Rail transport has the potential to grow and increase its modal share and to play a major role in a sustainable transport and mobility system, creating new investment opportunities and jobs. However, the growth of passenger transport services by rail has not kept pace with the evolution of other modes of transport.
The completion of the Single European Railway Area should contribute to the further development of rail transport as a credible alternative to other modes of transport.
The Union market for international passenger transport services by rail has been open to competition since 2010. In addition, only some Member States have opened their domestic passenger services to competition, by introducing open access rights, or tendering for public service contracts, or both. The opening of the market for domestic passenger services by rail should have a positive impact on the functioning of the Single European Railway area, leading to better services for users.
The “market pillar” of the 4th Railway Package consists of proposals to amend a directive on governance and market opening, a regulation on awarding public service contracts and a proposal to repeal a regulation on normalisation of accounts of railway undertakings.
The new provisions aim to introduce changes in order to:
- ensure impartiality of railway infrastructure managers to guarantee non-discriminatory access to tracks for new railway companies and ensure better use of rail infrastructure and improve financial transparency in order to remove the risk of cross-subsidisation between infrastructure managers and transport operators,
- open domestic rail passenger markets from 2020, so that railway operators can provide services across the EU. More competitive pressures should lead to better quality services, better in tune with customer needs and more frequent trains, and
- provide more competition and performance targets for public service contracts so as to improve cost-efficiency and get better value for money for taxpayers. Competitive bidding would become the norm for awarding public service contracts from 2023 to provide passenger rail services, which currently make up a large share of all rail services. Any contract awarded directly would need to meet performance targets (punctuality, quality of service etc.).
“Today the 4th railway package is definitely safely on track. Our citizens will now be able to benefit from better performing services. Rail companies should have better access to markets in all member states to increase competition, choice and quality for passengers. And rail transport should be boosted given its contribution to sustainable mobility in our societies” the Slovak Minister for Transport, Construction and Regional Development, Arpád Érsek, said. Slovakia currently holds the presidency of the EU Council.
Reforming the EU railways
The reform will open up domestic rail passenger markets in the member states and create fairer conditions for train companies in terms of non-discriminatory access to the network.
The revised rules make it easier for new operators to enter the market and offer their services. This should result in wider choice, cheaper fares and improved quality for passengers.
Competitive tendering will become the norm for public service contracts, with some exceptions. Direct award will still be possible where it leads to better quality of service or cost efficiency. To make this work, any directly awarded contracts will include performance and quality targets, covering, for instance, the punctuality and frequency of trains.
To ensure continuous and well-functioning services, member states can limit a new operator’s right of access if the proposed new service would compromise the ‘economic equilibrium’ of an existing public service contract.
The reform also strengthens the independence and impartiality of rail infrastructure managers in order to ensure that all railway companies have equal access to tracks and stations. Member states are able to keep their current organisational structures, but safeguards are put in place to increase financial transparency and avoid conflicts of interest. Financial transfers between the infrastructure manager and railway undertakings, and in vertically integrated undertakings between the infrastructure manager and any other legal entity of the integrated undertaking, should be prevented, where they could lead to a distortion of competition on the market, in particular as a result of cross-subsidisation.
The new system will be introduced gradually. Infrastructure managers must comply with the new requirements at the latest two years after the legal act has entered into force. On the basis of the access rules, operators will be able to launch new commercial services on 14 December 2020. Competitive bidding for public service contracts will start seven years after the legal acts are published.
The reform aims to make train travel cheaper, faster and more comfortable. This would encourage people to choose the train over other modes of transport which are less environmentally friendly.
by Elena Ilie
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