Budapest’s new bus service framework

Public transport first appeared in Hungarian capital city Budapest in the early 19th century in the form of the omnibus and later the horse tramway. These were followed by modes of transport that were revolutionary for those times: Europe’s second funicular connected the Castle Hill with the Danube riverbank while the Continent’s third cogwheel railway was built in the Buda hills. The first tramway was inaugurated in 1887, and by the end of the century, electric vehicles replaced their horse-drawn predecessors. Suburban railways were also built during this period. The Continent’s first underground was built in 1896 and is now part of World Heritage. The 3.7km-long line is still in operation today. Buses and trolleybuses appeared on the streets of Budapest in the first decades of the 20th century. The development of the public transport network continued soon after World War II: the trolley network developed extensively and the chairlift was opened, which mostly serves tourists visiting the Buda hills. Preceded by a long period of planning and implementation, the second metro line was opened in the 1970s and the third, North-South line, was built between 1976 and 1990. The construction of the fourth line connecting South Buda with the city centre started in 2004 and is expected to be completed in 2014.

Transport issues were always handled separately in Budapest, with different companies in charge of public transport, taxis, roads, etc., and the public transport company did not take a customer-oriented approach: it was an operator instead of a service provider. Despite this, before 1990 more than 80% of Budapest residents were using public transport, and therefore nobody felt a need to change the way public transport was organised. However, since 1990, the public transport market share has fallen to 55% in the city and to 30% in the suburbs due to rising personal car use. From 1990 onwards, personal car use kept increasing, while the old govern ance system combined with the lack of funding was not able to cope with the task of efficient transport organisation.

Within the framework of the new city management model, created 20 years after the political change of regime in Hungary, the BKK Centre for Budapest Transport was established following a series of thorough professional consultations in October 2010. The founding principle was to integrate into an umbrella organisation and to fundamentally reform the previously fragmented sectors of transport governance in order to ensure a high level of professional operation and the systematic coordination of the various actors of the transport branch. BKK gradually took over responsibilities in the course of the reform process following relevant legislative changes. The original goal of the transport governance reform, and the on-going mission of BKK, is to increase the quality of urban transport and transport-oriented development thereby achieving a more competitive and sustainable Budapest, which is currently the eighth largest city in Europe.

With 1.7 million inhabitants (2.5 million in the metropolitan area), Budapest has a broad public transport system of 1,100km that covers the whole city and most of the suburban areas, and carries 1.39 billion passengers a year. The core of the system is composed of the three metro lines and the 16 railway lines, five of which are part of the city’s rapid transit system (HÉV) and 11 are state-owned. These are comple – mented by the tramway, trolleybus, and the very dense bus system.

The bus sector provides full geographical coverage and transports 556 million passengers per year with a 24/7 service by 206 daytime and 38 night-bus lines. Peak-hour passenger load is above 90% on 80% of the lines with an average ridership of 24%. The annual operational cost is approximately €135 million. In addition to regular service, the bus sector provides operational and planned replacement of fixedrail services.

On 1 May 2012, the beginning of a new era in the transport governance structure of Budapest began. The wide-ranging reform process embarked upon by BKK reached its ambitious goal of overhauling the management model that had been in place untouched since 1968. The Municipality of Budapest officially appointed BKK as the competent integrated transport-organising authority with responsi – bilities covering public transport, cycling, walking, public road and bridge infrastructure management, parking and taxi services as well as transport development projects. The specific public transport tasks include planning, integrating, regulating, tendering and awarding, promoting, managing as well as controlling. The first major achievement of BKK since 1 May 2012 is the successful attainment of nonrefundable EU co-funding worth €150 million for the government-approved refurbishment and extension of two major tram lines (1 and 3) along with funding for the same amount for the procurement of rolling stock (trams and trolleybuses). Also, BKK introduced its new public boat service in July 2012. BKK is already preparing projects for the 2014-2020 financing period from the Cohesion Fund. The develop – ment of the Budapest public bike-sharing scheme (bubi) and the Automated Fare Collection (AFC) system are also underway.

One of the most pressing problems facing public transport in Budapest is the ageing vehicle fleet of metro cars, buses and trolley – buses. The average age of our buses is 18 years, which also entails deteriorated exteriors and passenger-areas as well as many break-downs and cancellations. The investment cost needed immediately for vehicle and infrastructure maintenance and replacement is €3 billion with no obvious source of funding. The tendering out of bus services helps us to address this problem and breaks the monopoly of in-house operator BKV (Budapest Transport Company). New operators enter the bus service market of Budapest, which will lead to a major refurbish – ment of the bus fleet of the city in the next few years in addition to providing competition and benchmark for BKV. The old fleet will be substituted without a major single financial contribution of the Municipality or BKK. Tendering should also lead to improvements in the level of service. New low-floor, airconditioned buses will be put into service, replacing old vehicles.

BKK has a large framework contract with the Municipality of Budapest for 15 years, while BKK contracted BKV for the fixed-rail services as an in-house operator for 15 years. Bus opera – tions contracts will be split: the Budapest Assembly voted to contract out 66% of bus operations and open the market for competitive tendering while the remaining 34% would remain with the in-house operator.

In terms of contracts and the tendering process, we have consulted with Transport for London (TfL) to learn from their vast experience in this area. We also found UITP’s tender structure recommendations invaluable. With such a high-risk project, it is absolutely essential to cooperate with other cities to learn from their successes and failures. The tendering process is fully compliant with EU public procurement rules and Hungarian public procurement law at the same time being completely transparent. The procedure is divided into two phases, the first being the pre-qualification phase open for application since September 2012 on an ongoing basis and the second being the actual call for tender for those operators who have successfully passed the pre-qualification phase. The main conditions of the PSO contract include gross cost contracts calculated with a kilometrebased service fee with fare revenues to be collected – and according risk to be borne – by BKK, as well as contract terms of 8+2 years along with guaranteed performance output in kilometre-volumes for the whole contract term. Risk-sharing and the spreading of costs between the operator and BKK are thus also realised. It is important to note that in Budapest not full routes, but only specific trips on a route are awarded with predefined service areas for the starting and ending of service. The reason for this is to ensure the even distribution of lowfloor vehicles throughout the whole network as required by law. Due to Hungarian procurement rules no bonus, only penalties can apply. Also, traffic and integrated bus fleet control remains the responsibility of BKK.

The first two contracts resulting from the BKK tender were concluded in October 2012 with VT Transman Kft. (49% owned by Arriva) for a total of 150 new 100% low-floor, fully airconditioned buses; 75 single and 75 articulated ones. All vehicles are equipped with EEVengines, CCTV security and passenger counter systems. The schedule is specified as 25-25 buses of each contract gradually entering into service in April, May and June 2013.

Looking ahead, BKK intends to issue a separate tender for midi-buses and a new tender for another 100 single and 100 articulated buses. It is also one of our main targets to install a BKKmanaged Automatic Vehicle Location (AVL) system to track each vehicle. The long-term goal of BKK is the gradual and continuous increase of the number of contracts and operators in Budapest as well as the provision of continuous quality control to ensure passenger satisfaction by meeting high expectations for punctuality and cleanness while at the same time making public transport more and more attractive.

About the author

Dávid Vitézy has been the CEO and Member of the Management Board of the BKK Centre for Budapest Transport since its establishment in November 2010. Prior to this, Dávid was a Member of the Supervisory Board of BKV (Budapest Transport Ltd.) between 2007 and 2009 and has also been a Member of the Management Board since 2010. Dávid was also a Member of the Monitoring Committee of the Transport Operational Program between 2007 and 2010. Between 2006 and 2010, Dávid was Spokesman for the Urban and Suburban Transit Association (VEKE – Városi és Elővárosi Közlekedési Egyesület), where he was responsible for managing the press relations, representing the opinions, statements and releases of VEKE in the media. Between 2005 and 2010, Dávid was the Head of Unit, Transport Development of VEKE. Dávid received his MSc degree in Urban and Regional Economics and Development from the Budapest University of Technology and Economics, Faculty of Economic and Social Sciences in 2010.