Financially independent public transport : its impacts on the public transport system in the Netherlands

In the sixties of the last century, Dutch public transport run into deficits that grew fast in the next two decades. At first, the government fully covered the deficits by subsidies. The current policy is to reduce the subsidies. Reducing subsidies may have substantial consequences for the public transport system. The research question is, what are the consequences of full suspension of the subsidies for public transport operation. For that, first, the financial performance of current public transport is investigated. Second, measures to improve the financial performance are analysed. Third, the effects of suspension of the subsidies are estimated by means of scenario analysis. Two scenarios are developed that differ with respect to the assumed strategy of the public transport operators in eliminating the deficits. In the first scenario the prime strategy is to make public transport more attractive in order to increase demand and revenues. In the second scenario the operators close down the most uneconomic parts of the public transport system in order to decrease costs. The scenarios are stepwise developed until a situation is created without operating losses. The analysis demonstrates that deficits are largest in urban and regional transport systems and that these will be affected mostly by subsidy suspension. The level of service will decline and the fares will increase substantially. The long distance services may be rather unaffected, depending on the strategy of the operators.