Business models should include examining competition and playing to one’s own particular strengths

gavinInterview with Trevor GARROD, Chairman, European Passengers’ Federation.

Europe has lately focused on the intense discussions around the Fourth Railway Package, a legislative act which should “stimulate the reduction of costs for railway passenger transport, to optimize the reliability, quality, information supply and to form an integrated transport network”, points out Trevor Garrod, Chairman, European Passengers’ Federation (EPF) in the interview for Railway Pro. Moreover, implementation will challenge operators, one of the greatest challenges being the submission of bids for the supply of transport services and, at the same time, to estimate the economic trends in the period its supplies the services. Another challenge is the competition of the other transport modes.

A part from the challenges and benefits created by the implementation of the Fourth Railway Package, Mr. Trevor Garrod explains the methods of increasing public transport attractiveness, but also the way in which increasing mobility options, orienting services to customers and the new solutions for increasing public transport attractiveness can become a business model leading to rail transport development; the EPF representative also talks about the difference between Western Europe public transport and Central and Eastern Europe public transport.

Railway PRO: The Fourth Railway Package has been intensely debated in the railway transport over the last period of time. What do you think about the effects of implementing it in the railway transport.
Trevor Garrod: We judge it by the simple criterion – will it benefit rail passengers and therefore increase rail’s share of the market?
That means that it has to lead to reduced prices, improved reliability, quality and information and create a better network.
The technical pillar should certainly help in this respect, especially on cross-border services. Streamlining of acceptance procedures and harmonisation of safety will contribute towards reduced costs make it easier to introduce new or improved cross-border services.
As far as the other pillars are concerned, much depends upon the terms of what is, effectively, a contract between an operator and a national or regional government.

Railway PRO: What do you think about the effects of implementing the Package in railway transport?
Trevor Garrod: Let’s look first at what has happened in countries which have already introduced liberalisation, because they can be seen as a model for this part of the 4th Railway Package.
In Great Britain the entire network was franchised out to private Train Operating Companies in the mid 1990s.  In Germany private operators were allowed to bid for regional services while the core national network remained with Deutsche Bahn.
In both countries, passenger numbers have increased.
Since 1996, 24% of German regional rail services have been operated by private companies. They have worked with regional authorities to reduce costs and tailor services to local needs, resulting in an 18% increase in train/kilometres and a 50% increase in passenger numbers. The new system has also prompted Deutsch Bahn to change the way in which it runs its remaining regional services.
In Great Britain numbers were already on the increase before privatisation and, of course, they may well have continued to go up if the nationalised British Rail had still been running trains. Passenger kilometres have doubled since 1993-4, passenger numbers have gone up by over 70% since the late 1990s and in the same period 20% more trains have run. The National Passenger Survey (which is not organised by the operators) shows passenger satisfaction overall at a record high.
Some of the fears which users had, that services would be cut and national ticketing and information would be fragmented, fortunately have not happened. That is because certain requirements were written into the law.
You can still buy a ticket from anywhere to anywhere, and use it on the trains of different operating companies. For example, from my home town of Lowestoft to Leeds in the north of England, I buy one ticket, which I use on a series of three trains, each run by a different company.  I can also print out a schedule of train times for the journey.
This facility is possible because of the Rail Settlement Plan, which allocates revenue between different operators (including open access operators) and, if appropriate, third parties selling tickets.
We are also fortunate in having a National Passenger Survey conducted twice a year, with results published so that passengers can see which operators are giving most satisfaction to their customers. This is conducted by the Government-funded statutory body Passenger Focus.
Other EU countries can learn from the British and German experiences if and when the Fourth Railway Package becomes law and is implemented.

Railway PRO: What are the challenges faced by operators when the Fourth Railway Package is implemented?
Trevor Garrod: The biggest challenge is to submit a bid to run services and, in so doing, to predict economic trends over the period of the franchise.
In Great Britain, this means reducing costs but improving quality. Companies bidding to run trains should also show an ability to innovate – which could mean through services where there were none before; better rolling stock; new bus/train links with through ticketing; improved customer service.
The company should only make promises which it is confident that it can fulfil.
A company bidding to run trains for ten years must also be able to make a realistic prediction of what the economic situation will be in ten years time. Failure to do so may lead to a situation where an operator has to “hand in the keys” to a franchise (such as happened in 2010 between London and Edinburgh) or to the problems besetting the re-award of the West Coast Main Line franchise in 2011/12.
A further challenge comes from competition from other modes. For example, a new coach operator or airline may enter the field and compete against the train operator. Certainly in Germany and in Sweden, long-distance coach operators have done so.  One question then to be considered may be: is the competition fair?  Another question arises: is a bus or coach operator attracting passengers away from the trains, or is it attracting motorists out of their cars?  The evidence from Germany and Sweden indicates some modal shift from car to bus or coach; but if the road operator undercuts the rail operator (in terms of price and/or flexibility), the latter may lose out.
Fair competition may also be an infrastructure matter:  the train operator is using the properly equipped station; the coach operator may just be picking up and dropping passengers in a back street.
We in EPF have taken part in the SMART MOVE project for a modal shift from car to bus and coach; but in so doing we have also argued for proper multimodal public transport hubs which operators should be required to use.

Railway PRO:  What are the challenges for railway transport operators in increasing transport demand and changing the market structure?
Trevor Garrod: One such potential challenge is open access – especially if it leads to a private company “cherry-picking” on a popular route such as Vienna – Salzburg, Hamburg – Cologne or Prague – Ostrava. It is perhaps too early to make a definite judgement  on the effect of companies such as WESTbahn, HKX or Regiojet – but that judgement must answer the question: are more people travelling by train  overall, or is one operator simply taking a portion of the other operator’s customers?
Great Britain only has three open access passenger operators at present. Their operations are, of course, purely commercial and a fourth operator ceased trading after losing money. The British open access operators carry a very small percentage of the total rail market, linking London with cities such as Hull, Sunderland and Bradford which previously had few or no direct links with the capital.
For the passenger, what is important is clear objective information and the chance to be flexible. There should be online and printed publicity showing the various options by train and other public transport modes. Not every journey is a simple return trip. Zonal tickets (such as found in the German Laender or the Italian region of Lombardy) and Interrail have an important role.
Sometimes British people find it convenient to go to the Continent by train and return by ferry or plane – but that can sometimes be difficult to book and expensive.

Railway PRO:  In your opinion, what are the methods for increasing the attractiveness of public transport?
Trevor Garrod: Public transport has to be easy to use and it has to be affordable. The technology is now there to enable the customer to plan and end-to-end journey. We in the European Passengers’ Federation have supported the Telematics Applications for Passengers that has been developed at European level and the concept of a multi-modal journey planner.
Ideally a passenger should be able to pay for an entire door-to-door journey in one transaction. That may happen in the future.
In the meantime, EPF encourages good practice whereby, for example, a ticket by high-speed train by the Italian operator NTV to Florence, Naples or Salerno also includes public transport for 24 hours in the destination city. This is one of many such facilities covered by our report THE FINAL MILE, published in English, French and German in October 2013 and available on our website ( www.epf.eu ).
Such seamless travel also means that local buses and other public transport should have easy interchange with trains. In cities with frequent urban transport, it is more important to have barrier-free access from the platform to the stop and to make the stop easy to find.
In rural areas, with less frequent buses, it is reasonable to hold connections, at least for a certain specified time. Communication between the train and bus operator would be sensible here, but more work needs to be done to persuade some of them. Sometimes public transport routes and schedules seem to be planned more for the convenience of the operator than the passenger.
In the late 1990s, a colleague and I had travelled by train from Strasbourg to Lauterbourg, in France, or a conference. The last train back in the early evening was actually a bus. It took longer and was less comfortable. On the way back we saw the train returning to Strasbourg as empty stock!
I recently chaired a meeting where several of those present complained that a popular local leisure area was not covered. The two bus operators present said that this was because the road was too congested and their buses would be delayed. The message seemed to be, “We won’t take you there because it takes us too long.”
Customers often complain that rail fares are too high. As I have indicated, the 4th Railway Package should reduce them. There is also a political debate to be continued on the respective costs of different modes of transport and how to create a level playing field between them. However, train operators can help themselves by encouraging off-peak travel at cheaper fares and by railcards which, effectively, reward more frequent users. Some operators in some countries already do this; others should follow their example.

Railway PRO:  To what extent can the increase of mobility alternatives, the customer-orientation of services and the new solutions for increasing the attractiveness of public transport become a business model?
Trevor Garrod: Any business model should certainly include examining the competition and playing to one’s own particular strengths. It may, for example, be faster to fly between two cities, but cramped seating, inconveniently sited airports and the amount of time spent in a terminal must be offset by the convenience of a city centre station, swift boarding and a comfortable train.
Customer service must also be part of a business plan. The daily commuter is familiar with the route and does not need much staff contact – though information when things go wrong is still important; and a human presence can also be desirable for security reasons.
The more occasional traveller appreciates the presence of staff who, furthermore, should be well-informed, well-equipped and well-motivated. Therefore, for most if not all operators, employment of adequate staff and the proper training of those staff should be part of any business plan. Consultation with users’ organisations should also take place as a plan is developed.

Railway PRO:  It is obvious that Europe is divided into unequal regions regarding public transport development and the implementation of new policies. What can you tell us about the project of encouraging public transport in Western Europe, compared to Central and Eastern Europe?
Trevor Garrod: There are indeed good examples in some western European regions. Sometimes a cross-border region such as Euregio Maas-Rhine, covering parts of German, Belgium and the Netherlands, brings together train and bus operators with joint marketing and a user-friendly day ticket.
The German Verkehrsverbunde (Transport Authorities) usually provides excellent examples of co-ordination within a city and its region.
Regionalisation in some parts of France in the past decade has also been very successful. It was pioneered in Alsace, where one organising authority now co-ordinates 13 rail services, 7 cross-border lines and 7 local bus routes. Since decentralisation, with decisions being taken in the region rather than in distant Paris, train-kilometres, bus-kilometres, passenger numbers and passenger-kilometres have all increased.
In 2009-10, for instance, passenger numbers grew by 13-14%.
In other places, simply investing to modernise a network and make it more user-friendly has led to increased usage.  In Northern Ireland, for example, there is a small rail network (following widespread closures in the 1950s and 1960s) but an extensive bus network.  Recent investment in new trains and infrastructure (including a cross-city line in Belfast plus four new stations including an impressive combined rail and bus station) together with good customer service and marketing, has boosted passenger numbers, which rose by 20% in the period 2008 – 2013. Northern Ireland is the one part of the United Kingdom which still has a fully publicly owned rail network and a provincial transport authority, Translink. That indicates that one size does not always fit all, and that conditions in differing European countries can means there is more than one way of delivering a good service.

Railway PRO:  According to current trends, more and more people choose motorised private transport. How could they be persuaded to choose public transport? What are the methods of increasing the attractiveness of public transport that the authorities and companies should apply to attract as many passengers as possible towards an environmentally friendly transport?
Trevor Garrod: The motor car is perceived as giving people more freedom and, of course, it is one of the inventions that have transformed lives – but most reasonable people accept that it also causes problems which must be addressed.
Car ownership is not the same as car usage.  If someone buys a car, this does not mean that they have to use it all the time. Government policies should encourage people to make rational and environmentally friendly choices. As I have already shown, fares policy and seamless travel can help public transport offer an alternative to the motor car and indeed to reduce what we may call “car dependency.”
Another way in which trains and buses can tempt people out of cars is through service frequency.  In the late 1980s, many cross-country routes in England and Wales underwent a transformation, with longer trains being replaced by shorter but more frequent ones.  The idea behind the concept was that people could be tempted out of their cars if they had a short, fast, comfortable train every hour instead of a longer train just four or five times a day or an inconvenient series of local trains.  Typical of this transformation was the route from Norwich to Liverpool via the major cities of Nottingham, Sheffield and Manchester.
My local railway from Ipswich to Lowestoft, some 70 kilometres, has also seen the benefits of a more frequent service. An hourly service was introduced on this fairly rural line linking two towns, in two stages from 2010.  Previously we had, essentially, only one train every two hours. In January 2014 the train operator announced a 60% increase in business since December 2010.
The design of the public transport vehicles themselves can also tempt people out of cars.  In Sweden it is often said, “when you start a family you have to buy a car.”  A family may need to take more luggage and needs room for items such as baby-buggies.  Designers or trains, trams, metros and buses need to allow enough flexi-space for such items and we in EPF have made this point in submissions to the European Commission. That also applies to bicycles by train. Otherwise some cyclists will attach their bicycles to the roofs of their cars.
A car has also often been seen by young people as a status symbol. Yet in some countries, things are changing. Over the past decade in Switzerland, the percentage of teenagers acquiring a driving licence has gone down, and owning a smartphone or tablet has become more of a status symbol.  Of course, Switzerland is also a country with an excellent public transport network. That brings me to my last point:  the carrot and the stick.
To encourage motorists to leave their cars at home, some cities have introduced a congestion charge. London did so in 2003 and cities such as Stockholm and Milan have more recently brought in similar schemes. To make this “stick” effective, however, a “carrot” is also required – and in the case of London this meant introducing 300 extra buses, including new routes and priority measures.
In the four years immediately following the introduction of the congestion charge in February 2003, daily bus usage went up from 90,000 to 116,000. Modal shift in London between 2000 and 2009 including a 67% increase in bus usage, 10% more passengers on the Underground (metro), 27% more passengers on suburban trains and 82% more on the Docklands Light Railway.
The congestion charge was not the sole cause of the modal shift – the extension of the Docklands Light Railway and the introduction of the Oyster stored-value card were also factors.

Railway PRO:  To what extent is urban rail transport an opportunity for sustainable development in the large cities?
Trevor Garrod: Firstly, let us define “urban rail transport” as public transport on rails – whether metro, tram, light rapid transit or conventional rail; indeed, in some cities (such as Karlsruhe and Mulhouse) the distinction is in any case blurred.
Electric vehicles – whether conventional trains, trams or metros – obviously reduce pollution and play a role in sustainable development and regeneration. It is important to develop brown field sites where possible rather than build on farmland, in forest or on parkland needed for recreation. Such inner-city sites are much better served by public transport than by cars.
The Docklands Light Railway and the recently completed orbital route of London Overground are highly successful in that respect.
In Nottingham I have travelled from the railway station on the new tram route which terminates on the site of a former coal mine, Phoenix Park, which is now a business park. In Salford (Greater Manchester) and Dublin I have used trams to the former dock areas now being regenerated while in Sheffield the Supertram is helping regenerate the formerly heavily industrialised Don Valley.
France, like the United Kingdom, had largely turned its back on the tram; but over the past two decades its larger cities have reintroduced tram systems or built metros and are cleaner and quieter as a result.
Lille is a good example of a city whose high-speed rail links, refurbished tram and modern metro have helped greatly in its regeneration.
In the Netherlands, I have visited suburbs of Amsterdam and Utrecht where the metro or tram respectively were designed into the new developments. These are pleasant places to live while the trip into the city centre is fast, clean and efficient.
These are all examples of good practice which we in the European Passengers’ Federation seek to discuss and promote.

[ by Pamela Luică ]
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