Public service obligation, positive for the operator or just another “headache”?

No matter how difficult the situation is, the rights of passengers in railway transport have to be applied and observed. Railway operators have assumed this responsibility by signing the public service obligation. It is mandatory to observe the passengers’ mobility rights. At first sight, everything may seem simple, the state pays for the demanded public services, the operator is paid for the provided services. Conversely, practice shows that things are not at all simple.
However, in some EU-15 countries and in all Central and East European countries (CEE), the rail sector is a primary victim of budget constraints. The state doesn’t pay subsidies in time. As closing public transport services is politically difficult, national authorities often continue to require extensive public service obligations without compensating them adequately.
Economically, a vicious circle is created: the operator suffers significant losses, it can no longer compensate the potentially affected passengers, it can no longer gain profit and, in the end, the economic branch, which is supposed to be supported through the transport activity, is visibly perturbed.
However, the European railway sector through the voice of the Community of European Railway and Infrastructure Companies (CER) believes that member states must pay for the services they request. Railway undertakings should not be forced to finance public service obligation losses with revenues from other activities. Unfortunately, it happens. Public service contracts need to be concluded for a reasonable period of time. The rights and obligations of rail transport passengers are ensured through Regulation 1371/2007.

Everybody is asking for their rights. Who pays for obligations?

Under the Regulation, railway operators define the quality standards for their services and implement a quality management system.
Service quality standards cover information and travel tickets, punctuality of services and general principles for facing service disruptions, cancellation of services, rolling stock quality, evaluation of customer satisfaction level, dealing with complaints, reimbursements and compensations in case service quality norms are not observed and assistance for disabled and low-mobility people.Moreover, the operators are obliged to evaluate their own activities in conformity with the service quality standards. Every year, they have to publish a report on the quality of the provided services,independently of the annual mandatory report. Reports on the activities of service quality standards are published on the operators’ website.
However, a member state can grant a derogation to national rail passenger transport services on a maximum period of 5 years in a transparent and non-discriminatory way. The derogation can be extended twice by another maximum period of 5 years since the implementation of the provisions of the present regulation. Once rail passenger transport was liberalised starting with January 2010, the rights of passengers as well as the obligations of the operator are mandatory of the entire network of the countries subject to this Regulation.
“When markets are opened and to make such liberalisation successful, it is crucial that a sufficient financing of the infrastructure is guaranteed and that public services obligations are properly compensated and that historical debt is reduced to a manageable level. In this regard, independent regulatory bodies have a role to play as the key institution that can contribute to the enforcement of European and national legislation in a country”, declared Johannes Ludewig, CER’s Executive Director in a short interview on the topic in December 2009.

by Elena Ilie


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