continue to apply in its present form. No new measures applied. PO1 – Open access to the market for regular services with the possibility to refuse authorisation if the economic equilibrium of a PSC is compromised Policy Measure Numbers: 1, 2, 3, 4, 5 and 6. This option would provide common market access rules for inter-urban regular services. It would simplify and standardise the authorisation procedure. The option would reduce costs by standardising the authorisation procedure throughout the EU; make the procedure more transparent; as well as reducing the number of grounds for refusal. Member States will be able to protect all public service contracts by limiting the right of access if the proposed service would compromise the economic equilibrium of an existing public service contract. As this option does not aim at total liberalisation of the domestic market it will still be possible for Member States to intervene in areas where regular services cannot be operated on a commercial basis. It would abolish legal monopolies, national establishment requirements and eliminate any special protection of other transport modes granted by Member States on inter-urban routes. It would reduce the administrative burden by standardising and simplifying the authorisation procedure for national regular services and abolishing the journey form for occasional services. In practice this would provide a common procedure for authorising national and international regular coach and bus services. Under this option Member States would have the option of limiting the right of access to the market where the new service would compromise the economic equilibrium of an existing public service contracts providing any public passenger transport service. To determine if a PSC may be compromised an independent body should make the decision to grant, refuse or limit the service on the basis of an objective economic analysis, following a request from the competent authorities that awarded the public service contract or the public service contract operator. The new independent body is proposed to ensure the impartiality and objectivity of the economic analysis and should function in a way which avoids any conflict of interests and any possible involvement in the award of the public service contract under consideration. The procedure and criteria to be followed when determining whether the economic equilibrium of the PSC is compromised by a new service should be in line with test carried out by regulatory bodies in other transport modes, EU Law and the principles of equality and non-discrimination. . If no request for a test is submitted within the deadline, the authorisation would be granted. If there is a request for the test the entity making the request would be required to provide the independent body with the information required to conduct the test. The independent body would assess whether the economic equilibrium of a public service contract would be compromised by the proposed new service. Member States will not be obliged to introduce a new independent body but will be free to use an already established body. The body will only incur costs if it is requested to conduct a test but as the required information is provided by other entities the cost of the test for the independent body will be minimal. The independent bodies would be required to develop a consistent methodology that would be clear, transparent and non-discriminatory. The analysis would focus on the economic impact of the proposed new service on the public service contract as a whole, not on individual services operated under it, over its entire duration. The economic equilibrium of a public service contract would generally be considered as compromised if the proposed new service has a substantial negative impact on the profitability of services operated under the public service contract, and/or the net cost for the competent authority awarding the public service contract. The independent body may grant the authorisation, refuse the authorisation or indicate possible changes to the proposed service that would ensure that the conditions for granting the authorisation are met, and give the opportunity to the applicant to adjust its application for authorisation accordingly. This method of regulating the interaction between commercial services and PSCs is similar to the method employed currently in Regulation 1073/2009 for international regular services. It is not possible to determine how new services would affect PSC’s in all the non-liberalised Member States but under this option the relationship between inter-urban (commercial) services and urban (usually operated under PSC and subsidised) services is clearly defined and the commercial service will only be permitted if it will not compromise the economic equilibrium of a PSC. There is no evidence to indicate that this method of regulating the relationship with PSCs has been problematic. However, there is the risk that operators are not provided with sufficient flexibility to address demand and provide services where they are needed. The extension of the scope of the legislation to include national regular services under this option is not supported by 6 Member States for PO2 – Open access to the inter-urban market for regular services over distances of 100km or more. Authorisation can be refused if the economic equilibrium of an urban PSC is compromised Policy Measure Numbers: 1, 2, 3, 4, 5 and 7. This option differs from PO1 in the approach taken to protect public service contracts and the extent of the REFIT intervention. It would simplify and standardise the authorisation procedure for national and international regular services and change the grounds for refusal. Similar to PO1, this option does not aim at total liberalisation of the domestic market. In this case Member States will be able to intervene in areas where commercial services may compromise the economic equilibrium of certain PSC’s. The opening of a new coach line could no longer be refused if the service carries passengers more than 100km. The 100km threshold enables Member States to take action to protect urban transport services covered by PSCs from competition. The extent of the REFIT intervention is increased as the authorisation regime becomes faster, more transparent and effectively lowers the barrier for new market entrants. It provides operators with more certainty when assessing whether a new coach line is acceptable or not. It reduces the administrative burden on operators through simplification and standardisation of the authorisation procedure. There is no longer a requirement to get agreement from authorities in all Member States in whose territories passengers are picked up and set down. In practice this would provide a common procedure for authorising national and international regular coach and bus services. New entrants would apply for authorisation to commence a new service. If the new service is carrying passengers over distances of 100km or more the authorisation is automatically granted. If the new service is carrying passengers over a distance of less than 100km competent authorities or the operators of a PSC would have a defined time to request an economic equilibrium test which would be conducted by an independent body in the same way as PO1. This method of regulating the interaction between commercial services and PSCs is employed in a number of Member States including Germany, France, Italy and in the past in the UK and Sweden. It is not possible to determine the future relationship between commercial and PSC services in all non-liberalised Member States. However, the distance threshold will clearly define the relationship between inter-urban (commercial) services and urban (usually operated under PSC and subsidised) services. There has been no evidence to indicate a problematic relationship between commercial services and PSC services in any of the Member States that have opened market access using a similar framework but there is some anecdotal evidence from Germany that rail has lost many customers to coach with twice as many coach passengers (30%) coming from long-distance trains as from local or regional trains (14%) but the German Ministry suggests that the loss of rail passengers is likely to be effected by other factors such as rail strikes, floods on lines and decreasing supply. The model to compensate public service operators for the operating a public passenger transport service under PSC that involves compensation from public authorities in the form of granting exclusive rights to provide services on a profitable route, in such a way that profits for the provision of the service cross-subsidise other non-profitable services imposed on the service provider appears to be more challenged under this option. This model is used both in railways (for instance in the United Kingdom) and in coaches (for instance in Spain). Such a model relies on the existence of a monopoly in the profitable service, and weak competition from other transport modes, as otherwise it would not be possible to extract the necessary rent from the profitable services to cross-subsidise the other services. The new services would introduce competition in the long distance market and a threat to this model of PSO funding. It is likely that new services would “cherry-pick” the profitable lines and as the PSO operator loses revenue from the profitable services this model of public intervention becomes challenged and new financing models may be required. PO3 – Open access to the inter-urban market for regular services without an authorisation process for regular services carrying passengers over distances of 100km or more Policy Measure Numbers: 2, 3, 4, 5, 7 and 8. This option differs from PO1 & PO2 in that all regular services that carry passengers over distances of 100km or more would be fully liberalised and there would be no authorisation procedure for these services. The existing time-consuming national and int