Owners of buses that offer long-distance passenger service within Greece have turned to borrowing from banks in order to replace their vehicles ahead of next year’s Athens Olympics. At the same time, however, they say that leasing is not an attractive option, at present. (Greece’s long-distance bus service has been organized, since the late 1950s, through cooperatives of bus owners – KTEL – based in each prefecture.) Sophocles Fatsios, president of the Association of KTEL Bus Owners, said the association has negotiated bank loans on very favorable terms. These loans will only be provided to current bus owners, not to prospective ones. Specifically, the bus owners signed a loan with a consortium of three Greek banks – Alpha Bank, EFG Eurobank Ergasias and Piraeus Bank – for loans payable in seven years, at a rate of 4.75 percent (2 percent over the European Interbank Offer Rate). There are penalties for failure to repay but these do not include impounding the buses. This latter term in the loan agreement precludes the use of leasing to renew the bus fleet, since, in leasing, ownership of the vehicle goes to the leasing company until all debt is repaid. The exact amount each bus owner can borrow will depend on a provision in a law that provides a state subsidy of up to 200 percent for each bus owner, provided certain conditions are met. The government has estimated that it will spend up to 88 million euros for the subsidies, to be taken from the Public Investment Program. The state subsidies will be provided directly to individual owners. They will also benefit from a special account set up in early 2002 by the Association of KTEL Bus Owners, which will provide another 10 percent of the total cost, if the owner buys a brand new bus, or 5 percent, if it is a second-hand one. The aim is, by the beginning of 2004, to withdraw all buses older than 23 years. At present, the total number of KTEL buses is estimated at 4,000, of which about half need replacement. Another 1,300 will be added to the KTEL fleet to cover the needs of the Olympics. Beside the subsidy incentive provided, the law will require the KTEL association in each prefecture to become shareholding companies, provided that there is a minimum of 12 buses per prefecture. After long hesitation, the owner-drivers have agreed to take this step. Still, only KTEL organizations in two prefectures have become corporations. The KTEL bus owners have expressed an interest in branching out into the tourist market by organizing trips and tours. This has led them to the decision to purchase buses that could compete with those owned by travel agents. Yet, given the hostility of the latter to this prospect, it is not clear if and how the KTEL associations will be allowed to branch out into these activities and whether limitations will be initially imposed.