Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
5. Creating the Industry Structure
• Competition among operators of vertically integrated railway routes together
with negotiated rights-of-track access at specific locations under private
agreements among railway entities (e.g. USA);
• Mandated but limited rights-of-access to competing operators defined under
national laws; access rights confined to defined routes and/or circumstances
exist in Canada, Brazil, Mexico, and the Russian Federation;
• General rights-of-access are mandated based on a policy of broadening access
to public infrastructure networks such as in the European Union, and Australia.
These three models provide a range of effective tools for allowing independent
private freight train operators to use national railway networks, and manage the
operational interfaces of a multi-operator regime.
By contrast, competition among rail passenger service providers is rare and occurs
mainly in EU member countries under three scenarios: (i) between a longdistance
national operator and a regional service provider on selected routes
(e.g., German Railways Inter-City Express (ICE) Service or regional route concessionaires);
(ii) between two operators on parallel or overlapping routes (e.g.,
perhaps 10-20 percent of the UK market); and (iii) using third-party track access
rights (a few UK services; a service planned between Cologne and Hamburg in
competition with German National Railways). This toolkit acknowledges potential
for direct competition for passenger services on some of the world’s busier
routes, but experience suggests that conditions favoring exclusivity are widespread
(see 5.3.2) and that pursuing competition in rail freight markets is an easier
place to start.
5.3.2 Competition for the rail market
Three circumstances militate against competition in rail transport services delivery.
1. Micro markets. Railways are a niche transport mode and railways are
most competitive where they can achieve high-level capital utilization——
infrastructure that carries substantial flows of well-loaded trains and wellutilized
locomotives, coaches, and/or wagons. But many railways in developing
and transition countries have inherently low freight and passenger flows,
which means that railway managers face the unenviable choice of running
longer cost-efficient trains at an unappealingly low frequency, or offering
more attractive service frequency for shorter, high-cost trains. Hence, it is often
said that rail services that succeed in thin markets do so because they run
on ‘the smell of an oily rag’; introducing competition—a second operator—
would mean running on the smell of half an oily rag.
2. Subsidized passenger rail services. Most rail passenger services in
most countries are subsidized by taxpayers because fares are inadequate to
cover operating costs. Introducing competition would reduce the fares,
thereby undermining the operators and increasing the drain on the public
purse.
The World Bank Page 74