Will Transport Scotland, the new national transport agency, be a fast track to travel improvements, or just another layer of government?

That was one of the intriguing questions that emerged in a year which earmarked a 10-year (pounds) 3bn budget for transport infrastructure to be at least partially delivered by Transport Scotland.

Local authorities fear that the agency, more details of which will be published by transport minister Nicol Stephen in the spring, will strip them of control over local roads, while Strathclyde Passenger Transport, which runs most public transport in west central Scotland, has mounted a fierce campaign to defend its status.

Professor Ewan Brown, the chairman of Transport Initiatives Edinburgh, has urged politicians, local authority officials and transport operators to look beyond their own agendas and consider 'what is best for Scotland'.

The transport minister has so far failed to persuade the Strategic Rail Authority to hand over funding control of the upgrade of Waverley station, which has a price tag of between (pounds) 250m and (pounds) 800m, and is instead authorising a (pounds) 100m repair programme.

He is also among those expressing concern about a possible delay to the completion of the west coast main line upgrade, which will allow Virgin's new tilting trains to run at 125 mph. That could now be three rather than two years away, because of spending cuts at Network Rail.

But at the end of the year the minister did announce grants of (pounds) 500,000 to SPT to develop the Glasgow Crossrail scheme and (pounds) 553,000 to councils to improve commuter services north and south of Inverness. He also announced (pounds) 1.5m of grants to rail operator EWS and haulier WH Malcolm to take freight off the roads. The long history of carrying the Royal Mail by train came to an end during the year, however, as the last mail train rolled and rail lost its previous 14% market share, leaving 92% of mail transported by road and the rest by air.

Meanwhile National Express, current holder of the ScotRail franchise, faces tough competition for the franchise's renewal in April. Aberdeen-based FirstGroup along with Arriva have already launched campaigns to try to persuade the SRA to switch the seven-year franchise.

The SRA wants improved services and value for money. So does the Scottish Executive, which takes over direct funding in April and will funnel over (pounds) 200m into the network, which is loss-making apart from the east-west shuttle, and which under National Express lost a further (pounds) 10.5m last year. The subsidy was lifted last year in an attempt to ensure that ScotRail is in a break-even position at the start of the new franchise.

First Group, which has three English rail franchises, is promising better integration of rail and bus links, but it faces possible competition objections over its Scottish bus networks. It has also pledged to move its rail business headquarters from Paddington in London to Aberdeen if it wins.

In a switch of control in the other direction, the 1900 staff employed on track maintenance in Scotland and Manchester by First Engineering, the Glasgow-based company, will transfer to Network Rail by the summer as it brings its operations under direct control.

Scotland's hopes of new air routes can only be fulfilled if road and rail links on the ground improve, according to BAA Scotland's chief executive Donal Dowds. He has also cautioned that there is a limit to route expansion, given the finite catchment of the Scottish airports, and the need for the no-frills low-cost carriers to maintain their hubs in the big population centres down south. But new routes were initiated or announced during the year, including Glasgow to Philadelphia and Dubai, Prestwick to Milan and Shannon, and Edinburgh to Milan. Edinburgh continued to close the gap on Glasgow as Scotland's busiest airport, with some analysts predicting that it will overtake Glasgow within four years.

British Airways, meanwhile, is handing over all its remaining internal Scottish flights to Glasgow-based Loganair, which will run them as franchises from March 1. They include Glasgow to Benbecula, Stornoway, Belfast, Aberdeen, and the Isle of Man, Edinburgh to Belfast, and Aberdeen to Shetland.

Loganair's average fare in 2001-02 was (pounds) 70, more than double Ryanair's (pounds) 33 average, and the company has urged the Scottish Executive to increase route subsidies to enable lower fares. Two new types of road service appeared during the second half of 2003, both launched by Stagecoach. The inter-city Megabus, with seats booked over the internet, began with cut-price fares of only (pounds) 1.

The Dunfermline Taxibus offers Fife commuters in less accessible areas pre-booked seats in a yellow Mercedes people-mover, direct to Edinburgh.

According to the Forth Estuary Transport Authority (Feta), a third Forth bridge will be needed sooner rather than later, with road bridge traffic predicted to rise from 70,000 to 100,000 by 2020, against a design capacity of 60,000. Feta says a new crossing should be reserved primarily for trams and buses and be funded by tolls.

Edinburgh road commuters are beginning to think about the threatened (pounds) 2 charge for entering the city on weekdays from 2006. The congestion charging plans will go out for consultation and a referendum in late 2004 or early 2005. The city council says the toll would raise (pounds) 900m over 20 years to help pay for a (pounds) 1.5 billion programme of roads and public transport improvements.

Public consultation on the proposed first routes for Edinburgh Trams was launched in the summer of 2003, following Scottish Executive approval of a (pounds) 375m first phase of the network. At least six companies are in the running to operate what will be Scotland's first tram system since the 1960s, with both lines due to open in 2009. Line one is a northern loop of the city from Princes Street to Leith. Line two runs to Edinburgh Airport. A third route, to the new Royal Infirmary, may follow.Glasgow's road congestion is set to be lifted if the five-mile (pounds) 500m northern extension of the M74 to the Kingston junction is approved following the public inquiry which began in December