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In the beginning of 2006, the regional government of Madrid decided to expand the subway network to the new Terminal T-4 in Madrid-Barajas International Airport using a public-private partnership ͑PPP͒ approach. Owing to the peculiar characteristics of this new access as the enlargement of an existing subway line, the PPP approach was based on separating infrastructure management from transportation service operation. The PPP contractor was entrusted with the infrastructure construction and maintenance while Madrid's public subway company remained in charge of operating the trains. This paper examines the theoretical foundation that justifies the implementation of different PPP approaches to deal with urban rail projects. The paper then explains the reasons why a nonintegrated PPP approach was ultimately adopted for the expansion of Madrid's subway network to the airport. From the outcome of the tender and the present operation performance, we find that nonintegrated PPP contracts have important advantages for urban rail PPPs, particularly for conventional subway networks. These advantages are notable in terms of encouraging economies of scale and density, boosting competition, and reducing the financial costs.

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Many governments are increasing private participation in providing and financing transportation infrastructure through concession contracts. One of the main challenges in the definition of those contracts is the correct allocation of risks between the public and the private sectors. Traffic risk has usually been difficult to allocate because neither the concessionaire nor the government can reasonably control it. In addition, traffic forecasts have proved to be inaccurate. Consequently, many governments are implementing traffic risk mitigation mechanisms in concession contracts. One of these mechanisms is based on the establishment by the government of a minimum income guarantee. Results of the implementation of a minimum income guarantee in Chile are presented: 38 transportation concessions were awarded in the past 12 years. The economic crisis that struck Chile from 1998 to 2002, reducing traffic levels below forecasts, makes the analysis of the performance of that mechanism particularly interesting. Despite the economic crisis, the implementation of a minimum income guarantee in Chile worked well because it encouraged private participation and was not very costly for the government. However, that mechanism did not reduce renegotiation pressures from concessions’ shareholders as a consequence of the crisis.