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Future of Rails

Future of Rails – The EC announced a package of measures to deliver better quality and more choice in railway services in Europe. Rail is a vital part of EU transport, with a key role in addressing rising traffic demand, congestion, fuel security and decarbonisation.

European Railways at a junction: the Commission adopts proposals for a Fourth Railway Package

The European Commission today announced a comprehensive package of measures to deliver better quality and more choice in railway services in Europe. Rail is a vital part of EU transport, with a key role in addressing rising traffic demand, congestion, fuel security and decarbonisation. But many European rail markets are currently facing stagnation or decline.

Faced with this reality, the Commission is proposing far reaching measures to encourage more innovation in EU railways by opening EU domestic passenger markets to competition, as well as substantial accompanying technical and structural reforms.

Vice President Siim Kallas, European Commission Vice President responsible for Transport said: "Europe's railways are approaching a very important junction. Faced with stagnation or decline in rail in many markets across Europe, we have a simple choice. We can take the tough decisions now that are needed to restructure Europe's railway market to encourage innovation and the provision of better services. Rail will be able to grow again to the benefit of citizens, business and the environment. Or we can take the other track. We can accept an irreversible slide down the slippery slope to a Europe where railways are a luxury toy for a few rich countries and are unaffordable for most in the face of scare public money."

The proposals focus on four key areas:

Standards and approvals that work

The Commission wants to cut the administrative costs of rail companies and facilitate the entrance of new operators into the market.

Under the new proposals, the European Rail Agency will become a "one stop shop." issuing EU wide vehicle authorisations for placing on the market as well as EU wide safety certificates for operators. Currently rail authorisations and safety certificates are issued by each Member State.

The proposed measures would allow a 20% reduction in the time to market for new railway undertakings and a 20% reduction in the cost and duration of the authorisation of rolling stock. Overall, this should lead to a saving for companies of €500 million by 2025.

Open markets that provide better quality and more choice

To encourage innovation, efficiency and better value for money, the Commission is proposing that all domestic passenger railways should be opened up to new entrants and services.

Companies will be able to offer domestic rail passenger services across the EU: either by offering competing commercial services or through bidding for public service rail contracts, which account for a majority of EU rail journeys and will become subject to mandatory tendering.

The proposals would bring clear benefits to passengers in terms of improved services, increasing choice. Combined with structural reforms, it could produce more than €40 billion of financial benefits for citizens and companies involved by 2035 and would allow provision of up to about 16 billion additional passenger-km according to Commission estimates.

National domestic passenger markets remain largely closed. Only Sweden and the UK have successfully fully opened their markets, with Germany, Austria, Italy, Czech Republic and the Netherlands having opened theirs to a limited extent.

Experience in these open markets, has shown improvements in quality and availability of services with passenger satisfaction rises year on year and passenger growth in some cases of over 50% over 10 years. In other liberalised markets, tendering of public service contracts has shown savings of 20-30% for a given level of service which can be re-invested to improve services.

A structure that delivers

To ensure fair access for all to the railway, independent track ("infrastructure") managers must run networks in an efficient and non-discriminatory manner and coordinate at EU-level to underpin the development of a truly European network.

To ensure that the network is developed in the interests of all players, and to maximise operational efficiencies, the Commission is proposing to strengthen infrastructure managers so that they control all the functions at the heart of the rail network – including infrastructure investment planning, day-to-day operations and maintenance, as well as timetabling.

Faced with numerous complaints from users, the Commission considers that the infrastructure managers must have operational independence from any transport operator running the trains. This is essential to remove potential conflicts of interest and give all companies access to tracks in a non-discriminatory way. The simplest and most transparent manner for achieving this is institutional separation. However, another (a holding structure?) structure may also achieve the required independence. It would require strong safeguards, including effective "Chinese walls", to ensure that infrastructure managers forming part of a corporate group are not under the influence of the transport operator in the same group and that infrastructure incomes including public subsidies are not diverted to finance other activities. In this case, if the vertically integrated railway wished to take advantage of market opening, it would first have to satisfy the Commission that its structure was delivering a level playing field for all operators. Otherwise other Member States would remain entitled to prevent it operating on their network.

A skilled workforce

A vibrant rail sector depends on a skilled and motivated workforce. Over the next 10 years, rail will face the combined challenges of attracting new staff to replace the third of its workforce which will retire, while responding to a new and more competitive environment.

Experience in Member States which have opened their markets shows this should lead to new and better jobs. Under the EU regulatory framework, Member States will have the possibility to protect workers by requiring new contractors to take them on when public service contracts are transferred, going beyond the general EU requirements on transfers of undertakings.

Next steps

The Commission's proposals must be approved by the European Parliament and Member State Governments, before being adopted.