413:, and/or other specifications related to service and quality. The auctioneer can specify either a net or gross contract. In the latter the operator bids for the full operating costs, and all revenue goes to the authority; with net contracts the operator will be granted all revenue, and will bid only for the difference between fare revenue and that needed to make the desired profit. The use of gross contracts reduces the risk of the operator since they do not need to estimate the ridership and will normally result in lower bids since there is a lower
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communities across the country that otherwise would not receive any scheduled air service. As of
November 1, 2013, the Essential Air Service subsidized 160 communities, of which 43 were in Alaska, whose guidelines for service are distinct from the rest of the country. The decision as to what
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Net contracts give the operators an incentive to increase ridership and reduce risk to the auctioneer. Gross contracts tend to have higher administrative costs for the authority administrating the fares. Urban public transport with transit authorities is most commonly operated with gross contracts,
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and be open to any transport operator registered in an EU member state. There are limitations in the number of passengers which can be carried where the route can remain eligible for PSO. The winning tenderer usually receives a monopoly on the route, but may have to conform to one or more conditions
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or other ad-hoc organization responsible for some form of transport in an area. To put sérvices out to tender, an authority must have an interest in subsidizing the transport. It must also have the authority to prevent other interests from operating competing services on parts of or all of the
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of service, such as the type and size of vehicle, the timing of services, the maximum fare paid for a portion or all of the seats offered, membership of a common reservation system, quality of service measured by a maximum percentage of cancelled services, etc.
436:, where the airlines serve low-population areas not profitable for the carriers without subsidies. Rail services can be unprofitable even on major routes, and government subsidies are sometimes offered through PSO. This has been very popular in
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government-owned transport. Infrastructure is often separated from operations, and may be owned by a governing body or a third party. The authority may also maintain the ownership of the vehicles, such as ferries or
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International routes are usually not supported by PSO. This is because of a political principle that people should pay for international travel themselves, not through tax money. This is especially evident in
303:(with or without subsidies) granting them a monopoly. In recent years, many markets have been deregulated, especially in Europe, by paying the lowest bidding operator to carry out services.
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Traditionally, public transport has been operated by a company wholly-owned by the state with a monopoly, like a national railway company. Alternatively, private companies were granted
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where there is very little international air traffic between cities other than through the capitals, where connections are commercially profitable. There are exceptions, like the
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for the community and from there determining the number of trips, seats, and type of aircraft that are necessary to reach that hub.
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on the route, as competing services would not be viable without subsidies. PSOs are aimed at routes which are unprofitable in a
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for a specified period of time in return for the subsidy. This usually leads to the winning bidder having a
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The term is also used in relation to electricity generation, such as wind power and biomass powerplants.
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in each bid. This option also makes it easier to create free transfer between operators and modes.
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Obligation imposed on an organisation by legislation / contract to provide a service within the EU
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In EU transport law, a PSO is an arrangement by which a governing body or other authority offers
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public service obligation style program enacted to guarantee that small communities in the
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Examples of air transport PSOs currently in operation in Europe are routes from
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in Sweden, or car ferries along Norway's road network. Ferry routes serving
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while airlines and ferry routes are typically operated on net contracts.
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The auctioneer will specify a number of terms of the service, such as
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or other regional or local authority, or it can be a
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are specific sectors where the concept is relevant.
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181:is an obligation imposed on an organisation by
134:The examples and perspective in this article
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680:"Public Service Obligation Levy 2015/2016"
639:United States Department of Transportation
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301:privileges
230:Dash-8-100
69:newspapers
567:Stockholm
458:oil price
454:Hong Kong
407:frequency
355:June 2014
326:does not
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158:June 2022
150:talk page
138:full view
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434:Ireland
347:removed
332:sources
250:auction
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211:banking
173:law, a
144:Please
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690:(PDF)
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508:Kerry
391:state
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637:The
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510:and
411:fare
330:any
328:cite
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