Pilot project study on innovative ways of sustainably financing public transport : final report

Urban public transport (UPT) plays an essential role in dealing with diseconomies of urban agglomerations, such as traffic congestion, air pollution and noise, and in attaining the objectives of low-carbon, resource-efficient and liveable urban areas. However, transport authorities are confronted with difficulties to ensure the financial sustainability of UPT systems. Fares and other direct revenues from UPT typically do not cover the cost of providing the service, since they must be low enough both to ensure affordable accessibility and to be competitive with private vehicles. This means, in practice, that UPT-specific infrastructure and part of the operation and maintenance (O&M) costs must be covered by public subsidies from different government levels. Less commonly, UPT costs are partially covered by contributions of indirect beneficiaries. Finding an appropriate funding mix for UPT is very often a cumbersome exercise. Continuous urban growth, evolving demand patterns, higher environmental standards and the emergence of breakthrough technologies and services in urban mobility call for significant improvement and expansion of UPT networks. The resulting increase in investment and O&M will most likely generate additional financial gaps to Public Transport Authorities (PTAs) that are already severely compelled by debt and deficit constraints. As a response to this challenge, this pilot study provides an active research on innovative ways to sustainably financing UPT within an evidence-based and contextspecific approach. The aim is to develop recommendations, proposals and guidelines on innovative financial mechanisms for the UPT system at European Union level. The study is not proposing concrete actions because, due to the subsidiarity principle, the European Commission is limited to providing advice and, in some cases, financial support to PTAs through programmes with specific objectives.