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How to liberalise rail passenger services? Lessons from european experience

Author

Listed:
  • Nash, Chris
  • Smith, Andrew
  • Crozet, Yves
  • Link, Heike
  • Nilsson, Jan-Eric

Abstract

This paper studies the experience of Europe's three most liberalised railways - Sweden, Germany and Britain - in opening-up rail passenger services to competition by means of competitive tendering, and seeks to draw lessons for countries that are just starting the process, such as France. It also comments on experience of competition in the market in these and other countries (this form of competition has been taken furthest in other countries - notably Italy and the Czech Republic, as well as on a single route in Austria). The paper fills an important gap in the literature - that has so far focused on econometric modelling of the impact of rail reforms - by considering how competition can best be introduced in practice. This investigation is important and timely given the requirements of EU legislation (4th Railway Package) which will require competition to be introduced into passenger rail services (by 2020 for commercial services, and 2023 for public transport contracts) across the whole of the EU. It finds evidence that competitive tendering has helped increase demand for and reduce subsidies to the rail passenger sector, but that there are many decisions that have to be taken as to how it is to be implemented. Short gross cost contracts may work well for regional services where the tendering authority takes the lead in planning and marketing such services. If services where ticket revenue recovers a larger share of costs – “more commercial services” – are to be tendered, long net cost contracts may make more sense. An alternative is to leave them operated by the incumbent but with open access for competitors to enter the market. Two particular issues face countries starting on the liberalisation process. Firstly, if existing rolling stock is owned by the incumbent rather than the franchising authority or an independent company; that remains a major barrier to entry. The second is the position of existing staff. If new operators are required to take them on at existing wages and conditions; that is a barrier to improved efficiency, but for new operators to recruit their own staff may also be problematic, particularly where the pace of change is fast.

Suggested Citation

  • Nash, Chris & Smith, Andrew & Crozet, Yves & Link, Heike & Nilsson, Jan-Eric, 2019. "How to liberalise rail passenger services? Lessons from european experience," Transport Policy, Elsevier, vol. 79(C), pages 11-20.
    • Handle: RePEc:eee:trapol:v:79:y:2019:i:c:p:11-20
    DOI: 10.1016/j.tranpol.2019.03.011
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    Citations

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    Cited by:

    1. Nash, Chris & Smith, Andrew, 2020. "Public transport procurement in Britain," Research in Transportation Economics, Elsevier, vol. 81(C).
    2. Mizutani, Fumitoshi, 2020. "A comparison of vertical structural types in the railway industry: A simple mathematical explanation model," Research in Transportation Economics, Elsevier, vol. 81(C).
    3. Nilsson, Jan-Eric & Odolinski, Kristofer & Nyström, Johan, 2023. "Using a self-selection mechanism for tendering in the construction industry: A case study of railway renewal contracts," Working Papers 2023:10, Swedish National Road & Transport Research Institute (VTI).
    4. G. Raghuram & Rachna Gangwar & Charu Rastogi, 2023. "A Critique of the Initiative for Public–Private Partnership in Passenger Train Operations1," Vikalpa: The Journal for Decision Makers, , vol. 48(1), pages 7-20, March.
    5. Christian Desmaris & Guillaume Monchambert, 2021. "Regional Passenger Rail Efficiency: Measurement and Explanation in the case of France," Post-Print halshs-03118747, HAL.
    6. Ristić, Bojan & Stojadinović, Nikola & Trifunović, Dejan, 2022. "Conditions for effective on-track competition in the European passenger railway market: A yardstick for regulations," Transport Policy, Elsevier, vol. 119(C), pages 1-15.
    7. Christian Desmaris & Guillaume Monchambert, 2021. "Regional Passenger Rail Efficiency: Measurement and Explanation in the case of France," Working Papers halshs-03118747, HAL.
    8. Álvarez-SanJaime, Óscar & Cantos-Sanchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, Jose J., 2021. "The effect of cooperative infrastructure fees on high-speed rail and airline competition," Transport Policy, Elsevier, vol. 112(C), pages 125-141.
    9. Brand, Christina & Sieg, Gernot, 2022. "An integral interval timetable for long-distance passenger rail services: Time to reconsider targeting on-track competition," Economics of Transportation, Elsevier, vol. 32(C).

    More about this item

    Keywords

    Rail; Passenger; Competition; European;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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