Public transport could possibly benefit from today's economic malaise
By Greg Spencer
Increased prosperity in the 1990s undermined the dominance of public transport in Central and Eastern Europe, so it's a distinct possibility that current economic recession could restore the status quo ante.
Many regular car users, faced with lighter wallets these days, will likely turn to subsidised services like public transport as a more economical travel alternative. All around the world, as governments ponder enlightened strategies for economic stimulus packages, renewed calls for public transport investments are growing ever more vigorous.
In the United States, where record-topping petrol prices have compounded the economic crisis, use of public transport is at a 52-year high, according to an industry study released in March. Americans took 10.7 billion trips on buses, trains and trams in 2008, a 4 percent increase from 2007 according to the American Public Transportation Association (APTA). Ridership was up 38 percent since 1995, the study revealed. Meanwhile, the US Department of Transport claimed that distances covered by car fell 3.6 percent from 2007.
Whether a similar shift will happen in Europe was debated at a recent meeting of SPUTNIC, an EU-supported public transport project fostering know-how transfer from Western Europe to EU new member states and aspiring candidates.
Among those arguing in the affirmative was Stratos Papadimitriou, a public transport expert from the Greece's Piraeus University. "This is an opportunity for public transport to provide people with not only a more sustainable means of transport but also a more economical one," Papadimitriou said. The expert predicted that the recession will lead to a net decline in travelling, but of those kilometres still travelled, a greater share will be on public transport.
Radu Popescu, general manager Ploiesti, a Romania-based public transport company, agreed that this is a logical expectation, but argued that public transport authorities looking to make market-share gains need to be proactive. "In order to [provide an attractive travel alternative] you need to ensure a minimum level of comfort and certain speeds," Popescu said. "But this can't happen without public commitment and investment."
A less sanguine forecast came from Guido Bruggeman, a consultant and former officer of the European Bank of Reconstruction and Development. "I expect that the financial crisis will have almost no impact on car use, at least among those who already have a car," Bruggeman said. "They will not shift suddenly to public transport as they have already their car."
However, Bruggeman conceded that those who lose their jobs may no longer be able to afford to use their own cars. And, of course, a credit crisis will affect people's ability to buy new cars. While most adults in Western Europe already own a car, there are many in Central and Eastern Europe who don't. "In the [CEE] region, one could expect that people who are planning to buy a car for the first time will just postpone the decision," Bruggeman said.
Can supply meet demand?
Even if recession does lead to greater demand for public transport, the sour economy could threaten the investments needed to accommodate them.
Zoltan Adam Nemeth, manager of EU projects for the Szeged Transport Company in Hungary, noted that EU Cohesion Fund projects require local co-financing, which the current global economic crisis has made more difficult.
Szeged was in the midst of a EUR 13-million investment for nine trams and ten trolleybuses. The Cohesion Fund can provide all but 13 percent of the required capital, but even that amount might be too tough to cover. "We did the financial planning for this in 2005-06 based on credit conditions at that time, so we don't know the impact will be. What if we can't fulfil our obligations?" Adam Nemeth wondered. "What if our contractors raise their prices because banks raise their financing rates?"
Meanwhile, one of the newest EU members has problems of its own. A big car boom started in Bulgaria with the country's EU accession in January 2008 when 20-percent VAT was dropped from the purchase price of used vehicles. It's uncertain to what extent, if any, the recession will temper the car craze, said Tsvetan Tsolov, head of innovation projects at the Public Transport Company Sofia.
Noting that the latest economic forecasts call for negative growth, Tsolov said that there may be more interest in public transport; however, it remains an open question as to whether authorities would be able to make necessary infrastructure investments. In Bulgaria, fraud scandals last fall led the EC to block structural funding for roads and environmental and agricultural projects. Transport authorities now hope that similar problems won't affect them, Tsolov said.
On the other hand, a looser job market might make it easier to hire public transport staff, including bus drivers, which has been a major challenge in recent years for the Brno Public Transport Company, said Rene Dvorak, an in-house economist for the operator.
