A novel model for determining public service compensation in integrated public transport systems

Abstract

In free market conditions, if public passenger transport services are commercially unprofitable, there will be no interest for transport companies to perform them. However, directly because of the citizens’ interests, on the one hand, and indirectly because of the economy, passenger public transport services have become of a general public interest. The authorities must prepare appropriate legal fair market conditions, based on which public transport will be subsidized and conducted. In order to achieve that, for the mutual benefit of the public, users and transport companies, it is necessary that the right Public Service Obligation Model (PSO model or in some literature PCS—Public Service Compensation) be defined. Within this study, the optimal approach to assigning a PSC contract to transport companies for performing the PSO in integrated and regular public passenger transport systems is determined. A novel model, presented in this paper, can help national, regional and local authorities to choose and determine the way and level of PSCs for conducting the public transport of passengers and establishing a sustainable public passenger transport system.