Interurban Buses in Public Competition

This essay explores the workings of the art of public competition, in search of the reasons for its conflict with liberalisation. It details the interurban bus “market” serving Barcelona’s hinterland, with reference to passenger usage, historical policy, administrative structure, and comparative costs. Analysis suggests a dualistic form of counter-balancing competition on key routes, regulated by the need to maintain equality between operators – albeit an equality bounded by the operators’ focus, which often masks an inequitable distribution of public funding within public transport overall. A pattern conflated by the tendency to emphasise only short run operating costs, and sometimes rely, almost blindly, on higher tiers of the state for fixed assets.

“Interurban Buses in Public Competition” is the second in a sequence of four essays titled, “The Art of Public Competition“, which together explore the competitive model underlying Spanish public transport. An anthropological analysis of the tension between this internal model and that of globalised economics, reveals the distortion of external finance on the internal workings of the art of public competition. The first essay in the sequence establishes the policy context for the liberalisation of public transport in Spain. The third examines how the art of public competition functions when one of its most important competitors is absent, using the case of post-Independència Catalunya. The final essay ponders the strategic interplay of risk, debt and optimism, using the example of Spain’s high speed railway network.


Given its thwarted railway ambition, it would be logical for the Generalitat de Catalunya (the regional government) to become more focused on (scheduled, public) interurban buses – which when combined with autopistas (motorways) can be competitive against railway journey times. The reality is not so simple. The Exprés.cat network was initiated in 2012 as a (peak-only) commuter service intended to make use of a new High Occupancy Vehicle lane on the C-58 autopista, a busy road that links the north side of Barcelona to Sabadell and Terrassa – territory already well served by both Renfe and FGC. Thereafter (Barcelona area routes e5 and later from 2013) Exprés.cat became largely a rebranding exercise (of marketing and vehicles) for pre-existing moderate-to-high frequency interurban bus services, albeit with some marginal improvements to frequencies or hours of operation. So while the Exprés.cat network does include key Renfe Rodalies destinations such as Vic, Mataró and Vilanova i la Geltrú, and covers the Mataró-Granollers-Sabadell corridor where the Generalitat had once hoped to build as a transversal railway, it also serves Igualada, an FGC terminus.

Expres.cat patronage data for 2017 can be be roughly compared to (the most recent) 2016 railway station usage data. FGC categorise journeys by station of origin, while Renfe provide separate totals for boarders and alighters. Renfe data for Rodalies line 3 exhibits significant differences between boarders and alighters – for example, twice as many passengers alight at Vic than board, while further up the line at Puigcerdà, ten times more people get on than off – skews not explained by underlying geography. To mitigate this error, Rodalies boarders and alighters have been summed and halved for purposes of comparison. While the nature of the Expres.cat network means almost all journeys counted will be to or from Barcelona, railway station data includes journeys involving intermediate stations. 34% of all Rodalies boardings (and 34% of all alightings) occur at Barcelona’s central stations, with a broadly similar proportion – a third – recorded by FGC. Assuming journeys between Barcelona’s central stations are negligible (such journeys will tend to use metro or bus), a third of all journeys board in Barcelona and a third alight in Barcelona, leaving a third that do not involve Barcelona at all. Ergo at any non-Barcelona station, half the journeys can be assumed to involve Barcelona. Assuming each of those boardings returns to its origin as a second journey, the total number of journeys between any non-Barcelona station and Barcelona is (conveniently) equal to the total number of boardings at the non-Barcelona station. While inevitably flawed in the detail, these assumptions allow rough comparisons of public transport mode share.

The table below compares Exprés.cat with the train on routes where both compete directly. Together these routes conveyed 6.3 million Exprés journeys in 2017, representing just under half of the Barcelona Exprés network’s ridership. The remainder of the Exprés routes do not match railway services sufficiently closely to warrant comparison (or in the case of Mollet del Vallès only started operation during 2017 and lack representative patronage data).

Annual Passenger Journeys (000s) by Exprés.cat and Train to/from Barcelona
Town Route Exprés FGC Renfe % Exprés Note
Sabadell e1 172 2190 3666 3 Exprés service is peak only.
Terrassa e2 89 3427 2705 1 Exprés service is peak only.
Universitat Autònoma via Cerdanyola del Vallès e3 839 1646 2820 16 FGC only serves Universitat Autònoma.
Igualada e5 872 191 82 Exprés patronage includes other services on the same corridor (see below).
Vilafranca e6 268 878 23
Mataró e11 1596 2378 40
Vic e12 541 736 42
Sant Pere de Ribes, Vilanova i la Geltrú and Sitges e14-6 1950 4391 31 Sant Pere de Ribes is not served by rail.

Igualada patronage includes other services on the same corridor, totalling over a hundred weekday departures in each direction, only about a quarter of which are Exprés services. However even a quarter of the quoted patronage would give Exprés a greater market share than FGC. This skew in favour of the bus is rational:

  • The railway station is on the east side of Igualada, not well sited for much of the town, in contrast to Exprés, which serves both east and west.
  • The Exprés travels to Barcelona in 70 minutes, while FGC takes at least 84 minutes, with broadly comparable frequencies.
  • Fares are identical for both modes (within the ATM system).

Vilafranca’s Exprés service is provided by the same operator, Monbus La Hispano Igualadina. It also has a small journey time advantage over rail, with broadly comparable frequencies in the peaks, but obtains a far lower market share – just 23%. The most obvious difference from Igualada is the location of the terminals – both rail and bus serve the centre of Vilafranca equally well. Indeed, the railway has generally better access to the centre of Barcelona, which for many journeys will offset the extra time spent travelling by train. On both these routes mode choice can primarily be explained by the transport economic logic of time minimisation, where the service associated with the lowest total (door-to-door) journey time tends to obtain the greatest market share.

The competition on the Mataró route is extremely mature – the railway is the oldest in mainland Spain, and the bus has been competing along the autopista since 1970. Journey time, frequency, terminal access and fare are close to identical for both bus and train – a pattern established by the Moventis group after buying Casas in 1996. The Rodalies secures the greater 60% of the market. A similar market share is achieved on the route to Vic, where the railway’s limited (single-track) infrastructure could make it vulnerable to high frequency bus-based competition – but in practice bus and train offer similar frequencies (with similar journey times) during the peak. Vic’s population is a third of Mataró, so neither the bus operator Sagalés, nor the rail operator Renfe, can expect to sustain Mataró-level frequencies from a much smaller base market. Short-run competition might lead one operator to attempt market domination by temporary over-supply of service (a form of competition seen in the early years of British bus deregulation), but with operations guaranteed in the short run (by a public mandate, such as a concession), competition can only occur in the long run. Where key competitive factors (fare, time, terminals) are similar for both competitors, a long run equilibrium emerges where each competitor offers a similar service and achieves a similar market share. Based on the Mataró and Vic routes, that equilibrium is currently slightly skewed towards Renfe, possibly by an intangible or irrational factor (such a social status bias towards rail travel). The equilibrium remains dynamic – for example an improvement by one operator, such as in vehicle quality, must be broadly matched by the other – and thereby competition serves to keep each operator “honest”, to keep their product offer current. As this sequence of essays progresses, it will become clearer that the “product” in this competition is more than just its transport utility, and that in turn makes this model of competition much more political and strategic than this initial economic introduction implies.

The Sabadell and Terrassa routes suggest that Exprés services that are unable to match the offer of the railways, risk achieving no tangible share of the market: Here journey times are similar (30 minutes from Sabadell, 45 from Terrassa), rail frequencies are better (typically every 10 minutes on both of two different railway lines, compared to 20 minute Exprés headways), and the railway has better access to the centre of Barcelona. On a rough calculation, vehicle occupancy on the Terrassa service averages just 7 passengers. Sabadell twice that, but still an underwhelming performance from one of the most highly trafficked interurban corridors in Spain. Cynically, these two routes serve only to justify the existence of the high occupancy vehicle lane they use. Neither route reflects well on its operator, Moventis Sarbus, which is apparently unwilling or unable to compete effectively. But since price and time are impossible to differentiate, they might reasonably retort – how? Well based on observations from other Exprés routes, match the railways by doubling or quadrupling the Exprés services’ frequency, and perhaps improve access to the centre of Barcelona. In theory both Sabadell and Terrassa have sufficient population (roughly 200,000 each, compared to Mataró’s 125,000) to sustain such high frequencies. Thus the question to ask is not how, but, why haven’t they?

In both Sabadell and Terrassa the competition between public transport operators has historically been between the two railways, FGC and Renfe’s Rodalies, as reflected in the patronage data presented above. Sabadell and Barcelona were historically also connected by bus, but only by a route intended to serve intermediate places – the A1’s one hour journey time and half-hourly frequency logically dissuades through passengers. FGC’s Sabadell service is less direct than Renfe’s, although the Generalitat has attempted to mitigate that by the 2016/17 extension of the FGC line within Sabadell, the results of which are not indicated in the (2016) patronage data. Thus to Sabadell and Terrassa, the competitive model outlined above functions as a railway duopoly. A third competitor, in the shape of a competitive Exprés service, adds nothing that the competitive model does not already achieve from its existing duopoly. That’s quite a statement to make, because a bus operator, whose buses typically have lower (full life) costs than trains, and whose infrastructure costs are distributed across many more users (especially private motorists), could compete here on journey time – and thus given a commercial market could challenge the (relative, monetary) inefficiencies of incumbant railway operators. But this market isn’t commercial: All this public transport is at the bequest of, and in substantial part paid for by, the public sector.

The Sabadell and Terrassa Exprés services are anomalies that logically will never be supported sufficiently to attain their (commercial) potential. That these routes were ever created is thus curious. As is the current intention to repeat the concept for Manresa – another strong railway duopoly and another peak-only Exprés service. The development of the Sabadell service may reflect the post-Crisis financial difficulty in completing FGC’s Sabadell extension – perhaps an attempt to try something different. Wider policy logic would seem to be utilitarian, although it can also be interpreted as the need to be seen to: The need to (be seen to) make use of the new High Occupancy Vehicle lane on the C-58 autopista, and the need to (be seen to) incorporate two of the largest cities in Barcelona’s hinterland within the coverage of the Exprés network. The utilitarian defense of transport that often isn’t, will become a recurrent theme of this sequence of essays – a function of an underlying tension between two different ways of societal organisation – of understanding, first touched on in earlier discussion of presence.

Interurban Bus Concessions

What’s most remarkable is that competing interurban bus services exist at all. In 1923 Primo de Rivera formalised Spanish motorbus operations through a concessionary model. Unlike railway concessions (where concessionaires were given up to a hundred years of operation to recover the substantial cost of their initial infrastructure investment), bus concessions were primarily a way of regulating pre-existing businesses, whose operations had typically evolved from stagecoaches to motorised buses. The extreme case, Sagalés, can be traced back to 1642 – no dictator messes with that kind of lineage. Primo de Rivera’s public bus concessionary model established several principles that would be reaffirmed in 1947/49 under Franco, and thus define much of the 20th century:

  • One operator per route. Multiple operators were obliged to form joint companies (“pool de explotación” or modern Unión Temporal de Empresas) to hold single route concessions.
  • 20 year concession periods. In practice concessions were renewed automatically, creating a system of property, not franchise.
  • No competition with national railways. RENFE had the right of refusal over any concession that coincided with its operations.

Under Franco, urban concessions were typically controlled through local mayors, else issued centrally in Madrid. In practice the definition of urban was extremely political. For example, Ciudad Meridiana’s first bus services were technically interurban, even though Ciudad Meridiana is administratively part of the city of Barcelona (Ajuntament de Barcelona), reflecting a long-running political struggle for acceptance by a city that historically considered Ciudad Meridiana an unwelcome imposition (a history more broadly reflected in the operation of some of its contemporary bus services by Bus Nou Barris, rather than “Transports Metropolitans de Barcelona”, TMB, as are other buses within the city). RENFE‘s role was similarly politicised, the organisation as much a provider of transport, as a physical manifestation of the nation. That RENFE yielded to any direct competition with road transport can thus be attributed to realpolitik. Its approach can even be interpreted as feudal – a method of managing private challengers to RENFE’s greater public domain, by integrating them into that domain.

RENFE‘s veto on competing bus services was thus negotiable, but not necessarily by the transfer of its concessions. For example, José Francisco Cosmen, founder of ALSA, recounts reaching an agreement with RENFE to manage bus services between Asturias and Madrid in the 1960s. Likewise, Sagalés is attributed with the operation of the Barcelona-Granollers bus service (which parallels the railway) in the 1970s, yet ownership of the actual concession did not transfer from RENFE to Sagalés until 1988. 1988 is the year in which RENFE-ATCAR (Autónoma de Transportes por Carretera), colloquially “RENFE by road”, was restructured into ENATCAR (Empresa Nacional de Transportes por Carretera), which was subsequently sold to ALSA. As a subsidiary of RENFE, ATCAR historically had priority for bus concessions, but it was only with the development of Spain’s road network in the 1960s and 70s that ATCAR sought to monopolise many long-distance routes. That naturally caused resentment among existing transport businesses, which in 1972 resulted in the creation of Bacoma (Barcelona-Córdoba-Málaga) – what might now be called a public-private partnership, albeit a partnership without adequate fiscal or boardroom control: ATCAR’s accounts contained numerous irregularities, particularly in regard to Bacoma. A reminder that there is a fine line between public-private partnership and public-private corruption.

So the Spanish bus industry was historically required to deploy ingenuity to access rigidity, which helps explain why a relatively opportunistic industry (from pioneering international routes in the 1960s, through disrupting the city tours market by challenging the legal limits of discretionary operation, to competitive entry into the soon-to-be-liberalised railway market) is also wedded to such a fixed operational model (where, as exemplified below, often nothing much has changed in decades). Unsurprisingly, the contemporary Spanish bus industry has internally conflicted views on liberalisation.

Traditionally many Spanish industrial sectors were moderated by the availability of capital, where capital is understood as a historical extension of feudal land, and thus a method of stabilising (in the broadest sense, governing) a country. Indeed, much of the control of the Spanish bus industry still rests with traditional mercantile families, in spite of the recent intrusion of multinationals – notably NEG‘s 2005 acquisition of the largest interurban operator in Spain, ALSA. However, because bus markets are relatively revenue-centric, capital is perhaps not as good a regulator as in other industries. Hence other forms of regulation would seem to have emerged to ensure adequate societal stability. The bus sector is thus revealed as a precursor of a future in which capital is increasingly global and associated with instability, with many more (especially technological) industries that are revenue-centric and not best managed by a model of stability based on capital. As explored later in this sequence of essays, in the Spanish government sector it is the lowest tiers (which have traditionally been capital-poor) that best understand how to manage in a revenue-centric world. Higher tiers continue to assume power flows through capital: AVE “investment” the shining example, which contrasts sharply to its national bus brand, “bus.es”, which has barely achieved a website. Similarly the European Union’s agenda of economic liberalisation – which has always been detached from its agenda of societal stability by dint of a sovereign structure that allows it to try and create a common market but not a common nation – may hinder societal stability by inadvertently exposing Spain to revenue-centric markets that the Spanish model of stability, built around capital, can’t intuitively manage.

The modern concession may be considered as a form of competitive public franchise – an ex-ante competition prior to a service commencing – albeit without the freedom of establishment (of new services in an open market) ocassionally mooted by the European Union. In parts of Spain, notably the cross-community concessions administered by central government, the competitive tender of concessions has become the norm, although the assessment of bids has proven contentious. However in some regions, including Catalunya, the overwhelming majority of concessions remain uncontested. Spain’s entry into the EEC triggered a raft of compatible legislation, including 1987’s Ley de Ordenación de los Transportes Terrestres (LOTT), which defined the broad legal context for bus operations, within which autonomous communities maintain their own laws and regulations: In Catalunya, 12/1987, the implementation of which offered existing concessionaires the option of a fresh 20 year concession – effectively an automatic extension from 1988 to 2008. In 2003, Catalunya’s decree 128/2003 offered existing concessionaires 25 year extensions (from 2003 to 2028) in return for commitments to improve the quality of their product – criteria the Spanish competition commission scoffed at. Thus the vast majority of interurban bus concessions within Catalunya now extend until 2028, effectively benefiting from 40 years of uncontested extensions, in addition to the decades of automatic reissue many concessions enjoyed prior to 1988. A far cry from 2007’s European policy of up to 10 years, possibly extendable by five.

As the Catalan Competition Authority highlighted in 2010, the economics of the bus industry do not mandate such long concession periods to secure investment. And as the Spanish commission noted in 2007, infrequent renewals create fewer incentives for service improvement. The inevitable conclusion is that the contemporary maintenance of bus concessions is intended to protect the underlying societal model, which is invariably at odds with technocratic European Union competition policy. Spanish policymaking typically establishes legislation, then waits for its society to knock back whatever isn’t acceptable, but because there is no such reverse channel back to Europe, incompatible EU policy can rattle round the Spanish legal arena indefinitely. This is clearly evident in the taxi sector, where the underlying reason for regulation – the psychological wellbeing of drivers who do an excessively variable job – is routinely confronted by a liberalisation agenda that, because it is built on a transport systems theory that dehumanises the workforce, has no structure by which to understand the regulation it dismisses. Catalunya’s apparent reluctance to liberalise interurban bus concessions is less intuitive, but some insight may be gained from a description of the underlying administrative structure.

Administering Equality

As 12/1987 enshrined, interurban bus concessions are owned by the Generalitat de Catalunya, with the services therein considered public service obligations, which justifies their public ownership and consequent partial public funding. Modern policy typically frames public service obligation as a social utility (for example, ensuring equality of access), without adequately justifying such overwhelming public intervention (for example, complete market failure). The actual use of public service obligations is far more strategic, through what article 128 of the Spanish Constitution terms “essential resources or services”, which typically translates as the infrastructure of a territory, especially power and communications. This how the modern political state physically manifests itself for its people – a pattern of administration with deep theological roots. As introduced by earlier discussion of presence, physicality is important because the physical arena allows common comparison – to comprehend the whole – and thus public competition is fought on physical terms. Broadly, bus services exhibit less physicality than railways, not least because buses utilise common roadspace, and thus their presence is less important and their sector more readily challenged, especially on multi-sector activities at the margins, such as school transport.

The art of public competition yields long run balance, where balance equates to sameness, and thus to some approximation of equality. Such physical comparators are crude, primarily delivering a sense of equality, which serves only to fill gaps which cannot be readily comprehended using the societal (family) model of knowable groups. As explored in the next section, significant inequalities can emerge when alternative structures of knowing are applied, not least financial models which assume the transaction of a common value (currency) across the whole system. Yet to apply an alternative system of knowing is to misunderstand the structure and motivation of public competition: Public competition exists because individual competitors cannot themselves fully comprehend the whole, nor transact across the whole, at least not with the same intensity of understanding achieved within their own subset. It exists between public bodies because “the state” has much the same limitation. A limitation that bred its own notion of equality, not necessarily that each will be treated equally, but that each will be treated equally to that which each knows: Such fairness – equality for those doing the same work – is deeply ingrained in the Spanish labour model, not least through collective agreements, which can result in identical wages and conditions across entire industries.

The operators of 96% of Catalunya’s interurban bus services are represented by FECAV (Federació Empresarial Catalana d’Autotransport de Viatgers) who, as the successor of “Catalunya de la Cámara de los Transportes Mecánicos”, have represented the Catalan bus sector since the Civil War. Such heritage makes FECAV more firmly established within the structure of the public transport system than much of the contemporary state. The influence of such powers a l’ombra (in the shade) are by definition difficult to characterise. Business federations are not just policy lobbyists: In a role closer to that of a trade union, FECAV participates in the negotiation of their sector’s collective agreement – common wages and conditions – which are extremely important to an industry where staffing accounts for the majority of operating cost. In a fully commercial environment this negotiation would be strictly between employer and employee (or their representative), with different companies potentially able to achieve different cost structures, and thereby competitive advantage. In Catalunya, the public sector administers the bus system, and therein the collective agreement, where administering implies ensuring equality – treating the whole sector the same. This promotes harmony and stability within the bus-driving family, and improves the transparency of public funding by allowing the application of a standard cost model to potentially uncontested concessions. However it also limits entrepreneurial flexibility (by fixing many costs and working practices), and transfers much of the long run risk to the Generalitat (who are expected to manage sector-wide cost increases).

The Crisis exposed some of the financial vulnerabilities of transferring risk to the Generalitat: Between 2005 and 2013 bus operating costs rose by a third (twice as fast as inflation), coinciding with declines in patronage, and thus revenue, caused by the economic slowdown – all at a time when the Generalitat’s own finances were under intense pressure. The Catalan Parlament’s eventual reaction was law 21/2015, which opened up potential new income streams to fund public transport, although not all these powers have subsequently been used: The Generalitat’s principle strategy seems to be encouraging patronage, and thus increasing revenue. The Spanish government has been more aggressive in actively transferring risk onto operators, notably in decree 75/2018, which de-indexes concession costings – ending the automatic inflationary re-calculation of costs. As noted in the review of concessions above, operators are not necessarily risk averse, and are capable of competitive market strategies – for example, new vehicle investment by an operator in response to market conditions, beyond any formal requirement for investment that may be attached to the terms of their concessions. Yet with traditionally minimal risk exposure and limited need of capital, bus operating companies can also be considered as simply bodies of workers, not solely motivated by profit, and who rely on the state to provide stability to their work environment. The tension between these two approaches to company – the private family and the family of workers – is omnipresent in Spanish labour history and still defines the legal structure of companies. Problems arise when the state cannot simply apply the same notion of family to both (and hence maintain a sense of equality), and instead (as common in external competition policy) seeks to analyse and moderate company motives.

The structure of FECAV may theoretically be considered a cartel, but only in so far as its operators are free market agents, analysis of which differs with perspective: From the perspective of the knowable group, the public sector is fostering collective equality, and to assume a (supernormal) profit motive is to misunderstand the sector as exceeding itself. Of course from the perspective of the whole, the onus is on the public sector to regulate profit, and the use of transferable currency (Euros) means the sector is not entirely isolated from the whole. The complicity of the public sector in such a “cartel” structure – both fixing costs (via collective agreement) and prices (via ticketing integration) – similarly needs to be understood from within its own context: The role of government, ostensibly here the Generalitat de Catalunya, is to manage the knowable group represented by FECAV, not strictly to represent the interests of the wider state – the whole of society – against FECAV: The administration of the Generalitat is itself constrained by the societal structure of knowable groups, and while the makeup of its groups are different, each element of the administration will similarly struggle to comprehend the whole – struggle to know the whole society its democratic credentials might imply it represents – a deficiency that is consequently difficult to acknowledge in the modern era of “democracy”. To reiterate the conclusion of The Expectations of Competition, government in Spain is a lousy top-down regulator because there is no top to go down from. Instead the regulatory – management – function occurs at the scale of the sector being managed, which has the advantage of understanding the sector from a perspective much closer to that found within the sector itself. However such an approach does not suit balancing between different sectors, a theme expanded in the next section, which is why the whole leans on alternative counter-balances, here characterised as the art of public competition.

This essay only scratches the surface of the different models the state deploys to manage different sectors. For example, in metropolitan Barcelona the government function is effectively (the precise role of AMB will be explored in the next essay) exercised by the municipal bus operator (TMB) itself, with a proportion of what are technically TMB’s concessions sublet (increasingly now as competitive tenders) to non-public operators – traditionally to TUSGSAL, a workers’ society in the north, and private operators in the south, primarily Baixbus. This set of counter-balances places the state right in the heart of the sector, with no pretension to a role of deus ex machina super-regulator.

A Division of Costs

The table below attempts a comparison of the costs of different public transport networks within the Barcelona ATM integrated ticketing system. This 2016 analysis combines ATM operations and subsidy data, except for subsidy of TMB, which is apportioned between bus and metro based on TMB’s accounts. For railways, a “vehicle” is an individual car (cotxes) – each train consisting of several cars. Municipal buses are those operating within towns outside metropolitan Barcelona. AMB manages bus services in metropolitan Barcelona, except in the city (Ajuntament de Barcelona) where bus services are TMB. The “total cost” is calculated by adding revenue and subsidy – a flawed logic, discussed below. Costs per passenger journey (a rough benchmark of passenger utility) and vehicle kilometre (a rough benchmark of operating efficiency) vary greatly between networks.

ATM Barcelona Costs and Performance (2016, figures in millions except comparators)
Network Journeys (M) Vehicle KM (M) Revenue (€M) Subsidy (€M) Total Cost (€M) Cost/Journey (€) Cost/Vehicle KM (€)
TMB Metro 381 86 257 184 441 1.16 5.14
TMB Bus 196 41 145 179 324 1.66 8.00
FGC 81 32 75 50 125 1.53 3.96
Renfe Rodalies 108 102 139 10 149 1.37 1.46
Tram 27 3 14 82 96 3.59 38.14
AMB Bus 87 37 93 90 183 2.12 4.91
Interurban Bus 34 45 44 34 78 2.30 1.73
Municipal Bus 40 14 22 11 34 0.84 2.48

In some cases comparisons are skewed by network quirks and biases, which are comprehensible with more detailed investigation. For example, 60% of all revenue collected on Àrea Metropolitana de Barcelona (AMB) buses comes from dedicated airport (SGMT) and tourist sightseeing (Julià/Trapsa/Marfina) services. Fares on these services are far higher than the surrounding public transport system, and thus generate vastly more revenue than average: The Aerobús service averages €7.30 of revenue per vehicle kilometre, compared to €1.20 on the local buses more obviously associated with AMB (services within the built-up area of Barcelona, but outside the administrative boundary of the city). Based on its current retendering process, at least 40% of Aerobús revenue is retained by AMB (the magnitude of this payment is the main criteria in bid assessment, but must be at least €2.30 per passenger journey, from an average fare of €5.35). Without cross-subsidisation from the airport and tourist buses, AMB’s bus subsidies would need to be around 50% higher.

However in many cases comparison between networks is hopelessly flawed because the derivation of “cost” varies: For traditional public sector operators, cost is rooted in operations, primarily staffing. In contrast, the costs attributed to Barcelona’s privately financed tram concession add payments for infrastructure and vehicles, reflecting the full life costs of the system, not just the system’s day-to-day costs. Renfe’s Rodalies adds even further complexity, since part of its funding flows directly through the Spanish government, not ATM, so is not included in the table above. In addition to occasional capital investments, such as new rolling stock, the Spanish government annually subsidises the Rodalies’ operations by 181 million euros (in the current year). That subsidy has recently been increased to allow Renfe to pay ADIF for access to the track Rodalies services operate on. Previously ADIF had granted that access for free, indicating another source of public subsidy with murky costings (albeit necessarily becoming less murky as railway liberalisation approaches). Suffice to conclude, the true cost of the Rodalies is considerably greater than that derived in the table above.

TMB‘s accounting lands somewhere in between short and long term costing: Leases and fees related to metro Line 9/10 occur as annual costs to be subsidised by ATM, while older metro lines and rolling stock are not attributed such a cost. Officially, Line 9/10 adds 128 million euros to the entire metro’s base service subsidy of 54 million. However, as documented in Public Competition in Post-Independència Catalunya, the full cost of Line 9/10 is much greater, at least another 250 million euros in annual station concession payments, plus the maintenance and repayment of roughly 4 billion of construction-related debt. As a hypothetical example, Line 9/10 costs can be applied to the entire metro network to estimate its true long term costs: The expansion of Barcelona’s metro route network historically averaged 1.2 kilometre per year (119 km over a century, although actual expansion was far less consistent). This equates to the equivalent of one Line 9/10 (as so far completed) every 30 years, after which its assumed construction concession period expires and its subsequent cost can be considered zero (operational maintenance only). On this basis, the full current cost of Line 9/10 can be taken as a broad indicator of a long run cost for sustained metro infrastructure investment: Depending on the method of finance, an ongoing cost of maybe 400 million euros each year. Plus trains – a perpetual lease since trains need replacing every 30 years – which assuming 150 trains on the same terms as Line 9/10 (roughly 1.5 million euros each per year), adds 225 million euros. A total of just over 600 million euros each year, in addition to roughly 300 million in existing (non-Line 9/10) operating costs. Ergo metro operating costs are only about a third of the total costs of sustaining and expanding the metro network.

All this flawed analysis of costs serves to mock, but in doing so explain in context, the public policy objective of revenue and subsidy equality in Barcelona’s public transport system: That government will match the contribution of the citizen, such that one will balance the other and keep the overall system stable. Another distinctly dualistic structure, the policy regulates civil society within itself by balancing the financial commitments of both the people and the administration. The “fairness” of this principle, which derives from 1960s Paris, presumes a consistency of monetary income and geographic access that simply does not exist in modern Catalunya: For example, the logical implication of the policy in sparsely populated rural areas would be to support only public transport services where the wealthy are prepared to pay a higher fare – which contradicts dominant policy themes of equality of access and integrated ticketing. Indeed, such logic may suppose subsidising taxis, yet discretionary (non-scheduled) public transport commonly operates without – although attempts to integrate “flexible” (demand responsive) transport will increasingly blur the barriers with traditional public transport modes. The current function of this policy is to be seen to be equal. That serves an important role in simplifying a complex topic into a notion that satisfies the common need for public fairness, and would be entirely appropriate for a society that considers itself as one. However overall “fairness” transpires to average a lot of unequal elements, and once different logics start being applied to different elements, especially different funding or organisational models, it becomes increasingly difficult to group these unequal elements together in one notion of equality. Likewise, the policy of revenue and subsidy equality masks the tendency for Barcelona to cross-subsidise Catalunya – a reasonable quid pro quo for the Generalitat’s capital investment, but a structure the Ajuntament de Barcelona (and to a lesser degree AMB) would presumably renegotiate were the Generalitat to reduce its capital investment.

Traditionally, at least, the cost inequalities buried within the whole public transport system were unimportant because the structure was internally counter-balancing – a counter-balancing apparent in the model of competition described on certain Exprés routes. To seek to understand a public transport system by breaking it into individual services, each with separate costs and competitive agency, is to apply a specific structure of understanding to that system. Globalised economics, and specifically European competition policy, tends to assume one structure of understanding – a broadly Anglo-Dutch enlightenment model – which more local “economies” do not necessarily conform to. The administrative structure of Catalan interurban buses suggests equality is limited to that which is knowable – which therefore cannot be the whole. Global commerce disputes that, supposing the whole a numerical machine, typically achieving its philosophical deception by temporal distortions – something that (less predictive) Spanish society can struggle with (a more extensive explanation of this rather complex argument is contained within The Moral of Sovereignty). Thus rather than balance the whole public transport system, as implied by conventional economic competition theory, we find various functionally independent counter-balances (dualistic attempts at equality) throughout the structure of the public transport system, each with rather limited interaction outside that which it knows. Where free market competition can encourage agency across market functions, sometimes with scant regard for understanding, the model observed in Catalunya tends toward agency in, and understanding of, quite specific elements of the system. A model that is inherently social and stable, but not necessarily an easy model to modify.

This in turn helps explain the tendency to “infrastructure agnosticism” by operators, the emphasis on day-to-day operating costs, with sometimes scant financial regard for the dependency of those operations on fixed assets. For the master planner, especially the business economist inclined to direct capital investment into reducing future operating costs, this disconnect between operations and infrastructure can be perplexing. As explored in the previous section, Catalunya’s bus operators are easier to understand as professional workers’ collectives, than as commercial risk managers – meaning operations are a function of the people, while the infrastructure is the land on which they operate. The italicised emphasis – people and land – is ostensibly feudal. This is indicative of the continuing role of capital assets in the societal regulation of people, where the people function in the microeconomy with those they know, while the land serves as structure. In contrast, for classical industrial economics the role of assets is to improve the productivity of the worker, while public choice economics dismisses the use of capital for societal regulation as “rent-seeking“. As further explored in On the Wings of Hope, the “feudal” model may now better reflect the role of global finance, the irony therein, that (European) policy continues to promote a rather utilitarian model of infrastructure investment rooted in industrial economics.

The next essay in this sequence, Public Competition in Post-Independència Catalunya, examines how the art of public competition functions when one of its most important competitors is absent. The suspension of policy-making within the Generalitat de Catalunya, following the region’s failed bid for independence, provided an almost unique opportunity to observe the strategic processes and limitations of the art of public competition. The optimistic finances of metro line 9/10 set the context, followed by analysis of the reactions of the city and metropolitan area of Barcelona to the Generalitat’s hiatus. That analysis exposes vast differences in the funding models of higher and lower tiers of Spanish government, which can be traced to the availability of externally-financed debt. Continue reading…