The European Commission published its long –awaited 4th Railway Package on 31 January 2013. It is a comprehensive package of measures covering technical approvals, management of the infrastructure, passenger services and the structure of the railway, all with the intention of creating a fully liberalised competitive rail system in which competition flourished and the rail market grows.
Lord Tony Berkeley, chairman of Rail Freight Group (UK) sent us a reasoned opinion on this matter. Lord Berkeley is also a Board Member of the European Rail Freight Association.
In the technical package, the Commission seeks to create one set of standards for promoting interoperability and technical standards throughout Europe. The European Railway Agency (ERA) estimates that there are over 11,000 national rules in the EU, all adding time and cost to new entrants or those wishing to introduce new rail vehicles. The Commission’s intention is to give the ERA wider competencies for vehicle authorisation, the safety certification of train operators and of supervising national rules and the operation of national safety authorities.
Some member states will resist such changes, either because they think they can do the job better than the ERA or, more likely, so that they can use these approval pro-
cesses as a way of preserving their national monopolies by way of technical regulation. I believe that this change is an essential part of opening up Europe’s’ railways to competition and to getting costs down.
Altering the structure of the railways has caused much opposition, especially from Germany, Austria and France. However, the Commission’s proposals again seek to introduce open and fair competition above rail, with no hidden subsidies, as well as much better co-operation between infrastructure managers (IMs) on operations, investment etc. It recognises that some IMs have been known to discriminate against non-incumbents, making it very difficult for new entrants to operate competitive services.
The Commission proposed to strengthen the role of the IMs so that they control all the functions of the rail network, including investment planning, day to day operations and maintenance and timetabling. There should be much better cross-border co-operation between IMs and separation of the roles of managing tracks and running trains. The Commission’s proposals could require institutional separation as the simplest and most transparent way of achieving such independence, and this is what the independent operators and IMs have supported. However, the Commission has been forced to accept a compromise to allow the holding company model, as practiced or planned in Germany, Austria, and France and in the Channel Tunnel between the UK and France.
Although ‘Chinese walls’ to ensure separation of accounting, IT, staff and no discrimination are proposed, there is strong evidence that this does not work in practice. Germany is subject to infraction proceedings by the European Commission due to unfair transfer of funds from IM to other parts of DB to the detriment of these customers, and in France SNCF has proposed a complete reintegration of all its train operations with the infrastructure manager RFF to ensure the minimum of competition to SNCF above tracks. The Channel Tunnel operations are still the subject to the Commission’s infraction proceedings over concerns about allocation of costs, charges and capacity.
Finally, the Commission seeks to open up the passenger market, either to allow competing services or through competitive tendering. It has identified many cost savings and/or service improvements that could be achieved, both domestically and in the international market. There is of course a need to make rolling stock available to all, and to ensure non-discriminatory access to integrated ticketing systems.
Now the Commission’s proposals go to the European Parliament and Council for consideration. There will sadly be much pressure from the governments who control powerful incumbents to water down or delay the proposals in order to preserve the status quo monopolies. I believe that Europe needs one consistent structure and set of policies if the rail sector is to grow and prosper; the options are wide open; in the UK with full liberalisation, passenger and freight traffic has grown by 60% in ten years, whereas in France rail freight traffic has halved in the same period, largely because SNCF has ensured that any competition is neutered.
I urge all those who believe in a growing railway sector in the future to press their governments and European Parliament members to support the Commission and oppose those who want to preserve their monopolies, which can only increase costs and prices and turn more and more customers to road.
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