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ICE discussion paper: public transport funding post-Covid

24 June 2021

Since the onset of the Covid-19 pandemic, countries and cities around the world have made drastic changes to public transport services. With lockdown restrictions in place, the entire public transport sector became effectively unviable; the sector has survived through emergency funding from governments.

While we cannot know for sure what public transport use will look like as vaccine rollouts continue and restrictions lift, the shifts in where and how people live and work are likely to drive lasting, structural change in travel patterns.

This has major implications for governments and public transport authorities, who have built substantial parts of their infrastructure, services and revenue models around transporting commuters during peak hours.

But safe, reliable, affordable, and accessible public transport is vital to addressing international challenges, such as reducing emissions, improving air quality and reducing congestion.

Planning future services

Making services too expensive or lower quality risks not meeting these goals, while continuing bailout packages are likely to be an unsustainable option given the size of public sector net debt.

Therefore, funding models which focus on transport systems covering their operating costs should be a very important concern. A number of options could be considered, including a combination of raising fares, reducing services, continuing subsidies, exploring alternative revenue sources, or incentivising people back onto public transport.

Above all, it is crucial that governments and operators take these decisions soon. The costs of uncertain, short-term subsidies without a clear transition plan could begin a spiral of decline and cuts to both public transport services and capital projects that would take years to recover from.

There are four key principles that underline a new approach to funding public transport. The funding model:

  1. Requires a reasonable amount of stability and resilience.
  2. Must be flexible enough to scale with demand for public transport in times when there is significant growth in demand.
  3. Requires a diverse array of revenue sources.
  4. Must be accepted by the public.

As the world moves towards recovery, there is an opportunity to do things differently. The policy choices made regarding spending and investments on public transport during recovery and beyond will determine each country's ability to reach sustainable development goals and national strategic objectives.

ICE discussion paper: public transport funding post-Covid

Content type: Policy

Last updated: June 2021

Authors: ICE

  • David Hawkes, head of policy at ICE