Commercial services in German local public transport

Abstract

Since 1996 German local public transport by road has been organised as a hybrid regime. This regime allows for market-initiated services as well as contracted public services initiated by competent authorities. The legal regime prioritises market-initiated services. In 2012 the legal framework was amended, but the general setting of a hybrid regime was kept together with the priority of market initiatives. The new law came into force in 2013. It was expected that conflicting initiatives might possibly concern regional services but not city networks, because of the high level of subsidies that are typically necessary for the operation of such networks. Surprisingly, in 2015 a market initiative competed successfully against the authority’s intention to tender the urban bus network in Pforzheim. As of December 2016 a daughter company of Deutsche Bahn operates these services without any contractual compensation. The company formerly operating the services in Pforzheim had to be shut down. The paper gives an overview of the regulation of the German road-based local public transport and describes the procedure by 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.