The sixth international
transit study mission, which took a close look at Scandinavian models of contracting
out bus and rail services, brought 13 transit managers from across the U.S. to
three Scandinavian countries during two weeks in May and June. Led by Shirley
DeLibero, the mission formed part of the International Transit Study Program, a
component of the Transit Cooperative Research Program, which is funded annually
by a grant from the Federal Transit Administration. The TCRP is authorized
under the ISTEA legislation and a peer panel selects participants, nominated by
their general managers. The ITSP is managed by the Eno Transportation Foundation
under contract to the National Academy of Sciences.
By Shirley A. DeLibero
Executive Director
New Jersey Transit Corporation
Newark, N.J.
Privatization of bus and rail
services has become the norm in the three Scandinavian countries I visited this spring
with 12 participants in the International Transit Study Program. Sponsored by the Transit
Cooperative Research Program, our trip focused on how cities in Finland, Sweden, and
Denmark have implemented programs to contract out bus and rail operations.
Through this report, as well as
others that will be presented by team members, we will share what we learned with the
transit industry.
During our trip, I found two key
reasons for privatization efforts succeeding in Scandinavia. First, transit system
operating personnel-drivers and mechanics-are able to move with their work and receive the
same pay and benefits during their first year with a new operator. In addition, union
agreements are renegotiated for subsequent years of the operating contract, with changes
minimal and generally related to benefits. Overall, I felt the real savings came from
eliminating layers of middle management personnel.
A second factor is the emphasis
on quality control. All operating contracts have strong service quality requirements. Most
use a system of both bonus and penalty payments to ensure compliance; many properties
incorporate customer survey results into contractor performance evaluations.
The customer clearly comes first
at the transit properties we visited. All were impressive in terms of cleanliness,
commitment to on-time performance, and the condition of revenue equipment. It is very easy
to move between transit systems. Passenger areas are well lit and well labeled. I didn't
have problems buying the right ticket for the trips we made.
These systems spend a lot of time
and money making it easy for riders to use transit-and they have to, because mass transit
carries about a third of all trips and as much as 70 percent of commuter trips in
metropolitan areas.
Below I describe contracts
implemented in the countries we visited.
Finland
Since 1994, the Helsinki
Metropolitan Area Council, known as YTV, has competitively contracted its bus services
that operate throughout the four-city capital area. While the city of Helsinki continues
to own and operate its own municipal bus system, regional services under YTV make up about
40 percent of the region's transit service, and are now operated by 14 private firms. By
purchasing two former municipal bus companies, Linjebuss and Swebus, Sweden's two largest
bus companies have used the competitive bid process to enter the Finnish market.
YTV awards bus service contracts
on the basis of price and a variety of service quality factors, including fleet condition,
customer service, quality assurance programs, garage location, and contractor experience.
On a 100-point scale, price accounts for 75 points, fleet quality 15 points, and other
quality factors for up to 10 points.
Competitive bidding has led to a
30 percent reduction in operating costs and a reduction in municipal subsidies. Bus fares
have been cut by 12 percent during a three-year period, and service has been expanded by
about 5 percent. Few problems have occurred during changeovers between transportation
firms and customer complaints have not increased.
While bus operators have been
able to move with their work, they lose seniority benefits and, in some instances, their
contract terms have worsened.
Sweden
Since 1993, Stockholm Transport
(SL) has procured all its public transit operations through open competition. Today,
approximately 70 percent of the bus and rail lines in the metropolitan area are operated
under contract-a change that has produced savings of $145 million a year and garnered a
cut in governmental subsidies. Farebox recovery has increased from below 30 percent in the
1980s to 44 percent last year.
With approximately 70 percent of
the region's bus service contracted out, national carriers Swebus and Linjebuss have won
the majority of bids, and currently operate about 3,000 of the 7,000 buses in urban
revenue service.
SL's bus operations contracts use
a system of rewards and penalties to ensure quality control. For urban bus services,
annual passenger surveys are used to assess on-time performance, vehicle cleanliness,
passenger information, and customer service. Using the surveys as incentives, contractors
whose customers report performance exceeding minimum standards by 2 percent are rewarded
with bonuses of approximately $26,000 and another $13,000 for each additional percentage
point. Conversely, contractors whose performance falls 2 percent below minimum standards
are charged $26,000 and $13,000 for each additional point. Penalties are also deducted for
significant service delays not reported and for reported cases of driver misconduct.
SL has also awarded contracts for
operating its three metro rail lines that provide over a million passenger trips a day. In
addition, the Rosiagsbanan suburban railway service, providing over 24,000 daily passenger
trips, and tram services, providing over 10,000 daily trips, are contracted out. Beginning
in 2000, commuter rail services, providing 200,000 daily passenger trips, will be
contracted out; the operation of a new light rail system due to open in 1999 will be
contracted out.
Rail operations contracts cover
"overall responsibility for quality with respect to customers, planning operations,
and rail traffic control, manning and technical maintenance of rolling stock." SL
normally leases vehicles to contractors and owns the tracks and facilities. In some
instances, station staffing is also contracted out. Personnel displaced by contract
operations are to join the new operator. Service contracts are awarded for five-to-10year
periods.
In Gothenburg, the former public
transit authority was converted in 1989 into a city-owned holding company. To date, over
two thirds of Gothenburg's bus routes have been contracted out. GS, the holding company,
has won over half of the contracts put out for bid, and Linjebuss has won the remainder of
the contracts.
Transit costs in Gothenburg have
been cut by 30 percent, in large part due to privatization. But service changes have also
been made. Bus service between 10 p.m. and 5 a.m. was eliminated to reduce costs, a
decision that riders found unacceptable. In a compromise, service was restored; however,
nighttime fares were doubled and discounts eliminated. The service is now self-supporting
and well used by riders.
Denmark
Copenhagen Transport, known as
HT, is a regional authority overseeing transit services in the three counties and two
cities that make up the metropolitan area. Two years ago, the Danish parliament mandated
fully contracting out bus operations in the region by 2002. As a result, HT's bus
operations were spun off into an independent company known as BD or Bus Danmark. To date,
about two thirds of the bus routes have been contracted out to 12 providers. BD has won
the largest share of the contracts.
HT uses a system of sanctions and
incentives to ensure high quality service from contractors. Missed or early trips, missing
fares, use of a vehicle type not consistent with the contract, and incorrect signage all
result in sanctions on the contractor. Two-and-a-half percent of the value of HT's
contracts is set aside as a quality bonus pool for contractors with the best performance.
HT also uses customer surveys in evaluating contractor performance. Factors surveyed
include vehicle cleanliness, vehicle temperature and ventilation, on-time performance, and
operator driving skills and route knowledge.
I noted a particularly
interesting marketing effort in Copenhagen. Customers were given video cameras to film
their own observations of the transit system. The footage was used in a successful
advertising campaign. HT found that this campaign not only cost less than normal
campaigns, but was more effective because of the personal involvement of its customers.
Finishing Up in Stuttgart
Following the memorable
Scandinavian experience, which also included technical innovations in traffic management,
fare integration, and an impressive array of mobility services for persons with
disabilities, we wrapped up our trip with a visit to Stuttgart, Germany.
In addition to attending the
World Congress of Public Transit, we were able to visit the Stuttgart transit system, SSB.
It provides outstanding bus, light rail, and tram service throughout the metropolitan
area, is very efficiently run, and currently has a cost recovery ratio of about 80
percent.
We were able to appreciate
firsthand why SSB was the first transit property that UITP chose to name the best transit
property in the world. Perhaps the best indicator they are doing things right in this town
that is home to Mercedes and Porsche is that auto use has declined from 48 percent to 43
percent of all trips taken.
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