Railway Companies

Competition to be postponed to 2024

If new bill of law is accepted, competition in railway transport will be postponed to 2024 or later.

There are 3 articles in new bill of law presented in Turkish Parliament. All of them may have direct effects on liberalization of railway transportation. Here are them:

Financial support for TCDD will continue

Having 1 bn TL of revenue and 3.5 bn TL of expenses, TCDD had a loss of 2.5 bn TL in 2019. The financial shortfall was met by Government until now. According to bill of law, this will continue until end of 2023.

TCDD is mainly responsible for development, management and maintanance of rail network. Its main income is the railway usage fee paid by train operators. If pushed for profitability, railway usage fees will increase. Support to TCDD means actually supporting trains competing with trucks and buses.

On the other hand, supporting TCDD will be an indirect support to its subsidiaries. Its leading subsidiaries are TCDD Tasimacilik as train operator and Turasas as rolling stock manufacturer. Both of them are both competing and also cooperating with private companies.

Financial support for TCDD Tasimacilik will also continue

TCDD Tasimacilik has a revenue of 1.4 bn TL, 1.2 bn TL subsidy, 3.7 bn TL of expenses and 1.1 bn TL of loss. It needs a financial support of 1 bn TL every year.

Supporting TCDD Tasimacilik allows the company to offer tariffs less than its costs. This helps competition of rail with trucks in one side. On the other side, it’s a problem for private operators which must ensure profitability and consider TCDD Tasimacilik’s price at the same time.

According to bill of law, this financial support will continue until end of 2023 and may be extended for 10 more years.

Private passenger trains will wait for 2024

As we wrote before, private operators can run passenger trains even today.

However, the subsidies paid to TCDD Tasimacilik for passenger trains is more than total revenue from tickets. That means, if a private operator starts operation, the ticket prices may double. Private companies have not prefered investing in this “not well known” area.

To speed up the enterance of private companies into this service, Turkish Government had decided participation of private companies to tenders for these subsidized trains as of 2021. In addition to many unknowns in this area for private companies, uncertainties due to Covid were added and not even a company took the chance competing with TCDD Tasimacilik.

With this bill of law, TCDD Tasimacilik will continue to operate all subsidized trains until end of 2023. No tender will be opened for them.

Thus, if bill of law is accepted, the competition both in freight and passenger transport will be postponed after 2023.

Cover photo: Steve Hobson ©


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