Finland

operating with the respective Verkehrsverbund, being responsible for regional bus and heavy rail services in their respective area. The competent authorities, which are only responsible for bus services in peripheral and rural regions, have mostly entrusted an administrative division. Hessen is a special case for the state and declared to apply 1893/91 strictly and tender all services.

Change has occurred in relation to the markets for bus services. Existing private and public operators are preparing themselves for the forthcoming competition to a greater degree. A uniform move forward is not apparent.

Amongst other forms of re-structuring into integrated operators (e.g., Berlin, Hamburg, Bonn), the sale (e.g., Bad Kreuznach, Zweibrücken, Görlitz) or partial sale (e.g., Leipzig) of various forms of cooperation (e.g., further joint ventures of several local transport operators with the group Taeter), further joint ventures of private- transport operators, and expansion attempts (e.g., positioning of DB AG as a

"European player" in the competition for the municipal transport operators) are being observed and prepared.

contracted transport was to abolish the authorisations for contracted transport. The production of non-subsidised public transport services still required an authorisation from the public-transportation authority. Furthermore, the new law included the termination of the obligation to operate non-profitable services.

As a result of adapting the new legislation, Helsinki and Turku divided their transport authorities into two parts: operator functions and authority. Espoo and Vantaa both sold their bus companies in this context to international operators. The main tool used when regional planning authority YTV opened the market was political decision-making. Later on in Turku, the Finnish Competition Board forced the city to open the market for competition. The main barriers for transition were, in the first place, incumbent operators, who were afraid of losing market shares and losing profits and were supported by local politicians. The authorities in the Helsinki region faced slight chances in upcoming years. Already, the city of Vantaa had ”outsourced” its tendering functions so that YTV was in charge of them. The same types of discussions were taking place in the City of Espoo, but no decisions have been made so far (Lahdenranta 2000).

The question of whether to introduce competition or not was a topical issue in the public transport branch, especially in the big cities, after the new public transport law had come into force in 1991. It should be emphasised that extensive tendering was possible only in the regional and local bus transport in the Helsinki region and in the City of Turku. Apart from that, only small-scale tendering was possible in cases where bus operators had abandoned an authorisation to operate non-profitable services. Authorities regard the tendering process in Helsinki as successful, and the cost level dropped considerably by up to 33% in connection with an unchanged service-quality level (Sinisalo, 2007). On the other hand, there was a problem when an operator losing a competition had to dissolve contacts with employees leading to strikes in Helsinki, for example. Another problem has been the lack of employees (i.e., bus drivers) at some point. Apparently, the working conditions have not been attractive for the personnel (Haatainen, 2003).

At the moment, there are mainly three types of organisational forms. In the Helsinki region and Turku, for example, transport services are in the hands of the public transport authority, with both public and private actors having a contract with the authorities. Tampere is a special case because it has defended itself against competition until today. Nevertheless, some years ago, Tampere sold a small company to Connex (TMP0). In many smaller cities, the service is based on market initiative, and providers are solely private-owned, except for the city of Pori (Rosenberg, 2005).

Basically, the organisational forms in large cities have already reached their new, stable situation for a tendered market so experiences can be drawn from it. The general strategy of the authorities is also to use tendering in the future. For a brief overview, in the Helsinki region, the cities and the regional body YTV, as well as the city of Turku, have the responsibility of planning the routes and timetables, developing the public-transport system, and acquiring the public-transport services by tendering. The rail transport is thus far produced as public management (Helsinki tram and metro) or by a direct contract (commuter trains in the Helsinki region). In Tampere, the majority of bus services are produced as public management, but plans for more tendering do exist. In the middle-sized cities, the private operators have the initiative and full responsibility of the services by authorisation (Rosenberg, 2005).

As a consequence of the new European law, a new law on public transportation (Law 869/2009)¹⁴ was also passed in Finland. It is very detailed and comprises nine chapters and 62 paragraphs. The most important regulations follow as a summary.

After the transition period, the traditional form of exclusive operating permits for particular schedules and routes in bus transportation will no longer be possible. In practice, this means that the many Finnish cities, which happen to be operated by a private monopolist, will have to shift their organisation model by the year 2019 towards either competitive tendering or establishing their own company. It will be interesting to see how much actual competition there will be in the remote, small cities by international comparison.

§12 of the act defines transportation authorities, all of which are now spreading beyond the city boundaries. This idea is similar to the Helsinki model, which has incorporated regional planning since the early 1990s. Apparently, the model is successful enough to be regarded worthy of copying.

§4 of the act defines the responsibilities between the authorities and the operator.

One interesting point is that it allows the operator to take over the planning.

Consequently, it may potentially become difficult to compare tendering applications.

§14 allows for the purchase of services to ensure a certain quantity and quality and the keeping of low prices for the users, as market conditions allow.

§27ff is directed to a market initiative. Traditionally, lots of Finnish local transportation was based on initiation by the market (i.e., private operators);

therefore, this mode of entering the sector is important. It is also in line with the spirit of the EU legislation (see above). An operator with a license basically only needs to inform the transportation authorities about starting the service.

14 http://www.finlex.fi/fi/laki/ajantasa/2009/20090869#L1P4

§30 is about the duration of permits and contracts. If the permit is based on a fixed schedule (Reittiliikennelupa), the maximum contract is 10 years or else (Kutsuliikennelupa) 5 years.

§41 gives the purchaser the distinct opportunity to choose the cheapest entry in the competition. The law is economically advantageous and provides a number of criteria, including quality, which could make the difference. The law also allows, according to §42, the ordering of a certain number of extra services from a provider without a new tendering, after the contract has been signed. This option opens the contracts to some flexibility to cover dynamics in demand and planning mistakes.

In a brief comparison of the two national settings, the common framework based on EU regulations dominates. However, there are a few differences worth mentioning. Regional authorities in Germany are allowed to dictate the form of organisation, such as in the Hessen state. In Finland, there is no additional restriction for the municipalities, which would reduce the freedom to decide. Also, when it comes to setting fares or a ticketing system, a Finnish city is independent from outside influence and restricted only by its own willingness to spend resources on LPT. However, the tradition of market-initiated services, despite being heavily subsidised, has led to many private monopolies to this day. Thus, it is often the private operator who has significant influence on such services. In Germany, a unanimous tendency was notable towards public monopolies, so cities have de facto a high influence through ownership. Both systems have changed in the last few years under EU rule. Another aspect is regional cooperation, which is new in Finland outside the Helsinki region, so city boundaries are more important for all actors. For example, at this point, public operators are not working beyond the city borders.

However, structures are changing in this context in Finland and getting closer to the model used in Germany with regionally integrated planning and operating.