Opportunities For Customer-driven Financing in Public Transport Service Provision

Document Type

Conference Paper

Publication Date


Subject Area

place - europe


In the Netherlands, both scientists and politicians increasingly consider customer-driven steering as a promising means to improve the quality and effectiveness of public services. Particularly, customer-driven steering may give customers more influence on provided services. Furthermore, it may facilitate the establishment of markets of societal interest that were traditionally served by (semi)governmental production only. This paper identifies the opportunities for successful application of customer-driven steering in public transport service provision. The paper provides answers to existing questions about the precise meaning and content of the term ‘customer-driven steering’. To this end, we combine knowledge from various (non-transportation) sectors with lessons learned during an experiment with a specific voucher scheme, called the ‘Pioneer Card’ (in Dutch: Pionierskaart). The Pioneer Card experiment was conducted by the Ministry of Transport, Public Works and Water Management in the Netherlands. The experiment took place at two new town greenfield locations, from 1999 – 2003. A separate paper presents the results of the Pioneer Card experiment in more detail. Having discussed the theoretical backgrounds of customer-driven steering, we identify goals for and market conditions under which it can be more effective than other policy instruments. Furthermore, we describe the different roles and tasks for the national government and regional authorities in the Netherlands. Indeed, the decentralisation process implies that initiatives for adopting customer-driven steering lie with the regional authorities. We identify some obstacles that may actually hold regional authorities from implementing customer-driven steering straightaway. The overall conclusion is that customer-driven steering can only be successful in specific, locally-determined applications. We identify two favourable situations. The first one aims at preventing social exclusion (due to lack of transport) in congested areas. Fixed-purpose budgets should be adopted for this particular purpose. The second favourable option concerns the accessibility of congested areas. Here, the open market should be regarded a stimulus to improve the effectiveness of service provision. To achieve effectiveness, customers must have sufficient freedom of choice. However, freedom of choice for customers should not be increased at the expense of clearly apparent ‘economies of scale’ for provided services. Relevant for the Netherlands in this respect is the Passenger Transport Act (WP2000). The act prescribes the provision of public transport services through concessions. The concessions give transport operators the exclusive right to provide regional public transport services during 3 – 6 years. As such, public transport concessions have strained relations with more freedom of choice for customers. Except for the above purposes, other instruments are considered more appropriate than customer-driven steering.


Permission to publish abstract given by AET.