MarketLine Blog

Rising Demand for Urban Transport

Europe’s transport markets are liberalizing, and as incumbent operators anticipate increased competition in domestic markets they are looking for opportunities abroad. In 2011, French urban transport company RATP began operating a bus company in London, and acquired the light rail contract for Manchester, UK. This article will examine its strategic motivations and the outlook for its UK operations.

RATP, like other European transport players, is expanding outside its domestic market. As European Union rules allow competitors to access their domestic markets, incumbent transport companies are looking to compensate by diversifying their operations geographically. Acquisition of an existing company operating in a foreign market is one way to achieve this. The regulatory framework is highly important in the British local passenger transport market.

Outside London, the bus market is deregulated, and new companies can begin to operate a particular route at any time. Within London, private-sector bus companies must bid for the concession to operate a given route for a fixed term. Operation of the light rail network in Manchester is also awarded as a fixed-term concession to a single company.

The British urban transit market has shown steady expansion for more than a decade, which gives RATP’s operations a positive outlook. London is the main driver of increased bus travel. A major expansion of Manchester Metrolink is currently underway, and should permit higher passenger numbers.

Underlying reasons for rising demand for urban transit may include population growth and a move away from car usage.

Find this interesting. You may also like RATP Case Study: Entering the UK Urban Transit Market 

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