Business case for public transport operators

A developing interchange is a promotional opportunity for transport operators , according to the NICHES project. Offering a higher level of service will result in an improved image. They can provide funding and participate in the planning process.

The landowner evaluates the type of contractual agreements with the service-provider and investigates the most appropriate business case for integrating the different transport modes and service-providers at the interchange.

The nature of station access planning requires participation by many stakeholders, so creating a collaborative environment early in the process is essential to success. Fostering collaboration among different operating entities can help achieve a coordinated system. Public transport authorities should acknowledge the interrelatedness of station access planning decisions among transportation modes and other elements of the community’s structure. The existence of an interchange access plan helps to define shared objectives between stakeholders in order to develop strong and open relationships with transport service-providers. The access plan also entails finding ways of reducing the operational costs of the different modes of transportation that operate at the station.

The transportation companies should also entail reductions in operational costs for the infrastructure owner, as the operators benefit from shorter travel times and induced increase in travellers through better accessibility. With this situation, it becomes logical to consider these money-saving factors in the financing of a transport interchange via payments from usage forms. Contractual agreements are thus required between real estate owners and the service-provider in the form of subsidies (by making real estate available or by taking part in the construction).

While coordination of the existing operators should be ensured, there is also a need for consideration of additional operators that can be attracted to the interchange (such as the long-distance intercity bus services that are increasingly entering the market).

 


NODES strategic objectiveContribution
Enhance accessibility and integration ++
Enhance intermodality ++
Enhance liveability +
Increase safety and security conditions 0
Increase economic viability and costs efficiency +
Stimulate local economy +
Increase environmental efficiency 0
Increase energy efficiency +

Good practice

Application in NODES test sites – Thessaloniki

By using a transport interchange, transport operators obtain several benefits. They can reduce their daily overheads, increase demand and increase the quality of the service provided. With the construction of an interchange, the real benefits that transport operators can obtain should be known in order to be able to apply a fee as part of the benefits they cangenerate when operating in the transport interchange. Below are four different business case scenarios identified at Greek interchanges:

  1. “Macedonia” Intercity Bus Station

The KTEL bus operators that had Thessaloniki as part of their services formed a partnership to create an interchange that could be used by all of them instead of each company having separate depots, headquarters, etc. scattered throughout the city. The partnership acquired the land and constructed the bus interchange through private funding. Part of the funding was derived from bank loans. The interchange commenced operation in 2002 and serves approximately 1.5 million passengers per year. The interchange consists of the KTEL bus terminal, administration offices, shops, ticket offices, urban transport bus terminal, taxi pier and car parking. Management of the shops is handled by the real estate management department of the partnership. Each of the KTEL operators pays rent for the use of the corresponding ticket office and the bus terminal depot space that it uses. Conversely, each operator receives a share from the real estate revenues proportional to their share in the partnership. The partnership receives 6000€ per month for use of the facilities by the Thessaloniki urban bus operator (OASTh).

  1. Thessaloniki New Passenger Rail Station (TNPRS)

OSE is the national rail service operator and has three subsidiaries, TRAINOSE, which is responsible for the rolling stock and the routing of the rail services, ERGOSE, which is responsible for the rail infrastructure and its maintenance, and GAIAOSE, which is responsible for all of OSE’s real estate property, including the railway stations. In its latest configuration, TNPRS has 16-20 shops available for rent. The railway station has numerous urban bus services operating to and from the station connecting it to many areas of Thessaloniki. However, the agreement between OSE and Thessaloniki urban bus operator (OASTh) does not include any fee for OASTh for the use of space in the interchange owned by OSE.

iii. IKEA Interchange

A contractual agreement between the bus operator (OASTh) and the IKEA company has been signed to establish the East Station “IKEA”, on the eastern side of Thessaloniki. The initiative for reallocating the eastern interchange of Thessaloniki was taken by Thessaloniki Public Transport Authority (ThePTA) in 2001. The station that formerly existed (in the Foinikas area) was considered inefficient in terms of capacity, design and surrounding area. A part of this framework, OASTh signed a private contract in April of 2004 with the “HOUSEMARKET SA” responsible for IKEA in Greece, as a private partnership agreement. The construction cost of the interchange was absorbed by OASTh, while the landowner provided the space and gave the name to the “IKEA Interchange”.

  1. MIKRA Interchange

Interchanges and parking spaces, designed to service the passengers of the Metro system in Athens and in Thessaloniki, are constructed by Attiko Metro SA. Since there are still no final decisions in Thessaloniki regarding the business models that are going to be followed, the tool was tested in similar interchanges of the Metro system in Athens. Those interchanges serve the metro system and have terminals for buses as well.

Conclusions

The business case used for the operation of the interchanges is considered quite simple. This business case was chosen based on the fact that all companies involved in the operation of the interchanges are of public interest. The main advantage in this case is that no extra costs are imposed on the operational overheads of the operators. However, the main disadvantage pointed out by the organisation operating the interchanges is that this business case does not provide any income for maintenance of the interchanges. For example, the chairman of the transport authority in Athens argued that Attiko Metro SA designed very nice, big interchanges, but did not provide any means to cover the operational overheads, such as the costs for cleaning the big roofs, heating the big stations, etc. An extra disadvantage is the complete absence of any provision for commercial activities at the interchanges. Until now, there have been no discussions regarding the modification of this business case for the operators and the owner of the interchanges in Athens. However, during the interviews with the project team of NODES, Attiko Metro SA showed great interest in the various good practices presented to them about existing operational schemes in Europe.


Potential interchange performance improvement

In a large interchange, all the general services are shared by all of the operators. This main issue reduces the costs for each operator and increases the quality of services that they are able to offer in an individual option.

With a transport interchange, the transport operators obtain various benefits. They can reduce the daily costs, increase demand and increase the quality of the service.  With the construction of an interchange, we have to know the real benefits that transport operators can obtain in order to be able to apply a fee as part of the profits they are able to generate when operating in the transport interchange.

 


Resources

The cost of making a business case that functions well is considered low.

The initial investment is borne by a number of local authorities or subsidies.

The local authority provides the real estate to the service-provider and takes responsibility for project-related works (e.g. installation of urban furniture), while the service-provider bears the costs for buying the urban furniture and vehicles, the system operating costs and furniture maintenance costs.

 

 

References

CRTM (2009). Madrid Interchange Plan. http://bit.ly/1Gyq6fy

NICHES (2010) Guidelines for Implementers of Passenger Friendly Interchanges.                                                                                                               http://www.niches-transport.org/fileadmin/NICHESplus/G4Is/21582_policynotesWG2_1_low.pdf

Transit Cooperative Research Program (2012). Guidelines for Providing Access to Public Transportation Stations. http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rpt_153.pdf