Fourth Railway Package: State owned railways attempt to prevent legislation

14.02.2014

State owned railways are making efforts, via their industry association in Brussels, CER (Community of European Railway and Infrastructure Companies), to prevent the European Parliament from even addressing the overnance part of the Fourth Railway Package on 26 February, and to convince the Parliament to adopt new rules that go back beyond the 2012 Recast Directive which is currently in force.

“The state owned railways fail to understand that only competitive railway undertakings will secure safe jobs. Member States are not in a position, in the long run, to finance their state railways’ needs,” Mr Wolfgang Meyer, president of MOFAIR, the association of private rail and road operators, said in Brussels today.

Mr Ludolf Kerkeling, CEO of the Network of European Railways, the association of competitive freight railway operators in Germany, added: “Prior to the introduction of competition, state railways did not even remotely meet private and commercial customers’ demands for high-performing and attractive railway services, nor did they meet the demands of the state and hence the taxpayers, for an efficient operation.”

Only with the opening of the railway market for private railway undertakings by European legislation did conditions change and, in some cases, significantly. Today there are better trains and transport services on offer in Germany, especially in the regional rail passengers and the rail freight traffic segments. Even the incumbent Deutsche Bahn has benefited from competition: Deutsche Bahn itself has confirmed that today it is as a company better positioned than ever before. The trade unions do not question competition in Germany either. Their main concern is to preserve the internal labour market within Deutsche Bahn. In this respect, it cannot be stressed enough that the Fourth Railway Package will in no way constrain the ability for employees of integrated companies, such as Deutsche Bahn, to move jobs between the infrastructure manager and the railway undertaking.

Despite the obvious advantages of competition and market opening, state railways are making efforts, via CER, to further strengthen their already substantial market power.

On 17 December 2013, the Transport Committee of the European Parliament reached an acceptable compromise in the Fourth Railway Package, which reconciled both the interests of state railways and those of new entrants.

“However, state railways are not satisfied with this compromise”, said Mr Wolfgang Meyer, and Mr Ludolf Kerkeling added “CER, the state railways’ association, is trying to take a backwards step, as they would like to get back to the rules that were in place before the adoption of the 2012 Recast.” This would effectively mean giving full access of the financial and human resources of the network back to integrated state railways. They will have full financial and human access to the infrastructure manger and public funds flowing into there. Because of the affiliated group, it would be unclear from which funds the expansion of the DB and the purchase of undertakings in other Member States and world will be financed. Also, prevention of competition by the control of the natural monopoly infrastructure cannot be excluded in the future.

For the competitors of the State Railways these proposals, however, would mean in many cases the closure. They do not have the possibility of cross-subsidization between infrastructure and railway operations. For private railway undertakings as well as for their passengers and customers, these proposals would clearly have the effect of pushing them out of business.

The deputies have it thus in their hand, said the representatives of the competitors,

  • whether the European railway market has a future,
  • whether innovations and investments can continue to take place in the railway market,
  • whether Deutsche Bahn will completely dominate the European railway market in the future
    and
  • whether private operators and their investments will disappear from the market.