Mr Bettel's Democratic party is to form a government with the left-wing Socialist Workers' party and the Greens after he secured a narrow victory in October.
Luxembourg City suffers from some of the worst traffic congestion in the world.
It's hoped that by 2020, all tickets for public transportation will be abolished, leaving no need for fare collection and policing of ticket purchases and a significant reduction in traffic congestion.
In 2016, more than 100 million passengers used public transport in the tiny country of 600,000 people sandwiched between Belgium, France and Germany.
Re-elected Luxembourg prime minister Xavier Bettel will make all public transport in his country free from next Summer.
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Secondary school students are also provided free shuttle services between their places of study and homes. As it stands fares are capped at €2 for up to two hours of travel - for a country the size of Oxfordshire, this covers just about every journey. The fare covers nearly all journeys in the country with the size of only 999 square miles.
The foreign policy of the European Union's wealthiest but second smallest state is unlikely to change much, with Jean Asselborn keeping his post as foreign minister while Pierre Gramegna remains finance minister in the new administration.
Part of the cost for the initiative will be footed by removing a tax break for commuters. A decision has yet to be taken on what to do about first- and second-class compartments on trains.
Apart from providing free public transport, Bettel's coalition government also intends to legalise cannabis and introduce two new public holidays.
However, because the Greens gained, the three parties in government have 31 seats in the 60-seat chamber.