User satisfaction and the organization of local public transport: Evidence from European cities

Highlights

• At present, there is no empirical investigation of the relationship between the organisation of LPT and customers' satisfaction.

• We use a large survey conducted in 2009 in 33 European cities and an originally built data set on the organization of LPT.

• The probability of customers' satisfaction is analysed with standard probit models.

• Results show that highest levels of satisfaction are correlated to the presence of one single LPT provider.

Abstract

In recent decades, market-opening policies in local public transport (LPT) have impacted most European countries. However, we can observe a high degree of variability in possible LPT arrangements, from public monopolies to open markets. This work addresses the following research question: How does user satisfaction correlate to alternative organisational models of LPT service provision? We use the results of a large survey conducted in 2009 in 33 European cities to analyse the likelihood of satisfaction with standard probit models. Results show that the highest levels of satisfaction correlate with the presence of a single LPT provider, as opposed to an industry structure in which multiple providers operate in the same market area.

Introduction

Local public transport (LPT) includes all those passenger services provided to the public on a non-discriminatory basis according to pre-established tariffs, routes and timetables, and that are designed to meet users' mobility requirements on a small (urban) or medium (inter-urban) territorial scale (Zatti, 2012).

Prior to the 1960s, most LPT systems covered their costs through tariffs and needed only limited transfers of funds from municipalities or other government bodies. However, subsequent investments in road networks and increasing rates of motorisation led to reductions in the demand for public transport. This change created a need for new organisational forms in order to reduce operating costs without affecting service quality. Over the past three decades, many nations and urban areas introduced competition in the field of LPT service provisioning (Gómez-Ibáñez and Meyer, 1993). As a result, LPT systems now operate under a broad variety of organisational forms (Nash, 2005). Dealing with such heterogeneity, the relevant question is which such form has led to the best results for users.

Many works have attempted to address this issue by investigating the link between alternative forms of governance in LPT service provisioning and the efficient provisioning of service, as measured in terms of operating cost savings. To the best of our knowledge, however, there has been no empirical investigation of the relationship between the organisation of LPT and customer satisfaction. The aim of this paper is to fill this gap, as looking at individual satisfaction with LPT services is not only interesting in its own right but is also relevant in relation to policy implications (Warner and Hefetz, 2008). To investigate this relationship, we will exploit a survey conducted in 2009 across several European Union (EU) cities that focused on users' satisfaction with LPT, among other issues. As for the classification of public transport systems, we suggest going beyond the ownership structure of providers, as the public–private dichotomy cannot be easily defined. As Van de Velde (1999) has pointed out, real world examples are far from being “pure organisational forms”, as a large number of intermediate situations exist that are shaped by legal, regulatory and organisational frameworks, with country-specific, or even city-specific, environmental factors needing to be considered, as well. This may be a confounding factor in any empirical analysis. Hence, the number of providers may be a less ambiguous indicator of the actual organisation of a LPT system. Local transport has certain features of a natural monopoly because the time and route slots are unique and there is a need to coordinate time plans and stops.¹ Moreover, public transport operations are also subject to economies of scale (Berechman and Giuliano, 1985, Farsi et al., 2007). As a consequence, it may be assumed that the number of providers has an effect on firms' profitability and, indirectly, on the quality of the service captured by consumer satisfaction metrics. Thus, we have tested whether the latter increased when more than one company operated in a given market. While intense competition—at least in the form of tendering for routes—should increase efficiency, cost-saving activities may affect quality of service and passengers may negatively perceive increased diseconomies of coordination.

The remainder of this paper is organised as follows. In the next section, we briefly summarise the most recent reforms undertaken in the LPT sector across the EU and discuss the literature devoted to the study of the effects of such changes. In the third section, we present our data set in greater detail. In the fourth section, we briefly present the empirical methodology applied in this study and, in the fifth section, we discuss our results. Some comments and policy implications are presented in the sixth and final section.