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RFI defines its new role

01 Nov 2002

INTRO: Since its birth on July 1 2001, Rete Ferroviaria Italiana has been working to establish a new operations and management structure. Meanwhile, the government is investing over i120bn to upgrade the national network and boost capacity on the core corridors

EARLIER THIS YEAR the Italian government approved a huge package of investment at the behest of Transport Minister Pietro Lunardi. Intended to improve rail, road, port and airport infrastructure right across the country, it will provide another €38·2bn for rail projects, in addition to almost €65·1bn planned in the state's first five-year contract with new infrastructure manager Rete Ferroviaria Italiana. On top of this, €20·1bn has already been allocated for ongoing investment projects.

Although legally RFI only came into existence on July 1 2001, the company's structure was set up as part of the restructuring of Italian State Railways started in 1998. RFI is a joint stock company wholly owned by Ferrovie dello Stato, which is now effectively reduced to a holding company. In turn it owns 100% of the high speed line project company TAV SpA, 100% of the railway power transmission company Società Elettrica Ferroviaria srl, and a 50% stake (with Réseau Ferré de France) in the Mont Cenis base tunnel project company Lyon - Torino Ferroviaire. It is also the legal owner of the national rail infrastructure assets on behalf of the state.

RFI operates under a 60-year Deed of Concession issued by the Ministry of Infrastructure & Transport in October 2000. This lays down the role of the infrastructure manager in developing, strengthening and maintaining the Italian rail network, controlling traffic and handling relations with train operators over safety standards and access to the tracks.

Within the concession, a five-year contract signed by the ministry on May 2 2001 regulates the relationship between RFI and the state, especially for the financing of investment projects and maintenance work.

Encouraging competition

RFI has an explicit objective in its mission statement to develop a competitive rail market, and Director of Strategy Nicola Mandarino says the company is 'keen to help newcomers'. Asked whether this has been influenced by the fact that RFI and Trenitalia are both still FS subsidiaries, he insists that 'there has been no discrimination against new operators'.

He feels that the holding company structure works. 'FS manages the political relationship with the government, whilst we have a technical relationship.' In any case, 'the ministry can control RFI's behaviour' through the concession, which includes formal checks to ensure fair play. There is also an appeals mechanism if operators feel their treatment has been unreasonable. In practice, Trenitalia still accounts for 98% of RFI's business.

So far, the ministry has issued over 30 licences to potential train operators, in addition to Trenitalia. Of these, five have completed the full safety certification process to operate their own trains on RFI tracks. Ferrovie Nord Milano, Rail Traction Company, Del Fungo Giera and Rail Italy have now launched freight services. On the passenger front, only Metro Napoli is running, but FNM is expected to start next month. About 20 of the new licensees are existing regional railways, but there are also some international operators who are expected to bid for regional passenger contracts in the future.

RFI has already built a catalogue of pre-planned train paths, which helps it to identify and sell spare capacity more effectively. The process can be conducted in parallel with safety certification, so that once an operator has been licensed the time to start-up can be minimised.

A key to this is the PIR, or network statement, which sets out the formal capacity allocation criteria as laid down by law. These are published on the RFI website for the benefit of all existing and potential customers, to guarantee a non-discriminatory access policy. Under an international process agreed at EU level, RFI can offer new paths within the existing timetable at between three days and four weeks' notice. Short-term timetabling intervals of three days make the system 'very dynamic'.

Under EU directives, safety certification for new train operators should be undertaken by a separate body from the infrastructure manager. Mandarino says this premise was not translated into Italian law. Thus the new certification body Cesifer is part of RFI's Technical Department. This gives it vital access to specialist knowledge about the track-train interface, signalling and electrification systems.

Mandarino accepts that 'safety must not be used as a tool to stop new entrants', but he says that it is essential to achieve an 'equilibrium' between growing the market and ensuring safety. 'RFI engineers are very conscientious', he notes.

RFI is proud of its steadily improving safety record. Marketing & Communications Director Leonardo Gorra points out that in 2001 only eight people died and 18 were seriously injured on the Italian rail network. By comparison over 7500 died on the country's roads in the same year, and 300000 were injured. Gorra notes that even these statistics are understated, as road fatalities are discounted if the victims do not die within seven days of the accident.

To encourage liberalisation, Italian access charges are amongst the lowest in Europe. The structure and level of the charges is defined by law to cover traffic control and marginal costs. The average price is around €2·3 per train-km for conventional lines, although the charge varies by type of line, time of day, and the degree of congestion around major centres. There are also rebates to operators where the technology does not meet modern standards; for example where the lack of ATP requires the use of a second driver. These rebates should be phased out after 2003 as a national programme of signalling improvements is completed.

Mandarino says access charges for high speed lines will be around €12 per train-km, 'because of the higher quality of the infrastructure, and the new technology.' These higher charges are also intended to help pay back the commercial debts incurred to fund construction. Mandarino notes that in general 'it is difficult for RFI to attract private capital for new works, as the structure of the existing track access charges cannot allow for the repayment of investment.'

Maintaining equilibrium

Under its operating concession, RFI is required to achieve 'substantial equilibrium over the longer term' in the operation of the network. Mandarino explains that this means covering costs, and not seeking to make profits. On top of access charges, a substantial state contribution is needed to cover RFI's maintenance and operating expenditure.

Nor do these operating costs include depreciation. This is currently set each year according to a trend established in the five-year contract, negotiated with the state on the basis of the corporate plan.

On the investment side, a priority for RFI will be to move from an annual budget to a rolling five-year programme in line with the planning process. 'This has been agreed in principle, but has yet to be implemented in practice,' Mandarino notes.

Under the 2001-05 contract, RFI is required to reduce the average cost of maintenance and operation over the medium term. Mandarino says the government is looking for savings of 6% to 8% a year. This has seen staff numbers fall from 40000 to 38000 in two years, and the figure is expected to stabilise at around 36000, out of 100000 for the whole FS group.

RFI employs around 17000 staff in operations, 19500 on maintenance work and 1500 in administration. It is directly responsible for signalling and day-to-day train regulation, and also operates the stations and all station services. Only commercial staff such as booking office personnel are employed by the train operators.

At present RFI undertakes all routine infrastructure maintenance in house, and only contracts out heavy renewals. Following experience with outsourcing IT systems and other support services, Mandarino suggests that there is a possibility of outsourcing some maintenance work, 'but not in the next three or four years.'

Contracts with the train operators cover access slots and the provision of station services. Mandarino says these are 'clear and open contracts' agreed on a 'market relationship'. They include provision for a performance regime of penalties and bonuses based on punctuality, as required in the RFI concession agreement. A formula for attributing delays between infrastructure manager and the operators is now being developed; a pilot scheme was launched in January 2002, and full attribution is due to start on January 1 2003.

A 'services charter' sets out the quality of station services that passengers can expect. There are 20 sets of quality parameters, with 'measurable indices' covering issues such as levels of service, safety in stations, provision of passenger information and cleanliness. This is now in its third year of operation, and is working well.

Customer satisfaction indices were agreed in discussions with the nine statutory regional passengers' associations, and are reviewed each year. As in many countries, the two greatest concerns are cleanliness and information. Noting that 'improvements to the charter have now been agreed', Gorra adds that 'quality demands only ever get higher.'

Investment priority

It is notable that the first objective in RFI's mission statement is to 'identify, study, develop and carry out investments aimed at improving and strengthening the rail network, and thus at optimising rail capacity'. As with its relations with the train operators, the overriding objective is to boost rail use.

RFI is responsible for proposing investment projects to the ministry, for new lines, double-tracking, electrification, resignalling and so on. Each must be accompanied by a standardised economic dossier, to allow comparative evaluation by the government. As the access charges are set by law, RFI cannot adjust them upwards to recover higher investment costs; Mandarino says 'they are a parameter, not a tool.' Each dossier includes two traffic scenarios, looking at the payback if the line were to be used to full capacity, and at the projected 'commercial demand' level.

The dossier process can also work the other way. 'The state can ask us to undertake non-commercial works, as long as it agrees to provide the extra funding for both construction and the ongoing maintenance and traffic management. By completing the dossier both sides will know exactly what the cost implications will be.' Once a project is underway, reporting protocols provide for the ongoing monitoring of expenditure and timescales.

In 2002 the government is providing €4·6bn to RFI for investment. According to Mandarino, this makes RFI the biggest single investor in Italy. And the figure is expected to increase by 18% a year until 2005.

Over the five-year contract period, total investment in the national rail infrastructure is budgeted at €65·1bn. Of this around €40·8bn will go on the Alta Velocità high speed network. Another €1·2bn has been allocated specifically for measures to improve environmental impact. And the total excludes ongoing projects and the extra €38·2bn authorised by Lunardi.

However, the allocated funding of €30·1bn will only cover 30% of the planned total, and implementation of the various schemes must depend on the actual funds allocated each year.

RFI has two main concerns about this high level of projected spending. Firstly, that the money will run out, and secondly that 'the system won't be able to cope', because the established contractors and the supply industry will not have the capacity to fulfil the demand - especially as other modes are also seeing a huge spending boost.

Capacity crunch

At present RFI handles around 9200 trains a day on its 16200 route-km. But Mandarino points out that there is a huge imbalance between supply and demand. 'Around 80% of the traffic runs on 25% of the network. There is a real capacity crisis on these main lines, whilst the rest of the nework is under-utilised.' On the main corridor between Milano and Napoli 'it is very difficult to get possessions. Maintenance has to be fitted into 1h windows, which makes everything very expensive.' With over 250 trains/ day using the double track between Milano and Bologna, the opening of the parallel high speed line in 2007 will provide much-needed relief.

'Removing the bottlenecks has become a top priority. That is why the focus of the AV network has changed from high speed to high capacity. There will be much stronger integration with the existing network, with 35 to 40 interconnections.' Modifying the routes to accommodate freight will give greater flexibility, 'and more than double the capacity'. But easing the gradients to suit heavy freight trains will inevitably increase construction costs.

Construction work is in full swing on several sections of the AV network. Roma - Napoli is nearing completion, and will open in 2004, apart from the final approach to Napoli which will be ready three years later. Another priority is the route between Torino and Malpensa airport near Milano, which must be completed by the end of 2005 ready for Torino to host the Winter Olympics in early 2006.

November 2001 saw the formal start of work on Milano - Bologna (RG 5.00 p309), which is now expected to be complete by 2007, along with the link from Milano to Malpensa. The Appennine tunnel between Bologna and Firenze is 59% complete, and should also be ready in 2007.

Work is also underway on a short section of the Milano - Venezia corridor, between Padova and Mestre. September 20 saw the start of the formal planning process for the Genova - Pianura Padana link.

The government is very keen to improve links to the south, and RFI has completed a study for a new line from Napoli to Reggio di Calabria, which is now with the ministry for assessment. Lunardi's latest infrastructure package includes funding for a new or upgraded route from Reggio di Calabria to Palermo. This includes the rail approaches to the Messina Straits bridge (RG 7.02 p395).

Short-term relief

As well as the high-profile new lines, RFI has a huge programme of short-term projects to boost capacity on the core network. Freight bypass routes are being developed to relieve the pressure around the major cities, which will allow higher speeds and release capacity for enhanced suburban services. Existing lines are being double-tracked, realigned and upgraded. In 2001 alone, projects totalling €3·7bn were completed, including 150 km of new tunnels, bridges and viaducts.

Major resignalling schemes are now underway on both the Tirrenica (above left) and Adriatico corridors. On the east coast route, the new control centre at Bari took charge of Pescara - Loretto on September 7. Senigallia - Rimini will cut over this month, and the rest from Castelbologna to Bari will be resignalled by the end of 2004.

Elsewhere, new routes are being created by 'knitting together' existing lightly-used lines. For example, double-tracking of the key freight corridor between Bologna and Verona will not be completed for another four years. So RFI has upgraded the track on the parallel Modena - Mantova - Verona route, which was formerly closed at night. Now most northbound trains run this way, leaving the direct line clear for the heavier southbound trains.

Similar work is underway in the south. The port of Gioia Tauro is the fastest-growing terminal in Italy for high-cube containers, but there is no capacity for extra trains to run through Napoli and Roma. So RFI has upgraded the Paola - Sibari - Taranto line and built a new triangle at Paola, enabling the container trains to be routed via the Adriatico corridor. The total value of upgrading projects underway or planned for southern Italy is put at around €36bn.

Gorra says there is a huge backlog of investment. 'The length of the Italian rail network is essentially the same as it was in the early 1920s. Over the last 80 years the population has doubled, economic activity has more than doubled, and income per capita has quadrupled. The country has invested heavily in its roads, its ports and its airports. Now it is time to put right more than 50 years of under-spending on the railways.'

TABLE: RFI financial results (im)

2000 2001

Access charges & other income 3052 1029

State operating support 1479 1502

Capitalisation 418 432

Total income 4949 2963

Labour costs 2970 1661

Cost of materials and services 2071 1161

Other costs 37 25

Total costs 5078 2848

Gross operating margin (129) 115

Depreciation (1403) (1088)

State depreciation coverage 999 1036

Other items (265) (65)

Net profit (loss) after tax (798) (2)

TABLE: Major RFI investment projects

Key Project Cost Comple- im tion date

1 Torino - Milano AV line 6800 2006-08

2 Milano - Bologna AV line 6100 2007

3 Bologna - Firenze AV line 4700 2007

4 Firenze - Roma upgrading 360 2004

5 Roma - Napoli AV line 5160 2004-07

6 Milano - Verona AV line 4420 2011

7 Verona - Padova AV line 230 2011

8 Padova - Mestre AV line 440 2006

9 Venezia - Trieste AV line 4300 after 2010

10 Milano - Genova AV line 4000 2010

11 Napoli - Battipaglia line 830 2005-11

12 Battipaglia - Reggio di Calabria AV line 15200 after 2010

13 Torino remodelling 130 2007

14 Bologna remodelling 1110 2007

15 Firenze remodelling 1220 2010

16 Roma remodelling 570 2005

17 Napoli remodelling 380 2008

18 Brenner Pass (Innsbruck - Fortezza) 2000 after 2010

19 Quadrupling Fortezza - Verona 1300 after 2010

20 Quadrupling Chiasso - Milano 1000 after 2010

21 Novara - Borgomano - Simplon double-tracking 1710 after 2010

22 Genova - Ventimiglia double-tracking 1150 2007-09

23 Bologna - Verona double-tracking 760 2006

24 Pontremolese line double-tracking 1480 2007-10

25 Napoli - Bari line upgrade 1040 2007

26 Palermo - Messina double-tracking 5400 2008-10 27 Palermo - Catania new line 3500 after 2010

- Train operations control system 1550 2003-07

- GSM-R radio network 310 2003-07

- Operations command & control system 2200 2003-07

- Environmental improvement and oise reduction package 1220 2004

CAPTION: As part of the upgrading of the Genova - Ventimiglia line, the single-track coastal section through San Remo was replaced by a 22 km double-track alignment further inland which runs largely in tunnel. The old station at Taggia (inset) was superseded by a larger station and public transport interchange on the new alignment Photos:Maurizio Tolini

CAPTION: As part of the upgrading of RFI's Messina - Palermo line for 200 km/h, Italferr has managed the construction of a new 15 km alignment for the final approach into Messina, including the 12·8 km Peloritani tunnel which was opened in September

CAPTION: This new tunnel near Vasto is one of several lengthy bores being built for the double-tracking of the Adriatico corridor between Pescara and Bari

CAPTION: This new viaduct at Tavernelle has been built as part of the double-tracking of the Bologna - Verona corridor. Work also began in May on a new 950 m bridge across the Po river

CAPTION: The new Tirrenica SCC signalling and control centre at Pisa was opened in July, and took charge of the Campiglia area covering lines near Roma last month. By the end of next year it will control over 800 route-km between Genova and the outskirts of Roma

RFI defines its new role

Since it came into existence on July 1 2001, Rete Ferroviaria Italiana has been working to establish a new operations and management structure. Its top priority is to boost rail usage by encouraging new train operators, upgrading the network and boosting capacity in the core corridors. On top of a five-year investment plan totalling €91·5bn, the Italian government decided earlier this year to allocate another €33·8bn to help overcome a 50-year backlog in rail infrastructure spending.

RFI definit son nouveau r