Opening the railway market for increasing cross-border competitiveness is a step towards integrating services into international transport markets. Also, increasing the competitiveness of railway services encourages industrial development, improvement of infrastructure investment framework, regulation of the infrastructure charging system and non-discriminatory access to infrastructure and related services.
The process of opening the railway passenger transport market is much more complex than the organisation of national traffic, and, this will mainly be attractive when the existing barriers on the routes with high traffic potential are removed, which means that railway transport becomes competitive compared to the other transport modes. For example, high-speed services between big cities will be directly competing air traffic, but also the other operators which provide services on the same routes.
In fact, many of the rights that a new entrant needs imply access to essential facilities and getting necessary licenses, as well as adopting other legal measures to regulate the competition environment and delivering transport services. The impact of market opening is also related to the economic situation and its development at national level.
Although the country is not a European Union member state, the authorities in Ukraine have recently announced that private operators could access the railway passenger transport sector after the modernisation of the Railway Company. The reason for this condition is that currently this transport sector is still unprofitable and could no successfully attract investors capable to develop the market and to launch new conditions to optimise the quality of transport services. “Private companies could supply railway passenger transport services in 5 to 6 years after the modernisation of the national operators”, said Borys Kolesnikov, Ukrainian Minister of Transport and Infrastructure. The authorities are well aware of the important role of the private sector in the development of railways and of the importance of modernisation in creating an attractive environment. “It is impossible to attract private investments in the railway passenger transport without implementing projects for the modernisation of services”, added the minister.
In this context, the opening of the Ukrainian market launches great challenges for the other markets in the region: the European and the CIS markets.
EU is interested in collaborating with neighbouring countries
EU is a political and economic partner of neighbouring countries, and in this context, consolidating cooperation in the transport sector determines the economic growth of the parties involved. The EU citizens and business sector and neighbouring countries become direct beneficiaries of transport cooperation optimisation aimed at improved services. Also, a better integration of markets can open new opportunities in the transport sector. As the European Commission has revised the proximity policy and has proposed a new policy for consolidating relationships, co-operation in transport will be adapted to the needs of every sub-region. Therefore, in the transport sector, EU will implement a differentiated level according to the availability of every neighbour to integrate on the European market. EU’s support, as financing for projects on infrastructure connections or for increasing the market access, will depend on the progress of neighbour countries.
In railway transport, the most important traffic flows between Europe and neighbour countries are carried out on the East-West axis and freight transport has recorded significant growth since the liberalisation of the market (2007). Since the liberalisation of the railway freight market has triggered the growth of freight volumes on the route, passenger transport could also be developed especially since the European railway passenger transport market has opened since January 2010. This will permit new companies to access the railway passenger transport markets, regulating the legislative framework and the price policy which will increase the number of passengers and railway transport market share.
In these conditions, railway passenger transport could have competitive advantages with other transport modes on the transport routes not only between EU and Ukraine, but also Belarus and the Republic of Moldova, countries that EU is interested in for co-operation on improving transport connections and customs procedures. Thus, fair and transparent practices on these routes are necessary to improve the transport market with neighbour countries and to improve the efficiency of railway passenger transport. Through the short-run policies it implements, EU proposes to specify 1520/1524 mm-gauge lines in the standards developed by ERA and also tries to promote the ERTMS system to neighbour countries in order to facilitate access to the markets in these countries.
CIS chooses constant development
The railway passenger market in the CIS launches new challenges not only through the growth and development potential, but also through opening access to international players. According to UNIFE’s report World Rail Market Study, apart from other markets, “a strong growth of the CIS railway market is expected by 2017”. Due to the geographical localisation of the region and the poor development of road infrastructure, railway transport plays a strategic role in the CIS and passenger transport has a 40% share from the point of view of the transport type. Also, the assets and particular advantages of railway transport on the opening of the market in the region are the main reasons why railway transport is preferred to other transport modes. According to the study “The Railway Market in Russia and the CIS”, elaborated by SCI Verkehr GmbH, railway transport will dominate the transport market, since “there will be no real changes for transport modes in this region on the medium and long-turn”.
Russia has a 68% share in the CIS railway passenger transport market, followed by Ukraine with 20% and Kazakhstan with 6%. The prospects of railway passenger transport in the CIS are positive due to the improvement of investment programmes and the launch of new high-speed services.
Under these circumstances, the liberalisation of railway passenger transport in Ukraine, planned for the next years, can launch a series of challenges on the international transport market, although there are different concepts about the opening of the market which plays an important role especially as regards the different alternatives of the structure of markets and companies. Therefore, the opening of the market develops railway passenger transport, competitiveness and increases railway transport market share. The positive effects of the liberalisation create new opportunities, not only at national, but also at regional level, and influence the development of traffic in Europe and Asia. Moreover, competitiveness can be stimulating by letting international companies access the market.
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