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Was open railway access good for Europe?

Following a comment I made about open railway access in Turkey, Onur asked me to expand my point of view.

Being a foreigner, I might not have a full understanding of the conditions in Turkey, However, I can share my views on what happened in Western Europe and in particular in France when similar laws where voted some years ago.

In 1991, the European Union published the first of several directives aimed at opening the railways. The European Union goal was to fix distortions in the European integrations:

All railway operators were not international and relied on a set of interoperability treaties to carry-out international traffic. Consequently, despite the free movement of goods & passengers, trains had difficulty to go through borders.

Nearly all railway operators in Europe were public companies, receiving various levels of subsidies distorting the true cost of railway transportation.

Railway were facing strong competition from road transportation, which themselves where not paying the full cost of the road infrastructure,

Most European railways were not efficiently managed and enjoyed some sort of monopoly preventing the entry of competitors.

At the beginning, the EU required for an accounting separation between infrastructure and operations. Gradually it became an effective separation. Then the EU pushed for open access to the infrastructure by any operator, very much like highways or airports can be used by many operators. This was a new paradigm in an industry where the business model had always been an integration of all the railway components in a single system.

Implementation across Europe was varied. The British Government passed the Railway act in 1993 that privatized British rail. This was the biggest railway privatization at the time, probably still is and much in excess of the EU requirements. The British chose to break-up British rails into a myriad of companies that were sold off. Later on, in 2002, the infrastructure bit, Railtrack had to be brought back into Government control. Everything else is still in private hands. The two most notable success have been an unprecedented level of investments in rolling stock, resulting is new trains almost everywhere and a huge increase in passengers trafic. However, the overall amount of government subsidy to railways has increased and the average fare paid by the passengers has increased as well. On the freight side, the success is not so big and the rail market share in UK is today about 10%, more or less the same level British Rail had. Interestingly, SNCF, DB & NS became big operators in UK through ownership of train operating companies.

The British case is rather extreme and I am under the impression the path currently taken by Turkey is more like France or Italy. The open access is implemented in order to invite competitors to the national champions namely SNCF and FS. The latter are kept in place.

In France, the transposition of EU directives was quite late and bumpy. The network was separated from SNCF in 1997 and put into a new state body. This new body was in charge of organizing open access and started collecting fees from its sole customer: SNCF. In order to convince SNCF to accept the deal, the Government transferred the huge debt SNCF had at the time to this new body. Later, it was found the whole set-up to be inefficient. In 2015, the network was given back to SNCF. The subject of the debt is still not resolved and the amount of subsidy has not reduced.

It was not until 2003 that a truly open access freight competitor started in France. Now the freight sector is fully open and there are about 20 private operators. However success is not there: the overall market share of the rail in freight is still less than 10% and is not growing. The overall net volume transported is decreasing. Private operators grabbed about 30% of the traffic that SNCF use to have. These new operators did not bring new customers and simply scooped away some of SNCF best customers. To be fair competition improved both the overall quality and security of railways, at least in France but in many other countries as well. The facts are there: nobody can argue that new entrants are less secure than SNCF.

One interesting move: SNCF is the owner of VFLI one the biggest private freight operator and captured this way some of the traffic it lost. DB is the owner of ECR, the biggest private operator in France. So in effect, we are seeing a competition between DB and SNCF through their subsidiaries, somewhat like in the UK.

In my opinion, implementation in France was made easier by the overall over capacity of the network. Apart from a few areas, there were/are many under-utilized lines and freight yards. It was easy for new operators to park their trains, service their locos, find path, … On the other side, SNCF was a good and finding all kind of excuses to delay open access implementation.

The 30% market share of railway freight going to private operators seems to be the water mark in several European countries like Germany or Poland.

In the passenger sector, the competition is almost nonexistent in France because open access is allowed only for international trains, SNCF still has a monopoly of domestic services. Only FS in partnership with Veolia is currently operating a non SNCF passenger train in France. DB managed some high speed sets on French lines, but that is in partnership with SNCF.

Italy is quite different. High speed lines are open to competition and NTV, another subsidiary of SNCF, is now running high speed trains between Milano and Rome in frontal competition with FS.

Cover Photo: Euro Cargo Rail ©


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