Commercial Services in German local public transport

Abstract

Since 1996 German local public transport by road has been organised as a hybrid regime which allows for prioritised market-initiated services as well as contracted public services initiated by competent authorities. In 2012 the legal framework was amended, but the general setting of a hybrid regime was kept as well as the priority of commercial market initiatives. The new law came into force in 2013. It was expected that conflicting initiatives would possibly concern regional services, but not city networks due to the typically high level of subsidies. Surprisingly, in 2015 a market initiative competed successfully against the authority’s intention to tender the contract for the urban bus network in Pforzheim. As of December 2016 a daughter company of Deutsche Bahn operates these services without any contractual compensation (‘commercially’). The company formerly operating the services in Pforzheim had to be shut down. The paper gives an overview of the regulation of the German local public transport by road and describes the procedure through which commercial operators may gain access to the market. It provides a closer look at the Pforzheim case and concludes with an outlook on the (political) consequences of the case.