Deutsche Bahn between public service provider and profit: is it time for a radical restructuring?

Long-distance trains arrive too late, cooperation between units isn’t working, profit forecasts are pessimistic, freight traffic is making losses, and the infrastructure is underfinanced: Deutsche Bahn is coming in for a great deal of criticism. How to achieve tangible improvements for customers? Are fundamental structural reforms necessary? Richard Lutz, CEO of Deutsche Bahn AG, points out that the pursuit of “growth on rails” has pushed the system to its capacity limits in terms of infrastructure, vehicles, and personnel. Bottlenecks are increasingly putting a strain on the quality of operations and on customers. The “Agenda for a Better Railway” is DB’s answer to this challenge and plots a path to sustainable success for the company. This path will be longer than expected and the company will have to invest significantly more than previously planned. The focus is on effective infrastructure, better rolling stock, and additional personnel. This is how DB is laying the foundations for urgent improvements in quality, punctuality, and reliability. He concludes: “We don’t need a radical transformation, we need to put in a joint effort to support capacity, growth, customers, and quality.” Christian Böttger of the University of Applied Sciences Berlin proposes short-term financial stabilization of DB AG. This might be achieved by selling Arriva, and possibly also Schenker. Then the company could finance upcoming investments and pay off debts. In addition, the governance of the company should be improved. Since DB AG cannot afford the infrastructure investments necessary to achieve the objective of doubling transportation volumes, these funds would therefore have to come from the German federal government. Overall, he assumes that it will take many years to solve the rail network’s problems. For Alexander Kirchner, Chairman of the Rail and Transport Union, “giving rail reliably more money and a clear political mandate ... are the number one solution to the problem.” In his view, it is first and foremost the owner—the German federal government—that bears the responsibility for how the entire rail system is suffering. For years now, instead of investing in infrastructure maintenance, wear and tear has been the order of the day. A radical restructuring would therefore be necessary with regard to financing the rail infrastructure. Günter Knieps of the University of Freiburg deals with the question of identifying the upheavals that advances in information and communication technologies will bring to future rail networks and the opportunities and challenges that will accompany those upheavals. The digital shift towards the Internet of Things could fundamentally change the future role of rail: in the markets for mobility services, in the area of fully automated trains, in the area of predictive train maintenance, in the area of train monitoring systems, and in establishing digital signaling.