Long-awaited, both criticized and acclaimed, the Forth Railway Package “is introduced” as the legislative package which should solve most of the problems of the European railways which the previous three railway packages combined could not solve. The package mostly talks about unitary interoperability in the European railway network, the compulsory character of separating railway operation from infrastructure management and the liberalization of the national railway transport.
The main objective of the Fourth Railway Package consists in improving the quality and efficiency of railway transport services by removing the still-existing barriers (unsolved by the three previous packages) thus encouraging the performance of the railway sector and consequently, competitiveness and economic growth. These barriers can be grouped into four categories, technical, administrative, institutional and legislative barriers.
At the end of January, the European Commission adopted the six proposals which compose the Fourth Railway Package. The initiative was appreciated by some players in the railway environment, while other players, such as Deutsche Bahn and SNCF, declared themselves displeased with the adoption of some of the provisions included in the new law proposal. The main issue of the two European giants is that they don’t agree with the separation of operation from infrastructure management.
In October 2012, Rüdiger Grube, Chairman and CEO of Deutsche Bahn (DB), demanded the European Commission to come up with a detailed analysis of the benefits resulting from the separation of the railway infrastructure managers from railway operators. Deutsche Bahn, member of a holding that also deals with railway infrastructure management, is concerned with the possibility that the European Commission could present proposals that would impose the reorganization of the German structure.
“We don’t want a rushed decision based on dogmatic approach”, said Grube while asking the Commission to be “honest enough so as to postpone the decision” in case a detailed cost-benefit analysis could not be drafted.
SNCF, represented by the business strategy and development director of SNCF Group, Sophie Boissard, agrees with the German operator. “The legislative framework to be adopted will shape the future of European railway transport for the next decades. Therefore, it is important to eliminate all mistakes. At the moment, it seems that choices are made with enough research. We cannot understand why there is no impact study on the Forth Railway Package”, commented Boissard.
How and to which extent the two giants, Deutsche Bahn and SNCF, will influence the decision on the vote is yet to be seen.
The Community of European Railways and Infrastructure Companies (CER) tries to persuade the European Commissioner for Transport to give up the mandatory separation between infrastructure managers and railway operators. This solution has not been very successful in many European countries. A series of public events and several bilateral meetings have thus been help and CER has even asked for the elaboration of a study that would evaluate the costs of such a separation. Moreover, CER has wished to draw attention on the needs of smaller European Union member states, but also on the effects that the vote of the Fourth Railway Package would have on them. The European Union says this package will be the last and expects it to solve the problems of the European railways.
“CER cannot support the disproportionate set of proposed measures regarding separation between infrastructure managers and railway undertakings. The existing legislation already contains substantial safeguards against distortions to competition. Also, available economic assessments from sources independent from the Commission demonstrate that no specific structural model is superior to any other. Thus, although CER appreciates the fact that the Commission has stepped back from imposing vertical separation as the only structural model for rail undertakings, it is hard to understand why the Commission continues attempting to narrow down the options available to Member States in such a dramatic manner”, states the organisation in a press release.
“The so-called technical pillar of the Fourth Railway Package, in conjunction with generalised open access rights, will mark an important step forward for the Single European Railway Area. CER looks forward to constructive exchanges with policy-makers in order to ensure progress on these vital issues. On the other hand, CER urges policy-makers to defend the principle of subsidiarity with respect to Public Service Obligations and governance matters”, said CER Executive Director Libor Lochman.
“Holding structure”? OK…but better off without it
The Commission wants to reduce the administrative costs of railway undertakings and to facilitate the market access for new entrants.
According to the new proposals, the European Railway Agency will become a “one-stop shop” for the entire EU and will release authorisation for the introduction in the market of vehicles and safety certificates for railway undertakings. At present, railway authorisations and safety certificates are issued by each member state.
The proposed measures would reduce the time frame necessary for the market access of new entrants by 20% and will also permit a 20% reduction of the cost and time necessary to issue the rolling stock permit. Overall, savings for companies would amount to EUR 500 Million by 2025, points out the recitals submitted to the European Commission.
To encourage innovation, efficiency and a better quality-price report, the Commission proposes the opening of domestic railway passenger transport markets to new entrants and new services starting with December 2019.
Undertakings will be entitled to offer internal railway passenger transport services in the EU wither by providing competitive commercial services or through tender for public service obligations in the railway sector which represents the majority (over 90%) of the EU train trips and whose attribution through tender procedure will become mandatory.
To ensure the balanced access of all undertakings to the railway lines, the independent infrastructure managers have to be efficient and non-discriminatory in managing the networks and to coordinate their activity in the EU to support the development of a true European network.
To guarantee that the network develops to the interest of all parties and to maximise operational efficiency, the Commission proposes the consolidation of the infrastructure managers’ role, so that they would control all the essential functions of the railway network, including infrastructure investment planning, current operations and maintenance, as well as the establishment of schedules.
Since they are confronted with various complaints from users, the Commission believes that the infrastructure managers should be operationally and financially independent from any railway undertaking which operates trains.
This is essential to prevent potential conflicts of interest and to provide non-discriminatory access to railways for all undertakings.
The proposal confirms that, in general, institutional separation is the simplest and most transparent method of reaching this objective. Railway undertakings which operate independently of infrastructure managers will have immediate access to the internal railway passenger transport market in 2019.
However, the Commission can accept that a vertically integrated structure or a “holding structure” can also provide necessary independence guarantees owing strict barriers that would ensure a mandatory juridical, financial and operational separation. To conserve this independency and in the context of the complete opening of the passenger transport market in 2019, it is possible that railway undertakings which are part of a vertically integrated structure would not be permitted to carry out their activity in a member states if they had not proved to the Commission that they dispose of all necessary mechanisms to ensure equal conditions and fair competition on the domestic market, the Commission motivates the proposals submitted to approval.
MEPs welcomed the Commission’s “Railway package” proposals. Here are some preliminary reactions.
“We want the operators to be able to run trains across the continent without technical or administrative barriers which undermine the internal market.” To remove them, “we need an increased role for the European Railway Agency”, said Transport and Tourism Committee Chair Brian Simpson.
Said El Khadraoui expects the debate “to focus on the opening of the domestic passenger market and the public service obligations”. Provisions must be added to prevent “cherry-picking by new entrants who are interested only in taking the most frequented and thus most profitable lines”, he added.
Mathieu Grosch said “Making the railway sector more efficient is vital.” He expects controversy over some of the concrete proposals. “For us, ultimately, the goal is to create sustainable jobs in the railway sector and improve public service”, he added.
No doubt that we will witness many debates either in favour or against the Fourth Railway Package in the form proposed by the Commission, as before being adopted, the Commission’s proposals have to be approved by the European Parliament and by the governments of member states.
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