Brussels, 19/06/2014 (Agence Europe) - The railways are costing Europeans dearly: €80 for every European a year or €36 billion in subsidies. Nonetheless, growth of the railways in Europe is uneven. In light of a report on the internal railway market (4th edition), the Commission believes that public money could be better used through public calls for tender. The logic of the 4th railway package is fully in line with this observation.
The biannual report published on Thursday 19 June, notes different situations in Europe. Countries such as Sweden, the United Kingdom, France, Belgium and to a lesser extent, Germany, Denmark and Spain have experienced renewed interest and constant growth since the 1990s. New member states, however, are moving backwards as public investment in railway infrastructure is falling away, which has led to a vicious circle of poor services and disenchantment with this mode of transport.
The Commission therefore recognises that subsidies are inevitable in this sector. Although long-distance and high-speed services are proving profitable, this is not the case with intra-urban and regional lines (94% of passenger lines are domestic, with half of these commuter lines). Public money injected into European railways by the EU member states amounts to €36 billion a year, as much as the revenue generated by ticket sales. The best way of optimising these subsidies, according to the Commission, is to proceed to public calls for tender and the net benefits would account for around 20%.
The report also illustrates that opening up the markets significantly lowers ticket prices and improves the quality of services (more frequent and reliable). Sweden and the United Kingdom are the only countries to have fully opened up their railway markets (including the passenger market) and around ten other member states have a system in which coexists the direct allocation of public contracts to new market entrants (Italy, Poland, Germany, Austria, Bulgaria, Romania, Estonia, Lithuania, Latvia and Slovakia). The gradual opening up of markets promotes the emergence of major railway groups active on the international scene and therefore more than a quarter of revenues are generated by these external activities. This is the case with the German company Deutsche Bahn (42%), SNCF in France (24%) and the Dutch company, NS (38%). (It should be noted, however, that the French and Dutch markets are not completely open to competition and have therefore remained closed to other railway operators.)
It comes as no surprise that the European Commission report confirms the proposals for railway reform it formulated in the 4th railway package that sought to correct dysfunctions in the sector - opening up the domestic passenger market, direct allocation of public contracts and governance. European Commissioner for Transport Siim Kallas has therefore reaffirmed that, in order to be on the right track in the 21st century, the railways have to take bold action, such as opening up the urban markets to competition and making calls for tender for public service contracts the norm. (MD)