Efficient procurement of public air services - Lessons learned from European transport authorities' perspectives

Abstract

This paper aims to derive lessons and best practices from the different European experiences by viewing issues from a public transport authority perspective. The heart of this paper is a survey of European air service procurement authorities. We discuss the authorities’ perspectives on why they fund a PSO including likely future funding trends and investigate various aspects of the procedures connected with the PSO process (transparency of the subsidy amount, risk sharing with the operator, incentives for operator, vetting of the operator and use of specialist advice). This paper also explores various aspects of the obligations authorities impose upon routes and operator (e.g. maximum fare, social discounts, ticketing, timetabling, size of aircraft, air cargo requirements). A particular interest of the paper is connected with the authorities’ interest in marketing the PSO as well as with the authorities’ perspective on promoting and enjoying sufficient competition in their PSO tendering exercises. The derived lessons from the EU experience are discussed in the light of their use in assisting policy makers in promoting and drafting their own regional air transport programs (e.g., Russia) or in further developing existing schemes such as the Remote Air Services Subsidy Scheme in Australia.