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The privatization of transport refers to the process of shifting responsibility regarding the provision of public transport or service from the public to the private sector. [1]
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The privatization of transport refers to the process of shifting responsibility regarding the provision of public transport or service from the public to the private sector. [1]
Transit privatization is highly controversial, with proponents claiming great potential benefits and detractors pointing to cases where privatization has been highly problematic.
One important argument in this respect is the consideration of public transport as a merit good. The rationale behind it is the idea that governments should guarantee basic service in public transport to deprived customer groups despite the fact that it is economically irrational.
While the subsidization of public transport is basically not contested, the important question in the public vs. private debate refers to the optimal level of subsidy. [2] Today there are no real answers to this issue, but Japanese policy to have a relatively free transportation market is considered to function well in providing transport to Japan's three major metropolitan areas. The country's flagship high-speed line, the Tokaido Shinkansen, has operated for almost half a century without a single derailment or collision, and in 2007, its average departure delay was a mere 18 seconds along its 320-mile route. [3]
The 1970s were an era of deregulation within the U.S. Back then public transport (i.e. railroads in 1976 and airlines in 1978) were deregulated. [4] Ticket prices increase or decrease based on the service provided and the amount of public subsidies.
Different approaches to privatize railways in U.S. and Europe were taken. In Europe, rail operations were separated from rail infrastructure, while the U.S. railroad system is widely deregulated and vertically integrated. [5]
Another example were public owned bus companies in the U.K. Those companies were reorganized in 1985 into private companies (with the exception of London). Cost savings mainly resulted from reduced employment costs and increased productivity. [6]
A number of innovations were adopted by private bus companies in the pursuit of profits with the most important being the launch of minibuses that increased service levels. [7]
However, separating rail operations from rail infrastructure turned out to make coordination of rail operations and infrastructure maintenance more difficult. [8]
The changes to the U.K. bus industry as a result of privatization had in contrast to the changes to the U.K. railway industry no effects on its safety. [9]
In the U.K. privatising railways entailed cost overruns, accidents and, finally, the bankruptcy of the rail infrastructure company. For the rest of Europe the separation of rail operations from rail infrastructure did not cause substantial problems. [10] The McNulty review of the UK railway industry in 2011 found that the fragmentation of the industry in the course of privatisation had caused a permanent increase in costs of between 20% and 30%. [11]
By the same token, airline market reformation in Europe has been successful. Today, a single European airline market exists leading to improved productivity and decreased ticket prices. As in the U.S., low-cost carriers have affected the market and, thus, improved resource allocation. [12]
As a densely populated country in a central location in Europe and with a developed economy, Germany has a dense and modern transport infrastructure.
Transport in New Zealand, with its mountainous topography and a relatively small population mostly located near its long coastline, has always faced many challenges. Before Europeans arrived, Māori either walked or used watercraft on rivers or along the coasts. Later on, European shipping and railways revolutionised the way of transporting goods and people, before being themselves overtaken by road and air, which are nowadays the dominant forms of transport. However, bulk freight still continues to be transported by coastal shipping and by rail transport, and there are attempts to (re)introduce public transport as a major transport mode in the larger population centres.
Transportation in the United States is facilitated by road, air, rail, and waterways. The vast majority of passenger travel occurs by automobile for shorter distances, and airplane for longer distances. In descending order, most cargoes travel by railroad, truck, pipeline, or boat; air shipping is typically used only for perishables and premium express shipments. Transportation is the largest source of greenhouse gas emissions by the United States.
The Staggers Rail Act of 1980 is a United States federal law that deregulated the American railroad industry to a significant extent, and it replaced the regulatory structure that had existed since the Interstate Commerce Act of 1887.
Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a result of new trends in economic thinking about the inefficiencies of government regulation, and the risk that regulatory agencies would be controlled by the regulated industry to its benefit, and thereby hurt consumers and the wider economy. Economic regulations were promoted during the Gilded Age, in which progressive reforms were touted as necessary to limit externalities like corporate abuse, unsafe child labor, monopolization, pollution, and to mitigate boom and bust cycles. Around the late 1970s, such reforms were deemed burdensome on economic growth and many politicians espousing neoliberalism started promoting deregulation.
Transport in Europe provides for the movement needs of over 700 million people and associated freight.
The privatisation of British Rail was the process by which ownership and operation of the railways of Great Britain passed from government control into private hands. Begun in 1994, it had been completed by 1997. The deregulation of the industry was initiated by EU Directive 91/440 in 1991, which aimed to create a more efficient rail network by creating greater competition.
Regulatory economics is the economics of regulation. It is the application of law by government or regulatory agencies for various purposes, including remedying market failure, protecting the environment and economic management.
In the context of European Union law, a public service obligation or PSO is an obligation imposed on an organisation by legislation or contract to provide a service of general interest within EU territories. PSOs may operate in any field of public service, but postal services, social services, energy, transport and banking are specific sectors where the concept is relevant.
The following outline is provided as an overview of and topical guide to transport:
A transport hub is a place where passengers and cargo are exchanged between vehicles and/or between transport modes. Public transport hubs include railway stations, rapid transit stations, bus stops, tram stops, airports and ferry slips. Freight hubs include classification yards, airports, seaports and truck terminals, or combinations of these. For private transport by car, the parking lot functions as a unimodal hub.
Land transport is the transport or movement of people, animals or goods from one location to another location on land. The two main forms of land transport can be considered to be rail transport and road transport.
New Zealand Railways Corporation (NZRC) is the state-owned enterprise that owns the land beneath KiwiRail's railway network on behalf of the Crown. The Corporation has existed under a number of guises since 1982, when the old New Zealand Railways Department was corporatised followed by deregulation of the land transport sector. In 1986, the Corporation became a State-owned enterprise, required to make a profit. Huge job losses and cutbacks ensued, and the rail network, rail operations and ferry service of the Corporation were transferred to New Zealand Rail Limited in 1990. The Corporation retained ownership of the land beneath the railway network, and charged a nominal rental to New Zealand Rail, which was privatised in 1993, and renamed Tranz Rail in 1995. In 2004, following a deal with Tranz Rail's new owners Toll NZ, the Corporation took over responsibility for maintaining and upgrading the rail network once more, trading under the name ONTRACK. Negotiations with Toll over track access charges concluded after four years with no agreement reached, so the government purchased the entire rail and ferry operations, naming the service KiwiRail. ONTRACK's railway infrastructure and employees were then transferred to KiwiRail in 2008, which itself was initially a subsidiary of the Corporation. On 31 December 2012, the Corporation once again became the landowner.
Buses play a major role in the public transport of the United Kingdom, as well as seeing extensive private use. While rail transport has increased over the past twenty years due to road congestion, the same does not apply to buses, which have generally been used less, apart from in London where their use has increased significantly. Bus transport is heavily subsidised, with subsidy accounting for around 45 per cent of operator revenue, especially in London.
The Transport Act 1985 was an Act of Parliament in the United Kingdom. It introduced privatised and deregulated bus services throughout Great Britain and came into effect in October of 1986.
Public transport is a system of transport for passengers by group travel systems available for use by the general public unlike private transport, typically managed on a schedule, operated on established routes, and that charge a posted fee for each trip. There is no rigid definition; the Encyclopædia Britannica specifies that public transportation is within urban areas, and air travel is often not thought of when discussing public transport—dictionaries use wording like "buses, trains, etc." Examples of public transport include city buses, trolleybuses, trams and passenger trains, rapid transit and ferries. Public transport between cities is dominated by airlines, coaches, and intercity rail. High-speed rail networks are being developed in many parts of the world.
Transport in the Union of Soviet Socialist Republics (USSR) was an important part of the nation's economy. The economic centralisation of the late 1920s and 1930s led to the development of infrastructure at a massive scale and rapid pace. Before the Soviet Union's collapse in 1991, there were a wide variety of modes of transport by land, water and air. However, because of government policies before, during and after the Era of Stagnation, investments in transport were low. By the late 1970s and early 1980s Soviet economists were calling for the construction of more roads to alleviate some of the strain from the railways and to improve the state budget. The Civil aviation industry, represented by Aeroflot, was the largest in the world, but inefficiencies plagued it until the USSR's collapse. The road network remained underdeveloped, and dirt roads were common outside major cities. At the same time, the attendance of the few roads they had were ill-equipped to handle this growing problem. By the late-1980s, after the death of Leonid Brezhnev, his successors tried, without success, to solve these problems. At the same time, the automobile industry was growing at a faster rate than the construction of new roads. By the mid-1970s, only 0.8 percent of the Soviet population owned a car.
Sean Declan Conrad Barrett is an Irish economist and former senator. He was a senior lecturer in the Department of Economics of Trinity College Dublin, and a Fellow of the college. In April 2011, he was elected to the Dublin University constituency of Seanad Éireann but narrowly lost his seat in 2016. In 2018 he was elected a Pro-Chancellor of the University of Dublin.
Clifford Winston is an applied microeconomist and senior fellow in the Economic Studies program at the Brookings Institution. He studies microeconomic policy and its impact on government performance, specializing in industrial organization, regulation, and transportation.
The impact of the privatisation of British Rail has been the subject of much debate, with the stated benefits including improved customer service, and more investment; and stated drawbacks including higher fares, lower punctuality and increased rail subsidies. The privatisation of British Rail began in the 1990s.
International Transport Forum, (2008), Privatisation and Regulation of Urban Transit Systems, OECD Publishing.
Clifford Winston, (2010), Last Exit: Privatization and Deregulation of the U.S. Transportation System, Brookings Institution.
Black William R., (2003), Transportation: A Geographical Analysis, The Guilford Press.
Cooper James, Mundy Ray, Nelson John, (2010), Taxi!: Urban Economies and the Social and Transport Impacts of the Taxicab, Ashgate Publishing Limited.
European Conference of Ministers of Transport, (2005), 16th International Symposium on Theory and Practice in Transport Economics, OECD Publishing.
Klein Daniel B., Moore Adrian T., Reja Binyam, (1997), Curb Rights: A Foundation for Free Enterprise in Urban Transit, Brookings Institution.