By Emily Kinder (Policy Executive, Rail Industry Association, London) and Conor Perry (Finance Directorate Trainee at the European Investment Bank, Luxembourg)
The journey begins at Hackney Wick Overground station in East London, reopened in 2018 after a £25m ‘industrial’ inspired facelift funded by a patchwork of local authorities. Tap in with your contactless card, and Transport for London’s (TfL’s) system validates it and logs the tap location. It then records the change to your travel path when you tap on the pink validator to switch to the Underground at Highbury and Islington, adjusting the fare. Queuing to tap out at Tottenham Hale (£2.10), you open the Trainline app to access your pre-booked ticket for the privately operated Stansted Express (£22). At the airport, you’re down £24.10 and 1.5 hours.
Landing in Luxembourg, you notice similarities between the two airports: a surprising number of tourists (the Grand Duchy runs highly targeted tourist campaigns, with the UK as a top market) and an unsurprising number of suited businessmen (one in ten Luxembourg employees works in banking or insurance). The similarities end at the door. On exiting the terminal, it is a short walk to any of four buses waiting to welcome travellers. There is no payment at the point of use, there is no queue, and there is no prebook advantage. On the 25-minute journey from the airport to Hamilius, the city centre, you pass the buildings at the centre of Luxembourg’s story. The European Court of Justice and the European Investment Bank face each other on opposite sides of the road – just two of the eleven European institutions, agencies, or administrative functions with a presence in Luxembourg. Alighting at Hamilius, you walk across the road and wait for the tram – no payment, no queue, no prebooking. After just 15 minutes on the tram, you can be home in Howald, on the outskirts of the city of Luxembourg. In 45 minutes or less, you can traverse the entire city, at no pecuniary cost.
The two transport systems are remarkable for different reasons. TfL is the only fully user-funded public transport system in a major metropolitan area, achieving a day-to-day operating surplus from their income in 2024. This income is mostly in the form of fares (58%), with the remainder stemming from commercial activities – largely property rental. While they do receive government funding for major projects and for asset replacement, they are unique in their capacity to offer a price-point and level of service that results in demand sufficient to cover the cost of operation.
In contrast, 0% of Luxembourg’s public transport system, administered by the Administration des Transports Publics (ATP), is funded by fares. That’s because in 2020, Luxembourg launched the world’s largest experiment in free public transport. All public transport within the nation is free at the point of service. They are not the only ones, nor the first. Public transport is now free in several cities, including Tallinn (since 2013), and Valletta (since 2022) – but Luxembourg’s experiment is the widest, encompassing the whole country and all travellers, even tourists.
The main goal of free public transport was to reduce congestion. Luxembourg has cheap petrol and an affluent population; the result is heavy car usage, exacerbated by the 200,000 commuters who commute to work in Luxembourg from France, Germany, and Belgium every day. The available evidence does not indicate any sign of the hoped-for modal shift from cars to public transport, but with a problem (and economy) this big, the gamble makes sense.
Spend enough in time in Luxembourg and you will hear confused and delighted tourists wonder aloud how the whole system can be free and functional. There are two complementary answers. Firstly, before the change was introduced in March 2020, the cover rate for ticket sales in Luxembourg (€41m) represented only 8% of operating cost – in contrast with the 100% figure achieved by TfL. Secondly, and crucially, Luxembourg has disproportionate wealth relative to its size, which facilitates policy decisions unimaginable elsewhere.
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A back-of-the-envelope calculation indicates how that wealth might change calculations around free transport: at the end of Q1 2020, Luxembourg’s GDP per worker was €240,786 – or €2.15 per minute worked, per worker. The majority of those workers commute into the city on the congested road network. If the free public transport fulfilled its main purpose of reducing congestion, the output gains had the potential to be substantial. If this policy reduced the average commute by just 5 minutes in total per worker per day, and those workers spent those minutes working, it could have increased nominal GDP in 2020 by €780,118,057, or €156,023,611 for every minute saved. This figure relies on some simplifications and assumptions (notably, a simple additive relationship between minutes worked and GDP), but it illustrates that with productivity like Luxembourg’s, tiny changes can have outsized impacts. Stumping up a further €41 million for a transport network is a drop in the ocean.
That doesn’t mean that the experiment was an unqualified success; aside from the lack of evidence of modal shift, spend a little more time in Luxembourg and you will begin to notice the problems created by the absence of a user price signal. During the morning rush hour, certain lines can be so crammed that users prefer to walk. The Luxembourg Times reports that cleaning sector workers on evening shifts wait hours for buses because of overcrowding. During the lull in the afternoon, certain lines can be so quiet that one is forced to consider the utility of their existence. Passengers know best what they need, and they vote with their credit cards. TfL accesses user demand signals through ticket machine data – ATP can’t do this, and it shows.
TfL’s ticket prices might improve service design, but they also cause problems. An analysis from Greenpeace in 2023 ranked 30 European capitals according to four criteria, including simplicity and pricing of tickets. While Luxembourg was joint 1st, London was 29th out of 30. The unfortunate reality is that transport is expensive, and as regular outbursts in the media about ticketing prices in London relative to other capitals show, people do not like that in London, they functionally pay for it.
And where London stands in isolation, Luxembourg cooperates. Luxembourg is part of the EU common transport policy – the UK is not. While TFL is still represented in Brussels, most other UK local authority offices have closed their doors since Brexit. In the UK, the Department for Transport has largely limited UK-EU collaboration objectives to facilitating the transport of goods and other necessities, and it’s in this capacity that the UK interacts with certain EU transport bodies as a non-member. These relations are focused on maintaining crucial communication, rather than any shared vision for developing transport services and infrastructure. This might change with the promised UK-EU relationship ‘reset’, but there is little sign of it for now.
Conversely, Luxembourg, a founding member of the European Union, is a consistent advocate for deeper European integration and cooperation. They work with France on shared infrastructure projects, and prioritise cross-border strategy. Many of Luxembourg’s infrastructure projects are co-funded by the European Union, and the EU is set to provide more than €50 million for improved connections between Brussels and Luxembourg.
A traveller journeying between London and Luxembourg will be struck by both the commonalities and differences. The cities are united by anti-congestion measures, financial services exports, and a high cost of living, but their approaches to transport are markedly different. Luxembourg, ever the internationalist, wants invisible borders, co-operation, and low-cost movement. London, powerhouse of an increasingly isolationist UK, wants to go it alone.
Emily Kinder is a policy analyst, working on rail policy at the Railway Industry Association in London. She holds an MSc in Philosophy and Public Policy from LSE (2024), and is interested in urban transport, micro-mobility, and international collaboration, as well as UK politics and the future of work.
Conor Perry is an economist based in London. He holds a BA in Economics from Trinity College Dublin and an MSc in Philosophy and Public Policy from LSE. Conor’s most recent position was in the Finance Directorate at the European Investment Bank, in Luxembourg, where he worked on Liquidity Risk.
