The biggest political story in yesterday's unveiling of the long-awaited fourth rail package was the European Commission's last-minute abandonment of mandatory unbundling. But aside from the thorny issue of ownership structure, the package contains many proposals that could change the nature of rail travel across Europe.
The package, which is made up of six legislative proposals, focuses on four key areas.
Strengthening infrastructure managers
The experience of countries which have already separated their train operator from their track manager – a move the Commission says is necessary to guarantee fair access to the market for new entrants – has shown that this separation is less effective is the infrastructure manager doesn't have enough power. The experience of France and the UK, who enacted such separation in the 1990s, has reflected this.
The proposal would mandate that member states pass specific tasks to the infrastructure manager rather than the train operator. These include track maintenance, investment planning and timetabling. This applies whether to both integrated companies or separate companies.
The proposal would create an EU-wide approval system for trains and rolling stock. This means that trains should be built so that they can run everywhere in Europe, and the EU certification would give them permission to do so. This should save time and money for companies by lessening the immense bureaucracy involved in running cross-border trains, which is usually 30% of costs for a route involving three countries.
Because the liberalisation is expected to result in transfer of public service contracts and other changes in the industry, the Commission has inserted protections for the rail workforce. Member states would be able to require new contractors to take on workers when public serice contracts are transferred. The directive also contains measures to encourage new workers, since approximately 30% of rail workers are expected to retire in the next 10 years.
Open national market
The overall objective of the liberalisation package is to get to a more ‘European' rail system, with improved cross-border connections. This, says the Commission requires that new entrants be given fair access to national rail markets. So the proposal will requires member states to open their domestic railways to new entrants from other member states.
The Commission says that this competition, through offering competitive tendering and competing commercial services, will ensure that competition is working and prices are fair. Previous rounds of rail reform have tried to encourage this market opening. But so far only Germany, Sweden, Italy, Austria, the Czech Republic and the UK have opened their domestic passenger markets.
The situation has been complicated, however, by the last-minute change to the proposal which will no longer require rail companies to ‘unbundle' their train operator company from their infrastructure manager. Smaller member states have been concerned that the priviliedged position enjoyed by Deutsch Bahn in Germany, where it owns both the train operator and the track manager, will give it an unfair advantage in going into smaller markets. This is why they were demanding that Deutsche Bahn be made to separate these entities before they were made to open their markets.
To reassure these countries, the Commission has added a provision that would allow them to close their domestic markets to a company which has not sufficiently separated its train operator from its track manager. Whether this has been achieved will be determined by the Commission. So if Deutsche Bahn wants to enter another country's market, Germany will have to ask the European Commission to certify that these two activities are acting with suitable legal and financial separation. If the Commission determines they are not, Deutsche Bahn would not be able to enter these smaller markets.
The Confederation of European Railways, in which Deutsche Bahn has a large presence, welcomed the proposal yesterday but said the ‘Chinese Walls' being required for separation between train operators and infrastructure mangers are too much. Much of the fighting over this proposal as it goes through co-decision will likely centre around exactly how stringent these separation requirements should be.
Dave Keating reports on the interrelated issues of environment, energy, climate change, transport, health, agriculture, fisheries and research for European Voice. In this blog, Dave brings you insights into the sometimes byzantine world of European Union policymaking as well as the equally confusing nature of life in Brussels. Originally from outside New York City, Dave has lived in Europe for six years. He can be reached at DaveKeating@economist.com.
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