Economic criteria for the maintenance, modification, or creation of public urban and suburban transport services (which may not necessarily be profitable) : report of the twenty-fourth Round Table on Transport Economics, held in Paris on 22nd and 23rd Nov

79 Pages·1974·3.561 MB·English

by  Beesley, M. E.OECD

ECONOMIC RESEARCH CENTRE
ECONOMIC CRITERIA
FOR THE MAINTENANCE,
MODIFICATION OR CREATION
OF PUBLIC URBAN AND SUBURBAN
TRANSPORT SERVICES
(WHICH MAY NOT NECESSARILY BE PROFITABLE)
EUROPEAN CONFERENCE OF MINISTERS OF TRANSPORT
PARIS 1974
ECONOMIC RESEARCH CENTRE
REPORT OF
THE TWENTY-FOURTH ROUND TABLE
ON TRANSPORT ECONOMICS
Held in Paris on 22nd and 23rd November, 1973
on the following topic:
ECONOMIC CRITERIA
FOR THE MAINTENANCE,
MODIFICATION OR CREATION
OF PUBLIC URBAN AND SUBURBAN
TRANSPORT SERVICES
(WHICH MAY NOT NECESSARILY BE PROFITABLE)
EUROPEAN CONFERENCE OF MINISTERS OF TRANSPORT
The European Conference ofMinisters ofTransport (ECMT) was
instituted by a Protocol signed at Brussels on 17th October, 1953. It
comprises the Ministers of Transport of the following 18 countries:
Austria, Belgium, Denmark, France, Germany, Greece, Ireland, Italy,
Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzer¬
land, Turkey, United Kingdom and Yugoslavia (associated countries :
Australia, Canada, Japan ; observer : UnitedStates).
The purposes of the ECMT are:
to take whatever measures may be necessary to achieve, at
general or regional level, the maximum use and most rational
development of European inland transport of international
importance;
to co-ordinate andpromote the activities ofInternational Orga¬
nisations concerned with European inland transport (rail, road,
navigable ways), taking into account the work ofsupranational
authorities in this field.
ECMT publications are marketed by the Sale of Publications
departmentoftheOECD,2,rueAndre-Pascal, 75775PARISCEDEX16.
TABLE OF CONTENTS
FOREWORD (cid:9)'(cid:9) 4-
LIST OF PARTICIPANTS (cid:9) 5
ECONOMIC CRITERIA FOR THE MAINTENANCE, MODIFICATION
OR CREATION OF PUBLIC URBAN AND SUBURBAN TRANSPORT
SERVICES (which may not necessarily be profitable) (cid:9) 8
M. E. BEESLEY
SUMMARY OF THE DISCUSSION (cid:9) 38
(Round Table debate on the report)
FOREWORD
One of the reports considered at the International Symposium
on the Theory and Practice of Transport Economics, organised by
the ECMT at The Hague from 5th to 7th October 1971, was on
"Economic criteria for the maintenance, modification or creation
of public transport services which may not necessarily be profit¬
able: urban and suburban transport".
The importance of this question and more recent research in
the field led to the view that its further consideration as the
subject of a Round Table discussion would be useful.
No one was better qualified to draw up the introductory
report for this discussion and ensure continuity of approach to
the subject than the author of the paper presented at the fourth
international symposium at The Hague. Thanks are due to him for
this further contribution.
The introductory report and the discussions at the 24th
Round Table contain numerous references to the report presented
at the Symposium at The Hague. It was not thought necessary to
print that document again here: it is still obtainable from the
ECMT Secretariat, 33, rue de Franqueville, 75775 PARIS Cedex 16.
LIST OF PARTICIPANTS
M. le Professeur J.P. BAUMGARTNER (Chairman)
Adjoint scientifique
Direction Generale des Chemins de Fer
Federaux Suisses
Rabbentalstr. 79
BERNE (Switzerland)
Professor M.E. BEESLEY (Rapporteur)
London Graduate School of Business Studies
Sussex Place
Regent' s Park
LONDON NW1 4-SA (United Kingdom)
M. L. BARTHEROTTE
Directeur du Reseau
Compagnie Generale Frangaise de Transports et
d'Entreprises
Reseau de Transports en Commun de la Communaute
Urbaine de Bordeaux
25, rue Commandant Marchand
33082 BORDEAUX (France)
Professor B. van BILDERBEEK
Technische Hogeschool Delft
Afdeling der Weg- en Waterbouwkunde
Kanaalweg 2b
DELFT (Netherlands)
Dr. Gary BROEMSER
Senior Operations Research Analyst and Policy
Advisor,
Policy Planning Division,
Office of Policy and Plans Development
Office of the Assistant Secretary for Policy,
Plans and International Affairs,
Department of Transportation
400 7th St. SW.
WASHINGTON D.C. 20590 (USA)
Dr. H. da COSTA ANTUNES
DireccSo-General de Transportes Terrestres
Av. 25 de Abril, 40
LISBOA-4 (Portugal)
M. P.H. DERYCKE
Directeur de l'U.E.R. de Sciences Economiques
Universite de Paris X - Nanterre
2, rue de Rouen
92001 NANTERRE (France)
Mr. Bernard FEENEY
Economist
Coras Iompair Eireann
5 Kildare Street
DUBLIN 2 (Ireland)
M. A. FIOC
Directeur des Etudes Generales
S.N.C.F.
88, rue Saint-Lazare
75436 PARIS Cedex 09 (France)
Professor K.M. GWILLIAM
Director
Institute for Transport Studies
The University of Leeds
LEEDS LS2 9JT (United Kingdom)
M. Z. JELINOVIC
Professor of Transportation
Economic. Faculty
University of Zagreb
Vrbaniceva 37/HI
41000 ZAGREB (Yugoslavia)
M. A. LOMBART
Directeur d'Exploitation
Societe des Transports Intercommunaux de Bruxelles
Avenue de la Toison d'Or, 15,
1060 BRUXELLES (Belgium)
M. M. MONTADA
Regierungsdirektor
Bundesverkehrsministerium
Sternstrasse 100
5300 BONN (Germany)
M. Y. OZDEN
Expert in Planning of Transport
State Planning Organisation
Basbankanlik
Zeskilati
ANKARA (Turkey)
M.^Marco PESSI
President de 1'Union des Entreprises Suisses de
Transports Publics (UST)
Directeur de la FART
6601 LOCARNO (Switzerland)
M. Alain PLAUD
Ingenieur des Ponts et Chaussees
Charge de Mission
SAEI (MATELT)
55, rue Brillat Savarin
75013 PARIS (France)
Dr. Wolfgang STERTKAMP
Bundesbahndirektor
Hauptv'erwaltung der Deutschen Bundesbahn
Friedrich-Ebert-Anlage 43-45
6 FRANKFURT/Main 1 (Germany)
Prof. Dr. Theo THIEMEYER
Hochschule Linz
Lehrkanzel flir Betriebswirtschaftslehre der
Offentlichen Verwaltung und der Offentlichen Dienste
A-4045 LINZ-AUHOF (Austria)
Secretariat : Messrs A. DE WAELE et A. RATHERY
ECONOMIC CRITERIA
FOR THE MAINTENANCE, MODIFICATION OR CREATION
OF PUBLIC URBAN AND SUBURBAN TRANSPORT SERVICES
(which may not necessarily be profitable)
Prof. M.E. BEESLEY
London Graduate School of Business Studies
1 . INTRODUCTION
I hope it will prove a useful approach if I write this paper
as an extension of that I gave at the fourth ECMT Symposium in
The Hague(l). I shall assume that participants will have that
paper by them, and pick up the tale, as it were, where it left
off.
I argued there that the most justifiable potential reasons
for subsidy were to be found in counteracting external social
costs such as urban congestion and in. aiding, in specific ways,,
the redistribution of income to "underprivileged" groups. I
indicated some of the deficiencies in information now preventing
a rational allocation of subsidies between different ways of
creating social benefit; and I drew largely on railway experience
in the United Kingdom to analyse some of the managerial and
innovatory trade - offs associated with subsidy operations. I
wish to review what seems the most important material published
in English since I wrote the paper that bears on these issues.
I take it, however, that we would not wish to exclude from
discussion any of the points raised there. For ease of reference,
I will call it "Economic Criteria", and page references refer to
the English version.
2. ALTERNATIVE USES FOR SUBSIDY
What is in many ways the most interesting United Kingdom
development since has yet to be publically discussed and I can
give only a general indication of its nature here. A major theme
of "Economic Criteria" was the need to compare alternative pay¬
offs to subsidy. An exercise in this has recently been completed
by London Transport. Greater London Council, the relevant poten¬
tial subsidy providers, wished to review the social returns from
providing a total yearly subsidy of varying levels. LTE reviewed
a number of alternatives, implying subsidies ranging from £15
million to £130 million a year - from some 20 per cent to 100 per
cent of LTE revenue. Because of the large number of potential
elements in the welfare function which might be deemed relevant,
the exercise was only feasible with a simple if inaccurate proxy
for social benefit. This was found in "maximising passenger
miles on LTE's system". With the addition of implied budget
(1) Economic Criteria for the Maintenance Modification or
Creation of Public Transport Services which may not
necessarily be profitable.
constraints, the various levels of subsidy, this became an
instruction to seek that policy which maximised passenger mileage
per £ of subsidy. (More strictly perhaps one should speak of
"maximising passenger mile losses" for some options which were
considered. )
Now, of course it is possible to imagine very many reasons
why using this relatively simple criterion should lead to para- '
doxial results in terms of net social benefit to Londoners. Thus,
clearly G.L.C. should be interested in the whole transport supply,
not only London Transport's; the criterion does not distinguish
systematically the effects on different income groups' mobility
etc. But it did, and does, have an intuitive appeal as a rough
indicator of the principal social cost to be minimised, namely,
road congestion, for gains in passengers to LTE are likely to
come from vehicles which use roadspace more extensively than does
LTE. (The criterion also represents a practical management
approach within LTE. It provides an important unifying role in
the search for new policies and internal initiatives. For example
very different technical interests can find common ground here and
it greatly helps evaluation by the leadership. This development
illustrates another theme of my paper: the need to determine
subsidies in part at least in the light of management require¬
ments, and I take this point up in section 5 below.)
The principal options considered with reference to the
criterion were: extensions to the Underground system; speeding
up bus services by overground bus priority schemes (reviving, in
a fashion, the old notion of tramwaj routes, but now with
enhanced speeds); extending mini-bus operation; providing bus
shelters; increasing wages in order to ease recruitment of labour
and thus to improve existing schedule keeping by buses; various
changes in fares for the system; and special concessions to
groups such as old age pensioners. Broadly, the results included
the following: that raising wages was clearly superior to any
form of reduced or revised fare; old age pensioners' concessions
generated most new traffic; and that new extensions to the under¬
grounds performed relatively badly. Thus the latter, it seems,
would require an appeal to effects outside the traditional area
of social cost benefit analysis as hitherto applied in London,
for road decongestion is a very prominent factor in this. At the
time of writing it is not known what action will follow from the
subsidisers.