Penalties as incentives for punctuality and regularity in tendered Swedish public transport

Roger Pyddoke K2 Working Paper 2019:6
Swedish public transport authorities emphasize that quality of service and customer satisfaction are important goals. For this purpose, tendered public transport contracts are frequently given quality incentives in the form penalties for failure to deliver desired quality. This paper studies penalty design for cancellations and delays, stated design motivations, performance monitoring and consistency in charging of penalties. The study also presents some evidence on how outcomes have evolved. Two main design forms are found, either charges for individual deviations or for deviations from an aggregate target level. Little motivation is found in the form of narrated or documented experience of penalty design and the outcomes the design of particular incentives. Deviations are monitored regularly by contract managers, based on computerized data capture. There appears to be no records of charging in the form of data series making it possible to trace the chain from outcomes to reductions in invoices. There are indications of non-negligible exemptions from charges attributed to factors beyond the control of operators. The current level of delivered departures is high and for both RPTAs but shows no trend. The aggregate level punctuality appears to be decreasing at both the RPTAs, but only statistically significant for one. The picture is complicated by the fact that punctuality develops differently in different parts of the region. This suggests that recent adjustments in the design of penalties may have had little impact on these quality dimensions.
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