INTRO: To beat their financial targets for 1997, the eight operating business units of Spanish National Railways placed key emphasis on sales, applied rigorous cost control and made maximum use of resources
THE EIGHT business units forming the Operations Directorate of Spanish National Railways were particularly successful in meeting the commercial and financial targets that were set for them last year. Passenger services are provided by the Suburban, Regional, Long Distance and High Speed business units, the remaining four being Freight, Intermodal, Traction and Rolling Stock Maintenance.
In their budgets for 1997, the eight were charged with increasing traffic revenue by 4·7% and ensuring that costs rose by no more than 1·4%. The income target was beaten by 3·2%, 8% up on 1996. Actual costs for 1997 were kept at 1·3% below the budgeted figure, and were roughly the same as those recorded in 1996.
This meant that all eight exceeded their cost recovery target for 1997 by 14·4%, thanks largely to a focused strategic approach that places heavy emphasis on sales, makes the fullest use of available resources and tightly controls costs.
These strategies have proved to be particularly successful within Renfe, where fixed operating costs represent a large share of the total. The business units have also been forming strategic alliances with suppliers, customers and operators to introduce market forces to the railway environment, motivate staff and attract private finance. The Freight business unit has been particularly active, and has signed an agreement with Transfesa to develop joint marketing initiatives, concentrating first on car parts moving between Spain and Portugal.
Efficiency has also been improved by creating market segments, such as the geographical corridors within the Long Distance business unit or the commodity-based structure of the Freight business unit. By focusing on a particular sector of the market, managers can develop a fuller understanding of the commercial environment in which their business unit works.
Challenges for 1998
Across the passenger business units, this year will see rolling stock acquisition and refurbishment programmes continue as well as the development of ticketing and information initiatives embracing the Internet, smart cards and ticket vending machines. Customer loyalty programmes will be developed and new schemes introduced, and through ticketing agreements will be signed with other operators.
The Long Distance business unit will define and quantify its travel products in terms of passenger comfort, journey time and on-board service. A new agreement is to be negotiated with the Madrid Transport Authority, which will cover 40% of the Suburban business unit’s total annual revenue and could form the model for relations with other regional governments. A similar process will seek to formalise relationships between the Regional business unit and those regional governments that support its services.
Key tasks for the Freight and Intermodal business units in 1998 include active paticipation in the Port Bou - Barcelona - Valencia branch of the Muizen - Lyon - Gioia Tauro Trans-European Rail Freight Freeway (RG 2.98 p69). This is due to be inaugurated on May 24, following the signature of an agreement with SNCB of Belgium, CFL of Luxembourg, SNCF and RFF of France and FS of Italy on February 27. Work will also continue on schemes to develop new freight facilities with the help of private finance, and the introduction of total transport packages including warehousing and distribution.
Organisational tasks include the fine tuning of accounting procedures to present results by market segment, line management and corridor, as well as tailoring the rolling stock fleet to meet traffic demand.
This year will present equally challenging tasks for Traction and Rolling Stock Maintenance, which act as service providers to the other business units within the Operations Directorate. The passenger and freight business units will this year begin to take direct responsibility for traction resources, and more trains will be operated by one driver only. Recent legislation opens new opportunities for purchasing traction current and could lead to strategic alliances with suppliers and other major consumers.
The Rolling Stock Maintenance business unit, responsible for depots and five major workshops, will continue to pursue opportunities in the refurbishment market. It will also seek strategic alliances with the private sector and fine tune its maintenance procedures using the latest techniques and equipment.
All business units will be drawing up and implementing business plans, as well as staff training and communications strategies and personal savings schemes for employees.
Funding framework
The broad lines of Renfe policy, as well as investment funding and performance targets, are set out in a five-year Contract-Programme with the government. The 1994-98 Contract-Programme comes to an end on December 31, with Renfe achieving its objectives and bringing down the total cost of the railway to the taxpayer by Pts74·3bn. This figure represents the difference between the 1993 results and those budgeted for 1998, and would reach Pts78·2bn had planned fare rises for Suburban and Regional services been implemented this year.
The obvious success of the 1994-98 Contract-Programme suggests that a similar agreement will be signed by Renfe and the government for 1999-2003, setting out major investment programmes for this period. Major investment for 1998 includes Pts53bn for new and refurbished rolling stock, Pts11bn for station improvements and Pts9bn for freight and maintenance facilities. A total of Pts2bn has been earmarked for improving rolling stock reliability, and Pts1bn is to be spent on forming strategic alliances.
Courting the private sector
Although at present there are no plans to privatise any of its business units, Renfe is actively seeking to introduce market forces and private finance to the railway environment. This strategy lies behind the proposed formation with rolling stock manufacturers of Agrupaciones de Interés Económico (p260) under Spanish and European Community law.
These AIEs would operate five selected Suburban, Regional and Long Distance corridors, using fares revenue to meet track access charges levied by the government, Renfe’s operating and maintenance costs and lease payments to the train builder. Designed to meet RENFE’s objectives and those of its suppliers, this novel concept is now being studied closely by the Ministry of Development.
The application of the AIE concept to passenger services, and possibly freight corridors, will depend on the results of this study. No formal decisions have yet been announced, and Renfe is working closely with the ministry on this project as with others. o
CAPTION: Suburban traffic around Barcelona, Madrid and other cities now forms the major part of Renfe’s total passenger business
CAPTION: Intermodal freight is a growth sector for Renfe, particularly in view of the break of gauge at the French frontier
TABLE: Table I. Key 1997 traffic indicators and 1998 targets (millions)
1997 1998
Business unit Passengers Pass-km Passengers Pass-km
Suburban 353·27 6·50 361·36 6·63
Regional 23·48 2·17 24·25 2·24
Long Distance 12·50 6·45 13·15 6·78
High Speed 4·37 1·44 4·52 1·49
Total 393·61 16·58 403·27 17·15
Tonnes Tonne-km Tonnes Tonne-km
Freight 18·42 7·15 19·30 7·47
Intermodal 6·93 3·84 7·14 3·96
Total 25·35 10·99 26·43 11·43
En Espagne les investissements se poursuivent
Au cours de leur programme contractuel de 1994 à 1998, les Chemins de fer nationaux espagnols ont réduit le coût annuel de 74·3 milliards de pesetas et ils ont consolidé leur structure d’entreprise maintenant basée sur 13 unités commerciales. En continuant à concentrer les investissements dans le matériel roulant, la Renfe cherche à développer des liens plus étroits avec le secteur privé et à attirer un financement privé pour certains projets. Sur les lignes à grande vitesse, les dépenses publiques sont maintenant administrées par GIF, qui espère terminer la ligne de Madrid à Barcelone et à la frontière française d’ici 2004Spanische Investition läuft weiter
Im Laufe des Vertragsprogramms 1994-98 hat die staatliche Eisenbahn in Spanien die jährlichen Kosten um Pta. 74·3 Mrd. gesenkt und eine Unternehmensstruktur gefestigt, die heute auf 13 Geschäftseinheiten basiert. Während sich die Investitionen weiterhin auf Schienenfahrzeuge konzentrieren, strebt Renfe eine engere Verknüpfung mit dem Privatsektor und den Gewinn privater Finanzierungsmittel für bestimmte Projekte an. Öffentliche Ausgaben für Hochgeschwindigkeitsstrecken werden jetzt von GIF verwaltet, die davon ausgehen, daß die Strecke zwischen Madrid und Barcelona und der franz
