Bloomberg News

EU Domestic Passenger-Train Markets Would Be Opened by Draft Law

January 30, 2013

European Union regulators proposed to deregulate domestic passenger-train markets across the EU in the latest bid to improve services, setting up a potential fight with national governments in the bloc.

The European Commission presented draft legislation that would open domestic passenger railways in the 27-nation EU to competition as of December 2019. The goal is to help trains win market share from cars and airplanes.

The proposal would affect EU countries such as France, Poland, the Netherlands and Belgium whose markets are closed. Member nations including Germany, the U.K. and Italy have opened their markets. The draft law would also establish EU-wide vehicle authorizations and safety certificates and bolster the role of track managers.

“This is quite radical,” EU Transportation Commissioner Siim Kallas told reporters today in Brussels. “The package is a good one.”

The commission is seeking to build on deregulation of the freight-train market and international passenger-train services. The bloc removed the remaining barriers to freight services in 2007 and deregulated the cross-border passenger market in 2010.

Domestic passenger-train services account for more than 94 percent of the EU passenger rail market, according to the commission, the bloc’s regulatory arm. In 16 of the 25 EU nations that have railways, an incumbent exists with a market share of more than 90 percent, according to the commission.

Draft Legislation

The draft legislation needs the support of national governments and the European Parliament in a process that can take years.

In 2005-2007, during the previous EU deliberations on rail- market deregulation, the Parliament pressed to remove barriers to domestic services and then abandoned the effort in the face of resistance by national governments. The assembly initially sought to set a 2012 date for such a step and then proposed 2017 as a compromise that also failed.

In today’s package, the European Railway Agency would become a “one-stop shop” for issuing approvals to place vehicles on the market and safety certificates for operators, according to the commission. Currently, national authorities perform these tasks.

A centralized European approval system would cut the time to market for new undertakings by 20 percent and reduce the cost and duration of the procedure for authorizing rolling stock by the same amount, said the commission, which projected overall cost savings for companies of 500 million euros ($678 million) by 2025.

Track Managers

To help ensure that track managers operate efficiently, the draft legislation would give them control of “all the functions at the heart of the rail network, including infrastructure investment planning, day-to-day operations and maintenance, as well as timetabling,” said the commission.

It also said track managers must have operational and financial independence from companies that run the trains.

“This is essential to remove potential conflicts of interest and give all companies access to tracks in a non- discriminatory way,” the commission said.

Rail undertakings independent of track managers would have immediate access to the domestic passenger market in 2019, according to the commission. It said a vertically integrated entity or “holding structure” would be acceptable as long as “strict Chinese walls” were in place to ensure legal, financial and operational separation.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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