Financial meltdown for public transport operators?
This month marks two years since the WHO declared COVID-19 a pandemic. Lockdowns and working-from-home policies have been felt most seriously in business districts, where, until today, it is still often much quieter on the streets than it was back in 2019.
Most white-collar companies have embraced the working-from-home trend, and many of them have introduced hybrid working standards in which the average office worker will spend only around 50% of the working week in the office. The related office exodus is being felt in Manhattan, London, Tokyo’s Marunouchi, La Défense in Paris, and many other commercial hubs in cities around the world (for more details, see this recent article in The Economist). Public transport operators in these cities have been financially hit due to reduced passenger numbers, and many of them have received financial support over the last two years from state or city authorities.
Will there be a financial meltdown for public transport operators because many of the metro trains, buses, and trams are still less occupied than they were back in 2019?
Yes, if you talk with many of the operators. Financial aid is finite. In the Netherlands, where Modasti Consulting is based, the nationwide scheme to financially support public transport operators ends this August. Financial forecasts are especially bleak in London and New York, where public transport budget deficits of £1.5 billion (in 2024) and $1.4 billion (in 2025), respectively, are expected.
No, if you consider that cities have often bounced back from crises. Leisure trips tend to – at least partly – fill up the gap left by the office exodus, and this reduces the traditional inefficiency in public transport operations caused by commuting peaks (during which parts of staff and fleet sit idle in between the morning and late afternoon rush hours).
As you can see on the Newsletters and LinkedIn articles page of Modasti’s website, I devoted two newsletters and three LinkedIn articles to the effects of the COVID-19 pandemic on the public transport sector. Please have a look!
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