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Finland sets out plans for passenger rail tendering

11 Aug 2017

FINLAND: The government’s plans to open the domestic passenger market to competition and bring the country into line with the EU’s Fourth Railway Package were set out by Transport & Communications Minister Anne Berner on August 9.

The model which has been chosen is similar to that adopted by Norway, which is currently in the process of opening up its passenger market through the competitive tendering of services.

The government envisages that national railway VR Group would be split into four state-owned companies, responsible for operations, rolling stock, infrastructure maintenance and property. New entrants would be able to lease locomotives, rolling stock and terminals from these companies. If necessary they could also source staff through them, although the government envisages than companies would undertake their own recruitment, including taking on former VR personnel.

VR’s current operating contract with Greater Helsinki area transport authority HSL ends in June 2021 and tendering for a new contract is already underway; the HSL board is expected to select its future commuter operator in February 2018. HSL’s fleet of 81 Stadler Flirt SM5 EMUs and the associated depot facilities and staff would transfer to the chosen operator. 

VR’s current national contract runs to the end of 2024, and it is envisaged that tendered operation would spread nationwide in stages during 2024-26.

Regional and urban councils would appoint operators, selecting the highest bidder for unsubsidised routes or the lowest subsidy requirement for services requiring public support; the state paid €27·4m for subsidised long-distance services in 2016. Operating contracts would initially be awarded for 10 years, with an option for a further three years.

The first region to be tendered would be the central-southern area encompassing Helsinki, Tampere, Lahti and Kotka, which would act as a pilot for the rest of the country.

The minister stressed that the railways were not being sold off, and said one of the aims was to increase rail’s market share from the current 5% to 6% in the 2020s and 8% by 2030s. She said the UK and Sweden now have multiple operators, which the government believes has led to additional services, increased ridership and the availability of cheaper tickets. 

The Finnish freight market was liberalised in 2007, but so far the only competitor to VR is Fenniarail, a small operator which launched services in 2016.