EUROPEAN COMMISSION Brussels, 8.12.2016 SWD(2016) 427 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Fifth report on monitoring developments of the rail market {COM(2016) 780 final}



List of abbreviations CEF Connecting Europe Facility DG MOVE EC Directorate-General for Mobility and Transport EFSI European Fund for Strategic investments ERADIS the European Union Agency for Railways database of interoperability and safety ERDF European Regional Development Fund ERTMS European Railway Traffic Management System ESIFs European Structural and Investment Funds, include Cohesion Fund, European Regional Development Fund, European Social Fund, European Maritime and Fisheries Fund and the European Agricultural Fund for Rural Development GVA Gross Value added HICP Harmonised Index of Consumer Prices IM Rail infrastructure manager INEA EU Innovation and Networks Executive Agency km kilometre KPI Key performance indicator NIP National Implementation Plan NPV Net Present Value NSA National Safety Authority p-km passenger-kilometre PPP Purchasing Power Parity PRIME Platform of Rail Infrastructure Managers In Europe PSO Public Service Obligation Recast Directive Directive 2012/34/EU establishing a Single European Railway Area REGIO EC Directorate-General for Regional and Urban Policy RFC Rail Freight Corridor RMMS Rail Market Monitoring Survey RMMS Regulation Commission Implementing Regulation (EU) 2015/1100 for rail market monitoring RU Railway undertaking RU Dialogue Dialogue of Railway Undertakings TEN-T Trans-European Transport Network t-km tonne-kilometre the Agency European Union Agency for Railways, until June 2016 called European Railway Agency (ERA) train-km train-kilometre UIC Union Internationale des Chemins de Fer UIRR Union Internationale pour le transport combiné Rail-Route List of Countries AT Austria BE Belgium BG Bulgaria CF Cohesion Fund CH Switzerland CY Cyprus CZ the Czech Republic/Czechia DE Germany DK Denmark EE Estonia EL Greece ES Spain EU European Union EU13 EU Member States having joined EU as from 2004 EU15 EU Member States having joined EU before 2004 FI Finland FR France HR Croatia HU Hungary IE Ireland IT Italy LT Lithuania LU Luxembourg LV Latvia MT Malta NL the Netherlands NO Norway PL Poland PT Portugal RO Romania SE Sweden SI Slovenia SK Slovakia UK the United Kingdom Table of Contents List of abbreviations List of Countries Table of Contents Figures 6 Tables 8 Boxes 8 Introduction 9 1. The state of the Union railway network 11 1.1. Description 11 1.2. Missing links and cross border vision 15 1.3. Infrastructure management 16 1.4. Infrastructure density 17

2. The evolution of the internal market in rail services 18 2.1. Traffic volumes 18 2.2. Passenger market 19 2.3. Freight market 22 2.3.1. Evolution of volumes 22 2.3.1. Future of rail freight 26 2.3.2. Rail noise 27 2.3.3. Rail freight in multimodal context 28 3. The evolution of the internal market in services to be supplied to railway undertakings 30 3.1. Passenger rail stations 31 3.2. Other service facilities 34 4. The evolution of framework conditions in the rail sector 38 4.1. Infrastructure charging 38 4.2. Capacity allocation and congestion 42 4.2.1. Network utilisation rates 42 4.2.2. Congested sections 43 4.2.3. Managing capacity shortage 44 4.3. Infrastructure expenditure and funding 45 4.3.1. Infrastructure expenditure 45 4.3.2. Funding and financing 49

4.4. Developments as regards prices of passenger services 52 4.4.1. Overall evolution of fares and tickets 52 4.4.2. Fares and tickets in different market segments 55 4.4.3. Intermodal competition 61 4.5. The quality of passenger rail services 69 4.5.1. Punctuality and reliability 69 4.5.2. Safety 73 4.6. Rail transport services covered by public service contracts 76 4.6.1. PSO scope 76 4.6.2. PSO compensation 78 4.7. Licensing 80 4.8. Degree of market opening and utilisation of access rights 81 4.8.1. Legal liberalisation and actual entry in the rail market 82 4.8.2. Freight market opening 83 4.8.3. Passenger market opening 84 4.9. Development of employment and social conditions 86 4.9.1. Employment in rail 86 4.9.2. Socio-demographic structure of the rail labour market 88 4.10. Harmonisation 90 4.10.1. EU legislation 90

4.10.2. Transposition 91 4.10.3. Infringements 92 4.11. Digitalisation 94 5. Funding and efficiency of the railways 96 5.1. Funding of railways 96 5.2. Performance in terms of main inputs and outputs 97 5.3. The challenge of performance management 101 6. Conclusions 104 Figures Figure 1 –Length of national rail networks (2014) and relative change since 2009 (length of lines, thousand km) Figure 2 –The proportion of electrified networks (2014) and relative change since 2009 (%) Figure 3 –Length of dedicated high speed lines (km, 2015) Figure 4 –Long term evolution of high speed lines in Europe (km) Figure 5 –Institutional setting in the Member States (end 2015) Figure 6 –Density of railway network in terms of surface area and population (2014) Figure 7 –Evolution of traffic volumes since 2005 and average annual change of train-km since 2009 (%) Figure 8 –Evolution of rail passenger traffic volumes Figure 9 –Passenger land transport modal split (%)

Figure 10 –Passenger land transport modal split by Member State (2014) and change since 2009 (in percentage points) Figure 11 –Passenger traffic volumes by Member State (p-km, 2014), proportion of international traffic (%) and average annual change of volumes since 2009 (%) Figure 12 –Propensity to travel by rail (2014) and its average annual change since 2009 (p-km per year per inhabitant) Figure 13 –Evolution of rail freight traffic volumes Figure 14 –Freight land transport modal split (%) Figure 15 –Freight land transport modal split by Member State (2014) and change since 2009 (in percentage points) Figure 16 –Freight traffic volumes (t-km) by Member State (t-km, 2014), proportion of international traffic (%) and average annual change of volumes since 2009 (%) Figure 17 –Stations' density in relation to network length (number of passenger stations per 1 000 line-km, 2014) Figure 18 –Number of stations serving more than 10 000 travellers per day Figure 19 –Number of stations serving less than 10 000 travellers per day Figure 20 –Number of freight terminals (2014) Figure 21 –Number of marshalling yards and train formation facilities (2014) Figure 22 –Number of storage sidings (2014) Figure 23 –Number of maintenance facilities (2014) Figure 24 – Number of maritime and port facilities linked to rail activities (2014) Figure 25 –Number of refuelling facilities (2014) Figure 26 –Track access charges for different categories of trains (EUR per train-km, applicable 2016) Figure 27 – Average revenue from the charges for the minimum access package (EUR per train-km, 2014) Figure 28 –Evolution of track access charges (EUR per train-km, projected 2013 and 2016) Figure 29 –Network utilisation rates (thousand train-km per line-km, 2014) and relative change since 2009

Figure 30 –Evolution of infrastructure expenditure ( billion EUR) and proportion of maintenance and renewal expenditure Figure 31 –Total infrastructure expenditure in Member States (million EUR) and proportion of maintenance and renewal expenditure Figure 32 –Maintenance and enhancement expenditure in Member States in relation to their network length (thousand EUR, per line-km) Figure 33 –Distribution of allocated funding by Member States (2014-2020) Figure 34 –Total allocated EU rail funding in Member States in relation to their network length (2014-2020, thousand EUR per line-km) Figure 35 –Harmonised Index of Consumer Prices: rail transport/all transport Figure 36 –Fare revenue per p-km (2012) Figure 37 –Average annual change in revenue per p-km (2007-2012) Figure 38 –Suburban fares: monthly or 30-day (PPP-adjusted fare EUR per km) Figure 39 –Regional fares: peak single (PPP-adjusted fare EUR per km) Figure 40 –Interurban fares under 300 km: peak single(PPP-adjusted fare EUR per km) Figure 41 –Interurban fares above 300 km: peak single (PPP-adjusted fare EUR per km) Figure 42 –High speed fare: peak single (PPP-adjusted fare per km) Figure 43 –International fares: peak single (PPP-adjusted fare EUR per km) Figure 44 –Comparison of rail and car travel: regional trips Figure 45 –Comparison of rail and car travel: intercity trips under 300 km Figure 46 –Comparison of rail and car travel: intercity trips over 300 km Figure 47 –Comparison of rail and coach travel: interurban trips under 300 km Figure 48 –Comparison of rail and coach travel: international trips Figure 49 –Comparison of rail and air travel: interurban trips over 300 km (lowest observed fare)

Figure 50 –Comparison of rail and air travel: international trips (lowest observed fare) Figure 51 –Punctuality of regional and local passenger services, percentage of services on time Figure 52 –Punctuality of long distance passenger services, percentage of services on time Figure 53 –Reliability of regional and local passenger services, percentage of services cancelled Figure 54 –Reliability of long-distance passenger services, percentage of services cancelled Figure 55 –Proportion of high and good satisfaction scores for railway stations and rail services Figure 56 – Significant accidents and resulting causalities Figure 57 – Significant accidents per type of accident (EU-28) Figure 58 –PSO Services as % of total passenger services (2014) Figure 59 – Split of PSO national, PSO international and non PSO services - EU (million p-km, 2014) Figure 60 –Percentage of traffic under PSO for both type A and type B traffic (2014) Figure 61 –PSO compensation per train-km (EUR/train-km, 2014) Figure 62 –Proportion of fare-box revenue (2014) Figure 63 –Trend in total number of active railway undertakings Figure 64 – Legal liberalisation and entry of the first competitor in the freight market Figure 65 – Legal liberalisation and entry of the first competitor in the passenger market Figure 66 –Market share of competitors in the freight market (2014, % of t-km) and evolution 2011-2014 (in percentage points) Figure 67 –Number of active railway undertakings in freight market (2014) Figure 68 –Market share of competitors in the passenger market (2014, % of p-km) and evolution 2011-2014 (in percentage points) Figure 69 –Number of active railway undertakings in passenger market (2014)

Figure 70 –Proportion of labour force between infrastructure managers and railway undertakings (2014) Figure 71 –Staff employed in incumbent rail undertakings (2014, thousand) Figure 72 –Staff employed in infrastructure managers (2014, thousand) Figure 73 –Gender structure of railway staff (2012) Figure 74 –Age pyramid of workers in rail (thousand employees, 2012) Figure 75 –Railway staff structure per age Figure 76 –Transposition monitoring: market, interoperability and safety Directives Figure 77 –Monitoring of infringement proceedings: market, interoperability and safety Directives Figure 78 – Cost and contribution of rail sector (billion EUR, 2012 in 2010 prices) Figure 79 –Trends in input indicators (2007=100) Figure 80 –Trends in output indicators (2007=100) Figure 81 –Trends in financial indicators (2007=100, adjusted for HICP) Figure 82 – Operating costs per train-km by Member State (EUR per train-km, 2012) Figure 83 –Passenger track utilisation and freight track utilisation (2012) – absolute figures Tables Table1 –Utilisation high speed lines for high speed services (2014) Table2 –Ownership (O) and management (M) of stations serving more than 25 000 travellers per day Table3 –Ownership (O) and management (M) of stations serving less than 1000 travellers per day Table 4 –Congested sections and nodes Table 5 –Global distribution of allocated funds to transport and rail projects from EU funds under current financial framework (2014-2020, billion EUR)

Table 6 –Distribution of funds from CEF to railways (2014-2020) Table 7 –Distribution of allocated funds to rail investment from European Structural and Investment funds (2014-2020, million EUR) Table 8 –Quality: services defined as on time in the RMMS Table 9 –Serious accidents in Europe (2014) Table 10 –Fatality risk in different modes (2009-2013) Table 11 –Proportion of international PSO in total PSO services (2014) Table 12 –Market entry by domestic Open Access Operators Boxes Box 1 –Challenges with the quality of network data Box 2 –Evaluation of the Train Drivers Directive Box 3 –Turning around the negative trends in Estonia and Romania Box 4 –Interoperability of rail networks Box 5 –Inland freight transport modal split – adjusted methodology Box 6 –Revitalising rail freight Box 7 –Policy framework for tackling rail noise Box 8 –Promoting combined transport Box 9 –Service facilities and services - compliance with current rules and future developments Box 10 –Accessibility of stations to persons with disabilities and persons with reduced mobility

Box 11 –Direct cost based charging Box 12 –Measuring available capacity Box 13 –Categories of infrastructure expenditure Box 14 –European Fund for Strategic Investments Box 15 –National fare data Box 16 –Anomalies in fares Box 17 –Monitoring the quality of rail freight services in future Box 18 –Passenger Rights Box 19 –The Fourth Railway Package and the Recast of the Railway Safety Directive Box 20 –Provisions on competitive tendering of rail public service contracts in the Fourth Railway Package Box 21 –Licensing data as available in ERADIS database Box 22 –Training in the rail sector Box 23 –Further harmonisation Box 24 –Global efficiency gaps Box 25 –Performance management in the existing EU law Box 26 –PRIME and its work on KPIs and best practice benchmarking Introduction This Commission Staff Working Document accompanies the Fifth Report from the Commission to the Council and the European Parliament on monitoring development of the rail market. While the Fifth Report provides a very compact overview of the latest trends, the current documents develops each topic in more depth. In addition, on the DG MOVE website, the data and graphs used in this document have been made available in Excel format . Coverage of the Report

This document presents a non-exhaustive report covering the main developments in EU rail market along the lines of the topics listed in Article 15 (4) of Directive 2012/34/EU establishing a single European railway area (hereinafter the 'Recast Directive'), according to which the European Commission has to report every two years to the European Parliament and the Council on: 1.The evolution of internal market in rail services; 2.Services to be supplied to railway undertakings (Annex II to the Recast Directive) 3.The framework conditions, including inter alia: infrastructure charging capacity allocation investment made in infrastructure developments as regards prices quality of rail transport services rail transport services covered by public service contracts licensing degree of market opening harmonisation between Member States development of employment and related social conditions 4.The state of the Union railway network 5.The utilisation of access rights 6.Barriers to more effective rail services 7.Infrastructure limitations 8.The need for legislation. The main focus of this document is on developments between 2009 and 2014. Where available, 2015 data are incorporated. Depending on data availability, some comparisons are drawn with the 2011 (rather than the 2009) situation.

The sources of data include Rail Market Monitoring Survey (RMMS) responses, the Statistical pocketbook "EU Transport in Figures", Eurostat, statistics collected by various sectoral organisations and ad hoc presentations and studies. Contributions from the Member States, national regulators and stakeholders participating in the Working Group for Rail Market Monitoring in the framework of the Single European Railway Area Committee, have also been considered. In addition, the results of two studies commissioned by the EC in 2014-2015 – Cost and Contribution of the Rail Sector and Prices and Quality of Rail Passenger Services - have formed the basis for the analysis presented in sections 4.4 and 4.5. All EU Member States are covered, except Cyprus and Malta having no railways. In addition Norway participates in the Commission's Rail Market Monitoring exercise (hereinafter 'the RMMS') and is included in most parts of the report. However, EU total and average figures, where presented, do not include Norway or Switzerland. In addition, 2013 and 2014 RMMS responses were not received from Greece and Ireland did not respond to the 2014 survey. Croatian data are available only as from 2013. The implementing act for rail market monitoring This is the last report drawing on voluntary RMMS questionnaires to Member States. As from July 2015 the Commission Implementing Regulation (EU) 2015/1100 for rail market monitoring (hereinafter 'RMMS Regulation') sets rules for mandatory data collection. The questionnaire annexed to the Regulation was developed in close cooperation with the Member States and stakeholders participating in the Working Group for Rail Market Monitoring. While mainly building on the existing RMMS, the new questionnaire includes also some new indicators, e.g. on revenues and traffic outputs, public service contracts, infrastructure charges and employment. With a better defined data requirements and a mandatory collection process, the new reporting arrangements are expected to lead to more consistent and coherent data. Member States' reports will be submitted electronically and, after validation, will be made publicly accessible. 1.The state of the Union railway network 1.1.Description The rail network is the backbone of the EU's transport infrastructure. The importance attached to rail as a sustainable and clean mode of transport is reflected in the TEN-T Guidelines , in the objectives of the Connecting Europe Facility and the Cohesion Fund priorities. National and European authorities are working together to ensure the necessary support for building new but also for improving existing rail infrastructure as a part of EU-wide multimodal network. Figure 1 –Length of national rail networks (2014) and relative change since 2009

(length of lines, thousand km) Source: Statistical pocketbook 2016 (based on UIC, IRG annual market monitoring reports, national statistics (BE, DE, FR) and Eurostat, DE 2009 - an estimate The total length of rail network in 2014 was about 220 thousand kilometres (km), which is about 2% more than in 2009. As shown in Figure 1 , in relative terms the rail network in use has increased the most in Spain and France and decreased in Greece, Portugal, Norway and Austria. Box 1 –Challenges with the quality of network data Network length is usually expressed in line-km, which refers to a rail route between two points. A line section can consist of single or multiple tracks – i.e. the pairs of rails. Sparsely populated countries have a higher share of single tracks, where smaller centrally positioned and densely populated countries have a high share of multiple tracks. While data on the length of lines is usually available, there could be significant variations in reported values for some countries depending on the scope of reporting. For example, for the biggest European network in Germany, depending on source, the following data can be found: Regarding data on the number of tracks, line speed and electrification, data are collected by Eurostat, but on a voluntary basis, which affects availability and data coverage. Therefore, in this document all network data is taken from the DG MOVE publication 'EU transport in Figures, Statistical pocketbook 2016', where the data from various sources (UIC, Eurostat, national statistics, sectoral sources) are combined using the best available options. At the same time good quality data on the network and its capabilities, such as maximum axle load, length of trains, electrification, line speed etc. are essential for monitoring the network quality and interoperability. In addition, many key performance indicators (such as traffic volumes and costs) are 'normalised' using line and track kilometres. Therefore, DG MOVE has undertaken, with the assistance of a consultant and in cooperation with Member States and the sector, a task of populating the TENtec database with good quality network data, covering at least the core and comprehensive network. DG MOVE is also cooperating with Eurostat as to refine the definitions applicable to network statistics and thus improve the quality of reporting. According to available statistics from Eurostat, about 60% of rail lines are single track. In Belgium, the United Kingdom and the Netherlands the share of multiple tracks (double or more) is more than 70%, while in sparsely populated Finland and Sweden less than 20% of the whole network has multiple tracks. Since 2009, it is estimated that 2800 km of electrified lines has been added to the European rail network. The proportion of electrified lines has since 2009 increased 1.6 percentage points and was in 2014 52%. As shown in Figure 2 , there are marked differences between the Member States - in Luxembourg and Belgium more than 80% of lines are electrified, while in the Baltic States and Ireland electrification rates are below 15%. Most progress between 2009 and 2014 was made in absolute terms in Spain (+781 km) and in relative terms in Greece (+87%). For the coming years Banedanmark (Danish infrastructure manager) and Network Rail (the UK infrastructure manager) have launched large-scale projects for the electrification of major parts of their networks. Figure 2 –The proportion of electrified networks (2014) and relative change since 2009 (%) Source: Statistical pocketbook 2016 (based on UIC, IRG annual market monitoring reports, national statistics (BE, DE, FR) and Eurostat

Note: Reported reduction in electrified lines in LV and NO could be due to changes in the scope of reporting (e.g. exclusion of side tracks without regular traffic in Norway) Travel speeds and high speed network There are major differences between countries in terms of travel speeds. Despite the significant investment in the modernisation of the rail network in Eastern Europe, there are still regional networks where maximum permitted speed for passenger trains is 120 km per hour or even less. These are mainly in the Baltic States, Poland, Hungary, Romania, and Bulgaria .

As regards the travel speed of freight trains, in some national networks and international rail freight corridors it is 50-60 km/h. However for the most of international freight trains, especially in central and eastern Europe, the average speed is between 20 and 30 km/h. On some international routes freight trains run at an average speed of only around 18 km/h. Figure 3 –Length of dedicated high speed lines

(km, 2015) Figure 4 –Long term evolution of high speed lines in Europe (km) Source: Statistical pocketbook 2016 High speed lines make up part of the rail networks of Belgium, Germany, Spain, France, Italy, the United Kingdom, the Netherlands, Austria (see Figure 3 ) and since 2015 also in Poland. In total 3.4% of the European rail network is high speed. Over the last six years the high speed network has been expanded by 1 400 km (31%). More than 110 billion passenger-km (p-km) or 26% of all p-km in 2014 were run on high speed lines. The Spanish high speed network with its 2 871 km in operation and 1 200 km under construction is the second largest in the world after China . In Denmark, Germany, France, Italy and Austria, another 1 200 km of high speed lines are under construction and new lines are planned in the United Kingdom and Sweden. In addition, large sections of the conventional rail network have been upgraded for use by high-speed trains. By 2030 the planned high-speed TEN-T should extend to over 30 000 km . Building high speed lines requires significant investment and, while there is always a societal dimension linked to railway developments, achieving high utilisation rates is nevertheless crucial for mitigating burdens. A recent study by the Feder Foundation noted that only one high speed line in Europe – Paris/Lyon – generates profits while all other high speed lines are dependent on public subsidies. Table 1 presents the utilisation rates of high speed lines by high speed trains in 2014. The best utilisation rate has been achieved by High Speed 1 in the United Kingdom, operating a dedicated line between London and the Channel Tunnel. Achieving high utilisation rates is more challenging for larger networks. In these terms the French high speed network clearly outperforms the others. The use of extensive high speed networks in Spain is 5 times lower than in in France and almost 4 times lower than in Germany. In the Netherlands, after the technical difficulties of launching the services with FYRA-trains, Thalys-trains are the only high speed trains operated on HLS-Zuid. Table1 –Utilisation high speed lines for high speed services (2014) BE DE ES FR IT NL UK Traffic with high speed rolling stock (million p-km) 910 24 316 12 788 50 659 12 794 242 4 360 Length of high speed lines (km) 209 1 352 2 515 2 036 923 120 113 Proportion of high speed network compared to total network

(line km) 6% 3% 16% 7% 5% 4% 1% Source: Statistical pocketbook 2016, based on UIC data Utilisation rate

(million high speed p-km per line km per year) 4.4 18.0 5.1 24.9 13.9 2.0 38.6 1.2.Missing links and cross border vision Cross-border projects to remove missing links and bottlenecks between national networks and creating the European single rail area are key components of the TEN-T policy supported by CEF financing. For instance – Öresund – the fixed rail and road link between Denmark and Sweden – has been completed and has brought positive socio-economic benefits to neighbouring regions. On-going projects include for example Evora-Merida (PT/ES), Gent-Terneuzen (BE/NL), Trieste-Divača (IT/SI), Karlsruhe-Basel (DE/CH) and Katowice-Žilina (PL/SK). The estimated cost of completing the TEN-T network is EUR 700 billion, a significant part of which goes to cross-border projects. In addition, assuring connection between smaller cities in neighbouring countries can contribute to improved economic and social well-being. These links, even if not included in the TEN-T Network, can serve as feeder lines providing access to the TEN-T comprehensive network. Other initiatives, mostly stimulated through EU regional policy, are intended to identify and support such projects, if viable. In response to the initiative of the EP Committee of Transport and Tourism, which aimed to map the cross-border rail sectors having been abandoned over the last decades, DG MOVE proceeded with an analysis of a selection of discontinued local connections. The aim was to identify necessary conditions for taking some of these projects forward and key factors for them being successful. The results are summarised in the brochure State of Play of Cross Border Railway Sections in Europe (February 2016). The results of the analysis showed that apart from traditional financing issues, there are many additional barriers for implementing cross border rail projects. These include: administrative and legal hurdles, such as different permission, concession and procurement rules in Member States; political barriers, such as unaligned political priorities or opposition from local communities to building a line; technical barriers in terms of different standards applicable to rail lines and rolling stock , variations in safety certification rules; operational barriers, such as different languages, infrastructure charging approaches, issues with ticket sales and with the access to service facilities. Several efforts are ongoing to facilitate and overcome these obstacles. The Fourth Railway Package has given a new role to the European Union Agency for Railways (the Agency) to provide EU level safety certification and vehicle authorisation. Some operational barriers, as regards train drivers, will be addressed during the ongoing evaluation of the Train Drivers Directive and implementing rules will be established to facilitate access to service facilities. DG MOVE has also commissioned a study on 'Permitting and facilitating the preparation of the TEN-T Core Network Corridors' and the new Procurement Directive contributes to the simplification of cross-border projects. Box 2 –Evaluation of the Train Drivers Directive

It is not only networks and rail vehicles, but also train drivers that need to be interoperable across the borders. Consequently, the main objective of the Train Drivers Directive is to facilitate the mobility of train drivers in the context of the increasing opening of the railway market while as a minimum maintaining the current safety levels. The Directive lays down conditions and procedures for the certification of train drivers operating rolling stock on the railway market of the EU. It also specifies the tasks of competent authorities in the Member States, train drivers and other stakeholders such as railway undertakings and infrastructure managers. The report submitted in December 2013 by the Agency was a first assessment of the implementation of the Directive. In addition to its benefits, the assessment concluded that the Directive has some unclear or outdated provisions and therefore the scheme is not fully effective in terms of achieving a harmonised EU-wide certification system for train drivers. The latter, however, is crucial for ensuring safety, non-discrimination of drives as well as for cost-efficient cross-border operations. Building on the report of the Agency, the Commission is currently conducting an evaluation of the Directive with the aim to provide a complete overview of its implementation as well as the effectiveness of its provisions. Depending on its results, the evaluation may form the basis for a review of the Directive. 1.3.Infrastructure management Management of rail infrastructure is in the hands of national infrastructure managers. Each Member State has one 'main' (incumbent) infrastructure manager taking care of the core part of the network, and other smaller infrastructure managers (mostly few, but e.g. in Germany and Sweden couple of dozens). These smaller infrastructure managers are responsible e.g. for specific lines, for regional infrastructure or for lines linking railways and service facilities. Transparent and non-discriminatory access to rail infrastructure is of a paramount importance for attracting more operators to the market. Infrastructure manages are also working on removing bottlenecks, raising efficiency as well as improving service quality, punctuality and reliability. The Fourth Railway Package has proposed further measures to ensure that infrastructure managers perform all the functions needed to run rail operations in an optimised, efficient and non-discriminatory manner. Network efficiency can be improved further by pursuing interoperability and encouraging cross-border cooperation. An overview of various national governance structures of the main infrastructure managers is provided in the scheme below. Figure 5 –Institutional setting in the Member States (end 2015) Since 2012 the following changes have taken place: In Belgium, the infrastructure manager is no longer part of a holding; In Slovenia, a holding structure was created and infrastructure manager's functions were merged; In Ireland, essential functions of infrastructure manager were separated, as required in case of integrated structures; In France, a new holding structure was set up, and all infrastructure management functions were reattributed to one single infrastructure manager, which is a subsidiary of the holding; Poland has a particular form of holding structure, where the State rather than the holding controls the infrastructure manager. 1.4.Infrastructure density The Czech Republic, Belgium and Luxembourg with high population densities, have the most dense rail networks in terms of territorial coverage. Density of rail networks per inhabitant is the highest in sparsely populated Nordic countries, where ensuring connectivity of different regions requires relatively more km of lines. Interestingly, the Czech Republic and Hungary score high and Portugal and Greece low both in terms of lines per surface area as well as per inhabitant. Figure 6 –Density of railway network in terms of surface area and population (2014) Source: Statistical pocketbook 2016, based on Eurostat, UIC, IRG-Rail annual reports (BE, DE, FR), national statistics, Eurostat, estimates 2.The evolution of the internal market in rail services There are slight differences in total p-km and tonne-kilometres (t-km) as reported in the RMMS and Eurostat due to variations in the scope of reporting. The traffic volume indicators in this section are based on RMMS data (available as from 2007), because it provides break-downs between PSO and non-PSO services, domestic and international services and to some extent also traffic volumes in different market segments. Eurostat data (as presented in Statistical pocketbook 2016) are used to assess the modal split, which requires combining the data of different modes. Finally, for train-kilometres (train-km), the data of UIC, Eurostat and IRG-Rail have been combined in order to acquire a dataset as complete as possible. Data on train-km per type of traffic (freight and passengers) is unfortunately only partially available in Eurostat dataset and therefore is not used in the analysis. 2.1.Traffic volumes

Figure 7 looks at the evolution of traffic volumes for passengers and freight over the last 10 years. Despite an unfavourable economic climate across much of the EU since 2009, rail passenger outputs were almost not impacted by the crisis and have continued to grow on average 1% per year. Rail freight outputs in t-km in contrast dropped heavily in 2009, the low point of economic crisis and have not yet fully recovered. Total train-km (including both passenger and freight train movements) have effectively not increased indicating possibly certain productivity gains. Figure 7 –Evolution of traffic volumes since 2005 and

average annual change of train-km since 2009 (%) Source: p-km RMMS, except IE and ES (Eurostat) and t-km RMMS, except IE, EL, ES and RO (Eurostat), train-km 2009 UIC, 2014 Eurostat, except BE, DK, FR, NL ( IRG Rail 4th Annual Market Monitoring Report) and PT (an estimate). 2.2.Passenger market Figure 8 –Evolution of rail passenger traffic volumes Source: RMMS except EL, ES, IE where a mixture of Eurostat data and estimates is used In 2014, about 9.4 billion rail trips were made in EU countries. According to RMMS data, over the last five years to 2014, passenger rail demand in the EU increased by 30 billion p-km to 429 billion. This represents an average growth rate of 1.5% per annum. About 6% of passenger traffic is international. While domestic travel has constantly increased, the international traffic remained the same compared to 2014. An increase of 5% or more took place only in France and in Portugal. Figure 9 –Passenger land transport modal split (%) Source: Eurostat and Statistical pocketbook 2016 While volumes have grown, the modal share of passenger rail in land transport at the EU level has shifted only a half of percentage point from 7.1% to 7.5%. It should however be noted that there are marked differences between Member States. Some Western European countries (the Netherlands, the United Kingdom) face the challenge of accommodating a modal shift towards rail on already saturated networks. Rail's modal share has increased also in the Czech Republic and Slovakia. At the same time some other Eastern European and peripheral countries (Latvia, Slovenia, Bulgaria, Croatia) cancel services due to financial constraints and decreased demand. The latter is often caused by low quality of services, where low frequency, long travel times and old fleet cause people to switch to other modes. This will in turn lead to a drop in revenue and to a vicious circle of service deterioration. Figure 10 –Passenger land transport modal split by Member State (2014)

and change since 2009 (in percentage points) Source: Eurostat and Statistical pocketbook 2016 Figure 10 shows that rail's modal share in passenger transport is higher than the EU average (7.5%) in nine Member States - Austria, Denmark, Hungary, the Netherlands, France, Sweden, the United Kingdom, the Czech Republic, Germany and Belgium, while Spain, Italy and Slovakia are also catching up. In Croatia, Romania, Poland and Bulgaria rail's share has declined more than 1 percentage point. According to Figure 11 the main markets for passenger rail travel are in large and high-income Western European Member States. The growth of rail use since 2009 varied significantly, the largest relative increases in p-km over the last 5 years being in the United Kingdom, the Czech Republic and Luxembourg. An average decrease of 4 % or more per year has taken place in Romania, Bulgaria and Greece. Most dramatic reduction has taken place in Croatia, where according to available statistics passenger traffic has halved over the last 5 years. The divergence in growth rates in Member States reflects the impacts of a broad range of exogenous and endogenous factors. For example, increased access to car ownership and higher car use in EU13 Member States has suppressed rail demand in these countries. Conversely, the opening of new infrastructure or services, such as the West Coast Main Line upgrade works in the United Kingdom (2008)have supported rail demand and encouraged modal shift. Congestion on roads is also a strong factor supporting demand for rail services, in particular if facilitated by a suitable service offer and appropriate public policies (such as scarcity charge). Figure 11 –Passenger traffic volumes by Member State (p-km, 2014), proportion of international traffic (%) and average annual change of volumes since 2009 (%) Source: RMMS, except EL, ES, IE where a mixture of Eurostat data and estimates is used Note: FR – drop in international traffic between 2012 and 2013 is due to a break in time series In Eastern Europe, upgrading rail infrastructure and rolling stock and thus enhancing service quality appears of being the lever to support modal shift towards rail. Box 3 –Turning around the negative trends in Estonia and Romania





Rail travel per inhabitant in Member States varies by a factor of ten. In 2014, estimated rail travel per capita was almost 1 400 km per year in Austria and France, and more than 1000 in Sweden, Denmark, Germany and the Netherlands; it keeps growing in all these countries. At the same time the propensity to travel by rail was less than 100 km in Lithuania and Greece. Figure 12 –Propensity to travel by rail (2014) and its average annual change since 2009

(p-km per year per inhabitant) Source: RMMS and Eurostat 2.3.Freight market 2.3.1.Evolution of volumes In 2014, more than 1.7 billion tonnes of freight was carried on EU railways. Figure 13 shows that rail freight outputs (t-km), while still being 7% lower than the 2007 peak levels, have recovered 14% between 2009 and 2014 reaching according to RMMS data to 417.6 billion t-km and showing average increase of 3% per year. In terms of t-km, more than 50% of traffic in 2014 was cross-border, giving to rail freight a much stronger European dimension than is the case for passenger traffic (where the proportion of cross-border traffic is only around 6%). The proportion of cross-border rail freight is expected to grow further, taking into account that the competitive advantage of rail freight vis-à-vis road tends to grow with distance.



Figure 13 –Evolution of rail freight traffic volumes Source: RMMS At the same time this means that rail freight is particularly affected by the lack of interoperability and sometimes lack of cooperation between the national railway networks, or in other words – the absence of a Single European Rail Freight Area.

Box 4 –Interoperability of rail networks There cannot be Single European Rail Area without interoperable networks and rolling stock able to run across national borders. In addition, standardisation of systems and equipment in its broader sense is crucial for achieving scale efficiencies and thus helping to reduce costs. Like highlighted in various parts of this document, lack of interoperability remains a key issue for international rail traffic. For instance, across the EU, there are six standards for track gauge, 6 different power standards and 4 pantograph profiles for electric power supply. Loading gauges for freight wagons and containers also differ. For instance, Eurostar, the Channel Tunnel high speed train operator, which has started preparations for launching passenger services on the route London- Rotterdam-Amsterdam in late 2017, would need to find a way to comply with 10 different technical subsystems. Specific EU legislation exists to promote interoperability and overcome such differences, which is implemented with the assistance of the Agency. The Agency provides also detailed analysis of the trends of implementation of interoperability across the EU in its biennial interoperability reports. In addition operational limitations in terms of capabilities of different network sections, such as maximum speed, electrification and permitted train length/axle load, can limit cross-border rail transport. The TEN-T Regulation has set capability standards for the TEN-T core and comprehensive network.



Figure 14 –Freight land transport modal split (%) Source: Eurostat and Statistical pocketbook 2016 As shown in Figure 14 rail's modal share in inland freight transport (including railways, roads and inland waterways) was 18% in 2014 and has been relatively constant for several years. However as with passenger transport, behind a stable EU level average there are widely diverging trends at the Member State level. Figure 15 shows that the modal share of rail freight in total surface transport varies between 80% in Latvia and 1% in Ireland. Overall, rail freight is more dominant in the Baltic States and Scandinavia. Lately several Eastern European countries (Slovenia, Romania and Hungary) have managed to significantly improve the rail's share in freight transport. A drastic decrease has taken place in Estonia due to rapidly dropping transit volumes (see below). Figure 15 –Freight land transport modal split by Member State (2014) and change since 2009 (in percentage points) Source: Eurostat and Statistical pocketbook 2016 Box 5 –Inland freight transport modal split – adjusted methodology The freight modal split data at the Member State level in this RMMS report differ from those used in earlier RMMS reports, given the changes applied by Eurostat for calculations. The modal split is based on the total inland freight transport performance expressed in t-km. Complying with the relevant EU legal acts, data on rail and inland waterways transport are reported according to the ’territoriality principle’ (transport on the national territory, regardless of the nationality of the haulier). However, road transport data is reported according to the nationality of the haulier (regardless of where the transport activity took place). Therefore, according to the new methodology, road transport data have been adjusted according to the ’territoriality principle’ before calculating the modal split. More information on how this is done is available: http://ec.europa.eu/eurostat/statistics-explained/index.php/Freight_transport_statistics_-_modal_split#Data_sources_and_availability . Figure 16 –Freight traffic volumes (t-km) by Member State (t-km, 2014), proportion of international traffic (%) and average annual change of volumes since 2009 (%) Source: RMMS, except for EL, ES, IE, PT, RO where a mixture of Eurostat data and estimates is used Note: BE: there appears to be a break in time series for international traffic as from 2013 As shown in Figure 16 , countries with the highest absolute freight volumes are Germany, Poland and France. In small Member States, such as Estonia, Latvia, the Netherlands, Slovenia, Denmark and Luxembourg more than 90% of freight is international. Since 2009 (the low-point of economic crisis), in Spain, Luxembourg and Denmark average annual increase has been close to 10% or more. Only in Croatia, Slovakia, Greece and Estonia there has been a further overall decline. Estonia observed a decline in freight volumes of 51% since 2009. Rail freight traffic in the Baltic States consists mostly of bulk cargo originating in the Russian Federation and delivered to the ports of the Baltic Sea. These transit flows have been unstable over the recent years due to political instability, but also since the new Russian ports at the Baltic Sea have taken over a major part of this business. Of the three Baltic States, Estonia was most seriously hit and it appears that some of its freight traffic has been displaced to neighbouring Latvia, in part, due to lower access charges (both rail track access charges and port fees) in Latvia. 2.3.1.Future of rail freight Despite the positive developments listed above, it is clear that with the current pace it will not be possible to reach the objective of the 2011 White Paper to shift 30% by 2030 and 50% by 2050 of long-distance road freight to more energy-efficient transport modes such as rail and inland waterways. The European Court of Auditors notes in its report Rail freight transport in the EU: still not on the right track that overall, despite the EU policy objectives and the EU funding available for rail infrastructure, the performance of rail freight transport in the EU remains unsatisfactory. Market opening has achieved uneven progress in Member States and a Single European Railway Area is still a long way from being achieved. As regards the travel speed of freight trains, in some national networks and international rail freight corridors it is 50-60 km/h. However for the most of international freight trains, especially in Central and Eastern Europe, the average speed is between 20 and 30 km/h. On some international routes freight trains run at an average speed of only around 18 km/h. Different national rules govern path allocation, infrastructure management and pricing making it more difficult for rail to compete with other modes of transport (in addition to other factors like the lack of level playing field between the different modes, the type of goods transported etc). This is particularly true for road transport, whose infrastructure is easily accessible across borders. As a result, rail freight transport performs poorly in terms of volume and modal share. The Court therefore recommends that the Commission and the Member States should help the infrastructure managers and railway undertakings to increase further the competitiveness of rail freight transport, particularly in terms of reliability, frequency, flexibility, customer orientation, transport time and price.

Box 6 –Revitalising rail freight Recognition that longer-distance, cross-border transport is most likely to shift from road to rail is being reflected in EU policies, as it is the case with the development of the Rail Freight Corridors (RFC), which is the key element of the European strategy to revitalise rail freight. The establishment of RFCs and their corresponding governance structures aims at improving the conditions for rail freight traffic along the corridors and to trigger its development in terms of volume, market share, quality and reliability. The corridor approach also fosters the cooperation between different stakeholders (primarily the Member States and the infrastructure managers), the coordination in terms of capacity offer, traffic management and conditions of use of the infrastructure, the harmonisation of processes and rules as well as prioritisation of investment. All nine corridors have been now set up and, based on the experience and feedback gathered so far (including stakeholder consultation process); an evaluation of the RFC Regulation is currently ongoing. The purpose of the evaluation is to assess whether there is a need to strengthen the corridor concept and to adapt it to the new needs and expectations of the sector. In addition, the Commission fully supports the Rotterdam Ministerial Declaration and Sector Statement on rail freight, in the elaboration process of which it has closely participated. For the follow-up, it is crucial that the relevant national authorities would immediately launch efforts to increase the quality and reliability of rail freight services in Europe. Rail freight has to face several challenges, which are to different degrees relevant to all market segments - trainload, wagonload and combined traffic: A quality challenge: improving reliability and punctuality, i.e. through higher interoperability and better co-operation across borders in the field of traffic and infrastructure management. A cost challenge: improving cost competitiveness by higher productivity and more efficient train operations, i.e. through improved and harmonised infrastructure standards, and by providing a more level playing field between transport modes. A service challenge: adding new added-value service features, supported by deployment of innovative technology, allowing rail to (re-)enter new / lost market segments. A political challenge: securing societal and political acceptance and support of rail freight, such as in the area of rail noise. Crucially, good last-mile infrastructure is vital for the development of rail freight. Discussions are ongoing with stakeholders on how to best address these issues, including e.g. facilitation of access to information on European last-mile infrastructure and identification of success features for support programmes for modernisation and new constructions. Finally, it is important to ensure that the same principles are applied for charges and taxes on different transport modes, notably the 'user pays' and 'polluter pays' principles, and that the overall framework conditions for various transport modes converge. This will, at the end, benefit rail freight. The Commission services have carried out substantial work in the past on the internalisation of external costs which also involved taxation and charges, and this work will be continued in the future. A comprehensive study on internalisation of external costs in transport, which will inter alia present a detailed analysis of transport related taxes and charges, will be launched in 2017. 2.3.2.Rail noise Rail freight noise is the most sensitive environmental problem for the railway sector and a serious nuisance for citizens living close to railway lines. The European Environment Agency estimates that nearly 14 million Europeans are affected by rail noise. A number of initiatives have been already adopted at the EU level in order to reduce noise exposure, including the Environmental Noise Directive 2002/49/EC, Technical Specification for Interoperability (TSI) on Noise, financial assistance under the CEF and modalities for noise-differentiated track access charges. However, despite the efforts of the Commission and Member States, progress in tackling rail noise is rather slow. There is a risk that excessive levels of railway noise can lead to uncoordinated unilateral actions by Member States along the most important European rail lines, in particular the Rhine-Alpine corridor, such as applying speed restrictions and restrictions on operating at night. Such restrictions would negatively impact the competitiveness of rail freight. Box 7 –Policy framework for tackling rail noise Given that more than 50 % of rail freight transport is international and many wagons run across borders, any attempt to combat rail noise at source needs a European response. In order to assess what further steps could be envisaged, the Commission conducted an Impact Assessment in 2014, which indicated that at present the most effective way to mitigate rail noise is by retrofitting the existing freight wagons with composite brake blocks. This technical solution reduces rail noise by up to 10 dB which equals a 50% reduction in audible noise for humans. The Impact Assessment showed also that the preferable approach would be a policy mix encompassing application of harmonised noise-charging principles, financial support both at EU and national level, development of noise-related standards of railway infrastructure and a revision of the TSI on Noise. The Staff Working Document on rail freight noise reduction encapsulates the whole policy framework. The Commission now envisages a revision of the TSI Noise so that in future the noise limit values become gradually applicable not only to new wagons but also to existing fleet; first to international wagons (suggested timing 2022) and then to the whole fleet (suggested timing 2026). It is paramount to provide stakeholders with a stable timeframe, which will allow them to anticipate the necessary investment and to adopt suitable market strategy. The Agency has started preparations for the revision of the TSI Noise with planned adoption mid-2017. 2.3.3.Rail freight in multimodal context Railways seldom provide door-to door delivery and therefore development of multimodal solutions is vital for its attractiveness. The study conducted by the Commission on the design features for support-programs for investment in last mile infrastructure (i.e. the movement of goods from a transportation hub to final destination) noted that while block trains and single wagon load transport still dominate the European rail freight market with 1.45 billion tonnes (82%), the intermodal transport accounts for 0.31 billion tonnes (18%) and is growing. The latter is triggered by rising maritime volumes, relevance for alpine transit and substitution of single wagon transport. The above mentioned study also looked at the changes in the framework conditions for the rail freight market in Europe and concluded that over the last decades the opening of transport markets has led to increased intermodal competition for rail freight. There has been also a shift in the range of transported goods and with new cargo types the customers expect faster delivery and transparent transport chains with real-time information. Therefore, to ensure that rail freight remains competitive, it is crucial to support its functioning in the intermodal context and to develop efficient solutions of combined transport. According to UIRR, the Association of European Road-Rail Combined Transport, the performance or rail-road combined transport has over the last year grown by 12.2% in 2014 and 5.23% in 2015 in terms of t-km. Shorter distance domestic traffic has been decreasing, while cross-border and in particular intercontinental combined transport is increasing (+27% in 2015). Subsequently, the average distance travelled increased from 780 km in 2014 to 882 km in 2015, proving once again that combined rail-road transport in longer distance and cross-border services is more competitive vis-à-vis road-only services than short distance (domestic) transport. Box 8 –Promoting combined transport Given that the EU has not yet fully internalised external costs of all transport modes, the market does not provide appropriate price signals to users for shifting towards sustainable modes. Therefore, to ensure further development of combined transport, suitable legal and policy frameworks are needed to ensure wider use and investment into infrastructure and logistical solutions. The Combined Transport Directive targets this market failure by supporting combined transport with regulatory and fiscal measures. It was adopted more than 20 years ago and was evaluated in the framework of the REFIT agenda in 2016. The evaluation identified several shortcomings, which the Commission is planning to address through an amendment of the Directive. The planned amendment is expected to give a further boost to combined transport in the EU and thus support sustainable development of the whole transport system. By improving the competitiveness of combined transport as an alternative to road transport, the initiative will contribute to decarbonisation and reduce transport related environmental pollution as well as improve road traffic safety and reduce congestion. To support the development of combined transport, it is important that the clearance gauge of a line gives access to standard container trains. The Commission will publish a report providing the analysis of the state of the network in these terms and suggest measures for respective enhancements in early 2017. 3.The evolution of the internal market in services to be supplied to railway undertakings The Recast Directive introduced a set of new rules for service facilities and rail related services. The new legal framework applies to a broad range of facilities including passenger stations, freight terminals, marshalling yards and train formation facilities, storage sidings, maintenance facilities, cleaning and washing facilities, maritime and inland port facilities and refuelling facilities. The provisions also cover the services provided in these facilities as well as additional and ancillary services such as traction current supply, pre-heating of trains, arrangements for transport of dangerous goods, access to telecommunication networks and ticketing services in stations. Box 9 –Service facilities and services - compliance with current rules and future developments The new rules introduced by the Recast Directive have not yet been transposed in all Member States. Even where they have been transposed, basic rules such as publication of access conditions and charges are often not yet fully complied with. There are various reasons for this, including a lack of awareness of operators of services facilities and a degree of resistance towards publication of information that is considered as sensitive by certain stakeholders (e.g. charges for access to facilities). Given fragmentation of the market (a large range of different owners and operators of various sizes), there could be gaps in terms of overview of all service providers and this complicates proper enforcement further. Yet several Member States have already made progress by gradually improving compliance with the existing legal framework, and some have even tackled problems not yet addressed in the Recast Directive. These range from the development of templates to facilitate publication of information to sharing real time information on trains arriving at the facility and attempts to align deadlines for path allocation and allocation of capacity in service facilities. In order to ensure a more coherent development of the service facilities market, the Commission services are currently preparing an implementing act to complement the basic legal framework. The act should help to codify best practice at an early stage and prevent divergences in implementation, which can be detrimental to the objective of a Single European Rail Area. The Commission also aims at reducing the cost of traction current, which currently accounts for 10 to 30% of the transportation price. For instance, following EC requests, DB Netz (Germany) opened access to other current suppliers to its network. This resulted in a significant drop of energy prices and increase in third-party suppliers' market share. Another aim is to create conditions allowing the suppliers to shift from an estimates based consumption billing to meter based billing. The latter would incentivise utilisation of energy friendly rolling stock and driving styles. Necessary conditions include on-board metering systems, transmission interfaces for metered data and a clearance system. SNCF Reséau (France) and ProRail (the Netherlands) have started to test a clearance system.

The main aim of the legislation is to increase the transparency of access conditions and charges applied and to ensure non-discriminatory access to facilities. Therefore, ownership and management of facilities needs to be monitored. RMMS information is rather complete for stations but still fragmented for other facilities and there is room for improvement as regards monitoring of this part of the rail market. In particular definitions of the various categories of facilities have not yet been harmonised. Therefore any data presented in this section must be interpreted with care. The Commission services are cooperating with national regulators and Member States to refine definitions and improve the quality of reporting. 3.1.Passenger rail stations There were about 30 000 stations in the EU in 2014, of which about 300 were large stations serving more than 25 000 travellers per day. Figure 17 –Stations' density in relation to network length

(number of passenger stations per 1 000 line-km, 2014) Source: Number of stations: RMMS and IRG Rail 4th Annual Market Monitoring Report for EL, HR and SK. Length of lines: Statistical pocketbook 2016 As shown in Figure 17 , Austria, Czech Republic and Slovakia have more than 250 stations per 1 000 line-km (i.e. less than 5 km between two stations) while Finland, Belgium and Ireland have, according to RMMS data, less than 50 stations per 1 000 line-km (i.e. more than 20 km on average between two stations). Figure 18 –Number of stations serving more than 10 000 travellers per day Source: RMMS (data 2013 for IE), BE, EL, HR and SK - data not available. Figure 18 and Figure 19 present the number of stations in different size clusters. Germany, France and the United Kingdom have the highest number of large stations serving more than 10 000 travellers per day. Bulgaria, Lithuania and Slovenia reported that they do not have such stations. Germany, France, Poland and the Czech Republic have a high number of smaller stations, serving less than 10 000 travellers per day. Very small stations serving less than 1 000 travellers per day outnumber the stations serving between 1 000 and 10 000 travellers per day in all countries except in the Netherlands. Figure 19 –Number of stations serving less than 10 000 travellers per day Source: RMMS 2014 except for IE and PL (2013 data) and BE, EL, HR, SK (data not available). For EE and SE: estimates for number of stations serving less than 1 000 travellers. As shown in Table 2 , ownership/management of large stations is concentrated in the hands of a few players. Infrastructure managers or incumbent railway undertakings are managers and often also owners. Governments own large stations in 7 countries, leaving the management to infrastructure managers or integrated companies. Table2 –Ownership (O) and management (M) of stations serving more than 25 000 travellers per day Number of stations (2014) Incumbent railway undertaking Other RUs Infrastructure manager Integrated companies Government Other private operators CZ 3 O, M DK 6 O, M O, M DE 121 O, M ES 14 O, M* FR 47 O, M O HR N/A M O IT 11 O LV 1 O, M LU 1 O, M O NL 21 O, M O, M AT 15 O, M PL 9 M O PT 6 M O SK N/A M O FI 2 O O O SE 4 O UK 36 M O, M NO 1 O M Source: RMMS. FR data reflects the situation in 2014 before the 2015 national railway reform. In SE the main infrastructure manager manages platforms in stations, the state-owned Jernhusen owns and manage around 50 station-buildings (out of around 160), including the three largest; the rest is owned by various entities such as local municipalities and private companies. *= in ES the management of commuter stations is entrusted to Renfe Operadora (incumbent RU). The ownership/management of small stations, presented in Table 3 , is more dispersed across the different players in all countries. In addition to government and main infrastructure managers, other railway undertakings and private operators are more involved in ownership and management of small stations. Table3 –Ownership (O) and management (M) of stations serving less than 1000 travellers per day

Number of stations (2014) Incumbent railway undertaking Other RUs Infrastructure manager Integrated companies Government Other private operators BG 297 M O CZ 2 323 O, M DK 159 O, M O, M DE 4 576 O, M O, M O, M O, M O, M EE 122 M M O IE 63 ES 1 095 O, M* FR 2 350 O, M O HR N/A M O IT 2080 O O LV 123 O, M LT 128 M O LU 43 O, M O HU 1 262 M O, M O NL 116 O, M O, M AT 1 179 O, M O, M PL 2 326 M O PT 378 M M O RO 937 O, M SI 260 O, M SK N/A M O FI 140 O O O SE 400 O, M O, M O, M UK 1 508 M O NO 297 O O, M O Source: RMMS. FR data reflects the situation in 2014 before the 2015 national railway reform *= in ES the management of commuter stations is entrusted to Renfe Operadora. Accessibility of stations for travellers with reduced mobility (including disabled people, people with temporary mobility restraints, elderly and accompanying persons such as parents with buggies) remains an EU wide challenge. Accessibility issues arise at different stages of a rail journey, not only at boarding a train and during the journey, but also in the preparatory stage. Given the societal dimension of rail transport, it is important for the sector to tackle this challenge making rail travel accessible to everybody and bringing new customers to rail. Box 10 –Accessibility of stations to persons with disabilities and persons with reduced mobility Commission Regulation (EU) No 1300/2014 of 18 November 2014 on the technical specifications for interoperability relating to the accessibility of the Union's rail system for persons with disabilities and persons with reduced mobility (PRM TSI) applies since 1 January 2015. The rules apply to infrastructure (e.g. obstacle-free routes in railway stations, visual and spoken information, platform width and height, and boarding aids) and to rail carriages (e.g. doors, wheelchair spaces, and information), making accessibility a mandatory requirement for newly built, upgraded or renewed rail infrastructure and rolling stock. The Regulation requires Member States to adopt National Implementation Plans (NIPs) to progressively eliminate all barriers to accessibility. The NIP contains a strategy, including the criteria and priorities for stations and units of rolling stock to be designated for renewal or upgrading. This strategy shall be formulated in cooperation with infrastructure managers, station managers, railway undertakings and, where relevant, with other local authorities. Representative associations of users including persons with reduced mobility shall be consulted. The NIPs shall be notified to the Commission by 1 January 2017. Within six months of completion of the notification process, the Commission has to prepare a comparative overview of the strategies contained in the NIPs. On the basis of this overview, and in cooperation with the Advisory Body, the Commission shall identify priorities and criteria to further guide the implementation of the Regulation. 3.2.Other service facilities Freight terminals Based on RMMS data and as shown in Figure 20 , Poland has the highest number of freight terminals, followed by Romania, France and Slovakia (with more than 400 terminals each). The widely diverging definitions used by Member States for freight terminals explain the major variations in figures between similar countries. For instance, Poland included 978 tracks with the possibility to load and unload owned by PKP PLK, while the United Kingdom reported only intermodal terminals. Figure 20 –Number of freight terminals (2014) Source: RMMS 2014 except for EL and IE (2012 data) and SE (DG MOVE estimates). For PL the figure indicates the tracks owned by PKP PLK with the possibility to load and unload, whereas there were 32 intermodal terminals at the end of 2014. UK figure refers only to intermodal freight terminals. Ownership/management of freight terminals is mixed. Non-incumbent undertakings own and manage terminals only in Germany and the United Kingdom. The government may own terminals (as in Bulgaria, Croatia, Italy, Luxembourg, Hungary Portugal, Slovakia, Sweden and the United Kingdom) but does not manage them. Terminals are mostly managed by infrastructure managers (in 12 out of 23 responding countries) or other private operators (in 11 countries). Marshalling yards and train formation facilities As shown in Figure 21 , France, Finland and the United Kingdom reported the highest number of marshalling yards and train formation facilities. However, again, there are divergences in definitions. For example, Germany's 71 marshalling yards and train formation facilities include only installations with gravity hill; including those without gravity hill would bring the figure to 236. Poland has reported 29 installations both with and without gravity hills (including 21 with gravity hill).



Figure 21 –Number of marshalling yards and train formation facilities (2014) Source: RMMS except for FR and UK (2013 data) and EL and IE (2012 data) In terms of ownership and management, the infrastructure managers are owners of marshalling yards in 14 out of 22 responding countries. Governments own marshalling yards but they outsource the management, often to infrastructure managers (e.g. in Bulgaria, Croatia, Italy, Lithuania, Luxembourg, Hungary, Portugal and Slovakia).

Storage sidings Figure 22 –Number of storage sidings (2014) Source: RMMS 2014 except for EL and IE (2012 data). Figure for PL refers to stopping tracks; figure for CZ refers to all operational sidings on the network. In DE DB Netz AG had refined their infrastructure portfolio, therefore the 2014 figure is significantly lower compared to 2013 (some tracks are no longer marketed as storage sidings). Storage sidings are sidings dedicated to temporary parking of railway vehicles between two assignments. Again there are profound differences in definitions used in various countries as well as important reporting gaps (only 16 countries provided data in the RMMS). In most countries having provided data, infrastructure managers own and manage storage sidings. Government ownership is reported in Croatia, Luxembourg, Hungary and Slovakia, without associated management functions. Maintenance facilities Similar caveats in terms of definitions and comparability apply to maintenance facilities. Poland's data as reported in Figure 23 for example, includes five levels of maintenance from basic running checkouts to facilities for general overhauls. Figure 23 –Number of maintenance facilities (2014) Source: RMMS 2014, except for EL and IE (2012 data), HR and NL (2013 data) and SE (DG MOVE estimates). Figure for PL includes facilities of 5 levels of maintenance, from basic running checkouts of the technical state to facilities where general overhauls are done. Figure for DK covers only maintenance and technical facilities on state lines. The 8 maintenance facilities reported by Denmark cover at the same time only major maintenance and technical facilities on state lines. Based on the data provided by 22 Member States, ownership and management of maintenance facilities is distributed across different players. The government is owner but never a manager of maintenance facilities. 'Other railway undertakings' and private operators often own and manage these facilities. Maritime and port facilities linked to rail activities As shown in Figure 24 , Italy, Germany, Romania, the United Kingdom and Sweden reported the highest number of these installations. Figure 24 – Number of maritime and port facilities linked to rail activities (2014) Source: RMMS, data 2014, FR and SK not relevant. Data for NO include 6 port facilities without tracks and/or lifting capacity. Based on the data reported by 21 Member States, most maritime and port facilities linked to rail activities are owned and managed by private operators. In Germany and Romania the government owns and manages the installations, whereas only in Germany, Slovenia and the United Kingdom the incumbent railway undertaking or other railway undertakings are the owners. Refuelling facilities According to IRG-Rail, the market of refuelling facilities appears to be more competitive than marshalling yards, given the high number of these facilities which are operated by independent infrastructure managers. Also, in some cases – as in Norway- railway undertakings make use of on-demand tank trucks in addition to refuelling facilities. Figure 25 –Number of refuelling facilities (2014) Source: RMMS 2014, SK declared figure not relevant. Figures for EL, ES, LV and FR are from 4th Annual Market Monitoring Report (2016) – IRG Rail. According to the RMMS, ownership and management of refuelling facilities is spread among various market participants, including non-incumbent operators. No respondent indicated government at the same time as an owner and manager of refuelling facilities. 4.The evolution of framework conditions in the rail sector 4.1.Infrastructure charging

Infrastructure charges enable infrastructure managers to recover the cost they incur in providing infrastructure to train operators. The core principle is that the charges should cover at least "direct" costs. Box 11 –Direct cost based charging The EU rail legislation aims to provide a more precise calculation of direct costs as a basis for setting track access charges. According to the Recast Directive, the charges for the minimum access package (the core components of the infrastructure service, such as use of tracks, traction current, train control services) and for access to infrastructure connecting service facilities, shall be set at the cost that is directly incurred as a result of operating the train service. The clear rules on the modalities calculating the undelaying direct costs are specified in Commission Implementing Regulation 909/2015 Direct cost based infrastructure charges ensure that the infrastructure manager does not lose money when accepting an additional train service and subsequently infrastructure managers should not reject any applicant willing to pay at least that level of charges. The rules for calculating direct costs include the prohibitions to levy higher charges for deviated trains and to recoup the wear and tear of infrastructure for which the infrastructure manager had received grants. Effective implementation of the principle of direct costs charging requires that infrastructure managers have a good overview of their assets and understanding of cost causation so that they are able to allocate costs to the different services and various types of vehicles. By so doing it allows the infrastructure managers to also incentivise the use of less damaging rolling stock. In addition to direct costs there are other components of charging systems that infrastructure managers can use to enhance: the effective use of infrastructure capacity (e.g. scarcity charge, reservation charge, discounts to specific traffic flows) environmental performance (modulation of charges depending on noise emission and usage of diesel/electric locomotives); cost recovery of specific investment projects (charges based on long-term costs); and operational performance (penalties/rewards linked occurrence/avoidance of service disruptions). In addition, mark-ups can be applied on top of the direct cost charges in market segments being able to pay such higher charges. The overall level of cost recovery through infrastructure charges affects the necessary level of government contribution and Member States may require different levels of cost recovery. As a result of this and other factors, the level and approach to charging may vary both within the charging scheme of one infrastructure manager as well as between Member States. The current RMMS does not allow distinguishing between the various charging elements used by each Member State. Therefore, while comparing the level of charges as reported in the RMMS, the results need to be interpreted with caution. Figure 26 –Track access charges for different categories of trains (EUR per train-km, applicable 2016) Passenger charges higher, mixed or equal Freight charges higher Source: RMMS Notes: DK – break in time series as from 2016; HR, DE 2014 charges; LV 2015 charges; LT and SI arithmetic mean of min/max charges; FR - some train services excluded; EL, IE no data; NO – does no apply charges Figure 26 illustrates the different situations in Member States. In most countries charges for freight trains are higher than for passenger trains, but in Germany, Spain, Belgium, France, Luxembourg and Portugal the situation is the other way around. In Austria, Italy, Sweden and Denmark there are no big differences or the results are mixed. Freight charges in the Baltic States are particularly high, which is to some extent justified due to higher permitted axle-loads. The intercity charges in Belgium, Germany, Spain and France are relatively higher because these include the charges for dedicated high speed lines. Suburban charges are most volatile (varying between EUR 0.17 in the United Kingdom and 11.50 in France) because their levels depend on national approaches to PSO contracts and rail financing (see section 5.1). In France, for example, the regions themselves (rather than railway undertakings) pay the so-called "redevance d'access" to the infrastructure manager for the rail services they have ordered under public service obligation. Norway does not apply charges to the major part of its network.



Figure 27 – Average revenue from the charges for the minimum access package (EUR per train-km, 2014) Data not available Source: IRG-Rail 4th Annual Market Monitoring Report Better comparability of average charges between the Member States is possible by monitoring the average revenue (i.e. yield) from track charges per train-km. These data are available for most Member States in the IRG-Rail Annual Market Monitoring report and are presented in Figure 27 . Only charges for the minimum access package are included and differentiation is made between freight and passenger trains. It is important to remember that this is an average value, while in each country charges for specific types of trains and/or specific lines could be very different from this average. The extremes on Figure 26 and Figure 27 are similar – the highest freight charges are in the Baltic States and the lowest in Spain, while the highest passenger charges are in France. In Slovenia passenger trains which operate under public service contracts are exempt from track access charges; therefore the average passenger charge per train-km is very low. Figure 28 presents the evolution of the applicable track access charges between 2013 and 2016 in various market segments in each Member State, as reported in the RMMS. The figures show that the infrastructure managers with high charges and rapidly decreasing traffic levels may need to alter the level of their charges as to generate a constant level of revenues. This can trigger a shift from rail to road, unless the traffic is largely international. It should be also noted that the Polish and the Bulgarian infrastructure managers have reduced their direct cost based charges in response to an infringement procedure before the EU Court of Justice.





Figure 28 –Evolution of track access charges (EUR per train-km, projected 2013 and 2016) Suburban trains Intercity trains Freight trains Source: RMMS

Notes: DK – break in time series as from 2016; HR, DE 2014 charges; LV 2015 charges; LT and SI arithmetic mean of min/max charges; FR - some train services excluded; UK increase only in line with inflation and currency movements; data for several Member States missing, NO – does no apply charges 4.2.Capacity allocation and congestion 4.2.1.Network utilisation rates Capacity allocation schemes should encourage infrastructure managers to optimise the use of their infrastructure, while ensuring fair and non-discriminatory access of all operators to tracks. Figure 29 –Network utilisation rates (thousand train-km per line-km, 2014) and relative change since 2009 Source: Eurostat and Statistical pocketbook 2016 (based on UIC, IRG annual market monitoring reports, national statistics and estimates Figure 29 shows that rail infrastructure in some parts of Europe is increasingly busy. The Netherlands has by far the most saturated network running about 50 thousand train-km per each line-km per year and, according to available data, 70% of Dutch railway lines consist of multiple tracks. The next group of countries – the United Kingdom, Luxembourg, Denmark, Austria, Belgium and Germany run about 30 thousand train-km per each line-km per year, being still much higher than the EU average of 19 train-km per line-km. In all these Member States rail demand continues to increase setting high demands on infrastructure managers to accommodate the additional traffic, while at the same time maintaining the state of the network and its service quality. Over the last five years, the utilisation rates have in relative terms increased significantly also in Ireland, Denmark, Estonia and Sweden while declining in Greece, Croatia, Poland, Romania and Bulgaria. Network utilisation rates provide a good basis for evaluation to what extent infrastructure managers are capable to recoup their costs from user charges. Network utilisation in Central Europe is three to five times that in the South East of the Europe, which means that the infrastructure managers in Central Europe can achieve better cost recovery rates. At the same time, many networks with already low utilisation rates have seen further strong decline of traffic levels, limiting their potential to recover the cost. This results in a widening financing gap, which can trigger a downward spiral for the rail system in that country as a whole, unless the State raises its subsidies. 4.2.2.Congested sections Congested sections are of a particular concern in international corridors, given that saturated networks lead to degraded performance: rejected path requests, delays and longer recovery times in case of disruptions. Therefore, according to Article 47 of the Recast Directive, where after coordination of the requested train paths it is not possible to satisfy requests for infrastructure capacity, the relevant section has to be declared congested. The infrastructure manager has to carry out a capacity analysis to identify the reasons for the congestion and develop measures for easing the situation. According to the RMMS, in 2014 ten Member States had declared part of their network or certain nodes congested - in total more than 2000 km of tracks and 6 big passenger stations. In Sweden, the whole area of Stockholm has been declared congested. Table 4 –Congested sections and nodes Member State AT CZ DE DK HU IT NL RO SE UK NO 2014 Tracks (km) 12 0 507 84 89 355 175 193 XXX* 652 71 thereof high-speed lines (km) 2 thereof lines for passenger transport (km) 12 507 89 175 193 71 Stations serving over 25 000 travellers per day (number) 1 2 1 XXX 2 Freight terminals (number) 1 XXX Marshalling yards and train formation facilities (number) 3 1 XXX 2013 Tracks (km) 12 581 507 84 348 214 181 71 thereof high-speed lines (km) thereof lines for passenger transport (km) 12 507 348 71 Stations serving over 25 000 travellers per day (number) 1 2 1 2 Freight terminals (number) 2 Marshalling yards and train formation facilities (number) Source: RMMS

* Indicates the whole Stockholm area In addition to the sections which have been officially declared congested, there are many sections with highly saturated traffic levels. However, it is very challenging to capture the extent of this problem at the network level due to measurement difficulties. Box 12 –Measuring available capacity Railway capacity can be defined as the maximum number of trains that may be operated using a specific part of the infrastructure within a given time period and with a fixed level of service. Theoretical capacity is a complex issue depending not only upon infrastructure characteristics (e.g. signalling system, number of tracks, etc.), but also on the way it is utilised and its operating conditions such as temporary speed reductions, mix and length of trains running and heterogeneity and frequency of services. Therefore, capacity estimation requires usually a line by line assessment and very detailed data of the railway system (infrastructure and timetables). At the same time, having a robust overview of constraints and remaining available capacity is pertinent for replying to important policy questions, such as: Is the existing rail infrastructure able to absorb the forecasted/expected traffic? Would the already planned interventions such as TEN-T policy and ERTMS (European Rail Traffic Management System) deployment guarantee an adequate available capacity and consequently adequate reliability and level of service? Will the congestion on some parts of the network become an extremely limiting issue for passenger or freight trains? Would the existing network be able to accommodate the potential demand of open access competitive services, which may require capacity at peak hours or along more profitable corridors? The options for overcoming this gap in data and assessment is addressed in detail in the JRC Technical report Capacity assessment of railway infrastructure. The Commission services have also launched a data collection exercise which should allow assessing the level of saturation of the TEN-T network. 4.2.3.Managing capacity shortage

Scarcity charges To some extent, capacity problems can be managed by applying scarcity charges which reflect the scarcity of capacity of the identifiable section during periods of congestion. According to UIC, in 2012 Austria, Denmark, Germany, Luxembourg, the Netherlands, Sweden and the United Kingdom used scarcity charges. EU law only allows such scarcity charges for a longer time if the infrastructure manager can demonstrate that it has exhausted all possible measures to do away with the causes of the problem. In order to ensure that applied scarcity charges were in line with EU rules and were not discriminatory, regulatory bodies need to develop the institutional capability to assess the capacity analyses and capacity enhancement plans of the infrastructure managers. Framework agreements Framework agreements are used for setting out the rights and obligations of an applicant and the infrastructure manager in relation to allocated infrastructure capacity and charges to be levied over a period longer than one working timetable period. Framework agreements are currently used by the main infrastructure managers in Germany, Austria, Italy, the United Kingdom, France and Greece. In conditions of limited capacity, it is important to set certain rules to framework agreements to ensure optimal use of infrastructure. The Commission accordingly adopted an Implementing Regulation on framework agreements which established criteria for concluding and amending framework agreements in case other applicants are interested in the same capacity and no other solution can be found to fulfil their request. Better planning capacity restrictions Railway undertakings have underlined the importance of more timely and specific information on upcoming capacity restrictions in line with the guidelines of RailNetEurope . The negative impact of planned capacity restrictions, such as maintaining a line, cannot be avoided but can be mitigated if infrastructure managers would consult railway undertakings beforehand and, in case of international services, coordinate among themselves to minimise the impact on users. Therefore, the Commission services are considering a review of scheduling rules as foreseen in Annex VII of the Recast Directive, to ensure the necessary lead times are respected. Priority Rules In congested lines the priority rules become important. In general, with few exceptions, passenger traffic has priority over freight and international over domestic. However, specific rules depend on transport strategies of each Member State. In most Member States the rules for prioritisation of path allocation requests in case of conflicting interests are set in national legislation, but for example in France, Croatia and Sweden the priority rules have been provided only in the network statements of the infrastructure managers. In the Netherlands legislation provides both priority rules and minimum capacity allocations for each market segment. In the United Kingdom, track access contracts between the infrastructure manager and railway undertakings are pre-approved by the regulatory body. In many countries (e.g. Hungary, Latvia, Poland, Norway) PSO services get the first priority due to their high value to society, while in some other countries (Austria, Estonia and Romania) international passenger traffic is prioritised. Often express trains get preferential treatment compared to commuter traffic. As a result both the process of how the priorities are defined and to which market segments they apply, are very divergent. This can create obstacles for railway undertakings operating across borders, in particular to freight operators. 4.3.Infrastructure expenditure and funding 4.3.1.Infrastructure expenditure Fostering railway infrastructure as part of the development of the TEN-T networks has been a prominent issue of European transport policy. The completion of the TEN-T network requires about 550 billion EUR until 2020. The total costs until 2030 for all transport modes are estimated by the Commission services at EUR 1.5 trillion .



Figure 30 –Evolution of infrastructure expenditure ( billion EUR) and proportion of maintenance and renewal expenditure Source: RMMS According to the RMMS, infrastructure expenditure has constantly increased over the last four years from EUR 29 billion in 2011 to more than EUR 45 billion in 2014. The maintenance expenditure has fluctuated, while investment into renewal and enhancements has continuously increased. In 2014 25% of infrastructure expenditure went on maintenance, 29% on renewals and 45% on enhancements, while in 2013 the respective proportions were 32%, 24% and 44%. Box 13 –Categories of infrastructure expenditure

The RMMS required reporting of infrastructure expenditure up to 2014 according to the following three categories: "maintenance" – non-capital expenditure that the infrastructure manager carries out in order to maintain the condition and capability of the existing infrastructure "renewals" - capital expenditure on a major substitution work on the existing infrastructure which does not change its overall performance "upgrades" (or "enhancements") - capital expenditure on a major modification work of the infrastructure which improves its overall performance. The RMMS Regulation adds the fourth category "new infrastructure", which was earlier included in "upgrades". Differentiating between "maintenance" and "renewals" or "renewals" and "upgrades" is not always straightforward. Therefore data reported contain some adjustments and is prone to national interpretation. As shown in Figure 31 , in 2014, the total infrastructure expenditure was highest in the United Kingdom and in France – much higher than in Germany, even if the German network is by far the largest in the EU. Both in France and the United Kingdom, the infrastructure managers have to catch up with the years of under-investment having at the same time significant investment into enhancements (including new infrastructure) ongoing. In Germany, the infrastructure expenditure in 2014 also increased rapidly (+57% compared to 2013) and additional 2 billion EUR was provided for maintenance and renewals. Figure 31 –Total infrastructure expenditure in Member States (million EUR) and proportion of maintenance and renewal expenditure Source: RMMS Notes: CZ maintenance and renewal merged, EL, EE, IE data not available, HU some difficulties in categorisation Maintenance and renewals In conditions of increasing traffic in many States and demanding performance targets agreed with public authorities and operators, maintaining the existing network in order to uphold its safety and operational performance and to ensure reliable service, presents a major challenge for infrastructure managers. Many infrastructure managers have suffered from chronic maintenance underinvestment due to a shortage of funds, but also due to the fact that over the last decade priority was often given to the investment into new lines. Liquidating accumulated maintenance backlogs is in general more expensive and disruptive to services than continuous routine maintenance. Therefore it is important to ensure a sufficient and stable level of maintenance and renewal expenditure. In 2014 Infrastructure managers invested EUR 24 billion in maintenance and renewal of lines. A median proportion of this expenditure in total infrastructure expenditure was 52%. The extremes varied between 4% in Spain, where very high proportion of investment goes into new high speed lines and 100% in Croatia. Since 2011 spending on maintenance and renewal has increased on average 6% per year, most significantly in Romania, Norway, Latvia, Germany and Belgium. The countries with remarkable decrease were Spain and Poland. Figure 32 gives an overview of the evolution of maintenance and renewal expenditure since 2011 (the earliest available data) in Member States per line-km. It should be emphasised, that expenditure between Member States should not been benchmarked. An adequate level of expenditure has to be established for each network individually, given that this depends on many factors including the length of the network, its architecture (e.g. distance between nodes and switches, signalling system, geographical conditions), the number of tracks, the traffic intensity and current state of the network. For example, in France maintenance costs are predicted to increase, given that the country has to catch up with a maintenance backlog. In the Netherlands, the state of the network is good and maintenance expenditure is expected to decline due to efficiency gains. The high cost of the Luxembourg network is due to its specific architecture allowing trains to run either on left or right track in both directions and due to the relatively short distances between the nodes. Figure 32 –Maintenance and enhancement expenditure in Member States in relation to their network length

(thousand EUR, per line-km) Source: RMMS Notes: EL no data for 2013 and 2014, EE partial information, IE no data for 2014, HU in 2014 difficulties in distinguishing between enhancement and renewal expenditure The most notable relative yearly increase in maintenance and renewal costs in 2014 took place in Germany (+72%); but also in the United Kingdom and Latvia. The countries with continuous increasing trend of maintenance/renewal expenditure per line-km were Austria, Norway, Belgium, France, Latvia, Sweden and Portugal. Enhancements At the EU level investment into network enhancements have since 2011 almost doubled reaching EUR 20.5 billion in 2014. At the Member State level, the year-to-year amounts are volatile, depending on project pipeline and availability of funding. The top 5 – France, Spain, the United Kingdom, Italy and Poland – accounted for more than 60% of total EU enhancement investment in 2014. In addition Norway (not included in EU total), invested EUR 1.1 billion to enhance its network. High speed lines Not all Member States (e.g. the United Kingdom and Germany, and France partially) have managed to distinguish between the expenditure to high speed and conventional network. Nevertheless, at least EUR 7 billion (or 16% of total expenditure) were in 2014 reported to have been spent on high speed lines, of that EUR 4 billion in France, EUR 2.5 billion in Spain and EUR 0.4 billion in Italy. In Spain, the investment into new high speed lines absorbed 90% of total infrastructure expenditure.

4.3.2.Funding and financing Sources to cover infrastructure expenditure include:

own resources of infrastructure managers in the meaning of track access charges and other revenues; own resources are in general used for maintenance, but to a limited extent also for investment; 'other revenues' include income from renting facilities, such as shops in stations or selling land or structures no longer needed for railways; national subsidies in the meaning of network grants; depending on country, subsidies can be used for investment only, or both for investment and maintenance expenditure; EU funds (grants)- for investment only; Bank loans – usually for investment only. According to the study The Results and Efficiency of Railway Infrastructure Financing within the European Union Railway more than 50% of railway infrastructure investment has previously been funded by national budgets. EU co-funding added an average of 12% and the remainder was financed by concessions, PPPs, loans, equity capital or, to a lesser extent, by track access charges. National funding and contractual agreements Regarding national funding, there is at the moment no comprehensive overview of the level of subsidies provided by national governments to rail infrastructure managers. To ensure that the infrastructure manager has mid-term assurance on availability of sufficient funds, the Recast Directive obliges the Member States to conclude contractual agreements between the competent authority and the infrastructure manager covering a period of at least five years. Contractual agreements should contain performance targets the achievement of which conditions the agreed level of funding. By the end of 2014 at least five Member States (the Czech Republic, Estonia, Latvia, Portugal and Finland) had no contractual agreement with any of their rail infrastructure managers. The duration of existing contracts varied between one year (for some smaller networks) and 30 years in case of the HighSpeed1 concession of in the United Kingdom. In general, in Eastern European countries duration of contracts was about 3-4 years, while in Western European countries 7-8 years. Most Member States had performance indicators attached to existing contracts, although the complexity varied widely from reliability indicators only to a range of 50+ indicators covering costs savings, energy performance, productivity, average speed, possessions, customer satisfaction etc. EU funding The EU can co-fund or support rail projects through the Cohesion Fund (CF), the European Regional Development Fund (ERDF), the Connecting Europe Facility (CEF), the European Investment Bank (EIB) (mainly loans) and through the European Fund for Strategic Investments (EFSI, guarantees). CEF is the main EU funding instrument for TEN-T investment, while CF and ERDF are mostly used by EU13. These funds play a major role in bridging the infrastructure investment gap in Europe, which is one of the Commission's top priorities. In total more than EUR 33 billion in grants under the current financial framework (2014-2020) has been allocated to rail investment. As shown in Table 5 , almost three quarters of the CEF funding and 37% of total EU transport funding has been dedicated to rail. Table 6 and Table 7 provide an overview of distribution of funds between different types of projects. Table 5 –Global distribution of allocated funds to transport and rail projects from EU funds under current financial framework (2014-2020, billion EUR) Rail projects All transport projects Proportion of rail investment ERDF and Cohesion Fund 18.7 70.1 27% CEF 14.6 19.7 74% Total 33.3 89.8 37% Source: Innovation and Networks Executive Agency (INEA), DG REGIO

Table 6