Mastering mobility with public transport 'microincentives'

Most public transport systems in many cities and regions worldwide rely on subsidies to operate. Subsidising public transport ensures accessibility for all users and makes public transportation modes more competitive, encouraging increased ridership and uptake over private vehicle use. 

A new study has been released by FACTUAL and supported by nine entities, including EIT Urban Mobility, CARNET, Karos Mobility, FAIRTIQ, Meep, Dott, Transport & Mobility Leuven, City of Tartu and Stad Hasselt. It proposes a change to the traditional public transport subsidy system, in favour of ‘a more flexible, dynamic, and targeted approach’ using microincentives. 

In simple terms, microincentives are 'tailored' reward schemes with a flexible and dynamic design to maximise the impact of subsidies in achieving financial and societal goals of city administrations and public transportation operators. The key differences between microincentives and traditional subsidies are that:

1. Microincentives are not purely financial but can offer alternative motivations beyond monetary subsidies;
2. Microincentives are envisioned to be highly granular, allowing for near-individualised incentives, and can be adapted to users’ particular needs and desires.

The report Microincentives for Sustainable Mobility in Europe, presents the outputs of the study, exploring these alternative, tailored funding structures or ‘reward schemes' to complement traditional government subsidies for public transport. 

According to the analysis performed, public subsidies constitute roughly half the annual revenue for most public transport authorities in Europe. Despite the COVID-19 pandemic and the cost-of-living crisis proving the importance of the public transport system as an integral part of a holistic mobility system, budgetary constraints have been a persistent issue that puts the financing of the public transport system under stress. The report recommends the use of microincentives to ease the financial limitations while simultaneously encouraging a modal shift towards public transport.

Some findings from the study and presented in the report include:

• The success of microincentives in promoting public transport use, depending on the needs and desires of transport users, has been proven in practice, e.g. to encourage public transport use during off-peak hours to smooth ridership patterns. Apart from ridership at particular times and days, microincentives could also promote increased public transport ridership for certain routes and specific user groups.
• The study conducted a preference study on car and peak-hour public transport users in Berlin, Oslo, Leuven, Madrid and Barcelona. The results suggest car users are most sensitive to price as an incentive to shift from car trips to public transport. However, the results varied between cities, which could indicate the importance of service quality as different cities provide different quality levels of service. 
  • In Barcelona, a 15% discount is sufficient for 20% of users to switch from a car trip with the same travel time, while in Lisbon, this value grows to 31%. Notably, in Berlin and Oslo, no discount is needed to achieve this shift, suggesting a higher baseline attractiveness of public transport in those cities. Peak-hour public transport users are also willing to change their behaviour in exchange for financial incentives. Yet, they are less price sensitive than car users, meaning higher discounts might have to be offered to incentivise them to shift travel times. 
• Microincentives for public transport could be more effective when combined with disincentives for car use. For example, integrating low emission zones (LEZs) or increased parking fees in addition to incentives for public transport uptake can encourage drivers to switch to public transport use as it becomes a more attractive alternative.

The report highlights the potential of microincentives to improve public transport ridership and achieve broader sustainability goals. For public transport authorities and government officials, the report delves deeper into the findings and explores the practical implementation of microincentives, along with some use cases to support the case of deploying microincentives in real-life applications.

The published report can be found here.

Author: Hugo Ong

Views and opinions expressed are those of the author(s) and do not reflect those of the European Commission.