Boosting transport capacity, encouraged by track access charges, yet still depending on government policies

Track access charges play an important part in the making of many decisions with long-term effects in the transport system, especially since they represent a central economic mechanism in the liberalised rail sector.

Railway operators pay the track access charge and expect to benefit from fair infrastructure access and paying lower charges means reduced operation costs for operators who face a harsh competition, both within the railway sector and with the other means of transport, mainly road. “Lower charges permit operators to face competition better and reflect in the price of transport services, supposing that other factors related to costs don’t change. A policy for stimulating traffic growth should encourage reduced track access charges. But there is also a problem: the infrastructure should also be available in the best possible conditions”, declared Edward Christie, Economics Adviser CER.
For infrastructure managers, track access charges are usually an important income source. Actually, this is their only source of income in some countries. Consequently, there are interest conflicts between operators and infrastructure managers.
Government policies can help overcome this problem by providing direct funding to rail infrastructure managers, enabling them to charge less than full  cost recovery, thus helping railway operators to compete against other means of transport and maximise the modal  share of railway transport. This general principle is fully justified  in what concerns public spending priorities: most road transport users don’t pay infrastructure charges (toll roads and motorways are more the exception than the rule). On the other hand, rail infrastructure users have to pay track access charges for each km of railway.
“Consequently, the balancing elements are the extent of state financing and the cost efficiency of rail infrastructure managers. While progress is possible with the latter, there is no escaping the fact that state funding is too low in a number of European countries. The typical result is that infrastructure managers push up the level of track access charges and rail traffic stagnates or falls.”, added the CER representative.
Boosting rail traffic therefore requires a level of state funding which is such that track access charges can be borne by rail operators without losses in competitiveness. That maximum level varies primarily depending on the competition from other modes. CER has advocated a policy of track access charges that adjust to inter-modal competition. “In effect, the idea would be that state funding should adapt to market conditions. Interestingly this concept is present in existing EU legislation in an implicit (and incomplete) form. EU Member States however prefer to retain discretionary power over those spending decisions and this has hurt rail traffic in many cases”, explained Edward Christie.

Torben Holvad,  Economic Adviser  –  European Railway Agency

“From an economic theoretic perspective it can be argued that charges based on short run marginal costs (SRMC) would promote the efficient use of the network. In this case access charges would be based on the costs incurred by running an additional train on the infrastructure. This refers to the existing infrastructure and would not include any investment costs related to the development or extension of the network”

[ by Pamela Luică ]
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