Railway PRO Summit: Rolling stock quality could be a criterion for granting subsidies

“The main source of income for rail passenger operators is the subsidy granted from the state budget for providing transport services. In 2016, the subsidy granted to rail passenger transport operators was estimated at over RON 1.3 billion (EUR 286.9 million), representing around 50% from the companies’ commercial activity. This is not a situation that would help develop the system, but, taking into account the increasing pressure over the public budget, we will not know to what extent it will cover a higher sum. Also, there are new companies that want to access the market, and under these circumstances, we will analyse the possibility of introducing the rolling stock quality criterion in granting the subsidies”, declared Horatiu Stroescu, Competition Inspector – the Railway Supervision Directorate of the Romanian Competition Council, during the Railway PRO Summit, organised by Club Feroviar and Railway PRO, with the support of the Romanian Railway Industry Association (AIF) in Bucharest on 3 – 4 October.
He said that this problem is to be discussed with the Railway Reform Authority (ARF) as subsidies will be established by ARF starting with 2018. “Through ARF’s decision, a mechanism of setting public services subsidies should be approved for rail passenger transport based on the criteria of dimensioning the minimum social package, travel routes, categories and number of trains that compose the minimum social package, as well as cost standards, so that state budget subsidies would be in conformity with the European Union’s regulations”.
At present, the public service compensation scheduled to be granted for the minimum social package approved in rail passenger transport is distributed 35% according to the passenger-km indicator and 65% according to the train-km indicator.
“Although the share of the compensation in the total incomes is very different from one operator to another, the financial flow ensured from this source is essential for the economic stability of the market players and ensure their functionality”, said Stroescu. According to the Competition Council, Softrans is the operator least dependent of this subsidy which has a share of just 31.63% of total incomes. In turn, the operators that most depend on the subsidy are Interregional Călători with 84%, Regiotrans with 82% and Transferoviar Calatori with 80%. As for the market leader, CFR Calatori, the share of subsidy in the company’s total incomes is 57%, “which shows a rather balanced distribution between the subsidies and the incomes obtained from the sale of tickets”.
Last year, there were five rail passenger transport operators in Romania: CFR Calatori, with a share of 84.6%, Regiotrans with 7.9%, Transferoviar Calatori with 4.5%, Softrans with 1.7% and Interregional Calatori with 1.3%.
As regards the volume of passengers who choose rail transport, the numbers are on a downfall with 64.44 million passengers compared to 66.46 million in 2015 and 69.39 million passengers in 2014. “Actually, the market dropped by 3% compared to 2015 and by 7.7% compared to 2014. For 2017-2018, the Competition Council estimates that the negative evolution of the passenger market will stagnate, not due to the efficient development strategies of the operators, but due to the government measures such as providing free rail transport services for students. Also, the presence in the market of a new player, Astra Trans Carpatic, will not affect the market structure as the operator only provides services on Arad – Brasov – Bucuresti – Constanta route”.

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