1. 1 The Voice of European Railways IDEI and Northwestern University - Toulouse 7-8 November 2003 Railroad Industry Structure, Competition and Investment - Some remarks from the Community of European Railways ______________________ Dr. Johannes Ludewig Executive Director Community of European Railways

2. 2 The Voice of European Railways CER: The Community of European Railways  The Community of European Railways brings together 34 railway companies and infrastructure managers from the EU Member States, Norway, Switzerland and the CEEC  The CER deals with all policy areas of significance to railway transport  The CER offers advice and recommendations to policy makers in Brussels  CER works in close collaboration with the Paris-based UIC

3. 3 The Voice of European Railways Development of Railway Lines and Motorways (in KM) in Europe (15) from 1970-2000 (Index 1970 = 100) MotorwaysRail High Speed Lines 199040.000 km900 km 200050.000 km3.000 km 201070.000 km6.000 km

4. 4 The Voice of European Railways The challenge of demand growth – EU White Paper Achieve a modal shift towards environmentally less damaging transport modes (« Revitalising RAIL »). and White Paper objective

5. 5 The Voice of European Railways “Revitalising Rail” (1)Competition as a necessary condition (2)Industry structure: Rail as a system (3)How to safeguard system advantages while allowing for fair competition (4)Other needs to realise a sufficient framework

6. 6 The Voice of European Railways (1)Competition as a necessary condition Starting point in the rail sector Directive 91/440, followed by 1 st and 2 nd railway package Competition leads to a variety of choices for consumers and increases thereby the overall market volume (Potential) competition puts pressure on market players to increase efficiency The European Union has opened up network industries for competition But: -- historical, political differences in EU Member States (e.g. importance of ‘service publique’ in France) -- opening of rail passenger market not so straightforward, overlap between contracted (public services obligations) and commercial traffic (mostly long distance)

7. 7 The Voice of European Railways (2)Industry structure: Rail as a system Railways are a track-guided transport system The performance of the system is largely determined through the infrastructure Traffic management functions (e.g. signalling) will in future be divided between track and vehicle (ERTMS) Investment decisions in new rail infrastructure depend on the planned services (detailed planning including train programme, foreseen time table) … just to name some examples … Technical interdepencies and economics of scope exists

8. 8 The Voice of European Railways (3)How to safeguard system advantages while allowing for fair competition Although EU Directive only ask for a separation of essential functions, EU policy is leading in some countries to a very complex structure (e.g. Slovenia) Some countries separate infrastructure from operations although no competition on tracks takes place or is actively supported (e.g. Finland) In Germany the market is completely open since 1994, more than 200 external operators - the system is still integrated Final remark: in other network industries (telecommunications, electricity) only functional separation It is possible to organise competition in different ways, but it is difficult to safeguard the system advantages in a separated environment

9. 9 The Voice of European Railways (4)Other needs to realise the sufficient framework Infrastructure as key for future development of the rail mode Reduce bottlenecks Build new lines Dedicated Freight Network / Priority Network Harmonize investments on rail infrastructure between EU Member States at European level Taking into account the long time delays for infrastructure investments => Decisions have to be taken now !

10. 10 The Voice of European Railways Lines for trains with high speed Priority network Separation of fast and slower trains and Harmonisation of speed Mannheim Dresden Köln Hannover Berlin Leipzig Dortmund Frankfurt/M Nürnberg Stuttgart Kassel Saarbrücken Würzburg Karlsruhe Düsseldorf Halle Rostock Magdeburg München Basel Hamburg Bremen Erfurt Wolfsburg In planning phase Important other lines Lines for trains with lower speed Dedicated network in Germany Develop Rail Infrastructure

11. 11 The Voice of European Railways BETUWE-Line 160 km new freight line 25 tons axle load 120 km/h design speed Capacity: 10 trains/h per direction ERTMS level 2 Early 2007 in operation approximately 4 billion Euro investment costs

12. 12 The Voice of European Railways Iberian Peninsula – Ukraine Iberian Peninsula – Germany (Slovakia) Benelux – Italy via Luxemburg CER Corridor Programme 2003 3 corridors analysed. 3 action plans developed involving RUs, IMs and States

13. 13 The Voice of European Railways Comparable framework conditions between modes of transport - unbalanced assignment of cost to road and rail (4)Other needs to realise the sufficient framework Infrastructure charging (Eurovignette revision) weak points (1) insufficient inclusion of external costs (2) unclear definition of cross-modal financing options The expected Framework Directive on Cross-Modal Charging & Financing has been abandoned ! Energy taxation VAT question

14. 14 The Voice of European Railways In conclusion: The need for simultaneous action In order to bring rail in a position to reach the targets, three conditions have to be met at the same time (1) improve railways’ performance to meet market requirements (task by the railways) (2) establish fair framework conditions for all competing modes (task for politics) (3) develop the necessary rail infrastructure so that the expected growth in transport demand can be accomplished (task for MS/EU) This means: EU Commission / Parliament / Council, national governments and railway undertakings must act according to their responsibilities without waiting for one another!