On mid December 2016, the European Parliament approved the provisions of the Market Pillar within the IV Railway Package. This approval comes after almost five years of negotiations between the Commission, Parliament and Council.
The forth railway package was initially put forward by the European Commission in 2013 and consists of six legislative proposals to enhance the efficiency and competitiveness of rail across the European Union. It intends to remove any remaining institutional, legal and technical obstacles in order to create an integrated European Railway Area. The Technical Pillar of the Fourth Railway Package was adopted in April 2016 and later came into force in June 2016.
In addition to the technical revisions, the IV Railway Package proposes reforms in the areas of governance and market opening. These changes are covered in proposals to update two existing pieces of legislation and to repeal a third legislative act which would be incompatible with the changes. The scope is to open up the domestic rail passenger market to competition, resulting in improved quality and efficiency. This would also be an important step towards the completion of the so much needed Single European Rail Area (SERA).
The European Union’s rail policy aims to encourage the development of high-quality, reliable, safe and efficient rail services. Putting into place a Single European Rail Area would help increase the competitiveness of the rail sector, develop an integrated rail network and increase the efficiency of rail transport services.
One of the main proposed chan-ges is to introduce mandatory competitive tendering for public service contracts for railways. This would make it easier for new companies and rail operators to enter the market by offering competing commercial services or bidding for public service rail services.
Together with this, the IV Railway Package also proposes to strengthen the governance of infrastructure managers. Infrastructure managers and rail operators are often still part of the same integrated structure. The proposed changes would separate infrastructure managers from rail operators.
The Market Pillar proposes new norms in order to remove the conflicts of interest, due to integrated structures (such as SNCF or Deutsche Bahn), which affect decisions by the infrastructure manager on market access and to improve the coordination between infrastructure managers and rail operators so they can better respond to market needs.
For the benefit of passengers
The new system will be introduced gradually but under the new rules, rail companies will be able to offer new commercial services on domestic lines starting with 14 December 2020. Competitive tendering is to become the general rule for new public service contracts from December 2023, with some exceptions.
“These legislative texts consolidate a regulatory framework that should enhance opportunities for railway companies and enable them to perform at their best. The rail sector now looks forward to enjoying a very much needed stable regulatory environment. The Market Pillar, together with the Technical Pillar of the package, is expected to be the basis for an efficient Single European Rail Area” CER Executive Director Libor Lochman emphasised.
Violeta Bulc, Commissioner in charge of Mobility and Transport, said that the debate marks the culmination of the work and engagement of the EU institutions over the course of the last five years to modernise and revitalise the rail sector. She considered this essential to meet the objective of smart and low-carbon transport mobility in Europe and to make rail competitive again.
She said that the fourth Railway Package would complete the internal market for rail services with the opening of domestic passenger service markets. Already by 2020, all European railway undertakings would have the possibility to offer open access services throughout Europe. The principle of the competitive tendering of public service contracts in rail would also become applicable in 2023. With the new governance rules, the aim is to provide fair rules of the game for all rail operators. Market opening is not an end, she emphasised, but a means to boost the attractiveness of the rail sector. On the one hand, established railway companies would shape up and become more consumer-oriented in order to withstand competition from new entrants. On the other hand, a better offer of services would help the rail sector become more competitive vis-à-vis other modes of transport.
Wim van de Camp, a shadow rapporteur for the IV Railway Package believes that it was not an easy Package to work with. The proposals refer to the further market opening of the European rail, and the Fourth Railway Package is an extension of the previous Railway Packages. He said that the Fourth Railway Package is the next step to be taken.
Under the new rules, rail companies will be able to offer their services in EU domestic passenger rail markets in two ways.
First, in cases where national authorities award public service contracts to provide passenger rail services, bidding for public service contracts open to all EU rail operators should gradually become the standard procedure for selecting service providers.
These contracts, which member states use to provide public passenger transport, account for about two thirds of passenger rail services in the EU. Inviting companies to bid for them should sharpen their customer focus and save costs for the taxpayers.
National authorities will also retain the right to award contracts directly, without bidding, but if this method is used it must offer improvements for passengers or cost efficiency gains.
•Contracts awarded directly would have to include performance requirements (as punctuality and frequency of services, quality of rolling stock and transport capacity).
•Direct award would be allowed for public service contracts below a certain average annual value or for annual provision of public passenger transport services by rail (EUR 7.5 million or 500,000 km).
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.
Second, any rail company will be able to offer competing commercial services on EU passenger rail markets.
However, to ensure that services which member states want to be supplied under public service contracts continue, member states could restrict a new operator’s right of access to certain lines. An objective economic analysis by the national regulator would be needed to determine when open access can be limited.
The reform adopted 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 known to be less environmentally friendly.
The Fourth Railway Package is the new legislation passed by the European Parliament, intended to eliminate the unnecessary and burdening technical barriers and to improve cross-border rail passenger services for anyone travelling across Europe.
The development of railway infrastructure and the improvement of the quality of rail passenger services are considered to be key priorities in the promotion of a sustainable transport and mobility system in Europe.
by Elena Ilie
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