Rising costs for public transport could hit commuters’ wallets hard

Rising energy prices leave transport companies with no pain-free options and the general public are likely to bear the brunt.

 William Nattrass

Written by William Nattrass Published on 20.10.2021 10:58 (updated on 22.10.2021) Reading time: 2 minutes

The whole of Europe is experiencing a sharp rise in energy prices, and the Czech Republic is no exception. Both the public and private sector are now scrambling to find ways to keep energy affordable and operations running this winter.

Public transport companies are among those affected by energy price hikes. Now, industry leaders are warning that increased fares for customers may be the only option to keep trams, trains and buses running.

Although some transport companies are saved from difficulties by longer-term contracts with energy providers giving them advantageous prices, there are fears that some could see operations disrupted if they cannot find a way to compensate for losses caused by the energy crisis.

“We have proposed three solutions to the situation: an increase in fares, a reduction in transport performance, or an increase in compensation from the authorities,” said Miloš Havránek, General Director of the Brno City Transport Company (DPMB) in a statement. The increase in energy prices is predicted to cost DPMB more than CZK 250 million.

Buying electricity and gas is the main concern for companies operating trams and metro services. These commodities are usually bought on the stock exchange in a so-called “gradual purchase,” which does not involve speculation on the price of energy. This form of buying leaves transport companies particularly vulnerable to sudden large price changes, according to industry figures.

“This purchasing policy allows us to compensate for smaller, predictable fluctuations in the market price of electricity. But since August, the market has been behaving completely unpredictably; predictions from the previous evening often do not apply the next day, and prices have broken historical records several times,” said City of Prague Public Transport (DPP) chief Petr Witowski.

It is thought the full effects of the current spike in the market price of energy will be felt next year. Companies expect to pay around 60 percent more for electricity than they did this year, meaning hundreds of millions of crowns in additional expenditure. A rise in oil prices is also expected to increase their operating costs.

In this environment, it is no surprise that companies and industry associations are raising the possibility of increased passenger fares to restore some financial balance. But tied to rising prices for a huge range of consumer goods, including everyday food and drink products, the off-loading of financial losses onto consumers is likely to cause headaches for households up and down the country.

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The alternative of greater levels of state compensation would help ease this burden, but it could also be counterproductive given the astronomical deficit already proposed for next year’s budget. The incoming coalition government has declared its intention to cut this deficit down to below CZK 300 billion. They are therefore unlikely to be keen on the notion of alleviating financial hardships through additional state expenditures.

As the economic hardships of the post-pandemic era bite, public transport companies are left with no pain-free options amid a deepening energy crisis. Given the need to keep services running and the importance of keeping some control over an already worrying budget deficit, the brunt of rising prices seem likely to again be borne by the general public.

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