Developing sustainable public transportation system in Budapest, Hungary - Case study of BKV (Budapest Public Transportation Company) Laura Taksás ...
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Developing sustainable public transportation
system in Budapest, Hungary
Case study of BKV (Budapest Public Transportation Company)
Laura Taksás
Bachelor`s thesis
International Business - Logistics
2020
DEGREE THESIS
Arcada
Degree Programme: International Business
Identification number:
Author: Laura Taksas
Title: Developing sustainable public transportation system in Bu-
dapest
Supervisor (Arcada):
Commissioned by:
Abstract:
This study is about developing a more sustainable public transportation in Budapest. Its
exams the opportunities and the challenges Budapest’s public transportation company
(BKV) has to achieve for providing a greener service.
Air pollution causes deaths of 7 million people worldwide every year. The starting point
of solving this problem is redesigning the city’s transportation. The importance of sustain-
ability and to change for greener public transportation can help to reduce emissions signif-
icantly.
Budapest as the capital city of Hungary has 1.776.361 inhabitants. Its transportation com-
pany serves 1.3 billion passengers throughout the year causing a fair amount of emissions
making Budapest as one of the most polluted cities in the European Union. This gives the
motivation and relevance behind the study and establishes the research question: What are
the main challenges for Budapest to adapt to a more sustainable public transportation sys-
tem? The aim of the thesis is to reduce emission and air pollution in Budapest.
Both qualitative and quantitative methods have been used in the form of interviews and a
questionnaire, which have been analysed by SWOT and PESTEL tools.
The main challenges are mostly coming from political issues and pressures as a state com-
pany can be influenced by governmental changes. The organization needs to utilize the
opportunities given and focus on doing green projects step by step in order to achieve its
goal to be a sustainable firm providing environmentally friendly services. To find out if
Budapest’s public transportation company manage to overcome these impedimental issues
in the near future, I suggest further investigation in the matter.
Keywords: sustainability, Budapest, public transportation, air pollution,
environmentally friendly technology
Number of pages:
Language: English
Date of acceptance:
Table of content
1 Introduction.......................................................................................................... 4
1.1 The importance of developing a greener transportation system ................................... 4
1.2 Background ................................................................................................................... 5
1.3 Relevance and motivation ............................................................................................. 8
1.4 Aim of the study ............................................................................................................. 9
1.5 Limitations ..................................................................................................................... 9
1.6 Structure of the thesis ................................................................................................... 9
2 Sustainable public transportation .................................................................... 10
2.1 The European Union`s Policy of sustainability ............................................................ 10
2.2 Example of sustainable public transportation .............................................................. 11
2.3 Budapest Public Transportation Company case study ............................................... 20
2.4 Current sustainable projects in Budapest Transportation Company (BKV): ............... 22
3 Research methods ............................................................................................. 24
3.1 Data analysis ............................................................................................................... 25
4 Results and analysis ......................................................................................... 26
4.1 The main challenges for Budapest to adapt to a more sustainable public transportation
system ..................................................................................................................................... 26
4.2 Interview 1.: Laszlo Nagy ............................................................................................ 27
4.3 Interview 2.: Mátyás Jangel ......................................................................................... 33
4.4 Questionnaire from the user’s point of view ................................................................ 38
4.5 Conclusion from the questionnaire .............................................................................. 49
5 Discussion ......................................................................................................... 49
6 Summary ............................................................................................................ 55
References ................................................................................................................ 57
1 INTRODUCTION
This study expands upon the challenges of developing a sustainable public transportation
system in Budapest, Hungary. This is a case study of the company of Budapest Public
Transportation Company (BKV).
1.1 The importance of developing a greener transportation sys-
tem
Sustainability becomes more and more important in business strategy decisions. As cli-
mate change and various crises hit the world day by day, everyone - including consumers
and firms - needs to act in order to prevent further regression. Sustainability includes
political, economic, social, and environmental factors. Its main purpose is to meet present
needs without compromising the ability of future generations to meet their own and to
keep a certain level and harmony to preserve the condition of our planet (Sustainable
Development Commission).
The world population is rapidly growing, reaching 7.715 billion in the year 2019 (UN-
FPA 2019). One of the main causes of this growth is urbanization. An increasing number
of people move to cities for job opportunities with more income, living space, better ed-
ucation, healthcare system and having other services. This migration creates megacities
and metropolises all around the world and these vast cities had to deal with the increasing
demand of public transportation service. Satisfying the needs of the growing population
in urban areas is one of the most pressing problems these companies needs to face but
doing so in a more sustainable way should also be among the aims of their strategies.
According to World Health Organization, air pollution kills an estimated 7 million people
worldwide every year, and 91 % of the world population lives places where air quality
conditions could not pass the WHO guideline limits. Of these 7 million people 4.2 million
people died by ambient air pollution which includes transportation, heating systems, in-
dustry waste and power generation (WHO 2019). City planning needs to face this chal-
lenge of rapid growth and plan accordingly. There are many tips already being tested to
make cities more sustainable. For example, intelligent streetlights that have censors and
software that controls and monitors the usage of electricity and could be also used to
analyse traffic data. Building city parts where cars are excluded, and the habitants can use
alternative transportation vehicles like bicycle, scooter, or public transportation. There-
fore, developing a more sustainable public transportation system by using the resources
effectively is a key factor in reducing air pollution and make the city more sustainable,
because it helps to use the resources the city has more efficiently and economically better
(Peach, J. 2019). There are lot of indicators that can affect such sustainability, like infra-
structure and land-based vehicles, pricing of the fuel, budget, politics, social traditions,
and attitudes (Qian Wang 2016).
1.2 Background
Budapest is the capital city of Hungary with the population of 1.776.361 people, spread-
ing 525 square kilometres, divided into 23 districts. It has two parts: Buda and Pest that
are divided by the river Danube. By geographic factors, Pest side is a plan and widespread
territory, while Buda side is built on hills which determine the methods of public trans-
portation that are used in these areas.
Figure 1.: Budapest`s districts with their name
Source: Academic Dictionaries
As the first omnibus appeared on 1662 in Paris, it spread out to the significant cities in Europe including Pest. The omnibus started to operate in 1832 which was the starting point of a community transportation. In 1st of August 1866 the appearance of the first horse drawn tramway was the meaning of the first transportation vehicle which could mobilize a mass in that time. As the city further developed, the demand for the suburban cities to join the capital emerged. Therefore, in 1887 the Budapest Transportation Com- pany – BKVT what it was called in that time – established the first suburban railway lines, which was extended with two more lines in the next two years. In 1887 the first tramway was built and soon tramways had a significant role in the public transportation of the city. The first examples of modern public transportation appeared on 2nd May 1896, when the first underground railway in the continental Europe - and the second in the world - has been constructed. It connects the city centre to the city park and is also listed as a world heritage site since 2002. The first bus line started operation in 1915. As the city grew and bridges were built, the demand for new lines and solutions became inevitable. In 1968 the Budapest Public Transportation company started utilizing river crossing and local boats services. In 1970, the plan of second metro line was accepted which was one of the biggest and most dynamic projects for public transportation in Budapest. After this addition, two other metro line have been built, connecting all the main railway stations and junction areas (BKV Zrt). While Budapest’s population is clearly big enough to mobilize everyday Budapest does not stop at the city borders. Budapest’s agglomeration is consisting of 81 settlements (34 of them are cities) which can be further divided into 6 sectors according to its orientation.
Figure 2.: Agglomeration of Budapest
Source: Gulyás Erika
Agglomeration has been booming since the early 2010’s when the prices of real estate
and also renting a flat become more and more expensive. The prices have not stopped
yet, which caused a massive migration to these agglomeration areas. Many of these cit-
ies’ populations have been grown twice since then, but while there are advantages for
moving outside the capital, people still need to transport to the city for work. While peo-
ple living in these areas can use trains, suburban buses to get to their destination, they
rather use cars, because of time saving and also there is no combine tickets and schedule
between the train, suburban buses and BKV company (Gulyás Erika 10.11.2019).1.3 Relevance and motivation
While Budapest's public transportation has developed dynamically over the decades,
serving 1.3 billion passengers per year. However, the company has not been invested in
sustainable solutions and vehicles enough, even though Budapest is one of the most pol-
luted cities in the European Union - mainly because of transportation and domestic heat-
ing (BKV Zrt).
As you can see from Figure 3. on page 7, almost the entire city is over the maximum in
carbon emission and smog. The poor air quality causes many diseases and shortens life
expectancy, not to mention the effects on mental health (Bucsky Peter 25.03.2018).
Figure 3.: Air pollution map of Budapest
Source: Tenczer Gabor
The motivation behind this study is to improve people health in the capital city of Hun-
gary and to spread the sustainable mindset, showing the way into progress.1.4 Aim of the study The aim of the study is to identify the challenges Budapest Public Transportation has to overcome and suggests solutions for sustainable public transportation accordingly to the resources available for the city and the country. Throughout this thesis the research ques- tion is: What are the main challenges for Budapest to adapt to a more sustainable public transportation system? These challenges are analysed mainly by using SWOT and PES- TEL logistic analyses of the city that can help to choose the best solution for the changes. To find the answers for the research question, both quantitative and qualitative methods are used, such as an online survey with the users to measure the demand for the change, and face-to-face interviews with representatives from the Budapest Public Transportation (BKV) itself. 1.5 Limitations The study is a case- study of the company of Budapest Public Transport System (BKV). The research ended in 15.03.2020 due to COVID19. 1.6 Structure of the thesis This thesis is divided into six parts. Chapter 1. one gives an introduction of the im- portance of sustainability and building a sustainable public transportation system in gen- eral and describing the background of transportation in Budapest and Hungary. In addi- tion to the above, the research question is established with the aim and the method it had been achieved. It also includes the limitations and structure of transportation. Chapter 2. is giving a good example of a countries that has already been using one and detail their solutions for sustainability and this is part of the case study of BKV (Budapest Public Transportation) and the challenges this company faces in order to develop a sustainable public transportation system. Chapter 3. is detailing the research methods and Chapter 4. is the analysis of SWOT and PESTEL based on the researched data. Chapter 5. is the discussion of possible solutions for the problem and conclusion and Chapter 6. is the summary of the whole study.
2 SUSTAINABLE PUBLIC TRANSPORTATION Before defining a way to develop a more sustainable public transportation system in Bu- dapest, there are some key elements that needs to be defined. As sustainability has been previously explained in chapter 1.1, the next term to consider is sustainable public transport system. Sustainable public transportation should be defined when fuel consumption, vehicle emission social and safety factors reach a level at which it can be sustained without causing more harm for future generations. This includes all vehicles from automobiles, trucks, buses, motorcycles, railways, bicycles to even aviation and maritime. 2.1 The European Union`s Policy of sustainability The European Union`s environment policy started with establishing the Single European Act which was introduced in 1987. Based on the act the Council (all the representatives of the EU members) could decide upon environmental laws and restrictions together with the European Parliament. In recent years, there have been numerous EU legislations deal- ing with environmental issues, like air and water quality, biodiversity, or waste. It comes as no surprise that recent restrictions and laws came regarding climate change and sus- tainability. Countries within the EU can face similar problems and these problems do not stop at borders either. For example, Danube river crosses 10 countries, so pollution can easily affect many other countries at the same time. The same goes for air pollution; as the problem of acidification shows, which damaged the ecosystem in Norway between 1990-2010 due to the excess of nitrogen and sulphur compounds caused by combustion of fossil fuels, that mainly originated from other European countries (Delbeke Josh and Vis Peter 2016). The European Union is on track to achieve the goals of reducing emission by 20 % by 2020. Greenhouse emission have been already reduced by 23 % between 1990-2018,
while it only decreased by 0.9 % coming from transportation and agriculture. For 2030,
the new goal is to cut it by 40 %. (European Commission 2019).
As the data shows there is still a lot of developing needed in public transportation for the
reduction in pollution.
2.2 Example of sustainable public transportation
The report of Sustainable Cities Index 2018 examined 100 cities all around the world and
based on 23 different indicators they rank the mobility and the sustainability of the cities.
Sustainable cities can be defined as urban places that are managed and planned with the
concern of social, environmental impact for its inhabitants, providing solutions for its
problems without compromising the future for generations to come. Sustainability can be
measured by city`s performance, investments short – and long term in future capability
and the satisfaction of its citizens. The rankings are based on 3 pillars: People, Planet and
Profit. There are many indicators and sub-indicators giving metrics for these 3 factors.
For example, People are measured by city`s performance like, crime rates, education,
health, working life and transport accessibility. Planet`s indicators including water sup-
plies, air quality, greenhouse emission, energy consumption, recycling rates, sanitation,
and investments in low carbon infrastructure, like bicycle or electronic cars infrastructure.
Profit is measured by the effectiveness of transportation rail, air and traffic congestion,
the cities’ economic performance in GDP and the business infrastructure (Sustainable
Cities Index 2018).
Figure 4.: The three pillars of sustainability
Source: Sustainable Cities Index 2018In 2018, 8 of the top 10 cities are located in Europe.
Figure 5.: Overall Index Rankings
Source: Sustainable Cities Index 2018
This is the overall ranking considering all the pillars in Figure 5. It is interesting to see
and to compare when it comes by each ranking the top 10 cities change a lot.
Figure 6.: Ranking index by People Figure 7.: Ranking index by Planet
Source: Sustainable Cities Index 2018 Source: Sustainable Cities Index 2018Figure 8.: Ranking index by profit
Source: Sustainable Cities Index 2018
As it can be seen in Figure 5. on page 14, by overall ranking London was the first on the
Sustainable Cities Index in 2018 based on all the three pillars of this research. When the
ranking by People index shown in Figure 6. is mainly based on personal well-being and
urban living, London is only in the second place and Edinburgh take the lead while two
more Asian cities Taipei and Seoul appear and even one North American San Francisco
has popped in the end of the list. When the ranking by Planet is analysed based on long-
term impact on the environment, city resilience (risk monitoring and natural catastrophe
hazard) and investment in low carbon infrastructure on Figure 7., 9 out of the top 10 cities
is from Europe and the 10th is a Canadian city represented by Montreal. In this sequence
London is not even on the list, Stockholm is on the top one. The last one in Figure 8. is
by Profit which includes employment rates, tourism and ease of doing business, a lot of
Asian cities made it into the list, like Singapore who is the first one, Hong Kong and
Seoul, also more North American are represented beside San Francisco, New York and
Boston are on the list too. Budapest was the 57th in overall ranking, 57th in People, 62nd
in Planet and 51st in Profit, therefore there is no doubt that there is place for improvement
(Sustainable Cities Index 2018).
As the research shows, European cities perform quite well in full filling or improving
their sustainability policies. Since London scored the first place on the list, let us see what
makes their public transportation sustainable in order to get inspiration for improving
Budapest`s place.London is one of the biggest megapolises in Europe. It has 8,9 million residents, it spans over 1579 square kilometres, gets 30 million visitors per year and 75 % of all UK rail journeys start or end in London. No doubt it has huge numbers in many aspects which could lead to a lot of challenges in order to develop environmentally friendly transporta- tion (Natalia de Estevan-Ubeda). London has such poor air quality that it makes one of the most noxious cities in the world. Especially in light pollution which is so high it makes the sky 67 times brighter than it would be without human interaction. In 2018, the mayor of London, Sadiq Khan ordered a high air pollution alert which was caused by the strong heatwave that ran through Eu- rope, intensifying pollution problems even more. This was the second time within a 6 months period that Sadiq Khan had to alert the residents of London about the air pollution and he considered it as a public health crisis (Bawden Tom 2018). Therefore, what makes London`s transportation sustainable? UK`s government has a strong policy on reducing emissions, the target is to reduce carbon dioxide by 60 % until 2025. London has Europe`s largest hybrid bus fleet which boasts 3240 hybrid buses in 2018. The” Routemaster” buses are not just reducing carbon dioxide but also nitrogen oxide. Besides hybrid buses, 96 electronic and 10 hydrogen buses are operating in the streets of London (Natalia de Estevan-Ubeda). The city`s public transport operator, Transport of London`s (TfL) strategy is to increase the number of these alternative low carbon vehicles and also to have 250 zero emission single deck buses which can help with the reduction of pollution and also noise caused by traffic. Moreover, 30 % of the bus fleet is made up by diesel-hybrid buses and mostly used in areas where the air quality is the worst. These vehicles can reduce emissions by 30-40 % (LondonAssembly 2018). New technologies are being tested in order to charge the electronic buses more effi- ciently. This technology introduces a wireless charging method where the buses do not have to be plugged in, but their battery would get their boost at bus stands at the end of their route. London is not just optimizing charging points for buses, but also supporting the infrastructure for electronic vehicles. TfL partnered with Shell who offers these charg- ing points in their gas stations. Beside getting as much low carbon vehicles as they can,
the other strategy to make London more sustainable is their energy plan and energy effi- ciency. They plan to install renewable energy sources, 1.1 MW of solar power on each of their buildings, bus stops and offices. This project would cost GBP 4.5 million and would save around 480 tonnes in carbon emissions each year. This renewable energy and energy efficiency project for TfL is a key factor in London`s Energy for Londoners program, whose goal is to switch from coal to renewable energy sources and 1GWof energy should be generated from clean energy sources. The long-term sustainability strategy for TfL is to decarbonize its fleet and aim for zero emissions by 2030 (Engerati 2018). Even Buda- pest Public Transportation sees the Transportation of London as a role model. London is a metropolis with enormous resources and possibilities that can be used to build a better future. Therefore, another example of changing for sustainability in public transport is Miskolc, located in Hungary. Miskolc has the same political setting as Buda- pest, however, is different in infrastructure and, of course in size. According to IQAir AirVisual 2018 Miskolc was the 37th worst air quality city in Europe. The change for more sustainable version of public transportation was inevitable and there have been projects for the sake of the cause. Several types of sustainable vehicles were tested like hydrogen ones like in London, electric ones and other hybrid types from Volvo. In the virtue of the research the SWOT analysis from the different technologies are the following:
SWOT Analysis
Helpful Harmful
Internal Strength: Weaknesses:
• the vehicles are free from • purchasing price is very ex-
emissions and fossil fuel pensive
• infrastructure (service sta-
tions) that are needed are
expensive to build
• lifetime of the accumulator
is between 5-6 years,
changing cost a lot
• there is no long period of
testing to know about the
problems
External Opportunities: Threads:
• several competitions
• most sustainable way of
• the energy production has
transportation
to be from a renewable en-
• new technology and pro-
ergy source for further sus-
gressive innovations get
tainable impact
better results and easier
way to adapt
• supported by the EU
Figure 9.: SWOT analysis about electronic buses
Source: Szabó György 2018
As it could be seen from Figure 9., electronic buses are completely free of carbon emis-
sions and fossil fuels. However, it can be a fully sustainable method if the energy source
for the battery accumulators are produced by renewable energy source. That does notmean without the renewable energy source it is not worth to utilize this technology, be- cause it is still more effective against air pollution than the other ones. The other problem with the electronic buses is the infrastructure that has to be built for usage. Service stations needs to be built and planned logistically after the research of how many kilometres can these buses go with one charge. The lifetime of these batteries is around 5-6 years, which means the company has to calculate the fact that it will be needed to change in all the vehicles they have purchased which cost a lot. There is no long time of testing behind this technology, so there is a risk of unknown problems can occur later on. Overall, the price of these kind of vehicles is very pricy at the moment, however the European Union usu- ally support these projects. New technologies and innovations occur constantly, making this type of transport the future of the transport methods (Szabó György 2018). As it was mentioned before in London`s public transportation charging methods are already chang- ing for easier usage and for saving up time. The SWOT analysis in Figure 10. on page 17 shows that the main feature of hydrogen in sustainability is when it burns up, it only creates water-steam and heat. Hydrogen is also the most common element of the universe, so the supply of it is almost unlimited. Testing and creating a hydrogen as fuel has been in the process since 1970, which means there is a longer period of time testing this technology than any other ones. The main reason for this method does not spread worldwide is because of its ratio of effectiveness and safety and price of producing it. It is expensive to manufacture it because the motor system is very complex. It is sensitive to temperature changing and hard to control and repair the motor, which probably made it less popular than electronic. Nevertheless, in recent days it is getting its popularity within public transportation companies as hydrogen buses ones (Szabó György 2018).
SWOT Analysis
Helpful Harmful
Internal Strength: Weaknesses:
• when the hydrogen • safety issues
burns up, only pro- • effective issues
duces water stream • sensitive for temperature
and heat changing
• most common ele- • difficult to control
ment in the world • expensive to manufacture
External Opportunities: Threads:
• has started to pro- • more complex and compli-
gress since 1970, cated to manufacture then
long period of testing the other methods
behind it
• still can be evolve
further
Figure 10.: Swot analysis about hydrogen buses
Source: Szabó György 2018SWOT Analysis
Helpful Harmful
Internal Strength: Weaknesses:
• from the alternative • it is more sustainable than
energy sources, natu- fuel and patrol, but less than
ral gases burn the hydrogen or electronic
cleanest buses
• highest calorific value
• easy to transport
• reliable
External Opportunities: Threads:
• easy to produce and • less innovations and invest-
manufacture ment go into this field
• popular since 2010
• cheaper than other
methods
Figure 11.: Swot analysis about CNG buses
Source: Szabó György 2018
In 2016 Miskolc Public Transportation Company also called MKV, choose to purchase
75 CNG (Compressed Natural Gas) buses with low floor design to access the vehicle
easily. Natural gas also called fossil gas, is one of the cleanest energy sources often used
for heating, cooking or as a fuel for vehicles. Natural gas is a greenhouse gas which means
it still releases carbon dioxide when it is burned but compared to coal or diesel it is way
more environmentally friendly, therefore often used to reduce carbon dioxide emissions.
Research shows that CNG buses can be operated 25-40 % cheaper than the same power
efficiency buses with diesel. However, these CNG buses cost more than diesel ones, but
the investment can pay off quickly. The price difference is between HUF 8-15 million for
CNG, but the reduction in fuel consumption is significant. CNG buses can save HUF 30-
40 in every km they work compare to diesel ones, so it can be calculated easily that after250000-350000 km the price of the CNG buses pay off and after that their operation cost is way cheaper than diesel ones. CNG has the benefit for being cheaper than the other methods and also being very reliable when it comes to usage. It is easy to manufacture and transport the gas in tanks, however less innovations and investments goes into this field than the other ones (Szabó György 2018). 2.3 Budapest Public Transportation Company case study The history of Budapest`s transportation has been already shown in chapter 1.2 Back- ground. The company BKV itself has been established in 1968. As the capital has become bigger and bigger the demand for new routes and solutions appeared. Many new bus lines were created, 3 more metro lines built since and tram lines and trolley bus lines give easy access to the heart of the city. Today, the city boasts 240 daytime bus lines, 43 night-time bus lines, 4 subway lines, 3 boat line services, 6 inner city trains, 35 tram lines and 16 trolleybus lines which transports 1.3 billion passengers throughout the year (BKV ZRt.). It is very common in the world that public transportation companies cannot sustain them- selves financially on their own. Most of the revenues come from ticket sales, which is not even close to cover the operation cost (around EUR 48 million). This is the reason public transportation is under public service, so state a municipal support can compensate the revenue in order to generate profit. All over the world it is common to support the inno- vation and the investment in alternative technology with complementary funding for fur- ther system development (BKV ZRt.). Since the establishing of the company, it has gone through many structural changes in the last 51 years.
Figure 12.: The levels of hierarchy in the institutional system
Source: Budapest Mobilitás Terv 2018
As you can see in Figure 12., this is the structure of the institution system that has been
officially introduced in 01.06.2018 with their abbreviation. Főváros is the municipality
of the capital responsible for everything in the city, therefore it belongs to the top of the
hierarchy as the local government. On the second level we can see FÖRI, BKK and
FKLM. FKLM is a Kft company which is taking care of all the procurement tasks that is
under the authorization of the local government of Budapest. FÖRI responsible for the
public roads of Budapest, maintaining, controlling, and supervising the usage of it. FÖRI
is basically Municipal Police Directorate of Budapest with road management role. BKK
used to be responsible for what now are FÖRI`s tasks, but then in 2018 it has been given
away, and now controls specific road management tasks, like all taxi services, taxi sta-
tions, operating parking systems including the profits that parking generates and also
some operative tasks in road management. Beside road management tasks, BKK has 100
% ownership over its subsidiary company BKV, in which the customer service part, cash
register management, customer information, controlling and insuring profit, some infor-
matics and human resource department is also serviced by BKK. The relationship be-
tween BKK and BKV is based on ownership of BKK that is exercising law and supervis-
ing over BKV, but the other hand it is also based on public service contract between them
as BKK as a contracting party. On the third level which BKV, BKÜ and BÖK belongs to
BKK with 100 % ownership, BKV as the public transportation company is responsible
for all the management and logistical tasks regarding transportation. BKÜ is mainly doing
supporting tasks for BKK and BÖK, participating in customer service, ticket inspection,
operation and supply management and procurement tasks. BKÜ also carry out payroll forthe employees, managing accounting and financial controlling. BÖK has been established
for debt management tasks in order to have easier tractability and standardization in mat-
ters of the municipality. Gellérthegyi Sikló is the name of the Budapest Castle Hill Fu-
nicular which is a funicular railway that links the Chain Bridge to the Budapest Castle on
the hillside, also belongs to BKK but as a separate department from the public transpor-
tation. It has its own ticket sales; no public transport ticket is acceptable on this vehicle.
The last two tasks from the hierarchy of institution in Figure 12. has been already dis-
cussed as the specific road management tasks BKK is still responsible for (Dr. Dabóczi
Kálmán 2019).
2.4 Current sustainable projects in Budapest Transportation
Company (BKV):
According to the Annual Report of 2018, several projects have been made in the cause
of sustainability. One of them is getting the certificate of the Energy Management System
MSZ EN ISO 50001. What is an MSZ EN ISO 50001 exactly and what is it for? The
purpose of MSZ EN ISO 50001 is to reduce carbon and gas emissions with the help of
reducing energy cost in order to improve environmentally impacts. With the usage of the
energy management system the savings of energy is very visible and effective from the
beginning. MSZ EN ISO 50001: 2012 and MSZ EN ISO 50001:2019 are energy manage-
ment systems that include specification of requirements of how to implement and develop
energy policies and legal requirements and information about energy use. These give the
companies a standardization of energy use, that can be adopted by companies of all sizes,
regarding economic, environmental, geographical, cultural, and social conditions. This
certification can be audited by a third party. The main benefits that companies (also BKV)
can gain from having MSZ EN ISO 50001 certificate are most importantly the reduction
in energy usage and cost of energy. Beside this, it gives the company a better business
performance that can generate innovations, strengthen the sustainability image, and im-
prove competitive advantage (Magyar Szabványügyi Testület 2019). Budapest Transpor-
tation Company (BKV) got the certificate of MSZ EN ISO 50001: 2012 and its audit has
been successfully closed. BKV also has the ISO 14001 certificate which means the com-
pany meet the international standard and requirements of having an effective environ-
mental management system. ISO 14001 mainly gives the companies a framework that theorganization can follow, like improving and maintaining an environmental management system (ASQ 2015). In the sector of vehicle acquisition 12 used Van Hool diesel buses and in 2017 40 Volvo 7700-7900 hybrid buses have been purchased in the name of sustainability. From those 40 hybrid buses that is the combination of diesel and electronic only 28 are in usage at the moment. The reason these types of buses need to suit the requirements of the Hungar- ian standardization because they are from a different country. This procedure so called “revision zero” has to be done one by one before it can be used in public. This revision has already been done in 39 of the buses, but 11 of them have complications only the help of the manufacturer can correct. With these hybrid vehicles the usage of fossil fuels has been significantly reduced and with that the carbon emission impact on the environment has also been cut down. Since these are diesel-electronic buses, the electronic technology has helped to minimize noise pollution. (BKV 2018). For the tram vehicles BKV issued a project (called Tatra project) with the end date of 01.05.2020 to proceed engine updates for all the 240 trams the company has in order to save more energy and be up to date. So far, 140 of the 240 has participated in the project (BKV 2018). One of the emphasized projects in 2018 was to install renewable energy sources, solar power panels on tram remises (in Zugló, Baross, Száva, Szépilona districts), on bus gar- ages (Dél-Pest, Cinkota district, Trolibusz garage) and on the headquarters of officials in Akácfa street. These solar panels give energy for lighting, heating system and boiler in these facilities. While reducing energy cost and emission significantly, the price of these panels will pay off around 8-10 years (BKV 2018). In 2019 BKV introduced their online ticket app for supporting online ticket purchase. The application has been improved for 2 years before introduction and has been waited by the users, because it makes purchase so much easier, with excluding finding ticket machines or ticker kiosk, having any risk of these machines cannot pay back the exact amount of money or any risk of bank card copying. However, the app does not contain all kinds of tickets, like single tickets, just season and 24/48/72 hours tickets (BKV 2018).
These are the main investments BKV has done so far in the name of sustainability. In chapter 4. the main problems and challenges both external and internal are analysed by SWOT and PESTEL in detail to figure out the solution of future strategy for BKV and create a more environmentally friendly image for the organization. 3 RESEARCH METHODS To answer the research question: “What are the main challenges for Budapest to adapt to a more sustainable public transportation system?” and to investigate further into solving the problems detailed, the combination of qualitative and quantitative research methods are used. The aim of qualitative research is to understand the research paper’s problem from the point of view of the population that this problem concerns. It is an effective method to use in order to identify intangible factors such as social behaviours, gender, age, beliefs, social economic roles; and then help to understand the complexity of these factors influ- encing the underlying issue (McLeod Saul 2019). The thesis outlines the challenges and problems that the Budapest Transportation Com- pany (BKV) has and is therefore a case study is the proper research method for analysing the problems. Case study is a research strategy usually used in empirical studies to inves- tigate a phenomenon or, in this case, overcoming obstacles that prevent investing in a cleaner future (Bryman Alan 2008, p 52-54). To understand what the obstacles are ex- actly, semi-structured interviews with Laszlo Nagy and Matyas Jangel from BKV would be conducted. The main piece of data that is needed from this method is the approximate budget, if they are allowed to provide such information and all the internal challenges or problems that has been prevented the company to invest in sustainability. However, case studies are usually connected to qualitative research methods, on this oc- casion both qualitative and quantitative methods would be used as well. For the quantita- tive method, a proper sample has to be chosen from the population that is suited for the investigation of the thesis (Bryman Alan 2008 p 52-54). Since this study is dealing with
public transportation, the word “public” has already implied from where the sample and data would be gathered. To dig deeper into the challenges a public company has, first it would be important and useful to know what the public thinks about the company itself and the problems also. For this quantitative research method online questionnaire is the most effective tool to measure the public opinion, starting with satisfaction. Questions have been asked like, are they satisfied with the service they have received nowadays? which is the most important factor in social impact of the company. Would they change it? What would they change it? Is there a demand for greener public transportation? All the answers are useful and important for building up the company`s image in the sustain- able point of view. The sample frame would include anyone who currently lives in Buda- pest or has lived there in the past 5 years and has been using public transportation; gender and age would be also analysed. Gender has not got so much significance factor, but education gives a perspective of which one has the mindset of for changing for the better. Age is a more significant aspect of the questionnaire and of going green, because knowledge, attitude, income, and social economic roles all depend on age. Also, to de- mand changes from a company, it will more likely lead to increasing the profit, which comes from the users as the citizens itself. Therefore, the other questions would be for the people who are up for the change and are willing to pay more for their seasonal tickets etc. if that is what it takes to be more sustainable. If they would choose to do so, what is the limit (in percentage, because there are so many ticket options) they are willing to pay for it on top of the original cost. The last question is about what the company would have change in order to improve their services for the users. Quantitative research method is the ideal tool for getting specific data, numbers, and percentage for analysing the point of view of the end user. 3.1 Data analysis After gathering all the data from all research methods, it will be analysed by using the framework of PESTEL and SWOT analysis. PESTEL stands for political, economic, so- cial, technological, environmental, and legal and it is a tool for identifying the macro forces an organization has and analysing it as external factors. After the PESTEL tool is deployed to identify these external forces which can be connected to either one or several
categories at once, it can be used for the opportunities and threads that are part of the
SWOT analysis (Oxford). The results that could be interconnected would need further
explanation why it cannot belong to only one category. The SWOT analysis, similar to
PESTEL is an easy, yet effective tool to measure the company`s strength, weaknesses,
opportunities and threads. Strength and weaknesses represent the internal factors in the
company, while opportunities and threads include the external factors. Internal factors are
easier to handle, because these are the things that the company can control over, so as
well can change it. External factors can include aspect that company can control or change
it, like competitors, market change or prices of raw materials (for example fuel price)
(Parsons Noel 2018).
4 RESULTS AND ANALYSIS
In this part, the details of the challenges for improving more sustainable public transpor-
tation in Budapest will be discussed as well as the results of the research are shown, by
detailing the main challenges and solutions the interviewers from the company have been
giving me and the analysis of the questionnaire responses.
4.1 The main challenges for Budapest to adapt to a more sus-
tainable public transportation system
As it was mentioned in the 1.2 Background part, Budapest’s agglomeration problem is
one of the biggest challenges when it comes to have a more sustainable transportation.
While according to statistics 6 out of 10 people use public transportation in the capitol
Budapest, this number is 10 to 3 when it comes to people from the agglomeration’s areas.
So, every third car is coming from these areas to the capital, which significantly increased
the number of cars used in Budapest by 20 % in the last decade. That means 1.2 million
cars are in usage everyday just in Budapest itself. This of course has major effect on
climate change as well, the more cars mean more traffic jams, more mission, more pol-
luted air which affects the health of people living in the city. The common goal would be
to improve the transportation from the agglomeration areas to the capital, unified tickets
within Budapest’s public transportation and the companies who are dealing with suburbantransportation (Vitézy Dávid 05.02.2020). The main role in the agglomeration commute is in the hands of the train company (MÁV) and the suburban bus company (VOLÁN) which both managed to operate with common ticket system inside the borders of Buda- pest. 4.2 Interview 1.: Laszlo Nagy Many major cities in Europe could figure out, how to unite the different transportation operators and divide the profit from the ticket sales between them, somehow it has been unsolved for Budapest for decades now. While in foreign countries public transportation has already been operated by more than one company it is easier to divide the profit be- tween them, but in Budapest it is the sole role of the BKV to provide this service to the public. That is why this project is more difficult here but definitely one of the main and urgent projects that has to be resolved soon. According to one of my interviewees called Laszlo Nagy who works in the Resource Management Department of the company also agrees this is one of the top priority projects that needs to be fulfilled. He claimed nego- tiations have started between the transportation operators, but it could still take some years to come up with the unification plan that the city administration would approve. This could be a great opportunity for the company. It was mentioned before that the European Union supports and established policies about the limitation of carbon emission. However, the Hungarian Government has not been supportive about founding projects that deal with renewable energy sources or any kind of sustainability issue. Surprisingly even without the assistance of the government, Hun- gary is one of the 21 countries that managed to reduce carbon emission by 32 % and energy consumption by 15 % from 2010. To produce 1 GDP equals 24 % less greenhouse gas output than it used to be (Origo 16.01.2020). In December of 2019, at the session of the European Council, Hungary voted to be cli- mate neutral by 2050. It would cost approximately HUF 50.000 billion to change for carbon neutral electricity generation, to switch all the transportation to electronic meth- ods. This is an incredibly large amount of money, spending 2-2,5 % of annual GDP every
year till 2050. The plan for 2030 is to rely on the mix of solar and nuclear energy and with that combination 90 % of the power generation of Hungary would be based on these energy sources. Beside this, the plan for changing the public transportation system for more sustainable methods has been started (Origo 16.01.2020). With the support of the EU and the government Budapest’s transportation system has a big chance to develop soon. My interviewee Laszlo Nagy has an optimistic feeling about this, but also like eve- ryone else is sceptical whether the government will keep its promises and grant the re- sources needed. This project would give strength for BKV, because since it is the biggest public transportation company in the country, it will be top priority for the founding. Laszlo Nagy highlighted the problem to change all vehicles for electronic ones, all the power sources have to be renewable energy source as well, in order to be truly sustainable. For changing to electronic technology and build the infrastructure for it and to generate energy from renewable source would take decades to plan, build and establish. They would need to plan where to build the service stations, recalculate the routes of every bus line in order to know how long they can operate without charging. The project is very complex with each step relying on the other, so if any of it will find difficulties it can cause huge resources, money, time loss. Everyone has to work together and support each other for the stages of the development, which in this economic and political state can be hard to imagine. It is a huge weakness point for the company. He also supports the implementation of hydrogen buses instead of electronic ones, be- cause they need less resources, infrastructure, and financial support. The other solution would be building more fixed tracks for trams and subways. In the near future for that reason, many night-time buses will be replaced by subways that now are normally going until 0:00, but the operating time will be expanded until 2:00 am. Threats can be the negative press and attitude towards the company. Many people think negatively about the company even though as a service provider it is way better than the competition in other cities. It mainly comes from a national attitude that everything is bad and needs to improve, complaining about it all the time and never see the impressive sides and advantages the company or the services have. This attitude mainly within the older generation who do not have comparison to other cities, nation’s public transportation.
Later on, it will be discussed how other generation’s opinion about BKV which was meas- ure by the questionnaire in chapter 4.4. Laszlo Nagy emphasized the company’s waste management and their recycling pro- grams. Every office building, garage, mechanic areas have the policy and equipment for collecting the waste selectively and how to deal with hazardous waste, where to put for example oily clothes etc. Old vehicle parts are also resold, reused, or recycled for further components. They use an environment management system which they can oversee if the waste management is under control. The Tatra project which was about to proceed engine updates for all of the 240 trams the company has in order to save more energy and be up to date is still an ongoing project and even though the end date was 01.05.2020 it has been slowed down because of finan- cial reasons and will go on until all of the trams will be updated. The reason Laszlo Nagy supports the fixed tracks vehicles is not just because these work with electricity which can be sourced by renewable energy and produced less emission, but because all the trams and subways have way to do power consumption that saves up a lot of energy. When a tram applies the brakes it generates energy, which is restored back to the network and another tram can use up that restored energy. That is why it is important that the schedule of trams and subways needs to be coordinated in order to use this regenerated electricity so nothing goes to waste. With this technique there is a 27 % energy saving and this is one of the reasons why renovating the subway networks is very significant. From the four subway lines, one of the newest was finished on 28.03.2014, and the oldest one is con- sidered as an underground tram network or “little metro” is mainly a protected monument, 2 subway routes left for the renovation project. For the metro line 2, the reconstruction took place between 2004-2008 and for metro line 3 (M3) has been started on 04.09.2017 and it is an ongoing project with the deadline for 24.08.2022 (BKV Zrt). In the 2.4 Current sustainable projects in BKV I have mentioned all the places that have been provided with solar panels. My interviewer is positive about further improvements in this field. However, these solar panels are mainly intended for helping with the supply of hot water in the buildings, it is still significant when it comes to saving up energy consumption in all. That is why it is more likely that it will take on other garages, office buildings and stations if the funding is given. But for using this energy, first the frequency
of the current has to be retooled. The current in most of the buildings is direct, but for the usage of the energy gaining for solar panels needs to be alternate current. The break-even point for the investment of these projects are around 10-15 years. Consequently, my interviewer Laszlo Nagy who is the head of Resource Management Department, is very optimistic of the future developments planning within the company in the name of sustainability. In the recent decision of the Hungarian Government towards carbon neutrality and climate change, the position of these projects for BKV has been strengthened. However, uncertain economic changes (like recent virus pandemic) can af- fect the implementation of these developments. Since, all these investments are signifi- cantly huge, it takes a lot of years even decades to achieve. The more time it takes for a project, the more it is exposed to ambient effects. There is always a risk of resource and financial shortage, suppliers demand, political changes, economic changes, and also tech- nological changes. These facts make every investment very risky and sceptical for its success.
SWOT analysis
Interviewer 1. Strengths Opportunities
Laszlo Nagy
Political • EU policies and sup- • Unite with other
port (P, L) transport operators for
Economic • Governmental found- reducing carbon emis-
ing and support (P) sion among people
Social • Priority of the com- coming from the ag-
pany among others for glomeration (S, En)
planning being carbon • Improving on online
neutral (P, L) apps and ticket ser-
• Tatra project (T) vices (S, En)
• Night-time bus lines
will be replaced by
fixed track vehicles
(En, S)
Technology • Purchase of hybrid and • Implementing more re-
hydrogen buses (T) newable energy
Environmental • Supporting the usage sources on office, gar-
and build of more fixed age and on terminals
Legal tracks vehicles (T) (En)
• Waste management • Goals for reducing car-
and recycling program bon emission till 2030
(En) by 40 % (En)
• Energy saving by re-
generating energy by
fixed tracks vehicles
(En, T)
Figure 13.: Strengths and Opportunities in BKV
Source: Nagy LászlóSWOT analysis
Interviewer 1. Weaknesses Threats
Laszlo Nagy -
Political • Cost of changing • Government does not
all buses to elec- take up on the carbon
Economic tronic ones and neutral projects (P)
build infrastructure • Complexity of the pro-
Social with it (E) ject to be carbon neu-
• Could only buy tral (P, L)
used hybrid and • If the negotiation of
hydrogen buses the train and suburban
(cannot know the buses would not suc-
lifetime of these) ceed (L)
(T, E)
Technology • For political pres- • Other public transpor-
sure maybe they do tation companies can
Environmental not get to choose easily change for sus-
the best option for tainable solution be-
Legal developing a more cause of the volume
environmentally (E)
friendly transpor- • Negative press and at-
tation (P) titude towards the
company (S)
Figure 14.: Weaknesses and Threats in BKV
Source: Nagy László4.3 Interview 2.: Mátyás Jangel My second interview was with Mátyás Jangel who is the head of Strategic and Purchas- ing Directorate. Due to circumstances (virus pandemic) our discussion and interview took place on the phone. Mátyás Jangel would divide the challenges of developing to more sustainable into three categories. One of them is the public transport service, which has been mentioned several times before is serious need of technological change. He also states the scepticism towards electronic buses mainly for the cost and the short lifetime of these vehicles. Furthermore, what is against of the electronic buses, there is no 10 years’ worth of testing of these vehicles to see what problems can occur after 5 years and what is the exact lifetime of it. All is known that accumulators most likely give up after 5 years and needed to be replaced. He supports hybrid and hydrogen buses more due to its cost effectiveness and it needs less infrastructure. CNG would be a very good option for environmentally friendly choice, but currently there is only one garage that is provided with the gas charger for these vehicles. More garages need to be built in order to change 600 buses for CNG ones. Regardless of which option the company would choose, chang- ing 600 buses is a very expensive issue. This most certainly could only happen in portions. There is a decree that until 01.01.2022 all the vehicles with internal combustion engines needs to be replaced with electric ones. The Hungarian Government announced an invest- ment cost HUF 32 billion for the aim of procurement of electronic buses all around the country’s big cities (cities with more than 25.000 population). Concentrating all the big cities in one sum instead of after each other makes this investment hasty and unplanned and the cost for its success would be more expensive than the given funding. Other ques- tion is how many buses the manufacturer market can provide in a short period of time. Which option is the best for acquisition, if the company would purchase from the manu- facturer or from private operators? BKV will certainly have a lot of testing of different and new technologies supplied by the providers. The second part of the company being more sustainable is about the company itself. The offices, garages and most of the operating board take place in 50, 70 years old buildings. To implement new technologies, like renewable energy sources, to these obsolete con- structions is tricky, very time-consuming work (while all the workstations need to be
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