In public service obligation

Leo Express began its operation as a private commercial carrier without any subsidies on its operation at the end of 2012. From December 2019, Leo Express will also operate regional transport in public service obligation in the Pardubice region (CZ) and in collaboration with carrier Arriva in Zlín region (CZ). We have a long-term interest in other regional and long-distance transport in public service obligation, which is ordered by the Ministry of Transport of the Czech Republic and by individual regions (authorities).

The common goal of carrier and authorities is the long-term satisfaction of the passengers and authorities. The key to success is high-quality rolling stock and customer service. Both is currently being appreciated by our passengers in 7 European countries, especially on rails in the Czech Republic, Slovakia, Poland and Germany. It is time to increase the standards of regional and long-distance PSO transport in these countries as well.

Commercial risk versus public service obligation

To operate a service at a commercial risk means that the operation needs to earn on itself, otherwise it will generate loss. The income comes only from passengers and the carrier isn’t supported by any subsidies from the public budget.

Passenger transport in the public service obligation is ordered by the Ministry of Transport of the Czech Republic in the case of long-distance transport and by individual regional authorities in case of regional transport. If the operation under such obligation is not profitable, the authority (i.e. Ministry of Transport or the individual region) will pay the difference. The carrier is therefore capable of operating a line with limited number of passengers without risking any loss.

Commercial risk

  • Carrier is operating at its own risk and is not supported by the state budget
  • Carrier decides on the number of connections
  • Carrier’s main motivation is the maximal possible profit

Public service obligation

  • Carriers doesn’t risk anything, because any losses are covered by the authorities
  • Long-distance transport is ordered by the Ministry of Transport of the Czech Republic
  • Regional transport is ordered by individual regions
  • Authorities’ main motivation is the best possible service for the passengers

The current goals of transport in the public service obligation

The main goal of authorities and carriers is to increase the occupation of each individual connection. The more passengers each connection transports, the more income it will generate and the less money from public budget is needed.

GOAL: INCREASE THE OCCUPANCY RATE

  • THE HIGHEST NUMBER OF CARRIERS IN THE HISTORY
    • that means possibility to compare their offers in a public tender or in market consultations
  • IMMEDIATE INCREASE OF RAILWAY’S ATTRACTIVITY AND BETTER USE AND CONTROL OF PUBLIC SPENDING
    • public money into regional transport as a long-term investment into public services
  • ATTRACTIVITY OF PUBLIC TRANSPORT IS DETERMINED BY THE COMPLETENESS OF SERVICES
    • new vehicles, on-board services, Wi-Fi connection, follow-up connections, door2door transport…
  • LIBERALISATION OF THE MARKET MEANS MORE JOB OPPORTUNITIES
    • in the rail sector as well as in connected services, support of the employment market and businesses in the whole region
  • THERE IS NO SUCH THING AS A LUCRATIVE AND A NON-LUCRATIVE TRACK IN  PSO TRANSPORT

Regional transport as a complex service

Regional transport cannot be only a train, but it should always be accompanied by other connected services, such as follow-up connections, possibility of light personal transport in the city, additional services on-board and good basic equipment of the vehicles. That is how a complex regional transport should look like for the best possible use of railway for passengers.

VEHICLES

  • Low-floor and barrier-free
  • Air-condition
  • Wi-Fi connection
  • Vending machines
  • Audio-visual information system
  • Bike, scooter and ski transportation

ADDITIONAL SERVICES

  • Bike stands and shelters at the stations
  • Bike/scooter rental
  • Car-sharing
  • Parking
  • Door2door transport

FOLLOW-UP TRANSPORT

  • Substitute transport must be adequate and rare
  • The transport from/to the railway station must be considered

INFRASTRUCTURE INVESTMENTS

  • Active lobbying for investments
  • Railway stations, electrification, safety

REGION'S PROMOTION

  • Collaboration with cultural events
  • Support of tourism

Carrier selection methods

According to the current legislative, the authorities can choose the carrier for PSOs in a public tender, or they can award the contract directly based on offers from different carriers in so called “market consultations”.

PUBLIC TENDER

  • More offers from carriers
  • Will be made mandatory from 2023, until then it is possible to award contracts directly with the use of market consultations

ADVANTAGES

  • Maximal rate of transparency
  • Lower prices are probable
  • Contract can be as long as 15 years (therefore amortization can be divided into longer period and that can lead to lower prices for the service)

DISADVANTAGES

  • The requirements have to set out very precisely and the process can last longer

DIRECT AWARD

  • Possible to close direct contracts up to 2023 (with the maximal length to 2033)
  • Possible only after comparing more offers in so called market consultation

ADVANTAGES

  • More freedom in setting out the requirements of the service
  • Possibility to influence the characteristics of the service during the validity of the contract

DISADVANTAGES

  • Less transparency, can lead to discrimination of some carriers
  • Risk of higher price than in public tender
  • The contract can only last up to 10 years (therefore the fixed costs can be divided into shorter periods)

The process of selecting a carrier for PSOs

Closing a PSO contract is a very time demanding process. The general consensus is that it is necessary to start the process at least 36 months before the operation of the service is scheduled to start. The causes for this are the legislative requirements and the time it takes for the carrier to prepare the service (especially to secure the needed rolling stock and to set out the procedures necessary for the operation – ticket sales, refunds, customer care, selling places…).

The terms for contracts on the provision of public services are set out in the: 

  1. 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. 
  2. This regulation is complemented by the Act No 194/2010 Coll. on Public Service in Passenger Transport. 

Advantages of liberalisation of the market

Liberalisation of the railway market brings significant advantages to passengers as well as to the ordering authorities. Due to competition the carriers have to increase the quality of their services, which brings more passengers to the railways and that results in less individual car transport, which significantly contributes to less traffic on the roads and better environment. 

  • Better services
  • New services for passengers
  • Lower prices for passengers and the authorities
  • Increase in number of passengers using rail transport
  • Low impact on the environment
  • Development of multimodal transport

Leo Express in public service obligation

The black trains of Leo Express were operated from 2012 only at a commercial risk. From 2019 they will set out to regional tracks as well. We have been awarded a contract for a PSO in the Pardubice Region (CZ), where we will secure the operation of two regional lines with our modern diesel units Alstom LINT, which are barrier-free, air-conditioned, with Wi-Fi connection and electrical sockets. Additionally, Leo Express will operate an express line Prague, Pardubice and Wroclaw (PL), which will be serviced by electric units Stadler FLIRT, which currently service our lines between Prague and Ostrava/Košice/Krakow/Staré Město u Uherského Hradiště.

Our trains will also help out in the Zlín Region (CZ), where we collaborate with Arriva to secure public regional transport. Here we will use some more diesel Alstom LINT units.



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Contact

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