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Public passenger transport service by rail and road

Harmonised Community legislation in the passenger transport sector is expected to contribute towards opening up the public transport markets. This Regulation defines the conditions in which the competent authorities can intervene to grant exclusive rights and/or compensation to public service operators.

ACT

Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road, and repealing Council Regulations (EEC) No 1191/69 and (EEC) No 1107/70

SUMMARY

Public service compensation may be necessary to ensure the provision of services of general economic interest (SGEI) and guarantee safe, efficient, attractive and high quality passenger transport.

This Regulation applies to regular and non-limited access, national and international public passenger transport services by rail and other track-based modes and by road.

Public service contracts and general rules

The competent authority * is obliged to conclude a public service contract with the operator to which it grants an exclusive right and/or compensation in exchange for discharging public service obligations * (PSO). Obligations which aim to establish maximum tariffs for all or certain categories of passengers may be subject to general rules.

To define the framework for the competent authority, the latter grants compensation for the net positive or negative financial impact on costs and revenue occasioned by compliance with the pricing obligations established in the general rules.

The public service contracts * and general rules define:

  • the PSO to be fulfilled by the operator and the areas concerned;
  • the parameters based on which compensation must be calculated and the nature and scope of all exclusive rights granted to avoid any overcompensation;
  • the means of distributing the costs linked to service supply (staff costs, energy, infrastructure, maintenance, etc.);
  • the means of distributing income from the sale of transport tickets between the operator and the competent authority.

The duration of public service contracts is limited and must not exceed ten years for bus and coach services, and fifteen years for passenger transport services by rail or other track-based modes. This period may be extended by up to 50 % under certain conditions.

Awarding of public service contracts

Public service contracts are awarded according to the rules laid down in this Regulation. However, for awarding certain passenger transport services by bus or tram, the procedures of Directives 2004/17/EC and 2004/18/EC apply.

Subject to certain reservations detailed in Article 5 of the Regulation, local authorities may provide public transport services themselves or assign them to an internal operator over which they have control comparable to that over their own services.

Any competent authority who uses a third party other than an internal operator must award public service contracts by means of transparent and non-discriminatory competitive procedures which may be subject to negotiation.

The obligation to instigate competitive procedures does not apply to:

  • low level contracts, the average annual value of which is estimated at less than EUR 1 000 000 or which supply less than 300 000 kilometres of public passenger transport services;
  • where emergency measures are taken or contracts are imposed in response to actual or potential service interruptions;
  • regional or long distance rail transport.

Terms and conditions

The Member States have three months to provide the Commission with all the information necessary to determine whether the compensation allocated is compatible with this Regulation.

Each competent authority must publish a global annual report on the public service obligations incumbent on them and the resultant compensation received by them.

One year prior to any competitive procedure, the competent authority must ensure that the following information is published in the Official Journal of the European Union: name and contact details of the competent authority, type of allocation proposed and services and territories likely to be affected.

The Member States must gradually come into line with the Regulation, with the end of the transition period fixed at 3 December 2019.

Background

This Regulation forms part of the objectives in the Commission's white paper of 12 September 2001 entitled "European transport policy for 2010: time to decide" and repeals Regulations (EEC) No 1191/61 and (EEC) No 1107/70.

Key terms used in the act
  • Competent authority: any public authority or group of public authorities in one or more Member States which can intervene in public passenger transport in a given geographical area, or any body invested with such power;
  • Public service obligation: requirement defined or determined by a competent authority to guarantee general interest services in terms of passenger transport which an operator, in considering its own commercial interest, would not assume or would not ensure in the same measure or under the same conditions, without compensation;
  • Public service contract: all arrangements made between one or more transport operators with one or more responsible authorities for all the rights and obligations of the service in question, including any unilateral public acts.

REFERENCE

ActEntry into forceDeadline for transposition in the Member StatesOfficial Journal
Regulation (EC) No 1370/20073.12.2009-OJ L 315 of 3.12.2007
Last updated: 02.04.2008
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