Impacts of Rail Deregulation on Rail Transport Performance

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Comparative Assessment of the

Impacts of Rail Deregulation on Rail

Transport Performance 04.07.2012 & Newcastle University

Erasmus Intensive Railway Programme 2010/211 25th June - 13th July 2012, Newcastle upon Tyne

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Team members & Mentors

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Team members:

Alexandra Staikou, Athens University of Economics and Business [GR] Antonios Polychronopoulos, University of Newcastle upon Tyne [UK]

Giovanni Marco Vallera, Università degli Studi di Roma “La Sapienza” [IT] Liviu Stoican, Universitatea Politehnica din Bucuresti [RO]

Loukia Lolou, Athens University of Economics and Business [GR] Rodrigo Cruz Dourado, Instituto Superior Tecnico [PT]

Group leaders:Michael Madas (GR), Paulus Aditjandra (UK) Other mentors: Fabian Meier (GE), Tom Zunder (UK), Dewan Islam(UK)

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Introduction

• Railways in the past were very popular

• Due to the evolution of road infrastructure and cars going faster they lost ground

• Because of this EU tried to balance the situation through legislations and projects

• Deregulation is in progress

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Objectives

• The goal of this project are:

1. Compare the impact of rail deregulation in the different EU countries

2. Analyse railway sector performance and identify problems

3. Propose solutions for them

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Methodology

• We tried to achieve this by reviewing laws and regulations from the Three Rail Packages.

• Our sources were mostly official like the EU, OECD and Eurostat publications.

• From them we highlighted the most important things and used them in our research.

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Methodology

• Review laws and regulations from the 3 packages

• Check for Implementation level on freight and passenger train reading the indicators

• Analytical information was extracted by the graphs and tables and after discussed.

• This information leads the research team to the problems that rose through the deregulation

• We can’t change the law but we have some recommendations

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The EU Railway Packages

1st

Package

2nd

Package

3rd

Package

Directive 2001/12/EC






Regulation 881/2004



Regulation 1371/2007

EU P

acka

ges

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Directive 2001/12/EC Open the international rail freight market

Establish a general framework for the development of European railways

Relationship between the State and the infrastructure manager

Relationship between the infrastructure manager and railway undertakings

Amend Directive 91/440/EEC by:

Separating the management of railway operation and infrastructure from the provision of railway transport services;

Improving the financial structure of undertakings;

Ensuring access to the networks for rail undertaking engaged in international intermodal transport of goods.

The

Firs

t P

acka

ge

1st Package (2001)

2nd Package (2004)

3rd Package (2007)

Infrastructure licensing and charging must be undertaken by an organization that does not provide transport operations, in order to create unbiased access to infrastructure.

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Directive 2001/13/EC • Freight operators must meet in order to be granted a

license to operate services on the European rail network.

• Licensing issue body must be independent from rail undertaking

• Rail undertaking can also refer to the commission if it claims that the national requirements are applied in a discriminatory manner. In case of such an appeal, the Commission must issue a statement.

1st Package

(2001) 2nd Package

(2004) 3rd Package

(2007)

The

Firs

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acka

ge

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Directive 2001/14/EC • Refers to capacity allocation and infrastructure charging

• Infrastructure manager must publish a network statement that describes the condition and limitation of the network

• Infrastructure manager calculates the charge, takes the track access fees and use them to fund its business (in according to Member States rules)

• If the infrastructure manager is not independent from a Railway Undertaking, an independent body must to do all these functions and collect itself the fees.

1st Package (2001)

2nd Package (2004)

3rd Package (2007)

The

Firs

t P

acka

ge

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2004’s Directives and Regulation 881/2004

• Development and improvement of safety on the European’s railways

• Lay down a procedure for granting the safety certificates that every railway company must obtain before it can run trains on the European network

• Member States must establish a safety authority independent from any railway undertaking or infrastructure manager and collecting safety indicators

1st Package (2001)

2nd Package (2004)

3rd Package (2007)

The

Seco

nd

Pac

kage

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• Member States must also establish an investigating body independent from any rail undertaking or infrastructure manager. It must investigate any serious accident and publish an annual report

1st Package (2001)

2nd Package (2004)

3rd Package (2007)

The

Seco

nd

Pac

kage

• Establishes 1 January 2007 the date to open up both national and international freight services on the entire European network

• Creation of the European Railway Agency that will establish common safety objectives that all Europe's railways must achieve

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2007’s Directives and Regulation (EC) 1371/2007

• open up the international passenger transport market by 2010

• operators will have the opportunity to pick up and set down passengers at any station on an international route, including at stations located in the same Member State

• allow train drivers to circulate on the entire European network with certification of cross-borders drivers, by respecting some standards

• regulate passengers’ rights (passengers with reduced mobility, accidents, personal security)

1st Package (2001)

2nd Package (2004)

3rd Package (2007)

The

Thir

d P

acka

ge

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Deregulation Impacts on EU-Members

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• “Tendering is indeed further related to rising performances in terms of patronage growth and service reliability, but empirical analysis seem to conclude that performances are more akin to the infrastructure investments coinciding with tendering rather than the regulatory reforms themselves”

(Aarhaug, et al.,2011)

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• Procedure passing from the first railway package to the second was considered successful and productive!

• Stakeholders had another opinion…


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Organizational models in EU members,(IBM Deutschland GmbH 2011)

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THE REALITY AFTER THE 1ST PACKAGE IMPLEMENTATION:

• In 2003-2004 the railway undertakings and infrastructure managers had a yearly income of 50 million.

• Only 51 of the 95 railway undertakings and infrastructure European managers have separate accounts for passenger and freight transport and/or infrastructure management


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• Relation between Infrastructure managers and Government commitments.

• Market is strongly related with independence.

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Deregulation Impacts on EU-Members Railway Liberalization Index

• Index to measure Implementation level

• Track the degree of market opening in the European railway transport markets

• Promoted by Deutsch Bahn AG, since 2002 (a year after 1st Rail Package)

• A study conducted by IBM Deutschland GmbH

LIB

Ind

ex

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• Divided in 3 sub-indexes:

• LEX – degree of transposed laws

• ACCESS - for market accessibility level

• COM - rail’s modal split and intermodal market share

• Each UE-member is rated to the following categories: Delayed, On Schedule and Advanced


LIB

Ind

ex

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Delayed

• High density of barriers in law and market exists and there’s a long way run. New entrants would expect difficulties to operate on state-owned infrastructure

On Schedule

• the process of liberalization is currently on going, although it may be having some problems


LIB

Ind

ex

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Advanced

• Favorable environment for private companies and high level in market opening implementation process


LIB

Ind

ex

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1 – Sweden

2 – UK

3 – Germany

25 – Lithuania

26 – Greece

27 – Ireland

LIB

Ind

ex

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Index Growth 2007-11

Ireland, Italy, Bulgaria and Belgium

Spain, Latvia and Lithuania

LIB

Ind

ex

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There are five types of licenses:

• Network license (authorises a person to be the operator of a network, and trains being used on a network for any purpose comprised in the operation of the network)

• Passenger train licence (authorises a person to be the operator of a train being used on a network for the purpose of carrying passengers by railway)

• Non-passenger train licence (authorises a person to be the operator of other trains being used on a network)

• Station licence (authorises a person to operate one or more specified stations)

• Light maintenance depot licence (authorises a person to operate one or more specified light maintenance depots)

Development of the number of notified and valid licenses, EU 2006

Performance of rail transport Licensing

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The number of the railway licenses increased in most EU members during the period of 2003-2006.

Development of the number of notified and valid licenses, EU 2006

Performance of rail transport Licensing

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2000-2007: the rail freight transport increased in most EU countries.

Trends in performance rail freight transport 2000-2007, EC 2009

Performance of rail transport Freight transport

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After 2008, there was a decrease in the rail freight transport, due to the economics crisis which affected a lot of countries.

Trends in performance rail freight transport 2007-2008, EC 2009


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Performance of rail freight transport (2001-2010).

Rail freight transport (thousands mio tkm), Eurostat 2011


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2000-2007: the majority of EU members had an increase in the rail passenger transport.

Trends in passenger rail transport over the period 2000-2007, EC 2009

Performance of rail transport Passenger transport

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In 2008, passenger transport continued to increase but in low levels.

Trends in passenger rail transport over the period 2007-2008, EC 2009


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Performance of rail passenger transport (2001-2010).

Rail passenger transport (thousands mio pkm), Eurostat 2011

2009-2010: there was a small decrease in rail passenger transport.

The sector with the highest increase in traffic is the high-speed sector.


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• Safety

• Punctuality

Quality of service

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Safety

One indicator to measure the quality of services is the safety. We can notice decrease through the years.

European railway passenger fatalities per billion passenger-km 1970-2006, UIC 2010

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Punctuality

One of the most important problems for passengers is the delay over scheduled arrival time.

Punctuality of combined transport trains on eight European freight corridors in 2007, EC 2009

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Punctuality

% Punctuality

Evolution of punctuality of the combined transport trains 1999-2007, EC 2009

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Conclusions

• EU-Members began the legal process of transposing EU Directives into national law and they completed the legally separation between IMs and Operators.

• Although we found divergent interpretation of railway legislation among the countries.

• The top rated countries are UK, Germany, Sweden and Denmark. These countries are already providing favorable conditions for new competitors both in freight and passengers service.

• Safety efforts were made and actually are being implemented sophisticated safety systems and new regulations that lead the railways to a one of the reliable and safer transport mode.

• Pax- kilometre data show that countries like Germany, France and UK have an increased performance in passenger services. On the other hand, ton- kilometre remain stable since the last years.

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Suggestions

• Specific training programs may be needed to help railway workers acquire new skills in order to obtain jobs in technically advanced railway companies.

• The rail sector faces the real danger of losing know-how if no training is provided to the beginners because many railway undertakings over Europe are facing shortages as a result of the incentive to early retirements.

• Spreading railway-related information and training on a wider range should become one of ERA’s role. The performance indicators should be published regularly by an official source like ERA, in order to better monitoring the deregulation impacts.

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THANK YOU

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teşekkür

ederim danke dank u thank you благодаря

obrigado mulţumesc grazie σας ευχαριστώ

!!