On 22 June 2023, the European Commission adopted revised Interpretative Guidelines on public passenger transport services by rail and road, presenting the Commission’s interpretation of key provisions within EU legislation (Regulation (EC) 1370/2007EN). The document improves legal certainty for all actors applying the EU legal framework.
The revised Guidelines explain how the authorities concerned should define the scope of public service obligations and clarify the new provisions on the award of public service contracts that were introduced to by the 4th Railway Package in 2016. The Package introduced the principle of the competitive award of public service contracts in rail, which is expected to increase the cost-effectiveness of public rail transport services. The direct award of such contracts is the exception, and from December 2023, can only be used in limited, well-defined circumstances.
The Guidelines also clarify the rules applicable to staff protection when there is a change of public transport operator following the award of a new contract. They also explain how compensation for public service obligations should be determined to ensure that the Internal Market functions smoothly, and in line with EU State aid rules.
Background: Public service obligations can be a powerful tool in the effort to make public transport more attractive and efficient in the EU. They can support a modal shift from private car use to environmentally friendly public transport modes, contributing to decarbonisation, as required by the European Green Deal, and as mapped out in the Sustainable and Smart Mobility Strategy.
The Regulation (EC) No 1370/2007 defines how competent Member State authorities can ensure the provision of public transport services by bus, metro, tram and rail that are more numerous, safer, of a higher quality or provided at lower cost than those that market forces alone would have allowed. The Regulation sets the conditions under which these authorities can contract for public service obligations and compensate public service operators for costs incurred when running these services.