Eliminating Transport Concessions

As of May 1, 2000, the number of people eligible for public transport concessions was significantly reduced through amendments to the Law on Transport Concessions.
The adoption of these amendments met with fierce opposition from people who previously were entitled to transport concessions. This is understandable. If people have enjoyed privileges (for instance, transport concessions, discounts for heating, free telephone calls, free treatment at health resorts, etc.), they start to think that all this is rightfully due to them and should remain forever. Hardly anyone gives a thought to the fact at whose expense these services are being rendered. The most popular argument is that concessions make it possible to aid the most destitute at the expense of those who are better-off.
But there is much more to it than meets the eye. In a system like this, there are always people who unfairly use such benefits as well as people who undeservedly have to pay for them. Transport concessions are extended to those who have the best conditions to use them but not to those who need them most. Take, for example, pensioners living in rural and urban areas: their opportunities to use transport benefits differ greatly. Transport concessions, as a measure of social support, are costly, poorly targeted, and ineffective. They should have been abolished long ago.
Transport concessions can have not only social, but economic and ecologic consequences as well. First, the more people use transport benefits, the less carriers are interested in the quality of services they provide. This happens because passengers that pay for their services have little influence on carriers’ income (income from compensation paid by municipalities accounts for almost half of the income reported by urban carriers). Evidently, municipal authorities are a more important customer to carriers than passengers paying their fares. Thus, the quality of services declines, causing misery passengers. In the long run, public transport is used solely by the privileged, and the carriers end up suffering even greater losses. Others buy cars in which to spend their time during traffic jams.
Second, transport concessions obstruct market entry for private carriers and reduce competition with existing public carriers. Under the current system, some passengers are required to be carried free of charge, but compensations for transport concessions are granted only to public companies. Yet, state-owned monopolists suffer themselves because promised compensations are not paid, price controls are applied to services they render. The transportation system thus falls prey to social objectives and is unable to maintain the same standard, let alone to improve it.
It raises no doubt that public transport services do not fulfil the needs of the public. When transport concessions are provided, carriers must keep special accounts to calculate the amount of compensations. They should also examine passenger flows by category and to do other types of research as well. This is too expensive both for public carriers and the municipalities. Also, the granting of transport concessions boosts the demand for transport services. When people do not have to pay for every trip they make, they often travel even if they do not really need to.
The growing demand for transport services is a tremendous urban, ecologic and social problem. For this reason, anything that props up this process has damaging effects on society. LFMI supports the government’s initiative to reduce the number of people entitled to transport concessions. We believe that social problems should be addressed by paying means-tested benefits directly to socially-supported individuals, not by subsidising service providers.