Public service obligations for European public transport

Public transportation is a service that is offered on a market, meaning that there is a supply, a demand, and a cost to utilise the service, even if that cost is little or subsidised. Different approaches to organise this market have been seen across Europe. The PSO regulation is establishing the legal framework on how to organise the relation between the public transport organising (competent) authority and the operator.  

In order to ensure the supply of services of public interest, the Regulation aims to ascertain how appropriate authorities may act in the area of public passenger transport. It establishes the terms under which appropriate authorities reimburse operators for expenses spent and/or offer exclusive rights in exchange for fulfilling public service duties when enforcing or contracting for them. Public passenger transport services operated nationally and internationally by road, rail, and other track-based modes are subject to the Regulation. 

The organization and funding of public transportation services by bus, tram, metro, and rail in the Member States are significantly impacted by this Regulation (EC) No 1370/2007 on public passenger transport services by road and rail. Its goal is to establish an internal market for public passenger transportation services while reaffirming that Member States have the authority to define public transportation services in accordance with population demands. 

By enhancing the broad guidelines for public procurement, the Regulation accomplishes this. It also establishes the terms under which concessions for public service obligations in public passenger transport services and compensation payments outlined in public service contracts will be considered compatible with EU internal market regulations and exempt from the requirement that the Commission be notified in advance of any State aid. 

Furthermore, in addition to playing a significant part in a sustainable transportation and mobility system, local public transport has the ability to expand and raise its modal share, generating new employment and investment opportunities. However, the development of other forms of transportation has outpaced the expansion of public passenger transport services. Nonetheless, improving the performance, efficiency, transparency, and quality of public passenger transportation services is one of the regulations’ specific goals. 

Since many public passenger transport services that society requires for its overall well-being cannot be operated on a commercial basis, the appropriate national, regional, or local EU authorities must be able to ensure that they are offered. There are a number of ways they might accomplish this, including giving public service providers exclusive rights, paying them well, and establishing guidelines for how public transportation should be conducted. 

Public service responsibilities may relate to cross-border public transportation services, including those that address local and regional transportation needs, subject to the consent of the relevant authorities of the Member States whose territory the services are rendered. 

Any competent local authority, whether it be an individual authority or a group of authorities offering integrated public passenger transport services, may choose to provide public passenger transport services directly to a legally distinct entity or grant public service contracts to a group of authorities, or to at least one competent local authority in the case of a group of authorities, exercising control over the entity in a manner similar to that of its own departments, unless national law prohibits it.  

Guiding principles and recommendations

1. If the appropriate body chooses to directly award a public service contract, it must establish quantifiable, open, and verifiable performance requirements (which will be contained in the contract). The performance requirements will specifically address rolling stock quality, operations frequency, passenger transport capacity, and service punctuality.  
2. Public service requirements in public passenger transportation should be specified by competent authorities. These requirements ought to align with the policy goals outlined in the Member States’ public transportation policy texts. 
3. Because it outlines how authorities can plan, contract, and fund public services, Regulation (EC) No 1370/2007 is essential for establishing the public transportation sector. To guarantee adherence to this regulation, any advancement in public transportation must be evaluated. 
4. Relevant stakeholders (according to national law) should be engaged when creating public transportation policy documents. Transport operators, infrastructure managers, employee organizations, and representatives of public transport service users are examples of these stakeholders. 
5. Achieving a high level of service quality requires well-defined goals (by the public authority). 
6. The goals of transportation policy cannot be restricted to transportation-related goals. It is also necessary to consider other urban strategies including economic development, environmental preservation, and social cohesion. The authority’s financial goals and its objectives regarding the market structure are two additional crucial elements. 
7. Public transportation service planning and design must take into account local conditions as well as the authority’s policy goals. 
8. The appropriate local circumstances must be identified and taken into consideration in order to effectively transform those policy goals into tactical measures as public transportation may be impacted by a variety of factors, duties, and competencies. 
9. The primary motivator for operators to participate in a market is the potential for profit realisation. The best incentives must be created so that operators’ profit-maximizing objectives align with the authority’s policy objectives. Incentives that increase the likelihood of making money are therefore ideal (and required). 
10. Any new service developed at local or regional level should be assessed against this legislation in view of the legality of the public sector financial compensation.