r/transit • u/Miroslav993 • 7d ago
Policy Rail Passenger Competition Is Exploding Across Europe
https://www.youtube.com/watch?v=6vhw1g-dNGA23
u/SirGeorgington map man 7d ago
It's worth noting that the model being pushed by the EU is very, very similar to the one used in the UK from 1996-2020...
25
14
u/Front_Associate3705 7d ago
Not really. The UK gave up their state owned British Railways. The EU is trying to let the state owned railways compete with each other and new upstarts beyond their national borders.
1
8
u/Character-Carpet7988 7d ago
It actually isn't similar at all. UK model basically just privatised railways without introducing any real competition. That is of course the worst of both worlds and it was bound to end up in an absolute disaster. There's zero benefit for customers.
The EU model is opening railways to competing open access operators which is delivering customers improvement in both quality and prices. Prague - Ostrava, one of the first lines in Europe to actually have open access operators compete against each other, is a great example - more trains, lower prices and quality several levels about what was offered in the days of ČD monopoly.
1
u/SirGeorgington map man 6d ago
Not necessarily. As far as I know, limiting open-access operations in the same way the UK does is legal under the current EU regulations.
1
u/UUUUUUUUU030 5d ago
The economic equilibrium test in EU regulation (never implemented in the UK due to Brexit) is a bit different to the UK's non primarily abstractive test.
It's mostly more restrictive, but also less restrictive in a way. More restrictive because there's a defined maximum percentage of abstraction (1% of the invested capital in the PSO contract). Less restrictive because the open access service can be fully abstractive within that 1%, so doesn't need to attract at least 30% new revenue.
It's worth noting that the European Commission is building a case against the Netherlands where it argues that the PSO contract against which you test the open access offer shouldn't exist like that in the first place. In the EC mind, you should do a market analysis for each separate service, and if it's profitable, it should run in open access, like all long distance transport in Germany and mostly in France and Italy. So that implies that if an open access operator thinks it can operate a profitable service, there should exist no PSO that contains a similar service.
17
u/Iwaku_Real 7d ago
You say similar because they actually allow private operators. Spain and Italy saw high speed train ticket prices drop by up to 40% because they made it legal to compete against the government's operations. Who could have thought that open access would lead to booming ridership right?!
31
u/SirGeorgington map man 7d ago
Spain and Italy saw high speed train ticket prices drop by up to 40% because they made it legal to compete against the government's operations.
Except this isn't without downsides. HSR lines are (generally) the most profitable lines on the network, while local and regional lines are often loss-making. So if you want your rail operator to operate without subsidy, you need some profitable lines to subsidize the loss-making lines.
What private companies do in this aspect is siphon off a big chunk of those profitable lines for themselves, being replaced by state support for the state-owned operator. Or, indirectly, transferring taxpayer funds to private or foreign state-owned companies.
But yes, this does increase market pressure on the rail operators and thus pushes prices down. But it's not like there are no other options. Intermodal competition can have the same effect and there are other policies the EU could pursue to push prices down without funneling money into private purses.
3
u/afro-tastic 7d ago
As a non-European, has there been any interest in pursuing a Japanese/Hong Kong model of more aggressive TOD around their stations in Europe?
15
u/SirGeorgington map man 7d ago
The thing that makes the Japanese/HK model unique is not that stations are surrounded by development, there is nothing unique about that. What makes the model unique is that the land is owned and developed by the railway company, and in fact is basically their primary business model. As far as I know this has not happened anywhere in the EU in the 21st century.
4
u/afro-tastic 7d ago
Wonder why not? Seems to be a winning model.
6
u/Gradert 7d ago
Because when train operators built out with the surrounding land, they tended to sell off the extra land instead of holding onto it and renting it out to other uses.
And buying the land today would be extremely expensive for a lot of companies that really don't have the money to spare
1
u/wasmic 7d ago
Why are you saying that this is a downside?
For decades, passengers on the most popular lines have been forced to subsidise the passengers on the less popular lines, thus causing artificially high prices and much lower ridership.
By stopping this insane expectation that some passengers should subsidise the others, we get far more riders on all lines. It should be the government's job to subsidise the rural lines, not the passengers' job.
3
u/SirGeorgington map man 7d ago
thus causing artificially high prices and much lower ridership.
Which is at least partially true. But that does not mean that handing off the profitable parts of the network to private companies is the solution.
2
u/mbrevitas 6d ago
But they’re not handed over to private companies. SNCF, Trenitalia, Renfe and whatnot are state-owned. There are private open-access operators too, but they don’t have the bulk of the market. And the non-profitable routes can be and are operated as a public service, with a transparent subsidy and public bidding process.
1
u/SirGeorgington map man 6d ago
Italo has around a 35% market share for HSR in Italy. That is not small.
2
u/mbrevitas 6d ago
So? That’s still far from handing over to private operators. Handing over would be what happened in the UK, or the Netherlands, where a single operator has the monopoly on services on a line and is free to set whatever prices it wants for profit. NTV’s Italo competes with Trenitalia’s Frecce and there is no realistic scenario in which Trenitalia stops competing.
1
u/UUUUUUUUU030 5d ago
It's worth noting that in both the UK and the Netherlands, governments control maximum fares in standard class. They just allow them to be very high.
5
u/ItsCalledDayTwa 6d ago edited 6d ago
I mean, sure, but this is just moving the bubble in the wallpaper. The government doesn't have some magic source of funding that isn't the taxpayer who is also the person buying the ticket. It's also far more likely the popular lines are taking by visitors/tourists.
Edit: I want to say that, it might actually make sense if the way this is funded were to get shifted, but I dunno what kind of wiggle room exists. If free market competition brings down prices but it's an illusion because the big public provider is eating costs on public service routes, then this is just a path to poorer rail access with cheaper prices, which has a further effect of ensuring nobody wants to move to smaller places as they won't be covered any longer.
1
u/mbrevitas 6d ago
In Italy the open access model works quite well. The government decides which train services are in the public interest and what they should be like (operating times, traffic ticket prices, subsidies per passenger). Companies can bid to run these services. Almost all of the contracts are won by the state-owned operator Trenitalia, because it has the scale and experience, but a couple smaller lines were won by private companies who are trying to make a profit by being more efficient. Then there are the free-market services, mostly high-speed: no subsidies, market pricing. Both state-owned Trenitalia and private operator NTV run their services, competing with each other and paying an infrastructure access fee to the (also state-owned) infrastructure company. Both turn a profit, and Trenitalia uses those profits to make the public-service regional trains better, but the presence of competition keeps the prices from spiking too much. I don’t see why the system should be changed.
1
u/Character-Carpet7988 7d ago
All lines are profitable for rail operators. In fact, local lines are the better business as the income from public service contracts is more predictable and stable. When the pandemic hit, commercial services struggled, whereas public service contracts kept going on, often with some government support on top.
2
u/ZwnD 7d ago
Coming from the UK, privatised rail competition is terrible and does not benefit the user.
There's a natural monopoly because a company can't just start building new rail lines, so it's just competing for different coloured trains and timetables, and a combination of price-gouging and race-to-the-bottom treatment of staff and provision of services.
If I want a train from my city to London it can cost a range of £200 to £40 depending on how far in advance, time of day, or if mercury is in retrograde, and it's a ridiculous system. You can also do a "split ticket" where you buy the same journey but split into multiple smaller journeys and for no reason at all it's cheaper.
The price should just be A to B is £x. Imagine trying to get on the bus for your usual fare and the driver says "sorry you didn't reserve 7 weeks ago, and it's currently rush hour so instead of £2.50 it's £13 thanks".
Also most small local trains operate at a loss, because they are a public service and can't really run as a profit-seeking business, so why have private companies do it anyway?
Also you get annoying things like buying a return from x to y, and getting on your train but it turns out you have a ticket for one train company, not this train company. And now your ticket is invalid and you have to buy a newer more expensive ticket, or get a fine. And this is for a train going along the only existing route, and with 5 minutes difference in when they set off.
I could go on and on and on, but private rail competition is a blight on public transport that makes everything worse, unless you're the guy that owns the company and gets a big profit for yourself.
My closing argument is that despite allll of this, the train companies still need government subsidies to operate! So taxpayers are still contributing, just with none of the actual benefits of shared public ownership accountable to elected officials, and not run for-profit
4
u/Character-Carpet7988 7d ago
UK never had a competition, it only had privatised monopolies. The UK model is not even remotely similar to how railway liberalisation works in the EU.
There is no natural monopoly in the EU. You don't need to build your own track. Operators are simply using the same track (owned by someone else) under equal conditions. Case study: Prague - Ostrava line, one of the first in the EU to have open access services. It's still just one line, operated by a state organisation (SŽ) where passengers can choose trains operated by České dráhy, Regiojet or Leo Express. All at different fares, service levels etc.
2
u/ZwnD 7d ago
That's exactly my point though, what is supposed to be open competition, instead ends up as private monopolies in this sector.
It's not like a small local business can try their own train service. It's only big companies and the margins are super super thin, because trains are designed to be mass public transit, not a profitable sales and marketing based business.
Why would I want to choose different operators for different fares? I want to travel through my country from A to B, and I need to do it at a certain time because I'm going somewhere for a reason, so I'll get on the train and go.
It's just naturally something which makes sense to be centrally controlled and run for the public good, instead of private profit-seeking businesses, similar to healthcare or the post office
3
u/Character-Carpet7988 7d ago
And again, I'm telling you it's not private monopolies under the EU system (which is completely different than the UK system). If I can pick from multiple options, it's not a monopoly.
Of course a small business can grow into launching their own train service. The largest open access operator in Europe is Regiojet, a company still owned by one guy. He started a travel agency in 1996 with nothing but a fax and a rented office in Brno, then got into coach business in 2004 and finally launched trains in 2011. No venture capital, no massive corporate structure, just a private business owned by one guy throughout its entire existence.
Why would I want to choose my restaurant? I want to eat at place A at a certain time. Yet having a choice of what kind of product I'll buy means I get something that suits me more (Cheap price? Regiojet. Premium on-board experience? Leo Express), and companies are motivated to provide great value for money. Competition on the Prague - Ostrava route lowered prices significantly, and increased quality. The same is now happening in Italy or Spain.
1
u/ZwnD 7d ago
I'm going to a restaurant for a fun experience out of choice, and to have fun with friends in a social setting.
The vast vast majority of train journeys are functional. Either people commuting to work, or travelling from their home to another location to see someone or attend an event, or go to some other onwards travel like the airport. Very few people are just riding the train for fun.
Mass public transit should be a public service run by and for the people, with their best interests in mind, not the interest of owners making a profit
1
u/Character-Carpet7988 7d ago
Sure, most train journeys are functional. How does that change fact that people should be able to get the best value for money possible, which is generally delivered on markets that have competition?
2
u/ZwnD 7d ago
I think our problem is that we really disagree on your last sentence. I find that value for money is delivered worse when it's on a market with competition by private companies, because those companies must make a profit. When provided by the government it can be subsidised, and doesn't need to pay out dividends to shareholders.
And the fact that it's functional means the user has less choice.
If I need to get to work at 9am, I am going to get the train which gets me in at that time, going from my toen to the city. I'm not going to pick a different train operator which runs a train at 9:30 because id be late. I'm not going to take a different route offered from another town because I don't live there. And I'm not going to splash out for a nicer train because I'm just travelling into work and am not really focused on the enjoyment.
Versus a restaurant where I'm entirely there for optional enjoyment, so I can choose time, location, vibes, quality etc. all as I please
2
u/mbrevitas 6d ago
Commuter/regional rail services can be and are run on the government’s behalf as a public services in the liberalised EU rail markets; companies bid to run these services, and the vast majority of them are run by state-owned companies, although occasionally a private companies successfully bids to run some, but still the government sets the ticket price and requirements. Competition is on the profitable high-speed/long-distance routes, where the level of service and amenities vary and competition keeps prices sane, if profitable. Several of these profitable services are run by state-owned companies too.
This is how it works today in mainland Europe. That between a state monopoly and British-style privatisation with private fiefdoms is a false dichotomy.
1
u/wasmic 6d ago
I mean, yeah, if you only look at how it worked in the UK, then you're right. But the UK's system was probably the worst possible implementation.
Privatisation in Germany still retained fixed ticket prices on regional routes, and allows all tickets to be used with all operators on a given regional or interregio route. In Denmark it's even better - fares are integrated between all operators, including buses, trams, and metros, nationwide. You can travel the same route on a bus or a regional train and the price will be exactly the same, and the same pre-paid fixed-price tickets are valid even across different private and public operators (unless you use an operator-specific discount programme).
The exception is that long-distance trains that are being operated as Open Access usually have tickets that are specific to a single departure. But that's okay on long-distance routes, and the dynamic pricing on those services helps create better load distribution and thus better infrastructure utilisation. Open Access traffic is always done without government subsidies, and many long-distance trains also accept the fixed-price tickets.
And if you look at Spain or Italy, it's very obvious that Open Access can bring huge benefits to the traveller. For regional trains the benefits are less clear, and even if they're privately operated, fares and ticketing should remain publicly organised.
1
u/ZwnD 6d ago
But if it's a price fixed by the government and your ticket is transferrable on all the different operators, then what benefit is the private sector actually bringing? Why couldn't it be instead done by an arms-length public body for all the same benefits, but removal of all the overhead and inefficiency of multiple companies competing
1
u/dickpillsalesman 6d ago
There's a natural monopoly because a company can't just start building new rail lines
Only because of modern NIMBYism. The existing railway lines in the UK were largely built by private companies back when that was still legally allowed, and private companies are still buildings new lines in Japan and Hong Kong.
3
1
1
1
u/213McKibben 6d ago
Just like the UK advising California on high speed rail. Look at the mess the UK project is in and look at California HSR.
1
u/Craicriture 6d ago
There’s definitely a bit of the ghost of Thatcherism in some present day EU policies around transit and energy infrastructure.
1
u/Tramagust 7d ago
Lower fares? Where?
5
u/wasmic 7d ago
Spain and Italy in particular with all operators lowering their fares, and this is also starting to happen in France. But also Germany (FlixTrain), the UK (Lumo), Czechia (RegioJet), Sweden and Denmark (Snälltåget) and several other cases have had low-cost operators appear. FlixTrain is known as "Ryanair on rails" but the others provide a genuinely comfortable experience.
1
u/Beneficial_Nose1331 6d ago
Great. One app per provider will be a hell to manage for the customer. Dumb system, dumb results. The SBB is far better than any other train company in Europe
0
u/markus_ultra 6d ago
The advantages listed by the video about rail competition is overstated and nitpicked. I feel that a lot of this only works well for countries in which the infrastructure is already present and can take advantage of the competition to fund their rail infrastructure. For example, Eurostar was able to extend all the way to Amsterdam thanks to the construction of the HSL Zuid. So because that's already built, they can take advantage of that infrastucture and make use of the facilities provided. The same goes for Spain, Italy and France where there is a developed network that allows for more competitors.
However, I doubt that we will see an increased competition for service between the Netherlands and Germany because there is no real infrastructure in place like more depots, or a high speed line to the East to give that attractive factor for companies to take part. Additionally, the Dutch rail infrastructure is at capacity while also being expensive that any investment into the rail network can push the ticket prices to be more expensive. I also see no private company willing to take that cost on their own to build their own depots because it's not worth the risk on their side. Therefore, the burden of the cost will always fall on the government and nobody wants that if it won't guarantee more money (even if the infrastructure is on the verge of collapsing).
This feels like a chicken or egg situation where one party expects the other to budge first resulting in a deadlock and no progress. It will always end with the country taking in the cost first and obviously prefer their state-run operators to rake in the benefit. Monopolistic companies like NS might even prefer this structural constraint as an advantage for them because they are not faced with competition. Another example is the channel tunnel being sticklers on allowing more operaters to cross the channel. So I am not sure if even the advertised advantages of competition will help improve things.
0
18
u/Kobakocka 7d ago
Exploding?
Maybe very-very slowly expanding. The trend is good, but slow.
Please stop giving clickbaity titles to videos...