Customer focus keeps Renfe on course
INTRO: As state support declines year by year, close customer focus and an emphasis on service quality is keeping passenger traffic at Spanish National Railways on an upward trend. Robert Preston put the questions to Renfe President and UIC Chairman Miguel Corsini
Preston: What impact will the policy of interoperability being promoted by UIC, UNIFE and CER have on the railways of Spain?
Corsini: The elimination of borders for rail traffic by means of standardised signalling and communication systems is, without a doubt, a very heartening prospect for the railway industry as it will enable companies to form a unified European rail transport system. It is also true for Spain. Although compatibility with other signalling systems in Europe is not a problem for us, we have thought it necessary to keep 'up to speed' with the latest developments in this area as far as the introduction of new signalling technology is concerned. With the support of the Ministry of Development and GIF, we have therefore prepared the section of our network between Albacete and Villar de Chincilla for testing new systems.
At Renfe we operate on two different track gauges without any problems. Nevertheless, it is important to us that these preliminary trials should take place on our network, as in this way the compatibility of new technology with existing systems will be tested on the ground, both on high speed and conventional routes. Securing interoperability through signalling technology makes it possible for trains to cross borders without changing locomotives or otherwise altering their composition, and with the same crew staying on board from origin to destination. This should enable timetables, service frequencies and the configuration of train paths on different networks to be combined to the best advantage, with obvious benefits for operators and their customers.
Preston: What were Renfe's results in 1999 and what is the forecast for 2000?
Corsini: The Renfe budget for 2000 is based on a Pts10·4bn rise in income, with total costs kept in line, increasing by only 0·1%, and state support falling by Pts17·3bn. With a month still to go before the end of the financial year, these targets were being met, and including September's figures income from passenger and freight traffic was 0·6% ahead of forecast. At 322million journeys, passenger traffic was 2·1% above the budget forecast of 315·2million, and 4·5% up on the previous year.
In 1999 Renfe recorded a total of 418million passenger-journeys and carried 26million tonnes of freight. The company made an operating profit of Pts10·4bn, giving a profit of Pts7·6bn after extraordinary items of Pts2·7bn. Comprising passenger and freight receipts, income from renting space in stations and from other property, trading revenue grew by Pts8·3bn in 1999, 3·9% up on the previous year.
The results of the High Speed business unit stand out in particular, where a 13·4% increase in sales demonstrates the degree of market penetration possible when rail offers competitive journey times and high-quality service. This is also borne out by the 10% increase in turnover, compared with 1998, recorded by the Main Line business unit, which operates inter-city passenger services on the conventional network.
This increase in trading income has helped to offset the reduction in state support, which in 1999 amounted to Pts232·1bn, down by almost Pts6bn from the previous year. Around 90% of this support is provided for Renfe to meet its public service obligations, such as Suburban and Regional passenger services and management of the national rail network, as well as debt servicing.
Preston: What is Renfe's strategy for tackling ever-increasing competition in the passenger and freight sectors?
Corsini: As a rail operator, Renfe is preparing to face the challenges of the future by placing special emphasis on the quality of service provided to customers. The freight businesses are pushing ahead with the development of customer service centres, which have produced positive results in other countries in the European Union. Monitoring all aspects of the transport process, these centres can at any time supply clients with the information they require, providing a sales and invoicing function as well as handling inquiries and claims.
On the passenger side, the service quality offered on our trains is highly valued by our customers. Punctuality and comfort are the key indicators of service quality, and in both fields Renfe obtains excellent scores during regular surveys. This acts as our guide for future developments.
Preston: For the conventional network, what rolling stock orders are likely to be placed over the next few years?
Corsini: As we pursue our policy of continually enlarging and refurbishing the rolling stock fleet, bids are currently being analysed for several future orders for the conventional network, ranging from inter-city passenger trains to new suburban EMUs. The first order to be awarded will be for the supply of at least eight gauge-changing trainsets, after bids were received from Alstom/CAF/Fiat and Talgo/Adtranz by the September 18 2000 deadline. A decision on the winning consortium will be made in the next few months.
In addition, last spring the Renfe board awarded a contract for the first series of our 21st century suburban train. Renfe is investing Pts8·5bn in a batch of 14 trains, forming a prelude to the replacement of at least 126 Class 440 EMUs which will be reaching the end of their useful lives over the next few years.
At the same time, we are continuing to make progress with existing programmes and are honouring our commitments to replace and refurbish the Renfe fleet. Our budget for 2001 includes spending of Pts32·9bn for rolling stock refurbishment or the purchase of additional new trains to existing designs. The Regional business unit is expected to invest Pts6·7bn of this total, and the Suburban business unit Pts3·6bn. The Main Line business unit will be spending Pts9·1bn, and Pts7·8bn has been allocated for buying new wagons and refurbishing locomotives for the Freight and Intermodal business units. The High Speed business unit will be investing Pts3·6bn to increase capacity.
Preston: Are the regional governments in Spain likely to play a larger role in the management and funding of Regional and Suburban services?
Corsini: Owing to their public service function, Renfe's Regional and Suburban services receive subsidy from central government, which plays an active part both in funding and managing these services. Renfe must take the government's wishes into account as established by the terms of the Contract-Programme which governs the relationship between the two parties.
The public service element means that Regional and Suburban services are of particular interest to the regional governments, and the development of these services is being carried forward by Renfe in ever-closer collaboration with the regional administrations. In 1999 we renewed agreements covering the provision of Regional services with the governments of Galicia, Andalucía, Aragón, Castilla y León, Castilla-La Mancha and Catalunya. A separate agreement with local authorities in Castilla y León saw the introduction in 2000 of a new Salamanca - Avila - Madrid TRD DMU service, with the journey time cut by 1h thanks to the infrastructure enhancements funded through the agreement.
As regards Suburban services, Renfe is working with regional governments to bring them within the remit of the metropolitan transport authorities, in order to ensure better co-ordination of rail services with other modes and to provide better, integrated, public transport. In 1999 Renfe signed an agreement with the Barcelona Metropolitan Transport Authority, which in a first step towards integration has set down common standards for access control and ticket vending systems. The next stage should see the introduction of a common fares structure (as is already the case in Madrid), applied throughout the Barcelona metropolitan area.
Preston: How can Renfe's present organisational structure of business units be further improved?
Corsini: In recent years Renfe's business units have been undergoing a process of consolidation, and for some time they have been operating with their own financial targets and their own accounts. Each one has made considerable progress, both on an administrative level and through the creation of market-based segments, a major step forward in offering customers more and better services through a process of specialisation. Since 1996 the Suburban and Regional business units have managed their own resources as far as drivers and traction and rolling stock are concerned, undertaken by the High Speed business unit since its formation in 1992. At present, all business units operating freight and passenger services have a traction component in their budgets.
Looking to the future, development of the business units is closely tied to the broader targets set out in the Contract-Programme that Renfe signs with the government. The current Contract-Programme includes an objective for Renfe to rationalise and improve its management structure by further restructuring along business lines. The object of this type of structure is, in one respect, to focus the company on the customer, which requires products ever more closely matched to their needs. In addition, by pursuing this model we are getting a clearer picture of both the income and the costs generated by each business unit, and we are seeking out new market niches where the customer's ever-increasing demands for quality are met by rail, the mode of the future.
CAPTION: Passengers have come to appreciate high standards of service on Renfe's AVE and Euromed (bottom) services
CAPTION: Renfe plans to develop customer service centres for its intermodal and conventional freight businesses
CAPTION: Recent additions to the Regional fleet include TRD diesel multiple-units for express services (inset). Double-deck EMUs are handling more of the growing Madrid suburban business