A study elaborated by an international consortium of transport economists has concluded that no special structural model exceeds the others as regards performance. There are no proofs to conclude that, in the railway transport sector, competition operates better through the total separation of the activities than through a holding type company.
Consequently, EU should approach a free choice policy for the structural model of the railway sector. The EVES-Rail Study (Economic Effects of Vertical Separation in the Railway Sector) has been requested and financed by the European Community for Railway and Infrastructure Companies (CER).
The study concludes that the effect of vertical separation (the infrastructure manager and operators are two completely separate entities) of costs is not a single positive or negative point which will occur identically in every country. On the contrary, the effect of vertical separation depends on the structural characteristics particular to each and every country. The substantial differences between third countries in the EU demand a different approach rather than the “one-size-fits-all” model imposed to all member states.
The EVES-Rail study has assessed the effects of different forms of vertical organisation in the railway sector in terms of railway system costs, rail modal share, state spending, competitive market entry, and alignment of incentives within the rail sector value chain.
For passenger traffic, the key result is that there is no statistically significant difference between the vertical separation model and the holding company model when the passenger market is open to competition. However, the combination of vertical separation with market opening appears to be superior to vertical integration (the absence of institutional separation).
Crucially, a decision to impose vertical separation throughout the EU would raise costs by at least EUR 5.8 Billion/year for no accompanying benefits. If rail traffic density rises, as would be a result of the European Commission’s 2011 Transport White Paper goal to raise rail’s modal share, then the costs of imposing complete vertical separation everywhere would rise dramatically.
“The work done by the consortium is solid and convincing. It demonstrates how the imposition of one single European model for all national rail systems would lead to increasing costs for all stakeholders. Today member states’ budgets could not cope with the rising costs deriving from such a reform, nor could the European citizens”, stated CER Chairman Mauro Moretti.
“Policy-makers have a duty to ensure that benefits outweigh costs for any reform they propose. EVES-Rail provides the cutting-edge analysis they need for the case of rail”, CER Executive Director Libor Lochman stated.
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