The liberalisation of passenger rail transport in the EU is a topic of intense discussions. The policies which encourage this process should allow passengers to benefit from more comfort, safety, attractive tariffs, while infrastructure managers should have more customers and, therefore, more revenues that would also determine the implementation of projects focused on increasing the quality of railway transport.
The liberalisation of the railway transport market in Europe will allow new entrants to access markets in the countries where the competitiveness level is not very high. In this context, the liberalisation can be a financing challenge in the railway sector as the process will improve the productivity of the railway system. All new players have to be consi-dered a source of proposals for creating a better transport system that would benefit from technological innovations and ser-
vices. Also, with the adoption of the Fourth Railway Package, liberalisation will bring benefits to public authorities only if the opportunity of bringing more initiatives and money to the system is created.
All these aspects will form a performing and competitive market, but also new opportunities concerning the necessity of new rolling stock and infrastructure financing resources.
Mr Benoît Chevalier, Deputy Director for Railway Regulation, French Ministry of Transports talks in the interview below about the challenge the liberalisation process poses to railway system financing, the importance of the political class on establishing an environment favourable to the development of the railway transport market and opening access to services on the new high-speed lines in France.
Railway PRO: To what extent the libera-lisation of the railway market is a challenge for the financing of the railway transport system?
Benoît Chevalier: Opening the railway passenger system market in Europe to alternative railway undertakings, as proposed in the fourth railway package, could bring a number of new players in the countries not already widely open to competition. This process is likely to improve productivity of the railway system, but the experience of past market opening shows that local authorities tend to choose a better service for the same or higher price rather than keeping the previous service at a lower price. Thus, every new player must be seen as a new source of proposals for a better transport system and technological, customer service innovations. Such a process is a good way to have a more creative, more dynamic market, but also creates new needs and requires new sources of financing for the rolling stock or the infrastructure proposals that will arise.
Railway PRO: How can the railway business environment determine the political class to accelerate the liberalisation pro-cess?
Benoît Chevalier: Liberalisation has been widely announced and is likely to conclude the process of the four railway packages (three already in force, one being discussed at the Council and the European Parliament). So liberalisation will probably arrive, and the questions left for answer are both when and how it will be organised. As always, the details of the European texts and the national transpositions will be key to a successful liberalisation. The exact date is not as big a challenge as the actual creation of the market. The best way to do it is probably through experimental initiatives, and the private sector is expected to lobby each government asking them to launch a small number of experimental tenders to test the best way forward for each national system.
Railway PRO: The objective of the Fourth Railway Package aims to improve the efficiency and quality of transport services. What are the challenges (gene-rated by the application of the legislative package) that operators have to face?
Benoît Chevalier: The legislative package is not yet adopted, but if it is, liberalisation is likely to create benefits for the public authorities only if it brings the opportunity to bring more creativity, more initiative and sometimes more money into the system. Actual challenges are many, and will depend on the final discussions of the fourth railway package which will extend until 2015 or even 2016. They include the balance to be found between “open access” fully private services and trains operated under a public service contract; the terms and conditions of the staff; the actual relationship between the infrastructure manager and the railway operators, since the infrastructure separation proposed by the European Commission must make way for a strong cooperation in the day to day job… And the discovery of better ways to finance railway infrastructure.
Railway PRO: What does access opening to services on the new high-speed lines mean for France? How would you explain the profitability of the new lines regarding new entrants?
Benoît Chevalier: High speed lines, combining higher costs and higher re-venue, have turned out in other countries to be the profitable segment of the market, even if it very much depend on the infrastructures tolls. However, French high speed lines are already open to competition since 2009 for international passengers, and nobody has yet contacted France to discuss the start of a new service from Paris to London, Brussels or Milano. This means that the profitability might be smaller than thought. But of course, when the national passenger market is eventually open to competition, we anticipate new entrants to try to create services from Paris to Lyon, for example. The role of the French government will be to make sure there is no discrimination between competitors. But it will be for them to create a successful business plan and a profitable business.
Railway PRO: Under the Fourth Railway Package, ERA will be responsible for the supply of the single safety certificate to all railway transport operators (including the authorisations of vehicles put in ser-
vice in the market). How does the national safety authority see the transition towards the implementation of this process since it implies a major change at the level of each state?
Benoît Chevalier: The initial proposal of the fourth railway package included a complete transfer to ERA of the tasks as well as the responsibilities to deliver authorisations. The transport Commission of the European Parliament agreed. But the Council designed a more efficient system, where the authorisation arrives after an exchange between ERA and the national safety authorities. There is no decision taken yet, but in any case ERA will probably have to recruit a number of expert staff for the tasks the regulation gives it. There is even a question of whether there are enough experts for hire on the market…
Railway PRO: Proposed measures would allow reducing by 20% the time necessary for a new operator to enter the market and by 20% the costs and duration for rolling stock authorisations. Also, for companies it would mean saving EUR 500 Million by 2025 (according to the recitals submitted by EC). In this situation, how do you see the cost-benefit analysis?
Benoît Chevalier: The 20% figures are symbolic, but it is fundamental to make sure any value created is a net value added by a more efficient, more creative, more competitive and customer-oriented transport system, rather than an economic asset transferred from the public to the private operator. As far as rolling stock authorisations are concerned, they have been reported to be very long and demanding processes, causing a loss of value (trains parked waiting months for the authorisation…) that was not captured by anyone. It is necessary to shorten them but only if the safety level is secured in the long term. The safety level of the railway system has a significant cost; but it is the cost to stay in business, and provides the huge benefit of making it one of the safest modes of transport currently operating in France and elsewhere.
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