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Mixed signals at Paris conference

01 Apr 2002

'WE ARE accelerating the pace of change' insisted Jean-Arnold Vinois on February 26. 'The situation is very serious; we need to push hard to capture business, or rail freight will disappear in 10 years.' Head of Railway Policy at the European Commission's Directorate-General of Energy & Transport, Vinois was outlining the EC's Second Railway Package (RG 2.02 p59) to the Adam Smith Institute's conference on The Future of European Rail in Paris.

The package was endorsed by the EU's heads of government at the European Summit in Barcelona on March 16-17. But while the EU may be convinced of the need for change, others closer to the cutting edge were less certain. French National Railways' Development Director Michel Leboeuf argued against vertical separation. 'Rail is a whole system; separation of infrastructure and operations is purely artificial. It is the whole solution which brings the traffic.'

The decision by nine infrastructure managers last December to pull out of the Community of European Railways and form their own association leaves the operators to fight a rearguard action. But Vinois has a grander vision which could see the disappearance of national railways as we know them. 'We should move towards the provision of trans-European services under the responsibility of a single supplier', he suggested.

At the local level, we are starting to see trans-national contract operators, with Vivendi, for example, holding public transport concessions in Britain, Germany, Sweden, France and Australia, amongst others. Open-access freight operators in Germany are branching out with international flows into the Netherlands, Scandinavia and Switzerland. Sweden now contracts out all local services and subsidised long-distance corridors; with the disappearance next year of the exclusive right for state-owned SJ AB to run profitable inter-city routes, there will effectively be no 'national operator'.

There was much discussion of the situation in Britain, and the impact this might have across Europe. Speaking for the train operators, GNER Chief Executive Chris Garnett suggested that 'growth has created all our problems. We all made the arrogant assumption that we could be more efficient than BR.' But on balance, he felt the government was right to put Railtrack into administration. 'They were going nowhere ... something had to change.'

As a former Railtrack director, Railway Safety Chief Executive Rod Muttram flagged up the underlying problem with the infrastructure company. 'One of the biggest problems that is never talked about was that all the responsibility was divorced from the technical excellence. It was not the split of infrastructure and operations that was fundamentally wrong. The real problem is round the edge: selling all the technical expertise to a myriad of consultancies, so then you have to buy it back for every project.'

State support needed

Most delegates agreed that continued government support was fundamental for the future success of the rail industry. Newly-elected as Chairman of European Infrastructure Managers, Bo Bylund said his experience at Banverket was that 'there must be a political willingness to increase investment in the rail sector'.

Anton Valk of NS agreed. 'The critical issue is government investment in infrastructure. There are discussions over better capacity utilisation, or providing more capacity, but in the Netherlands we can't get many more trains on the track.' He felt sure that 'in every country the railway will be dependent on the government; we are all struggling to find the right structure.'

Bylund was adamant that 'you have to have separate infrastructure management'. The Swedish experiment had seen substantial efficiencies in both the cost of train operations, and the provision and maintenance of infrastructure. There was no conflict, he felt, in having a state-owned infrastructure manager working with completely private train operators.

Whilst supporting the principle of separation, Britain's Rail Regulator Tom Winsor took the opposite view over the channelling of public finance into the industry. Providing state funds for direct investment in the rail network would produce 'sub-optimal solutions', with a temptation to go for big headline projects. Far better, he suggested, to pay the support to the operators, who could then steer the direction of infrastructure spending through market forces.

Channelling large subsidies through the operators can also distort the market, and make regional railways, at least, appear highly uneconomic. But ignoring this argument, Winsor warned that 'direct subsidy of infrastructure increases the political risk for investors - you need to rely on private-sector objectives.'

Although officially an infrastructure manager, Réseau Ferré de France is more closely aligned with the operators than EIM. RFF Chief Executive Jean-François Bénard felt that it was important 'to ensure the cohesion of the rail network'. Underlining that the 1995 changes in France were 'a genuine reform', he said the RFF-SNCF split was helpful in 'clarifying responsibility for investment decisions'.

Setting up RFF was 'a political decision' to ensure the state ownership of the railway, as it would be 'unthinkable to privatise the assets'. But SNCF retains the technical responsibility for the infrastructure. 'RFF decides what to do, and contracts SNCF to do it', he explained. However, he was sure that there would be no significant open-access operation on French tracks before the EU-mandated deadline of March 2003.

Dedicated corridors

One area where the French agree with Vinois is the question of the mixed traffic railway. An arrangement which has proved workable for the past 175 years is looking increasingly less appropriate for the future - at least on key corridors.

In the longer term, Vinois 'would like to separate freight and passenger routes ... everything is confused at present.' As a result of this, he felt, 'the use of rail capacity is very under-exploited.' Leboeuf agreed: 'a mixed traffic railway is not the solution; you need dedicated routes for freight.'

As the passenger-oriented TGV network continues to expand, SNCF is looking to develop dedicated freight corridors incorporating parts of the conventional network with some new construction. Leboeuf suggested that a top priority would be a new freight bypass around Lyon, linking a Magistrale Fret from Luxembourg through Franche-Comté with the Rh