PARIS (Reuters) - The Paris region opened its bus system to competition on Wednesday, kicking off the liberalization of one of Europe’s biggest public transport systems.
The board of regional public transport authority Ile-de-France Mobilites (IDFM) approved a new system for private operation of parts of its bus system and selected the first routes to be opened for a series of tenders that will be worth more than 12 billion euros ($13.6 billion).
The Ile-de-France region - which accounts for about 30 percent of French GDP - will open all bus lines in the “Grande Couronne” of outer suburbs to competition by 2021. The “Petite Couronne” of Paris itself and inner suburbs will follow by 2025.
On Wednesday, IDFM’s board chose the first six of 40 outer suburban bus route areas that will be opened for tender in July. The tenders will be awarded in spring 2020 and new operators will start in January 2021. Six more lines will be opened to tender in the second half of this year, and the rest in 2020 for combined annual revenue of about 900 million euros.
Revenue of the Ile-de-France bus operators is about 2.5 billion euros per year, and with operator contracts being tendered for 5-7 years, these could be worth at least 12.5 billion euros, IDFM director Laurent Probst told Reuters.
For now, most of the Ile-de-France bus network is operated by state-owned or semi-state-owned public transport operators, whose contracts are renewed in one-to-one negotiations.
Transdev, majority-owned by state bank Caisse des Depots, has a 50 percent market share; Keolis, majority-owned by state railways SNCF has 20 percent; while state-owned public transport firm RATP has 10 percent.
A series of private operators including Lacroix, STIVO, TICE, Albatrans, Savac and Procars have a combined market share of 20 percent. There are no foreign operators, although Transdev is 34 percent owned by Germany’s Rethmann, Canadian pension fund CDPQ has a 30 percent stake in Keolis and some of the private operators also have foreign shareholders.
“There is space for new players, and we hope that foreign operators will take part in the tenders,” Probst told Reuters.
No foreign players have expressed an interest in the tenders so far. Industry specialists say that Britain’s FirstGroup and Abellio, Deutsche Bahn-owned Arriva, Spain’s Vectalia and Moventia, and Swiss PostBus could be contenders.
Transdev, Keolis and RATP themselves are also major players in public transport systems abroad.
Probst said introducing competition is not an aim in itself but a means to improve service and reduce costs.
IDFM on Wednesday also approved plans for a tender for more than 600 new clean buses, which will be owned by IDFM, not by the new operators. Their existing buses will be bought by IDFM at the end of their contracts.
France is well behind Britain and Germany in terms of opening public transport to competition. French President Emmanuel Macron privatized long-distance buses when he was economy minister under his predecessor Francois Hollande.
But while rail liberalization is obligatory under European Union rules, Macron’s reform of the SNCF last year was aimed at ending the job-for-life contracts of its workers, but not at privatizing French rail.
Reporting by Geert De Clercq; Editing by Peter Graff