“…interoperability and opening up markets to competition are the foundations of Europe’s ‘next generation’ rail system”

Interview with Jean-Pierre Audoux, General Manager, French Railway Industry Association (FIF)

The French Railway Industry Association (Féderation des Industries Ferroviaires, FIF*) currently represents about 50 companies from across the country’s industrial chain – from equipment suppliers and rolling stock manufacturers to signalling and track industries, engineering firms, designers and test centres.

Railway Pro:
How is the rail industry developing – both in France and Europe?

Jean-Pierre Audoux: The biggest changes in recent years have been the evolution of the rail industry and the missions of the FIF. The year 1996 was the ‘annus horribilis’ for rail in France, marked by implosion of the SNCF, the country’s incumbent operator. After years of losing market share, stagnation in traffic and major deficits, the company could no longer afford to function at a loss. For years freight had been struggling to compete with road haulage and the focus on high-speed rail meant regional train services had been neglected.
And the future looked bleak for the rail industry as a whole, both at home and abroad. Up to the nineties, the preferred transport modes were the car for journeys up to 400km and the plane for longer distances. Critics claimed the only viable prospect for the industry was high speed. But despite such gloomy prospects, major rail operators in Europe, such as Deutsche Bahn [Germany’ rail freight was deregulated in 1994], had already started implementing reforms. Also 1996 was marked by changes in legislation with the introduction of Directive 91/440 on the liberalisation of international passenger markets and Directive  96/48 on high-speed interoperability. So on a European level the foundations for a ‘new rail order’ were being put into place, with all the consequences this implied.
In 1997 as France embarked on reforms, the FIF assessed the situation and tried to anticipate the future. Because we had two options – either to believe the critics, lose faith in the future of rail and shut up shop, or recognise that the industry had reached a turning point and that this would be followed by difficult transitional period. At the FIF we chose the latter and decided to prepare for these years of change, which we believe will continue up to 2020.

Railway Pro:
Are European Directives shaping the market in the right direction?

Jean-Pierre Audoux: For the FIF, the Directives I mentioned earlier have several implications. Interoperability and opening up markets to competition are the foundations of Europe’s ‘next generation’ rail system. Once we had grasped the importance of these two factors, we had to prepare: this meant thinking outside the box and taking a more Europe-centric, then global approach, as well as increasing the number of actors in the industry. Returning to the ‘annus horribilis’ of 1996, despite their different rail cultures, most countries in Europe had one point in common – monopoly by the state-owned operator, for example the SNCF, British Rail, Gunndesbahn [Germany], Ferrovie dello Stato [Italy] and Renfe [Spain]. And in every case this operator monopolised every aspect of the sector, from services and rolling stock to network maintenance and investment. But thanks to interoperability and market liberalisation, new rules and regulations, plus more players in the field, this monopoly is now at an end.

Railway Pro: Must industry players adopt a different approach?

Jean-Pierre Audoux:
It’s vital operators refocus on what they do best, and should be doing – namely transporting passengers and goods – and let the manufacturers design and build the rolling stock. In 1996 European rail operators were designing and developed their trains themselves. They delivered specifications to manufacturers and said ‘this is what we want’. So our manufacturers were just executors. But today they have gained expertise and as the world market opens up their past attitude of “I am in my home turf and I export” is being replaced by “I locate to where the big business is developing.” Company culture is becoming international and multinational.
The market shares of leading rail countries are falling and will continue to do so.  This doesn’t mean they have been supplanted by others, simply that turnover on an international level is gradually rising everywhere. So obviously during this transition period we need to think harmonisation, more actors and company consolidation.

Railway Pro:
What is the FIF’s role in this ‘new rail order’?

Jean-Pierre Audoux:
Our task is to explain exactly what is going on and the new rules of the game. This includes organising work groups, presentations and holding conferences. It’s also our job to assess investments in rail on all time scales – long, short and medium – analyse situations and make proposals at political decision-making levels.  Particularly at this time of credit crunch, we need to seek alternative sources of financing projects than the taxpayer.  Other missions include taking steps to help to optimise the way rail systems operate to reduce loses. And to boost  efficiency and reliability we try to bring actors to the table to discuss how they can improve performance levels. Here we draw on our close relations with political powers and public authorities. Overcoming barriers to boosting productivity is another area we are working on.

Railway Pro: Are Private Public Partnerships (PPP) the way ahead for funding infrastructure projects?

Jean-Pierre Audoux:
For major rail projects PPPs are extremely complicated because of the risks linked to traffic and building the lines. For example geological faults might be discovered when works are already underway, which was the case with the Paris-Lille high-speed line [opened in 1993] where part of the track collapsed. In theory the journey should take 50 minutes one way, but it actually takes 1hr 02 or 05 because on a certain stretch speeds are reduced and this weakness was only discovered during construction works. So obviously banks will only agree to loans if they are sure the project will turn a profit. And between the risks and potential gains private companies need reassurance and convincing too. If we want to use PPPs for rail we need to make them attractive for both parties, which currently isn’t the case.

Railway Pro:
How does rail stand to benefit from the French government’s Grenelle Environment initiative?

Jean-Pierre  Audoux:
The Grenelle [round table, led by president Nicolas Sarkozy, aimed at defining policy on ecological and sustainable development issues] includes an extremely ambitious rail programme for new lines and renovation work. But unless funding is secured to put recommendations into place, it risks becoming the ‘grenouille’ (‘frog’) of the environment, i.e.  lots of croaking but little movement! Plus the SNCF, infrastructure manager RFF and industrialists must come to the table and re-assess the working of the current system. Although under no legal obligation to do so, the former two are coming under increasing political and media pressure to reallocate budgets and optimise their activities. If France wants to remain competitive at both European and international levels we need to implement structural reforms, obtain financial backing means and remove cultural barriers.

Interview recorded by Lesley Brown

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