WHITE PAPER - A STRATEGY FOR REVITALISING THE COMMUNITY'S RAILWAYS
Date: 1996-07-30
Institutions: European Commission
Subjects: common transport policy, competitiveness, rail transport, transport market, transport policy

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  30.07.1996 
COM(96)  421  final 

WHITE PAPER 

A STRATEGY FOR REVITALISING THE COMMUNITY'S 
RAILWAYS 

(presented  by  the  Commission) 

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CONTENTS 

Executive summary 

Section  I - A new kind  of railway  is needed 

Section  II  - Why rail  is in trouble 

Section  III  - Finances 

Section  IV  - Introducing  market  forces 

Section  V  - Public  service  in Rail  Transport 

Section VI  - Integration  of national  systems 

Section  VII  - Social  aspects 

Section  VIII  - Synthesis  and  timetable  for  action 

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EXECUTIVE  SUMMARY 

A STRATEGY  FOR  REVITALISING  THE COMMUNITY'S  RAILWAYS 

1. 

2. 

The  railways  could  do  much  to  sustain  mobility  in  the  next  century.  However,  while 
unease  is  growing  about  the  negative  effects  of  transport,  rail's  market  share  still 
declines. The main reason  is dissatisfaction  with the price and quality  of rail  transport, 
despite  encouraging  examples  of  new  services.  Rail  is  felt  not  to  respond  to  market 
changes or  customers'  needs,  as other  modes do. 

In fact  the railways have been largely  insulated  from  market forces.  Governments have 
a  certain  responsibility  in  that  they  often  did  not  allow  sufficient  managerial 
independence  and  imposed  obligations  without  compensating  fully  for  the  costs 
involved;  they  also  failed  to  set  clear  financial  objectives  but  subsidised  losses  or  let 
debt pile up. The railways were spared difficult  decisions, but this ill prepared their long 
term  future. 

3.  A  new  kind  of  railway  is  needed.  It  should  be  first  and  foremost  a  business,  with 
management  independent  and  free  to  exploit  opportunities,  but  answerable  for  failure. 
For  this  it  should  have  sound  finances,  unencumbered  by  the  burden  of  the  past.  It 
should be exposed  to market  forces  in an appropriate  form  which  should  also lead  to a 
greater involvement of the private sector.  A clear division of responsibilities is required 
between  the  State  and  the  railways, particularly  for  public  services.  A partnership  is 
needed  between  the  Community,  Member  States, the railways and  their  staff  to  create 
such a new railway.  As part of this initiative, action at the Community  level is urgently 
needed  in the  following  areas. 

4.  Finances 

Member  States must fulfil  their obligations to relieve the railways of debt and  improve 
their finances; the Commission will report on progress made.  The Member  States must 
also  create  a  sound  financial  basis,  by  linking  aid  to  restructuring  programmes.  The 
Commission will apply  Community rules on State aids so as to progressively  move the 
railways towards  viability. 

5.  Market forces 

The extension of access rights to infrastructure  would allow new railway enterprises to 
enter the market.  Last year the Commission tabled a proposal to allow open access  for 
all  freight  and  for  international  passenger  services.  This proposal  is a critical  element 
of the strategy  for revitalising the railways and it is therefore  essential that  it should be 
rapidly  adopted.  To  help  ensure  that  access  rights  are  effective,  it  will  propose  the 
separation  of infrastructure  management  and transport  operations  into distinct  business 
units.  It is now urgent to  improve  conditions  for  international  freight  transport,  so the 
Commission will promote the establishment of trans-European rail freeways,  with open 
access  and  simplified  arrangements.  Market  forces  should  also  be  introduced  into 
domestic  passenger  transport.  This must  be done  in such a way as to respect  network 
benefits and bolster the provision of public services.  Consequently, the Commission will 
study the best practical ways of introducing market forces and will then make proposals. 

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6.  Public services 

The  Commission  is  strongly  in  favour  of  better  public  transport.  The  State  has  a 
legitimate right to ensure the provision of public services in transport, which Community 
law clearly  recognises.  There is, however,  great  dissatisfaction  with these  services.  It 
is  necessary  to  improve  quality  and  value  for  money,  for  which  a  clear  definition  of 
responsibilities  is essential.  The Commission will propose the generalisation  of public 
service contracts between the State and transport operators. As with domestic passenger 
transport  in general,  it will  first  study the practical  issues of introducing  market  forces 
and  will,  in due course,  make the  necessary  proposals. 

7. 

Integration of national systems 

The  railways  developed  on  national  lines,  which  resulted  in  difficulties  in  operating 
across  frontiers,  inadequate  planning  of  infrastructure  and  fragmentation  both  of  the 
supply  industry and of research. While progress has been made, integration is far  from 
complete.  The  Commission  is  proposing  measures  to  promote  interoperability  for 
conventional  rail,  advance  technical  harmonisation  to  help  create  a  single  market  for 
railway  equipment  and  to  strengthen  railway  research.  These  measures  are  also 
necessary  to  ensure  that  rail  can  contribute  fully  to  a  European  intermodal  transport 
system. 

8. 

Social aspects 

Railway  staff  are naturally  concerned  that restructuring  may cause loss of jobs. This is 
natural, although  a competitive  sector  is the only  way to  secure future  employment.  It 
has to be pointed out that without restructuring  massive job losses would occur, both in 
the  railways  and  the  supply  industries.  Personnel  policies  including  substantial 
programmes  to  retrain  redundant  workers  are  required.  These  are  primarily  the 
responsibility  of  the  Member  States  but  contributions  from  the  European  Social  Fund 
should  be carefully  considered. 

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SECTION  I  -  A  NEW  KIND  OF  RAILWAY  IS  NEEDED 

1.  The  European  Commission  believes  that  railways  should  play  a  much  greater  role  in 
tackling  the  transport  challenges  facing  the  Community,  as we move  towards the  new 
century.  Urgent action is required to revitalise the sector, so that it performs  better and 
more  fully  satisfies  the demands  of our  society.  For this, Europe needs a new kind  of 
railway. 

2. 

3. 

4. 

Everyone is aware of increasing congestion, environmental problems, traffic  noise, and 
the  growing  opposition  to the  unchecked  development  of new  road  infrastructure.  At 
the  same  time  both  citizens  and  industry  need  reliable,  safe,  cheap  and  fast  transport. 
This is the major  transport challenge facing  us at the end of the twentieth century.  The 
social  impact  of transport,  both of goods or passengers, can be significantly  reduced  if 
greater  use  is made  of  rail  rather  than  road.  It  is paradoxical  that,  when  many  of  the 
problems  that  rail  could  help  solve  are  increasing,  its  share  of  transport  markets 
continues to decline. 

It is against this widely  recognised background,  that the Community  has developed  the 
railway  element  of  its  overall  transport  policy.  The  Community's  needs  can  be 
expressed  in  numerous  ways  :  for  instance  the  railways  should  be  more  efficient, 
customer oriented, and attractive to users, but less expensive and requiring less subsidy. 
The  goal  should  be to  make  rail  as attractive  to  use as other  means of  transport. 

The  Commission  believes  that  the  further  introduction  of  market  forces  is  the  most 
effective  means  of creating  a railway  that  can  compete  with other  modes  of  transport. 
This  must  be  done  in  a  manner,  however,  that  bolsters  the  railways'  essential  role  in 
providing  public  services,  to  ensure  adequate  mobility  for  society  in  general.  It  will 
require  efforts  from  all  stakeholders  and  implies that the  Community  and the  Member 
States provide the required framework,  while the railways themselves radically improve 
services  and raise  efficiency. 

5.  At  the  moment  many  railways  are  largely  insulated  from  market  forces.  If people  do 
not  use them,  the  trains  are  less full  and  the  State  makes  up the  losses.  In  future  the 
railways must behave much more like normal businesses, that endeavour to satisfy  their 
customer's requirements in the knowledge that, if they fail to do so, some one else will 
and they will lose the business.  This is the fundamental  change to be achieved, and the 
consequences  for  transport  could  be  immense. 

6. 

If all the relevant  interests can act together to create the right climate, the railways will 
be in a position to respond to opportunities and improve performance  in numerous ways. 
What is required  is a framework  that fosters  initiatives and allows creative responses to 
business  opportunities.  The  method  will  vary  and  is  for  individual  managements  to 
decide,  but  the  result  will  be  more  efficient  and  productive  railways.  Some  railways 
may focus entirely on their core business of operating trains; others may choose to enter 
into partnerships, for  example with road hauliers or logistics companies and offer  door-
to-door  intermodal  services.  Some  may  operate  across  Europe  providing  seamless 
services,  while  others  may  concentrate  on  local  services.  However  if  they  are  to 
survive,  all  railways  must  focus  on  what  their  customers  want  and  on  how  they  can 
satisfy  these needs.  An example of this development is the introduction of efficient  and 
regular  shuttle services on cross-border  routes, which has generally  resulted  in  shifting 
significant  quantities  of  goods  from  road  to rail. 

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A number  of  factors  point  towards  significant  opportunities  opening  for  rail.  Further 
enlargement  of  the  Community  toward  East  and  Central  Europe  will  provide 
considerable  opportunities to expand  the role of rail.  In the late  1990's,  many of these 
countries  still  have  more  extensive  rail  networks  offering  opportunities  for  freight 
delivery and collection.  This and the consolidation of the single market may lead to the 
lengthening  of journey  distances  so increasing  the attractiveness  of rail. 

One  of  the  major  challenges  facing  the  Community  and  its neighbours  is the  issue  of 
trans-Alpine traffic.  The expansion of the Community has had a major  impact on  traffic 
flows through this natural barrier between Northern and  Southern Europe.  There are a 
limited number of routes through the Alps and the growth in trade is putting these under 
increasing  pressure.  The Alpine  environment  is particularly  sensitive  to  the  effects  of 
pollution;  a  comprehensive  strategy  to  alleviate  the  problems  of  the  region  would 
probably  give  rail  a greater  role  in carrying  transit  traffic. 

In short, rail has characteristics which could make it an increasingly  attractive  form  of 
transport  in Europe.  In recent decades  it has declined  in importance  and has  failed  to 
adapt  sufficiently  to changing  markets.  Many possibilities already  exist  for  improving 
and  developing  services,  and  new  areas  of  opportunity  may  open  up.  To  meet  these 
challenges, the  Community  needs a new kind  of  railway.  The Commission's  purpose 
in putting forward the proposals contained in this White Paper is to create the conditions 
at  Community  level  for  the major  adaptations  needed. 

SECTION  II -  WHY  RAIL IS  IN  TROUBLE 

Decline  of  rail 

10.  Rail transport began in the first half of the nineteenth century and rose to be the primary 
means of transport by the beginning  of this century. Then the advent of motor  vehicles 
powered by internal combustion engines began to eat into that dominance. Since the end 
of  the  Second  World  War,  the  role  played  by  rail  in the transport  market  has  been  in 
constant  decline  and  now,  in the  closing  years of the twentieth  century,  rail's  share of 
the  passenger  market  is no more  than  6% and that  of the of  freight  market  16%. 

11.  Between  1970 and  1994 passenger  transport  by rail  grew by 25% from  216 to  around 
270 billion passenger/kilometres a year. However the overall market doubled in the same 
time,  and  the use  of  private  cars  more  than  doubled,  rising  by  120%.  Over  the  same 
period  freight  traffic  lost half its market share decreasing from  283 to 220 billion tonne 
kilometres while the freight  market expanded by nearly 70%, and road freight  increased 
by almost  150%.  Of course global figures only tell half the story because rail is a major 
force  in  some  areas  and  does  not  compete  in  others;  moreover,  recent  trends  in  the 
Member  States  are  to  a  certain  degree  diverging.  Annex  1  gives  an  overview  of 
developments  in rail  and  its share  of the transport  market  over  the past  decades. 

12.  Where do these general developments lead? If recent trends are extrapolated  for the next 
ten years, the railways' share of the passenger market would fall from  6 to 4%, although 
the  absolute  quantity  of  traffic  might  rise  slightly.  The  railways'  share  of  the  freight 
market  would  drop  from  16  to  9%,  with  volumes  remaining  approximately  static. 
Moreover, decline in market share needs to be seen in the light of a predicted expansion 
in passenger transport of 40% and freight  traffic  by 30% over the same period.  Indeed, 
a  greater  drop  cannot be  excluded,  as diminishing  flows  could  trigger  a vicious circle. 
This means that there is a real possibility that rail could disappear altogether  from  large 
segments  of the  freight  market. 

13.  Although only illustrations, these trends are alarming. They suggest serious increases in 
congestion, pollution and possibly accidents; they also suggest that increasingly the roads 
will  carry  traffic,  including  highly  dangerous  goods, which  would  be  better  kept  well 
away from  people. This is not to say that rail can solve all our transport problems. The 
railways cannot compete in some transport markets and, of course, railway  infrastructure 
has  limited  capacity.  Nevertheless  rail  transport  can  make  a  real  contribution  to 
sustainable  mobility,  which  will  be  lost  if present  trends continue. 

14.  Rail transport  risks  entering a vicious circle, if it has not done so already.  Contractions 
in service lead to reductions in traffic  flows,  both directly and indirectly, because of the 
loss of  network  benefits;  for  example,  cutbacks  in regional  services  can reduce  traffic 
flows  on  the  main  links. This  in turn pushes up  costs for  the remaining  traffic;  in rail 
transport this effect  will be strong because the sector is capital intensive and has a high 
level  of  fixed  costs.  The  result  will  be  a  continuing  spiral  of  price  increases  and  of 
diminishing  traffic  or  of  losses  met  by  subsidy  or  debt.  The  pressures  on  government 
budgets  will  increasingly  limit  the  scope  for  subsidy.  Already  many  States  are  less 
willing  to  fund  the  losses of  their  railways than  before. 

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15.  The result would be severe cuts in service and the closure of much of the network,  with 
catastrophic  effects  both  on  the  rail  sector  and  on  its  suppliers.  Railway  enterprises 
employ  directly  some  1.05  million  people  (1994)  throughout  the  Community  and  the 
shut-down of large parts of the network would cause many to lose their jobs. The  effects 
on the  supply  industry  would  be  similar  as they  would  lose large markets. 

Causes  of  decline 

16.  There are many reasons for the decline of the railway sector over the last half  century. 
Perhaps the most  important was the rise of other modes that offered  more flexible  and 
less  expensive  transport  :  buses,  lorries  and  the  private  car.  Citizens  and  businesses 
increasingly  turned to road transport, which led to the construction  of road networks to 
meet this demand.  At the same time traditional, heavy  industries whose products  were 
transported  by  rail  declined  in  importance.  The  railways  did  not  find  new  freight 
markets  to  compensate  for  this  loss,  offering  services  often  considered  inflexible, 
unreliable  and expensive,  even  in the  sectors where they  could be  competitive. 

17.  As  road  transport  has  become  more  efficient  and  cheaper,  the  fact  that  the  price  of 
transport often  does not reflect  all costs sufficiently  has become increasingly  important. 
The  prices  paid  by  individual  users  do  not  sufficiently  reflect  external  costs  such  as 
those  of  congestion,  pollution  and  accidents.  These  costs  are  often  higher  for  road 
transport  than  for  other  modes,  so that  the  conditions  of  competition  favour  road  and 
work  against more  environmentally  friendly  modes. This  issue was discussed  in  more 
detail  in  the  Commission's  Green  Paper  "Towards  fair  and  efficient  pricing  in 
transport"'1.  While  this  is  an  important  issue,  it  is  an  illusion  that  charging  for  the 
external costs of transport would in itself be sufficient  to lead to a resurgence of interest 
in rail.  Cost is certainly  one  consideration  when making  a transport  choice,  but  there 
are many others such as speed, reliability  and  flexibility  of service. 

18.  The  railways  have  even  lost  out  in  one  market  where  they  should  be  in  a  powerful 
position,  long  distance  freight.  One  reason,  among  others,  is that  they  are  organised 
along  national  lines.  In  fact,  there  is  no  internal  market  in  rail  services  at  the 
Community  level.  Article  10  of  Directive  91/440/EEC2  granting  access  to  the 
infrastructure  everywhere in the Union currently only applies to international  groupings 
and companies providing combined transport services. Moreover, there is a whole series 
of regulatory and administrative obstacles. This situation prevents competition from new 
operators and frustrates  the organisation of seamless international  services.  Reliability, 
flexibility  and speed disappoint customers - on major  shuttle services inland from ports, 
average  speeds  are  often  not  above  20  kilometres  an  hour.  The  comparison  with 
international  road freight  is stark, where consignments travel in a vehicle which readily 
crosses  frontiers  and  are  frequently  in  one  person's  care  from  collection  to  delivery, 
resulting  in clear  responsibility  and  good  quality  of  service. 

1 

"Towards  fair  and efficient  pricing  in transport".  COM(95)691, 20.12.95. 

2  Council  Directive of 29th  July  1991 on the development  of the Community's  railways. (91/440/EEC) 

O.J. No. L 237, 24.8.91. 

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19.  Management  of the railways  must  bear  a large  degree of  responsibility  for  the  decline 
which has taken place.  However, relations between the State and the railways have been 
a  prime  cause  of  the  disappointments  of  rail  transport.  States  have  usually  denied 
railway  enterprises  the  freedom  of  a  commercial  business.  As  well  as  political 
interference  for  immediate ends, the authorities have tended to require the maintenance 
of  very  uneconomic  services.  Railway  investment  has  often  been  inadequate  or  mis 
directed, and so a consequent burden on finances.  Governments have compensated  with 
large  subsidies  that  met  losses without  being  directed  to a particular  objective  such as 
the  improvement  of  efficiency.  In addition  financial  objectives  were often  confused. 

20.  Another  reason  for  decline  was  the  inadequate  adaptation  of  the  rail  network  to  new 
patterns  of  economic  activity  and  urbanisation  and  the  consequent  changes  in  traffic 
flows.  While the capacity and quality of infrastructure  did not properly meet new needs, 
little  used  infrastructure  was  kept  open  and  became  a  burden  on  finances.  Although 
major  investments  have  been  made  in  recent  years  and  others  are  planned,  there  was 
little attempt to improve railway infrastructure  as the motorway networks were built; this 
helped  worsen  the  imbalance  between modes. 

A  new  kind  of  railway 

21.  To overcome these weakness and to exploit future  opportunities, the Community  needs 
a  new kind of  railway.  It  should  be  first  and  foremost  a business.  It  should  have the 
independence  and  resources  to compete.  It  should  be  free  of the burdens  of  the past. 
Market  forces  should  be  further  introduced  in  an  appropriate  way.  The  division  of 
responsibilities  between the  State  and the railways  should  be clarified,  particularly  for 
public  services.  National  railway  systems  should  be brought together.  It  is clear  that 
this requires major  efforts  from  all stakeholders  : management, workers, Member  States 
and the supply industry.  As part of this partnership for  change, the Community should 
provide a modernised regulatory framework,  as well as measures for integrating national 
systems at European level.  Consequently, the Community itself should act in five main 
areas : finances, introduction of market forces, public services, the integration of national 
systems  and  social  policy,  its ideas and proposals  are set out  in the next  five  sections. 

SECTION  HI  -  FINANCES 

Long  standing  problems 

22.  Sound  finances  are  essential  if  railway  enterprises  are  to  be  transformed;  they  are  a 
condition  of  independent  and  dynamic  management,  as  Directive  91/440/EEC  on  the 
development  of  the  Community's  railways  clearly  recognises.  The  traditional  financial 
organisation  of  the  railways,  however,  would  have  hastened  their  decline,  even  if 
everything  else  had  worked  in  their  favour.  State  support  met  deficits  but  was  not 
focused  on  clear  objectives.  Financial  objectives  were  obscure  and  incentives  to 
management lacking; commercial pressures did not work to check deficits and borrowing 
as they should do.  Allocation of costs and revenue was inadequate; it was often  hard to 
tell  whether  a service made or  lost money.  Investment,  although  on a large scale,  often 
did not meet business needs and was a drain on finances. Borrowing was usually  limited 
by  ceilings  on  borrowing  by  the  public  sector  but,  paradoxically,  was  often  less 
constrained  by  the credit-worthiness  of  the  borrower. 

23.  At the same time, the State imposed obligations, directly or indirectly without necessarily 
defining  them clearly  or compensating  the railways fully  and directly. Most  obligations 
concerned transport in the public interest; some served wider aims, such as employment, 
social welfare  and regional development. Railways were also expected to buy equipment 
from  national  suppliers  not  on  the  wider  market,  which  raised  costs  considerably. 
Progress, however, has been made in clarifying  the financial  responsibilities of the State 
and  of  the  railways.  The  Community  has  built  up  a  body  of  legislation  concerning 
railway  finances3,  and  some  Member  States  have  done  much  to  clarify  and  improve 
railway finances. Nevertheless, the financial  organisation of much rail transport  remains 
very  confused  and  is a serious obstacle  to the  improvement  of  services  and  efficiency. 

Recent  trends 

24.  It  is  interesting  to  look  at  some  recent  trends,  although  general  indicators  hide  wide 
differences  of performance.  To begin with revenue, both passenger  and  freight  receipts 
have  declined  steadily  over  a long period.  While this follows  the fall  in freight  and  the 
stagnation  of  passenger  traffic,  it  is also  caused  by  a dramatic  decline  in yields, that  is 
revenue  per  passenger  or tonne  kilometre.  Receipts  from  the farebox  presently  amount 
to  around  65% of  total  operating  revenue.  As  might  be  expected,  operating  subsidies 
increased,  although  they  seem to have  fallen  in the  last few years. 

Council  Directive  91/440/EEC  op.cit. 

Council Regulation  (EEC) n° 1191/69 of 26th June  1969 (OJ LI56, 28.06.1969)  as amended by Council 
Regulation  (EEC)  n°  1893/91  of  20  June  1991  (OJ  L169,  29.06.1991)  on  action  by  Member  States 
concerning the obligations inherent in the concept of a public service in transport by rail, road and inland 
waterway. 

Regulation (EEC) No.  1192/69 of the Council of 26th June  1969 on common rules for the normalisation 
of the  accounts  of railway  undertakings.  O.J.  L156, 28.6.69. 

Regulation (EEC) No.  1107/70 of the Council of 4th June  1970 on the granting  of aids for transport  by 
rail,  road  and  inland  waterway.  O.J.  LI30,  15.6.70. 

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25.  Staff  costs declined  as a proportion  of  operating  costs in the  1980's,  but have  increased 
since  1990 and currently represent around 63% of total operating costs. While there has 
been  a considerable  reduction  in staff  numbers  this  has been, offset  by  increasing  costs 
per employee.  Another trend is the growing capital intensity of the railways. In the mid 
1980's two units of capital generated one unit output; in 1994 more than three units were 
required.  The capital  base of the railways  was expanded to finance  this.  Railway  debts 
have  increased  significantly  in the  1990's  although they  have  fallen  as a proportion  of 
total  capital,  because  governments  injected  capital.  In parallel  with  the  general  rise  in 
debt,  interest  charges rose as a share  of  operating  revenue to around  15%,  contributing 
to  losses. 

Basic  principles 

26.  For  the  railways  to  flourish,  clear  financial  objectives  and  a  proper  division  of 
responsibilities  between  the  State  and  the  railways  are  essential;  and  for  successful 
restructuring, the burden of past debt must be lifted.  The railways must have a  financial 
structure that allows effective,  independent management as in other sectors, but must also 
take  much  greater  responsibility  for  their  financial  situation.  Railway  finances  should 
be  organised  according  to these basic principles  : 

-  Member  States  should relieve  railways  of the burdens of the past; 

-  the  railways  should  be run  on a commercial  basis; 

-  Member States should pay full  compensation for public services and exceptional social 

costs. 

With  the  exception  of  this  compensation  and  support  for  specific 
infrastructure 
investment (see § 31), the railways should finance their operations without transfers  from 
the  State. 

27.  These  principles  flow  from  Community  rules  on railway  financing  (see  § 23).  If  fully 
applied  and  tightened  where  necessary,  they  would  provide  a  sound  framework  for 
restoring the financial  health of the railways.  However the main actors are the State and 
the  railways.  States  have  to  face  up  to  their  responsibilities  in  relieving  past  debts, 
creating  a sound  structure  for  the  future  and  compensating  for  the  services they  obtain 
from the railways. The railways themselves must reduce costs radically and improve their 
financial  management,  for  instance,  through  precise  allocation  of costs  and  revenues. 

Specific  policies 

28.  The  railways  cannot  face  the  challenges  of  the  future,  encumbered  by  past  debt. 
Regulation  1107/70  allows  Member  States  to  give  financial  assistance  for  various 
purposes, including the repayment of loans without prior notification.  From  1st January 
1993 when Directive 91/440/EEC came into force, Articles 77, 92 and 93 apply. Indeed, 
this Directive imposes an obligation on Member States to help reduce debt to a level that 
does not  impede  sound  financial  management  and to  improve  railway  finances. 

11 

However,  it seems that this obligation  has not  been put  into practice  equally  across the 
Community.  Beginning  in  1997, the  Commission  intends  to report  at regular  intervals 
on the progress made by the Member  States in reducing  debt and  in improving  railway 
finances.  Here, the Commission will take account of the fact that certain Member  States 
which aim to meet the convergence criteria for Economic and Monetary Union may wish 
to  modulate the reduction  of  debt  over  time. 

29.  The Member  States are also obliged  to help reduce recent debt,  that accumulated  since 
1993.  However, State aid for this purpose and to meet operating losses is subject  to the 
State Aid  Rules of the Treaty,  as Directive  91/440/EEC clearly  states  : Member  States 
have  to  notify  aid  to  the  Commission  and  obtain  authorization.  Community  rules  on 
State  aid  do  not  allow  them  to  relieve  or  guarantee  such  debts,  inject  capital  or  meet 
operating  deficits  indefinitely  and  without  conditions.  This  would  not  be  the  way  to 
progress towards sound finances and greater competitiveness.  The Commission will only 
authorise  such  State aid  if it  is in accordance  with the  Treaty,  in particular  Article  92. 
In practice a necessary, but not necessarily a sufficient,  condition of authorisation would 
be a restructuring  programme,  in accordance  with the Community  guidelines4.  Its  aim 
would  be a progressive move towards viability  within a reasonable period;  it would  set 
clear  objectives  and  contain  concrete  measures  to  raise  revenue  and  to  reduce  costs. 
Moreover,  the  Commission  will  develop  more  specific  rules  and  guidelines,  if 
appropriate. 

30.  The  application  of  the  State  aid  rules  would  under  certain  conditions  not  affect 
compensation  that  Member  States pay  for  the provision  of public  services  (see  section 
V).  If these public services are provided on the basis of contracts following  a transparent 
and non-discriminatory allocation procedure, the corresponding compensation is not State 
Aid but payment  for  a transport  service.  In any case compensation  which do not  fulfil 
these requirements are, for  the time being, exempt  (on the basis of  Regulation  1192/69 
on  the  normalisation  of  the  accounts  of  railway  undertakings)  from  any  notification 
pursuant  to  the  State  Aid  rules.  Moreover,  compensation  must  also  be  paid  for 
exceptional social costs only borne by railway undertakings, such as early retirement and 
specific  welfare  allowances.  These  costs  have  declined  since  this  Regulation  was 
introduced in  1969. The Commission will assess its implementation  and its relevance to 
present  circumstances. 

31.  General responsibility  for  promoting the development  of railway  infrastructure  remains 
with  the Member  States. For major  new projects  there is growing  interest  in  involving 
private  capital.  But  while  interested  in  the  possibilities,  private  developers  are  often 
deterred from  investing alone, because social and private benefits diverge and returns are 
low and uncertain.  Public/private  partnerships are therefore  a promising  way to finance 
large  infrastructure  projects,  particularly  the  priority  TENs  projects  endorsed  by  the 
European  Council  in  Essen.  It  is  the  Commission's  practice  to  authorise  public 
investment  in  infrastructure,  so  long  as  it  is  equally  accessible  under  the  same  non 
discriminatory  conditions  and  does  not  distort  competition.  In  the  short  term,  it  is 
legitimate for  States to finance investment  in railway infrastructure  so as to compensate 
for  unpaid  external costs in the road  sector or to meet non-transport  objectives,  such as 
regional  development,  as long as these  conditions  are met. 

4  Community  guidelines  on State Aid for  rescuing  and restructuring  firms  in difficulty  (O.J. 

C  368,  23.12.1994) 

-  12-

However,  it  is  true  that  this  practice  does  not  necessarily  resolve  all  problems  of 
distortion  of  competition,  notably  those  arising  from  different  rules  being  applied  in 
different  Member  States to the various modes  of transport.  Moreover,  in the  long  run, 
the Commission  believes that  in all modes of transport users should  pay the full  cost of 
infrastructure.  The  Commission  will  carry  out  a  study  on  charging  for  infrastructure 
costs,  in order  to define  further  common  principles  (see  § 51). 

Summary  of  proposals 

32.  The  Commission  will  report  at  regular  intervals  on  the  progress  made  by  the 

Member  States  in  reducing  debt  and  improving  finances,  beginning  in  1997. 

In  the  case  of  debts  accumulated  since  1993  and  of  current  losses,  the 
Commission  will  only  authorise  State  aids,  if  they  are  in  accordance  with  the 
Treaty,  (in  practice  linked  to  a  restructuring  programme  whose  aim  is  a 
phased  move towards viability);  it will  develop  specific  rules and  guidelines  as 
required. 

The  Commission  will  assess  the  implementation  of  Community  legislation  on 
to  present 
the  normalisation  of  railway  accounts  and 
circumstances. 

its  relevance 

Common  pricing principles to be elaborated  by the Commission  should  ensure 
that  no distortions  of intermodal  competition  occur. 

13 

SECTION  IV  -  INTRODUCING  M A R K ET  FORCES  INTO  RAIL 

33.  The  further  introduction  of market  forces  is a key element  of the  proposed  strategy  to 
revitalise  rail  transport.  It  would  give  management  and  workers  incentives  to  reduce 
costs, improve service quality and develop new products and markets.  At present such 
incentives  are  generally  limited  and  acting  on  them  often  does  not  give  significant 
financial benefits  to the railways. The best practical  way to introduce  market  forces  is 
likely to differ  from  one part of the railway system to another, and to evolve over time 
as the railway  market  integrates  at the  European  level. 

Access  rights  in  freight  and  international  passenger  transport 

34.  The railway sector badly needs new capital and enterprises to revitalise  services. Open 
access  to  railway  infrastructure  would  allow  the  entry  of  new  operators  offering  new 
and better  services; this competition  would  stimulate established  operators to  improve 
their  performance,  as has  happened  when  other  public  enterprises  have  been  exposed 
to  competition.  Open  access  would  also  allow  transport  enterprises  to  develop  the 
services needed  in an area without  frontiers  and to find new markets. At present  a rail 
transport service is generally the sum of national services; rarely does a single operator 
have  responsibility  for  a whole  international  service  from  door  to  door  or terminal  to 
terminal. This segmentation  is particularly  serious in the case of freight,  as the  market 
increasingly  demands  seamless  transport  with  full  logistic  support.  Other  modes  can 
offer  it; rail  cannot. 

35.  Open access represents the application  of the principle of freedom  to provide  services 
to  the  railway  sector,  though  belatedly  compared  to  other  modes  of  transport.  The 
Commission strongly believes in the implementation of this principle where appropriate, 
while accepting that it may be achieved by stages and take account of the particularities 
of a sector. In the case of the railways, the Community  took a first step with  Directive 
91/440/EEC, on the development  of the  Community's  railways. This created  the right 
of access for  groupings of railway enterprises to operate international  services between 
the  Member  States  where  the  constituent  enterprises  are  established  and  the  right  of 
enterprises  offering 
international  combined  transport  to  operate  throughout  the 
Community.  Moreover,  Directive  91/440  has  still  not  been  fully  implemented  in  a 
number of Member States (see Annex 2) and the Commission has consequently  initiated 
infringement  proceedings  against  six Member  States. 

36.  However,  the  effectiveness  of  the  access  rights  created  by  Directive  91/440  has  been 
limited by the fact  that the complementary  Directives of  19955 clarifying  conditions of 
access (licensing, capacity  allocation  and charging) will only  have to be transposed  as 
from  June  1997,  and  also  by  the  condition  of  belonging  to  an  international  group, 
except  if  providing  combined  transport.  This  means  that,  in  the  case  of  freight,  an 
individual  railway  enterprise would  not  be able to develop  a complete  transport  chain 
integrating  international  and  domestic  legs. 

5  Council  Directive  95/18/EC  of  19th  June  1995 on the  licensing  of railway  undertakings.  O.J. No. L 

143, 27.6.95. 

Council  Directive  95/19/EC  of  19th June  1995 on  the  allocation  of railway  infrastructure  capacity  and 
the  charging  of  infrastructure  fees.  OJ. No.  L143, 27.6.95. 

-  14-

Since  1991, moreover, the railways have continued to lose market share, so the urgency 
of revitalisation remains as great as ever.  Consequently,  in July  1995 the  Commission 
proposed  the  extension  of  access  rights  to  all  freight  services,  domestic  and 
international, and for  international passenger services, without the condition of  forming 
a group6.  These services can usually be operated on a commercial basis, so open access 
should  attract  new  capital  and  enterprises.  The  Commission  will  press  for  the  rapid 
adoption  of  its proposal7. 

Rail  Freight  Freeways 

37.  The Commission  is committed  to rapidly  achieving completely  open access for  freight 
services.  This  will  provide  Community  enterprises  with  the  freedom  to  identify  and 
exploit business opportunities, essential to halting the decline of rail's market share  for 
freight.  However, until that  stage is reached,  interim measures are needed to allow the 
potential of rail freight  to be tapped.  The existence of national railway companies, with 
different  organisation  and  procedures,  has  hampered  the  development  of  this  traffic. 
An advisory group of railway operators, transport companies and unions recommended 
to  the  Commission  that  it  promote  the  creation  of  a  number  of  trans-European  rail 
freeways  for freight8.  The idea is that the Commission would encourage Member States 
to select a number of promising routes, after consulting infrastructure  managers, railway 
enterprises  and  freight  shippers.  The  infrastructure  managers  located  along  a  given 
route  would,  together  and  at  the  same  time,  open  access  to  the  infrastructure  for  all 
freight  services.  They  would  jointly  raise  the  priority  given  to  the  freight  in  the 
allocation  of train  paths and ensure  that  infrastructure  charges were fair  and  attractive 
to freight  operators.  They would also reduce the minimum delay at frontiers  caused by 
administrative  procedures. 

38.  One-stop-shops  would  be  created  to  handle  demands  for  train  paths  as  quickly  as 
possible.  Infrastructure  managers  would jointly  market  access to  their  infrastructure, 
with  a  common  set  of  charges  and  conditions  which  must  of  course  comply  with 
Community  law. They would work together to improve the flow  of freight  traffic  and, 
in  cooperation  with  railway  enterprises,  cut  down  the  length  of  stops  at  frontiers  to 
complete the railways'  own procedures.  It should be noted that as the freight  freeways 
are  meant  to  be  set  up  quickly,  as  an  interim  measure,  their  creation  would  not 
prejudice long term decisions about infrastructure  investment or technical  specifications. 

Communication  from  the  Commission  on  the  development  of the Community's  railways. 
COM(95)337 final of  19.7.95. 

7 

In this context it should  be recalled that the introduction of more competition  should be seen in 
the  intermodal  context.  As  explained  in  some  detail  in  this  paper  railways  may  need  some 
support to restructure and to become commercially  viable, and they may not be, for some time, 
able to cover all infrastructure costs if they are to compete with other transport modes. However 
that does not mean that rail transport should be protected from intermodal competition. That  is 
why  the  Commission  in  its  recent  proposal  to  modify  Council  Regulation  No.  684/92  on  the 
international  carriage  of  passengers  by  coach  and  bus,  suggested  to  delete  a  safeguard, 
according to which  Member States could forbid an international  bus service if it could seriously 
affect  a  directly  comparable  rail  service.  This  safeguard  has,  by  the  way,  as  far  as  the 
Commission  is aware of,  never  been used  in the past. 

The  future  of rail  transport  in Europe.  Report  of  advisory  group to Neil  Kinnock,  European 
Commissioner  for  transport.  19.6.96. 

-  15  -

39.  The  creation  of  these  freeways  would  have  a  wide  range  of  benefits. 

Infrastructure 
managers  would  gain  experience  of  collaboration  which  could  lead  to  new  thinking 
about infrastructure  and its potential to provide different  types of service, including the 
transport of dangerous goods.  Open access should attract new operators and the single 
point of contact would  vastly simplify  obtaining train paths.  The overall result will be 
an expansion  of  the total  value  of rail  freight  business with  benefits  for  all  operators. 
If  Member  States  wish  to  arrest  the  decline  of  rail  freight,  they  should  rapidly  act 
themselves  and  induce  infrastructure  managers to  intensity  their  collaboration.  There 
are  of  course  practical  difficulties  to  be  overcome,  but  if  tackled  in  a  spirit  of  co 
operation  they  should  be soluble. 

40.  The  Commission  is keen to promote  the early development  of these  freight  freeways. 
It will  circulate  a detailed  paper  in the  autumn  of  1996 and will  hold  a conference  in 
the  near  future,  to  which  infrastructure  managers  and  existing  and  potential  rail 
operators  would  be  invited,  to  discuss  the  establishment  of  such  corridors.  An 
illustrative  map  of  the network  of routes  which  could  evolve  is shown  at  fig  1 in  the 
annex. 

Domestic  passenger  transport- and  exclusive  rights 

41.  The improvement of services is as important in domestic passenger transport, as in other 
segments of the market.  Much of the public  is dissatisfied  with the service it receives. 
Punctuality  and  reliability  are  often  found  inadequate  and  standards  of  comfort  poor; 
the image  citizens have of rail transport,  as of public transport  as a whole,  is often  of 
something  to  be  supported.  This dissatisfaction  is one reason  why  people  use  private 
cars even  in congested  cities.  The relatively  poor performance  of  railway  enterprises 
is one cause of this dissatisfaction;  public policy  is another.  States often  fail  to  define 
clear priorities and leave the provision of these services to long established  monopolies 
often  without  sufficiently  clear  objectives  and  nearly  always  without  the  stimulus  of 
market  forces. 

42.  The introduction  of market forces  could  improve domestic passenger transport, just  as 
it  could  international  passenger  or  freight  services.  The  question  is the  best  way  of 
achieving  the  aim.  For  some  services,  like  those  over  longer  distances,  open  access 
may be the best solution.  It has the advantage of offering  most scope to new operators, 
and of allowing  full  freedom  to provide  services in the spirit of the Treaty.  However, 
it  may  not  be  an  attractive  solution  for  services  operated  on  dense  and  highly  used 
networks,  like the  urban  and  regional.  Here  the  same infrastructure  may  be used  for 
numerous services, raising complex issues of how to allocate train paths and share costs 
between  different  operators.  Coordination  is  needed  to  optimise  timetables  and  to 
maintain  network  benefits,  like  common  information  and  ticketing  systems.  Much 
domestic  transport,  whether  or  not  it  is  commercially  viable,  is  treated  as  a  public 
service.  Better public services can be provided at lower cost by an exclusive concession 
that reduces risk  and  uncertainty  for  an operator  (see  Section  V,  § 58). 

43.  For  such  services,  where  open  access  is  not  desirable  or  feasible  a  more  promising 
approach  would  be  to  maintain  exclusive  concessions.  Market  forces  could  be 
introduced by awarding them through a Community-wide tendering process; the tender 
would  clearly  specify  the type of  service required  and the limits to the  concessions. 

16 

Their  exclusivity  must  not  go beyond  what  is necessary  to ensure the provision  of  the 
service, and so must be limited in time and space.  These conditions have to be defined 
carefully  and  adapted  to the  specific  characteristics  of the railway  sector. 

44.  The  implementation  of  open  tendering  also  raises many  practical  issues, for  instance, 
the  provision  and  ownership  of  rolling  stock,  the  extent  of  cross  subsidies,  the 
maintenance  of  network  benefits,  access  to  facilities  like  maintenance  and  cleaning. 
Other  questions  include  the  exact  definition  of  the  activities  to  be  tendered,  the 
maintaining of adequate levels of investment and the introduction of effective  incentives 
and penalties related to performance.  The phasing of the different  changes required  is 
also an important issue.  The Commission intends thoroughly to study the best practical 
ways of  introducing  market  forces  and  will  then  make proposals. 

Conditions  of  access 

45.  Establishing  rights of access is the first step; the second is to create the conditions that 
make  them  effective.  As  mentioned  in  §  36,  the  Community  began  this  with  the 
adoption  last  year  of  two  Directives  on  licensing,  capacity  allocation  and  charging. 
They  were  intended  to  clarify  how  the  access  rights  created  by  Directive  91/440/EC 
should  be implemented,  but not to  settle  all  regulatory  questions. 

46.  Major  issues  indeed  remain  to  be  tackled.  The  regulation  of  railway  transport  is 
particularly complex, covering licences, infrastructure  charges, allocation of train paths, 
safety certificates  for specific  services, interoperability, technical standards,  conformity 
assessment, working  conditions and  so on. It also depends on a number of actors  : the 
Community,  governments,  public  agencies,  international  bodies and,  given  a tradition 
of self regulation, the railway companies themselves. Certain issues particularly concern 
the Community, for instance infrastructure  charges, allocation criteria for train paths and 
the  independence  of  the  allocation  process,  as  well  as  the  more  technical  questions 
discussed  in  Section VI). 

47.  Another question is that of the consistency of agreements between railway undertakings 
with  Community  law.  They may wish,  for  instance, to  form  groupings to exploit  the 
access  rights  created  by  Directive  91/440  (see  § 35)  or  to  cooperate  in  international 
combined  transport.  So  far  as the  latter  is  concerned,  the  Commission  has  given  an 
exemption  under  competition  rules  to  cooperation  agreements  between railways  (case 
IV-35 III,  decision  of  24.7.95, concerning  two fiches of  the  Union  Internationale  des 
Chemins  de  Fer);  It  will  report  on  the  implementation  of  the  decision  by  the  end  of 
1997.  The Commission will now examine whether clarification  is needed of the scope 
for,  and  conditions  of,  exemptions  for  cooperation  agreements  between  railways,  for 
example  in  the  area  of  waggon pools, and  will  take any measures  needed. 

Infrastructure  costs  and  capacity  : charges  and  allocation 

48. 

Infrastructure  costs  are  a  major  element  of  total  railway  costs.  The  railway  advisory 
group to Commissioner  Kinnock considered that infrastructure  costs were too high and 
that this was one  of the  factors  which had contributed  to rail's decline.  Infrastructure 
owners are in a monopoly  position  vis-a-vis train operators and therefore  mechanisms 
are  needed  to  ensure  that  they  have  adequate  incentives  to  improve  efficiency  and 
reduce costs. 

-  17-

This will become increasingly  important as the railways move toward greater  separation 
of  infrastructure  management  and  transport  operations.  The  group  also  noted  that  the 
organisation  of  the  body  owning  the  infrastructure  has  implications  for  its  ability  to 
reduce  costs. 

49.  Clear  principles  for  infrastructure  charges  are  necessary,  if the new  railway  system  is 
to  work.  With the  separation  of  infrastructure  management  from  transport  operations, 
transactions  between  the  two  sides  of  the  railway  system  have  to  be  explicit  and 
transparent.  Different  systems have  already  emerged  in the Community.  For  instance, 
the Federal Republic of Germany and the United Kingdom intend completely to recover 
costs,  while  the Netherlands  and  Spain  allow  the  use of  infrastructure  free  of  charge, 
at  any  rate  for  a  transitional  period.  The  immediate  question  is  whether  these 
divergences  will  make  the  entry  of  new  operators  more  difficult  and  make  some 
corridors  more  expensive  to  use  than  others,  even  if  costs  are  similar.  The  latter 
situation could be problematic from  a transport and internal market point of view. The 
Commission will evaluate whether further  harmonised rules need to be introduced at an 
EU  level.  Where  the  infrastructure  owner  does  not  charge  for  access  but  the  State 
reimburses  the  costs,  the  actual  cost  of  providing  rail  services  will  be  less  clear  and 
pressure  to reduce  infrastructure  costs will  be  correspondingly  reduced. 

50.  However,  charging  for  transport  infrastructure  is  also  a  major  issue  in  the  common 
transport  policy  as  a  whole.  The  central  theme  of  the  Commission's  Green  Paper 
"Towards  Fair  and  Efficient  Pricing  in  Transport"  is that,  as  far  as  possible,  charges 
should reflect  both direct and external marginal costs, should recover all these costs and 
should  be linked  to the costs caused  by  users. This is the long term  objective  towards 
which policy should be directed.  In the short term, it is legitimate for  States to  finance 
investment in railway infrastructure  so as to compensate for unpaid external costs in the 
road  sector  or to meet non-transport  objectives,  such as regional development,  so long 
as  this  financing  does  not  create  unacceptable  distortions  of  competition.  The 
competition problems that could  arise, both within  and across modes, are an important 
reason  for  the Commission to carry  out a study on charging, in order to define  further 
common  principles. 

51.  This study  on  an overall  approach  to  infrastructure  charging, would  have  to  reconcile 
some conflicting  aims.  For example  charges need to take account  of the unpaid  costs 
of road transport, but be high  enough  to give incentives to reduce infrastructure  costs. 
A choice has to  be made between  channelling  public support  directly  to the  operators 
of public  services  or  using  it to  reduce  infrastructure  costs. And fixed prices  possibly 
covering marginal  costs have to be reconciled with negotiated charges reflecting  scarce 
capacity  and  congestion. 

52.  Even  with  sophisticated  charging  systems,  the  administrative  allocation  of  capacity 
would  naturally  continue.  This  is because  immensely  complex  timetables  worked  out 
by the railways need  stability  and  certainty  to work. Both operators  and  infrastructure 
managers  require  continuity  to  commit  large  resources; this will  still  be  so  even  with 
a  wider  introduction  of  market  forces.  While  accepting  this  need  for  administrative 
allocation,  the  Commission  has  two  concerns.  First,  timetabling  must  be  sufficiently 
open and flexible  to allow new entrants to obtain train paths. It welcomes the railways' 
own  initiative to modernise  the timetabling  process.  Second, principles  for  allocation 
and  for  charging  should  be  consistent  :  for  instance  charges  should  be  higher  for 
services  given  priority  on  congested  lines. 

-  18 

Further  criteria  for  allocation  should  therefore  be  developed  as well  as  principles  for 
charges. When the Commission has completed the necessary preparatory studies, it will 
propose  further  principles  both  for  infrastructure  charges  and  for  allocating  capacity. 

Independence  of  allocation  process 

53. 

If  all  transport  operators  are  to  enjoy  access  to  infrastructure  on  fair  terms,  sole  and 
final responsibility  for  allocating  paths cannot be left  to a body that operates  transport 
services itself.  The  conflict  of  interest  is obvious;  an  undertaking  cannot  at  the  same 
time  be  both  a  competitor  and  the judge  determining  access  to  any  relevant  market. 
Articles  86 and  90(1)  of  the Treaty  would  prevent  a railway  enterprise  in a  dominant 
position  from  determining  what  other  parties  are  its  competitors.  While  the  railways 
should  continue  themselves  to  work  out  timetables,  an  immensely  complicated  task 
involving  thousands  of  train paths, an  independent  body  should  supervise  the  process 
and  have  the  final  say  in  the  case  of  disagreement.  The  Commission  will  ensure  that 
Community  principles  are  respected,  when  it  comes  to  the  transposai  of  Directive 
95/19/EC on the allocation of infrastructure  capacity and the charging of  infrastructure 
fees.  It  will  also  evaluate  whether  the  provisions  laid  down  in  this  Directive  are 
sufficient  to  guarantee  independence  and  will  make  proposals  to  strengthen  the 
allocation  process,  where  appropriate.  The  existence  of  an  independent  appeal 
mechanism  or  the  absence  of  apparent  discriminatory  behaviour  are  not  sufficient  to 
rule  out  an  infringement  of Articles  86 and  90(1)  of the  Treaty. 

54.  Even  with  independent  regulatory  bodies,  however,  new  operators  may  still  face 
practical  difficulties  in  obtaining  access  to  infrastructure  managed  by  an  integrated 
railway. In fact  an integrated  railway  is not in the business of marketing  infrastructure 
services and may not be organised to do so effectively;  its prime aim is to produce and 
sell  its  own  services.  The  Commission  therefore  believes  that  a  modification  of 
Directive 91/440/EC to require the creation of two distinct business units with separate 
management  and  balance  sheets is required,  when  Member  States maintain  integrated 
railway  companies. 

55. 

In order to resolve the problems of allocating infrastructure  and of generally integrating 
national  railway  systems  several  options  need  to  be  examined.  One  could  be  the 
creation  of  a  European  Railway  Agency,  as  proposed  by  the  advisory  group  to  the 
Commissioner  for  transport  (see  §  38).  This  would  address  directly  the  difficulties 
caused by the existence  of national  bodies, some of whose functions  have an  essential 
European  dimension.  These  include  the  supervision  of  allocation  of  infrastructure 
capacity,  another  technical  harmonisation  and  safety  rules  to  advance  interoperability 
and  the  creation  of  a  single  market  for  railway  equipment  (see  Section  VI).  A 
European  Railway Agency  could make a valuable contribution.  While clearly a  major 
undertaking,  the  Commission  believes  that  the  proposal  merits  careful  study,  in 
particular  regarding  its technical  and  institutional  aspects. 

19 

Summary  of  proposals 

56.  The  Commission  maintains  its  proposal  of  July  1995  to  modify  Directive 
91/440/EEC  so  as  to  extend  access  rights  to  railway  infrastructure  for  all 
freight  and  for  international  passenger  services.  It will  press  for  its  adoption 
as soon  as  possible. 

In  the  case  of  domestic  passenger  transport,  the  Commission  will  study  the 
best  practical  ways  of  introducing  market  forces  and  will  then  make 
proposals. 

The  Commission  will  propose  modification  of  Community  legislation  to 
transport 
require 
operations  into  distinct  business  units,  with  separate  management  and 
balance sheets. 

infrastructure  management  and 

the  separation  of 

The  Commission  will  promote  the  rapid  creation  of  a  number  of  trans-
European  rail  freeways  for  freight.  It  will  publish  a  detailed  paper  in  the 
autumn  and  organise  a conference  in the  near  future. 

The Commission will study further  principles for infrastructure  charging and 
capacity  allocation,  and will  in  due  course  make proposals. 

The  Commission  will  study  various  options  for  the  improvement  of  the 
institutional  framework  for future  railway development  (including the  setting 
up  of  a European  Railway Agency). 

The Commission will examine whether clarification  is needed of the scope  for, 
and  conditions  of,  exemptions  for  cooperation  agreements  between  railways 
and will  take  any  measures  needed. 

- 2 0-

SECTION V -  PUBLIC SERVICE  IN RAIL  TRANSPORT 

Importance  of  public  service  in  transport  to  the  Community 

57.  Services in the general  interest are a key element in the European economic and social 
model; in the case of transport this is reflected  in Article 77 of the Treaty which  refers 
to certain obligations inherent in the concept of a public service. Objectives are to  offer 
citizens mobility  with continuity  and  quality  of  services, and contribute to  sustainable 
development,  social  cohesion  and  regional  balance.  In  all  Member  States,  authorities 
intervene at a certain point in the market,  for  example to introduce regulated  tariffs  or 
to  ensure  regular  railway  services  with  sufficient  coverage  of  the  national  territory. 
These  are  services  which  are  not  provided,  or  not  to  the  same  extent,  by  a  transport 
undertaking  when  it only  considers  its own commercial  interests. 

58.  The Commission consistently attaches the greatest importance to the provision of public 
services  in railway  passenger  transport,  in the  interest  of users and  to meet  the  wider 
aims  of  the  community  as  a  whole.  This  approach  was  once  more  underlined  in  the 
Green  Paper  on the Citizens'  Network9.  In  supporting  public  services  in the railways, 
however,  there  is  a  great  need  to  obtain  better  value  for  public  money  and  more 
efficient  services.  The policy  envisaged  by the Commission  aims at the  improvement 
of transparency  in financial relations  between the  State and transport undertakings,  as 
well as the introduction of an element of market forces, to stimulate the modernisation 
of public  services. 

59. 

In  this  context,  it  is  sometimes  thought  that  public  service  and  efficiency  are 
contradictory, although they are rather complementary : improved efficiency  will benefit 
the quality  and quantity  of public  services, and public services improve the  efficiency 
of  the  market.  Indeed,  the  introduction  of public  services  allows  for  correction  of  the 
market's  failure  to take account  of social  values, so that a transport  undertaking  takes 
on activities of  general interest  which  it would not assume if considering only  its own 
commercial  interests. 

60.  Historical,  legal  and  cultural  disparities  exist  between  Member  States  concerning  the 
concept and organisation of public services in rail transport.  A proposal to improve the 
efficiency  of public services must naturally respect the principle of subsidiarity. It must 
allow each  Member  State  authority  to  decide on the organisation,  level  and  definition 
of  a  public  service  as  long  as  Community  principles  are  respected.  Moreover,  the 
Treaty does not prejudice national rules on property ownership and allows the provision 
of  public  services  by  either  public  or  private  undertakings,  even  in  a  competitive 
environment. 

9  The Citizen's Network.  COM(95) 601 final  of 29.11.95. 

-  21  -

Improvements  to  the  Community  framework 

61.  Community  regulations  on  "action  by  Member  States  concerning  the  obligations 
inherent  in  the  concept  of  a  public  service  in  transport  by  rail,  road  and  inland 
waterway"10 already exist. In these, the general rule is that Member States have the right 
to  obtain  rail  transport  services  in  the  public  interest,  as  long  as  they  compensate 
transport  operators  for  the  financial  burden  involved.  However,  urban,  suburban  and 
regional  services  can  be  excluded  and  the regulations  continue  to  allow  the  imposing 
of  public  service  obligations.  This  means  that  a  railway  is  compelled  to  provide  a 
service that in practice may not be transparently defined  nor fairly remunerated; it lacks 
a  clearly  defined  working  environment,  which  confuses  objectives  and  undermines 
managerial initiatives.  Moreover, contract or not, there is no obligation to open tenders, 
so  operators  do  not  face  competition  and  Member  States  are  not  sure  of  paying  the 
minimum  price  set  by the  market. 

62.  The Commission considers that the current organisation  is not transparent nor  efficient 
enough to achieve the objective  of a high quality, efficient,  public service. It envisages 
two  major  improvements.  The  first  would  involve  moving  from  a  mixed  system  of 
obligations  imposed  by the  State and  of  public service  contracts, to the application  of 
contracts  negotiated  between  the  State  and  the railway  operator  to all  types  of  public 
service,  including  the  urban,  suburban  and  regional.  They  would  clearly  specify  both 
the service to be provided  and the compensation to be paid. The financial  contribution 
from  the  public  authority,  would  be  explicit  and  transparent  compensation  for  the 
burden  of providing  non-commercial  services.  The payment  would  be agreed  by  the 
Member  State  and  the  railway  undertaking  for  a certain  period  of  time  when  signing 
the contract.  In this way, responsibility  for  costs and losses would be transferred  to the 
railway,  stimulating  it  to  improve  efficiency.  Each  Member  State  would  have 
responsibility  for  defining  public services, in particular  in terms of quality,  continuity, 
regularity,  capacity,  accessibility  and tariffs  applied. 

63.  Second, market forces  should be introduced  into the operation of services.  This is one 
of the key  issues that  the Commission  will  address in its study on  introducing  market 
forces  to  domestic  passenger  transport  and  in  its subsequent  proposals  on the  subject, 
(see  § 42 to 45 above). 

Summary  of  Proposals 

64.  The  Commission  will  make  proposals  to  generalise  the use of  public  service 
contracts  agreed  by the  State  and  the  transport  operator,  as opposed  to  the 
imposition  of  obligations  on transport  operators. 

As with  domestic  passenger  transport  in  general,  the  Commission will  study 
the  best  practical  ways  of  introducing  market  forces  into  public  services  and 
will  then  make  proposals. 

10  Council  Regulation  (EEC)  n'l 191/69 as amended  by Council  Regulation  (EEC)  n°  1893/91  op.cit. 

- 2 2-

SECTION  VI  -  INTEGRATION  OF  NATIONAL  S Y S T E MS 

65.  The railways developed  over a long period  of time to meet national  needs. They were, 
and  usually  are, operated  by national  companies  whose  prime concern  is the  domestic 
market. Operating rules and technical  standards are largely defined  at national level, so 
that  procedures  diverge  and  a huge,  diverse  stock  of  infrastructure  and  rolling  stock 
exists.  This  has  caused  a  fragmentation  of  both  the  railway  system  and  the  supply 
industry, a fragmentation  that still exists. It is one reason for the failure  of the railways 
to  raise  their  performance  as  rival  modes  have  in  recent  decades.  Differences  in 
technical  standards  and  operating  rules  have  complicated  interoperability  and  helped 
split  the  supply  industry  into  a  set  of  national  companies  serving  national  markets; 
research has also suffered  from  fragmentation  for much the same reason. This is not to 
say  that  the  Community  is at  square  one  in  integrating  railway  systems; progress  has 
been  made  in  some  areas, while  major  problems  remain  in others. 

Single  market  for  railway  equipment 

66. 

Just  as  the  railways  developed  on  a  national  basis  so  did  their  supply  industries. 
Historically  many  railway  companies  built  their  own  rolling  stock,  though  there  were 
also private builders. The change to diesel and electric locomotives encouraged  greater 
use of the latter; as a matter of convenience and national policy, equipment was usually 
purchased  from  manufacturers  in  the  same  country.  However  the  railways  often 
continued to design equipment, having considerable expertise, large design departments 
and  a  strong  engineering  culture;  they  also  closely  defined  the  specifications  for 
manufacturers  to  follow.  Only  in recent  years  has there  been  a move to  performance 
specifications  with  the transfer  of confidence  and  of  expertise  that  this implies.  Also 
the railway  supply  industry  has been consolidating  across national  borders,  leading  to 
the emergence of some large European companies less identified with particular national 
railways.  However  there  is  still  segmentation  into  national  markets  served  by  local 
suppliers, which  has  frustrated  competition  and  raised costs. 

67.  Under  the single market programme,  the  Community  in  1993 adopted  a Directive  on 
public  procurement  in  the water,  energy,  transport  and  telecommunications  sectors11. 
This legislation  both  laid down the principle  of non-discrimination  between  suppliers 
and set procedures for open tenders.  Nevertheless, procurement by railway  enterprises 
remains  very  much  on  national  lines.  The  Commission  therefore  intends  to  follow 
closely  the  impact  of  the  Directive  and  to  continue  the  definition  of  European 
specifications, to serve as references in contract documents.  Competition rules are also 
relevant  here.  In markets where  railway  undertakings  occupy  a dominant  position  as 
purchasers of goods or services, Article 86 forbids  them to practise any  discrimination 
between  suppliers  in the various  Member  States. 

Council  Directive  93/38/EEC  of  14th  June  1993  coordinating  the  procurement  procedures  of  entities 
operating  in the water,  energy, transport  and telecommunications  sector.  O.J.  LI99  19.8.93. 

-  23 -

68. 

69. 

70. 

For  conventional  and  light  rail,  the  Commission  has,  as  a  first  step,  mandated  the 
European  standardisation  bodies  to  propose  standards.  These  would  cover,  among 
other  things,  rolling  stock  and  infrastructure  components,  the  testing  of  vehicles, 
aerodynamics, fire protection, electrical safety and electro-magnetic compatibility.  The 
first standards  are  expected  to  be  implemented  in  1998 as European  standards and  to 
serve as references  in contract documents for  public procurement; the  implementation 
of the  other  standards  would  follow  over  a period  of  several years. 

In July  1996, the Commission's proposal for a directive on the interoperability  of high 
speed  rail12  was  adopted.  This  will  create  a  process  for  setting  mandatory  technical 
specifications  that  both  serve  as  references  for  public  procurement  and  permit 
interoperability  and  contribute  to the creation  of  a single market;  it also provides  for 
independent assessment of conformity.  Certain of these specifications  will be extended 
to conventional rail as the two systems are not separate and distinct; material developed 
for  one can be used  for  the other.  The Directive represents an important  step towards 
an  integrated  market. 

The  Commission  will  now  adapt  , with  the  full  involvement  of  the  railways  and  the 
supply industry, the relevant parts of the process for furthering  interoperability  in high 
speed  rail  to  conventional  rail.  Moreover,  the  Commission  will  continue to  examine 
the  technical  measures  necessary  to  improve  accessibility  for  disabled  and  elderly 
people,  technical  harmonisation  in  this  area  leading  to  better  quality  services  for 
passengers.  This harmonisation  would  cover  rolling  stock,  stations  and the  interface 
between  the two. 

71.  Drafting  and  adopting  specifications  is one  exercise; assessing  conformity  with  them 
is another. In the past the railways themselves were largely responsible for both setting 
requirements  and  certifying  conformity,  a  practice  that  is  no  longer  acceptable. 
Following the Directive on the interoperability  of high speed rail, Member  States will 
select independent bodies to carry out the procedures for the assessment of  conformity 
and of suitability for use.  Such bodies are being established in the Member States and 
their  work  could  progressively  be extended  to  conventional  and  light  rail. 

Interoperability 

72. 

The  fragmentation  of  the  railways  also  means  that  interoperability  did  not  come 
automatically.  Great  efforts  were  needed  to  reduce  the  regulatory,  technical  and 
operational  differences  that could prevent trains circulating freely  without  stopping  at 
frontiers.  Some  obstacles  remain,  as recognised  by the Maastricht  Treaty  which  sets 
the  objective  of  promoting  interoperability. 

12  Council  Directive  on the interoperability  of the  European high speed train  network. 

- 2 4-

73. 

74. 

This is not to deny  that some progress  has already  been made.  Railways have  certain 
agreements  on  technical  harmonisation  to  facilitate  international  services.  Thanks  to 
these,  passenger  carriages  and  freight  wagons  can  move  between  the  countries  of 
Europe;  the  need  to  change  from  one  train  to  another  at  frontiers  disappeared  long 
ago13.  The Directive on the interoperability  of high speed rail will establish  a process 
for setting technical specifications  to allow interoperability  on the high speed  network. 
In conventional  rail, the major  differences  that remain are between electrical  systems, 
signalling,  operational rules, and the qualifications,  linguistic included,  of train crews. 
The result is that railways regularly  change  locomotives and crews at frontiers.  There 
are also differences  in structure and loading gauge, that can affect  combined  transport 
(see  § 81). 

In assessing the need  for greater interoperability  in conventional  rail, a major  question 
is  the  value  of  time  saved  by  not  stopping  at  frontiers.  A  selective  approach  is 
necessary,  based  on  a  careful  assessment  of  the  routes  and  services  that  would  gain 
competitiveness  through  interoperability.  As a first step, the  Commission  intends  to 
examine the scope for  increasing interoperability  on major  international routes in cost-
effective  ways,  It  will  also  consider  the  use  of  TENs  funds  to  support  projects 
involving  several  railways. 

75.  Another consideration is that there are different  means to interoperability. For instance, 
there  is  a  choice  between  changing  the  power  supply  to  a  common  voltage  and 
employing  multi-current  locomotives,  which  is common practice.  Careful  assessment 
is  needed  of  where  further  technical  harmonisation  would  be  justified,  as  large 
investments  would  be  involved,  particularly  for  adapting  infrastructure.  Common 
specifications  are nevertheless  essential  in some areas, in particular  command-control 
and traffic  management systems; here the European Rail Traffic  Management  System, 
when  operational,  should provide  the basis  for  compatible  systems  in  future. 

76. 

Finally, in the case of freight,  long delays at frontiers are caused by customs, veterinary 
and  phyto-sanitary  controls  and  by  the  railways'  own  procedures  for  handing  over 
trains, both within the Community  and at external frontiers.  The railways'  procedures 
involve  the  transfer  and  verification  of  information  about  wagons  and  their  loads, 
which  could  be  sped  up  through  integrated  information  systems.  International 
organisations have done valuable work on administrative problems specific  to  frontier 
posts;  further  work  remains  to  be  done  on  the  time  taken  for  the  railways'  own 
procedures, based  on best practice. The Commission  will urgently  tackle the  question 
of  how  best to  eliminate  these  delays,  in  consultation  with  the relevant  international 
bodies. 

13  Because  of  differences  in  track  gauge,  special  arrangements  are  needed  at  the  frontiers 
between France  and Spain,  Finland  and Sweden, and between Central  Europe and the  Baltic 
republics  and the CIS countries. 

25 

Infrastructure 

77. 

The  Community  is  already  working  on  an  ambitious  policy  to  tie  national  transport 
infrastructure  together  into trans-European  networks. In  1996 guidelines  for  the trans-
European  networks  were  adopted.  For  rail,  the first priority  is to  complete  the  high 
speed  network and  in particular realize the priority projects endorsed  by the  European 
Council  at  Essen.  The  emphasis  so  far  has  been  on  passenger  transport  and  greater 
attention  must  now be paid to  freight.  This traffic  has been  in continuous  decline  for 
decades, and deficiencies  in infrastructure  have been among the causes.  Infrastructure 
must  be  good  enough  to  allow  radical  improvements  in quality  and  the  development 
of  new  services.  The  revision  of the  TENs  guidelines  which  will  take place  before  1 
July  1999  in  accordance  with  Article  21  of  the  guidelines  as adopted  by the  Council 
and  the  EP  on  17  July  1996,  will  be  the  occasion  to  reconsider  how  railway 
infrastructure  can  be adapted  to  meet  changing  patterns  of  economic  activity  and  the 
resulting  traffic  flows. 

78.  Concentration  of traffic  is important  because  of the high fixed costs of  rail  transport. 
This  could  be  encouraged  by  a  better  integration  of  freight  transport  into  land-use 
planning.  For  instance  more  freight  villages  could  be  developed  and  heavy  users  of 
transport  concentrated  near  terminals  with  adequate  facilities  for  changing  cargoes 
between  modes; this could  especially  benefit  wagon-load  traffic.  It  is also  important 
to  exploit  the  full  scope  for  intermodal  transport.  A proper  network  of  terminals  is 
necessary  to ensure the  interface  between  modes (for  passenger  as well  as for  freight 
transport).  The  Commission  will  examine  this  in  a  Communication  on  promoting 
intermodality to be published at the end of  1996.  A different  question is how to ensure 
that dangerous goods are transported  by rail; their carriage by road  is growing  despite 
the  risk,  even  over  longer  distances. 

79.  Bottlenecks  at  particular  locations  are  more  likely  to  handicap  freight  traffic  than 
general  shortage  of  capacity.  The  Commission  will  identify  bottlenecks  and  consider 
how  best  to  eliminate  them;  according  to  circumstances  the  solution  could  be  major 
infrastructure  works, limited  improvements, different  methods of operation  and better 
train management,  including  the  extension  of the European Rail Traffic  Management 
System  to conventional  lines. 

80.  Differences  in structure gauge  limit possibilities  for  combined transport,. in particular 
the movement  of large containers and of  full  height road vehicles along major  routes. 
When  there  is  an  adequate  market  for  such  transport,  increases  in  gauge  could  be 
considered.  While  large  scale  rebuilding  of  infrastructure  is too  costly  to  be  feasible, 
selective  improvements  in the right  places could  give disproportionate  benefits.  They 
could  also  allow  the  better  exploitation  of  the  new connections  built  or  planned  to a 
large gauge, such as the Channel and trans-Alpine tunnels and the Store Belt crossing. 
This  is  another  issue  to  be  considered  in  the  subsequent  revision  of  the  TENs 
guidelines, stipulated in Article 21 of the Decision of the European Parliament  and the 
Council  "  sur  les  orientations  communautaires  pour  le  développement  du  Réseau 
Transeuropéen  de Transport",  of  July  1996. 

2 6-

Safety 

81. 

The Commissioner's advisory group noted that, in comparison with the road sector, rail 
was subject  to onerous  safety  obligations.  The group considered  that,  in  determining 
requirements, the cost and benefits were sometimes not adequately considered  and that 
rail safety  investment decisions were based on a much higher maximum value of a life 
saved  than  for  road.  The different  cost  implications  for  these modes could  adversely 
affect  the  safety  of  the  transport  system  as  a  whole.  Differing  safety  requirements 
between Member States also hamper rail in competing for international traffic.  In view 
of  these  factors  the  group  recommended  that  the  Community  should  work  toward 
development  of  common  safety  appraisal  techniques  and  a  probability  based  safety 
regime.  The  Commission  will  study  the  possibilities  for  action  in this  area. 

Noise  reduction 

82. 

The public's main criticism of rail transport is excessive noise and there is considerable 
opposition  in  many  areas to  the  expansion  of  infrastructure  capacity.  Greater  efforts 
are needed  to reduce  noise if the expansion  of rail transport  is to  be widely  accepted. 
Some Member  States are beginning national regulation of noise, but this could hamper 
the free  circulation of trains and set back a single market for  railway  equipment.  It is 
important,  therefore,  to  develop  a  Community  approach  to  the  reduction  of  railway 
noise. 

83.  Noise  abatement  has  long  been  an  important  subject  of  research,  supported  by  the 
railway industry and by the Community.  In parallel to supporting research efforts,  the 
Commission,  in cooperation with the interested parties and international organisations, 
will  assess  the  policy  instruments  for  reducing  noise.  Among  the  possibilities  are 
economic  instruments  such  as variable  infrastructure  charges  differentiated  according 
to  the  noise  level  of  wagons,  legislation  on  emission  limits,  negotiated  agreements 
between  the  railway  sector  and  the  Community  on  targets  for  noise  reduction  and 
measures  to  ensure  good  maintenance  of  equipment  already  in  use.  The  assessment, 
to be launched after  public discussion on the forthcoming  Green Paper on future  noise 
policy,  will  look  at the possibilities  of  using  a mix  of these  instruments. 

Research 

84.  A  forward  looking  innovation  strategy  is  crucial  for  a  competitive  railway  industry. 
in  business  and  operational 
Innovation  should  bring  dramatic 
performance,  including cost, service quality and reliability, and flexibility  of operation. 
The  Community  research programme  has  a major  role to play  here.  It can provide  a 
framework  for  the coordination  of hitherto  separate research  activities  in the  Member 
States and for the creation of the critical mass needed for major demonstration projects, 
so reducing  the  lead-time  between  research  and  introduction  to  Community  markets. 

improvements 

85. 

The  Community's  Fourth  Framework  Programme  aims  at  promoting  research  and 
development  activities  in  a  wide  range  of  areas.  A  significant  number  of  specific 
programmes within the Framework Programme address R&D issues of relevance to the 
include  both  generic  technologies  and  sector  specific 
railway  sector.  These 
technologies. The latter are mainly addressed by both the Telematics Applications and 
the  Transport  Research  programmes. 

27 

The  Telematics  Applications  Programme  should  lead  to  a  significant  deployment  of 
transport telematics that promotes transportation services, including multimodal aspects. 
The  Transport  Research  Programme  aims  at  integrating  socio-economic  research  and 
technological  activities.  These  programmes  include  both  field  trials  and  full-scale 
demonstration  projects  focused  on  network  interconnection  and  interoperability,  that 
are designed to establish the feasibility  of new technologies and the conditions for their 
successful  deployment. 

86.  Community  research  work  is  already  providing  a  decisive  contribution  to  the 
implementation  of  major  policy  goals.  A  particular  example  is  the  European  Rail 
Traffic  Management System (ERTMS). Its purpose is to create a harmonised command 
control  and  traffic  management  system  that  can  be applied  throughout  Europe.  Once 
introduced  it  would  not  only  improve  safety  and  interoperability,  but  also  reduce 
operating  costs  and  improve  management  of  infrastructure  and  of  fleets.  Moreover 
ERTMS  is  the  first  step  towards  the  integration  of  traffic  and 
infrastructure 
management  with  customer  services.  The  work  should  also  lead  to  Community 
specifications, to be included in the Directive on the interoperability of high speed rail, 
these  would  help  open  up procurement  markets  and  so reduce costs. 

87. 

To get best value from  the Community's  R&D activities, the Commission instituted in 
1995  the  concept  of  Task  Forces.  One  of  these  addresses  the  theme  :  "Trains  and 
Railway  Systems  of  the  Future". 
Its  main  purpose  is  to  bring  together  the  major 
players  in the railway  sector to formulate  a technology  acquisition  strategy.  Priorities 
have  been  identified  in  areas  such  as  high  speed  transport,  urban  transport,  traffic 
management,  freight  transport  and  railway  equipment  production  a  major  objective 
being heavily  to  cut costs.  Future activities could  include both the completion  of the 
longer term projects already initiated under the Fourth Framework Programme, and the 
development of an approach that reconciles socio-economic studies on transport policy 
with  technical  activities;  work  should  evolve  from  promoting  intermodality  and 
interoperability  and  accessibility  for  the  disabled,  to  fully  integrating  railways  in  the 
global  transport  system.  Main  target  areas  for  research  would  include  quality  of 
service,  enhanced  efficiency,  safety  and  human  aspects,  and  environmental 
sustainability. 

28 

Summary  of  proposals 

88.  The  Commission  will  continue  to  support  standardisation  for  conventional 
and 
light  rail.  It  will  study  how  relevant  aspects  of  the  technical 
harmonisation  process  for  high  speed  rail  might  be  adapted  to  conventional 
rail. 

The  Commission  will  continue  to  examine  the  technical  measures  necessary 
to  improve  accessibility  for  disabled  and  elderly  people. 

The  Commission  will  examine  the  scope  for  improving  interoperability  on 
major  international  routes  in  cost-effective  ways.  It  will  consider  the  use  of 
TENs  funds  to  support  projects  involving  several  railways. 

In  the  case  of  freight  traffic,  the  Commission  will  study  how  to  eliminate 
delays  at  frontiers  caused  by  administrative  controls  and  the  railways'  own 
procedures,  in  consultation  with  the  relevant  international  bodies. 

The  Commission  will  publish  a  communication  on  the  promotion  of 
intermodality  at  the  end  of  1996. 

In the future,  the Commission will assess the  improvements  to  infrastructure 
needed  to  develop  freight  transport  and  will  make  any  required  proposals 
for  the  revision  of  the TENs  guidelines. 

The Commission will assess policy instruments  to reduce railway  noise, in the 
context  of  general  Community  policy  on noise. 

The  Commission  will  promote  synergies  between  the  different  Community 
and  national  R&D  programmes,  consultation  procedures  in  which  the  Task 
Force will  play  a major  role. 

For  calls  for  proposals  under  the  Transport  Research  Programme,  the 
Commission  will  emphasise  socio-economic  study  proposals  to  support  the 
transition  from  national  to Europe-wide  railway  systems. 

The Commission  will continue to promote  demonstration  projects  in  priority 
technical  areas, in particular, the continuation  of ERTMS activities  and  full-
scale validation  tests. 

The  Commission  will  urgently  tackle  the  question  of  how  best  to  eliminate 
long  delays  at  intra-Community  and  external  borders  in  consultation  with 
the  relevant  international  bodies. 

-29 

SECTION  VII  -  SOCIAL  ASPECTS 

89. 

There  is  great  concern  among  railway  staff  about  the  social  implications  of 
restructuring,  above  all  the  possible  loss  of jobs.  This  is  easy  to  understand,  as  the 
railways  will  have  to  change  enormously  in  the  years  ahead,  if  they  are  to  compete 
with  other  modes,  and  as employment  has already  fallen  heavily.  Indeed  it  declined 
by  over  one  third  in  ten  years,  from  1.55  million  in  1985  to  1.05  million  in  1994. 
Such  a  decline  is  dramatic  in  itself  and  is  a  particular  shock  to  a  sector  that 
traditionally  gave  life-long  employment,  with  well-established  career  patterns. 

90.  Community policy  towards the railways may be fuelling  the debate about loss of jobs. 
It  is  feared  that  opening  access  and  allowing  competition  from  new  entrants  would 
cause  employment  to fall  both  in the  established  railway  companies and  in  the  sector 
as a  whole.  This  would  be  due  to  new  operators  requiring  less employees  to  do  the 
same job and under less pressure to maintain employment as the established companies. 
In  the  Commission's  opinion,  this  view  is  understandable  but  ignores  four  essential 
points. 

91. 

92. 

93. 

First, the drop in railway jobs over the last ten years took place before the access rights 
created by Directive 91/440/EEC came into effect.  Consequently it was not caused by 
Community policy.  The causes were rather a rise in productivity, stagnant demand  for 
rail transport as competition  from  other modes grew ever stronger, and pressure on the 
public  funds  available  to  support  public  services  and  to  finance  losses.  Second,  the 
trends  which  caused  employment  to  decline  over  the  last  ten  years,  will  almost 
certainly  continue  over  the  next  ten  years.  As argued  earlier,  competition  from  road 
transport  is  far  more  likely  to  increase  then  fall.  Concern  about  its  negative  effects 
may grow but this will not be the salvation of the railways.  Third, technical  innovation 
will continue to reduce the need  for  labour  in the sector. Fourth budgetary  constraints 
are  far  more  likely  to  tighten  than  loosen,  particularly  with  economic  and  monetary 
union. 

This being so, only a dramatic rise in performance  will guarantee the long-term  future 
of  rail  transport  and  of  employment.  The  aim of  Community  policy, as explained  in 
this White Paper,  is to bring  about  such a change.  Failure to act will inevitably  cause 
further  deterioration  in the position  of the railways on the transport market, and  could 
jeopardise 
restore 
competitiveness  is the  only  way  to  stable  employment;  although jobs  in  the  railways 
will  be  less  numerous  in  future,  they  should  be  more  secure  in  a  healthy  industry. 
Moreover, a certain number of jobs will be created when new entrants find and exploit 
new markets. 

in  major  segments.  Vigorous  action 

their  presence 

to 

To  make  the  railways  competitive,  removing  the  burden  of  surplus  manpower  is 
essential,  but  is  only  one  aspect  of  employment  policy. 
It  is  also  necessary  to 
reorganize  the  patterns  of  work  so  that  employees  become  more  productive.  This 
means,  for  instance,  new  and  simpler  organisational  structures,  wider  delegation  of 
decision-making, greater initiative for junior management and workers, more  flexibility 
and an end to restrictive practices.  It also means large investments in technologies and 
training.  Such  changes  are  being  made  in  large  firms  throughout  the  world,  in 
particular,  those  changing  from  a  system  of  assured  market  and  strict  command 
structures  to  one  where  markets  have  to  be  found  and  exploited  and  enterprises  have 
to  adapt  very  rapidly. 

30 

However,  the  Commission  is  clear  that  these  changes  must  not  lead  to  unacceptable 
working  conditions  and  is  willing,  where  necessary,  to  ensure  the  harmonisation  of 
working  conditions  and  training  and  certification  requirements  for  personnel. 

94. 

Some  personnel  may  be  redeployed  to  new  activities,  for  example  to  relations  with 
customers,  travel  information,  security  and  assisting  disabled  and  elderly  passengers; 
appropriate training will be required for these occupations.  However, redundancies will 
be inescapable.  Imaginative policies, backed by adequate resources, will be needed to 
retrain  and  adapt  redundant  workers  to  new  activities.  The  prime  responsibility 
naturally  lies  with  the  Member  States  who, despite  pressure  on their  budgets,  should 
realise  the  long-term  benefits  for  both  transport  and  for  public  expenditure  of  not 
skimping  money  for  necessary  measures  to  retrain  railway  workers. 

95.  Moreover,  the possibility  of  a contribution  from  the  European  Social  Fund  should  be 
examined.  The  Commission  would  consider  favourably  projects  aimed  at  facilitating 
the  redeployment  of  redundant  workers  through  training  schemes.  Under  the  current 
programming  cycle  (1994-1999)  Member  States have the possibility  to  launch  a new 
series of calls for  projects  for  the period  1997-1999; railway  companies could  consult 
the  authority  responsible  for  the  European  Social  Fund  within  each  Member  State  to 
check  the  possibility  of  financial  support.  Moreover  a  specific  Community  initiative, 
ADAPT, could also be used to facilitate  adaptation to structural change, although  funds 
are  limited.  A  trans-national  initiative,  ADAPT  allows  a  project,  such  as  a  training 
programme, to be submitted  for  approval  at a national  level by a railway  undertaking, 
provided that it is associated with a similar project in at least two other Member States. 

96. 

97. 

The Commission will examine the possibilities the European  Social Fund can offer  in 
the future  for facilitating the adaptation required by industrial restructuring for example 
in the railways. 

The Commission  also considers that measures are needed to organise working time in 
the  railways  in order to  improve  working  conditions and ensure the health  and  safety 
of  workers.  While  general  principles  should  apply  to  all  sectors,  particular  measures 
have  to take  account  of  the  specific  nature  of different  industries. 

Since  1993  the  social  partners  in  the  railway  sector  have  worked  together  for  a 
solution,  and  the  Commission  is  encouraged  by  recent  positive  developments  in  the 
Joint Committee on Railways.  The Commission will monitor the situation to see if the 
social  partners  can agree on adequate health  and safety  protection  as regards  working 
time  in the  sector.  This  subject  will  be  dealt  with  in more  detail  in the  forthcoming 
White Paper on the sectors and activities  excluded  from  Directive 93/104  on working 
time,  including  transport. 

-  31 -

Summary of proposals 

98.  The Commission will examine the possibilities the European Social Fund can 
offer  in  the  future  for  facilitating  the  adaptation  required  by  industrial 
restructuring for example in the railways. 

The  Contmission will  publish  a White  Paper on the sectors  (including  rail) 
which were excluded from Directive 93/104 on working time. 

- 32 

SECTION VIII -  SYNTHESIS AND  TIMETABLE FOR  ACTION 

99.  A new kind of railway  is needed  which should first and foremost  be a business.  This 
requires  an ambitious  strategy.  For  it to  succeed,  all  parties  must  work  together  and 
take  difficult  decisions  : the Community,  the  Member  States, the  railways, their  staff 
and the supply  industry.  Major  adjustments  will be necessary, which may prove hard 
to  accept;  for  example  railway  enterprises  may  have  competition  from  within  the 
sector, and staff  may suffer  further  losses of jobs.  However, continuing the status-quo 
does  not  guarantee  security,  rather  the  opposite.  The  railways  would  continue  their 
decline,  putting  more jobs  at risk.  It  is vital  to  accelerate  the  process  of  adaptation. 
All parties have delayed change for too long and policies need time to make an impact; 
meanwhile,  competition  from  other  modes  will  relentlessly  continue.  While  the 
Member  States and the railways themselves must take the greater part of the measures 
needed,  the Community  must act  in  its areas of  responsibility. 

Finances 

100.  The railways will  only  have  independent  and  dynamic  management,  if their  finances 
are sound.  This  is a pre-condition  of successful  reorganisation.  The railways  should 
tighten their  financial  management;  with,  for  instance, clearer  allocation  of  costs  and 
revenues.  The Member  States must put railways on the path to financial  viability, by 
relieving  them  of  the  burden  of  past  debt;  the  Commission  will  report  regularly  on 
progress  made.  They  must  also  create  a  sound  basis  for  the  future,  by  setting  clear 
objectives  and  linking  relief  of  recent  debt  and  support  for  operating  losses  to 
restructuring programmes.  The Commission will ensure the application of Community 
rules  on  railway  finances  and  on  State  aids,  which  should  guide  the  new  financial 
structure  of  the railways  and progressively  move them towards  viability. 

Introduction  of  market  forces 

101.  Access  rights  to  railway  infrastructure  would  attract  new  capital  and  enterprise; 
competition  would also stimulate established  operators to improve performance.  The 
Community  has  taken  a  first  step  by  creating  limited  access  rights  for  international 
traffic.  Last year the Commission proposed their extension to all freight  traffic  and to 
international passenger services; it will press for the adoption of this proposal.  To help 
ensure the effectiveness  of  access rights, the  Commission  will  propose the  separation 
of  infrastructure  management  and  transport  operations  into  distinct  business  units;  it 
will  also  study  further  general  principles  for  capacity  allocation  and  infrastructure 
charges.  However,  action  is  urgently  needed  to  encourage  international  rail  freight 
transport, where there is great potential but strong dissatisfaction with existing services. 
Anticipating  legislative  changes,  the  Commission  will  promote  the  creation  of 
international rail freight  freeways,  with immediate open access and the right conditions 
to  attract  freight  transporters. 

102. 

Introducing  market  forces  could  also benefit  domestic passenger  services.  This  must 
be  done  in  such  a  way  as  to  respect  network  benefits  and  bolster  the  provision  of 
public  services  in which rail transport plays an important role.  The Commission  will 
study the best practical way of introducing market forces and will in due course make 
proposals. 

-  33 

Public  services 

103.  The  Commission  is  strongly  in  favour  of  better  public  transport,  an  essential  aim  of 
transport policy.  The State acting on behalf of the general public has a legitimate right 
to ensure the  provision  of public  services  in transport,  which  Community  law  clearly 
recognises.  There  is great  dissatisfaction,  however,  with the quality  and  organisation 
of public service and the value obtained  from  public money. To increase transparency, 
clarify  responsibilities  and  ensure  full  compensation  for  the  financial  burden  of 
providing  services,  the  Commission  will  propose  the  generalisation  of  public  service 
contracts between the State and transport undertakings.  Further introduction of market 
forces  could  also improve the quality of public service and reduce their cost.  As with 
domestic passenger  transport  in general, the  Commission  will  study  the best  practical 
ways  of  introducing  market  forces  and  will  then  make proposals. 

Integration  of  national  systems 

in  operating  across  frontiers, 

104.  The  railways  developed  on national  lines  over  a century  and  a half.  This  resulted  in 
difficulties 
inadequate  planning  of  cross-border 
infrastructure  and  fragmentation  of  the  supply  industry  and  of  research  activities. 
Although some progress has been made in breaking down national barriers, a desirable 
degree of integration is still far-off.  To achieve it, the Community, the Member States, 
international organisations, the railways and the supply industry must cooperate closely, 
building on existing work and extending  it as required.  The Commission  is proposing 
measures  to  promote  interoperability  for  conventional  rail,  advance 
technical 
harmonisation  to help  create a single market  for  railway  equipment  and  to  strengthen 
railway  research. 

Social  aspects 

105.  Railway  staff  are naturally  concerned  about the social implications of competition and 
restructuring.  There  has  already  been  a  heavy  loss  of  jobs,  quite  unrelated  to 
Community policy.  The Commission realises that, to become competitive, the railways 
may  need  to  significantly  reduce  their  workforces.  However  it  is  clear  that,  if  the 
railways  do  not  become  competitive,  they  will  lose  markets  and  have  to  reduce 
employment  even  more.  The  greatest  threat  to  employment  comes  from  under-
performance, Personnel policies, including substantial programmes to retrain redundant 
workers, backed by adequate resources, are needed.  This is primarily the responsibility 
of  the  Member  States.  However,  contributions  from  the European  Social  Fund  must 
be carefully  considered. 

The  wider  policy 

106.  The  white  paper  has  concentrated  on  railway  policy,  but  other  aspects  of  the 
Community  transport  policy  should  create  more  equal  conditions  for  rail  to  compete 
for business.  Rail transport will only fulfil  its potential if it can form part of a strategy 
for  developing  intermodal  solutions  to transport  problems.  The aim  is to  ensure that 
the  railways  can  exploit  their  comparative  advantages  and Community  policy  should 
contribute  in two ways. 

34 

First,  it  should  support  the  physical  interconnection  between  modes  (intermodal 
terminals)  and  the  development  of  intermodal  system  and  the  launching  of  pilot 
projects  for  intermodal  services.  The  transport  research  programme  in  future  should 
put  greater  emphasis  on  intermodal  issues.  The extension  of  the programme  of  pilot 
actions  for  combined  transport  (PACT),  proposed  by  the  Commission,  would  give 
impetus to the  launching  of  new  services. 

107.  Second, the transport policy should encourage sustainable mobility and greater transport 
efficiency 
including,  where  appropriate,  a  better  balance  between  modes.  The 
Commission  has recently  presented  two  important  Green  Papers.  First  the  "Citizens' 
Network",  about  collective  transport  that  offers  a  real  alternative  to  the  private  car. 
Second, "Towards fair and efficient  pricing in transport", which concerns the inclusion 
of all costs, direct and, social, in the price paid by users.  The Commission is  following 
these  Green  Papers  with  proposals.  It  has  recently  proposed  a  Directive  on  vehicle 
taxes,  tolls  and  user  charges  imposed  on  heavy  goods  vehicles  (the  so-called  "Euro-
vignette"  Directive14). 

108.  Other  initiatives  are  also  relevant.  Guidelines  for  the  trans-European  networks  have 
been  adopted,  as  has  the  Directive  on  the  interoperability  of  high  speed  rail.  The 
proposed  approximation  of  legislation  on  the  transport  of  dangerous  goods  by  rail 
should  facilitate  such transport.  So, while the present  White Paper  focuses  on  railway 
policy, the common  transport  policy  in  general  should  help develop the  environment 
necessary  for  a competitive  rail  sector. 

109.  The  Commission  realises  that  the  provision  of  a  framework  at  the  European  level  is 
only  one  of  the  building  blocks  for  revitalising  the  Community's  railways.  A 
partnership  with  the  management,  workers,  supply  industries  and  Member  States  is 
essential  for  a railway  renaissance  tô  be generated.  The Commission  recognises  that 
the  required  changes  are  fundamental  and  that  whilst  the  Community's  role  is 
important,  significant  adjustments  will  have  to be undertaken  by all  parties  involved. 
It  is  also  clear  that  implementing  these  changes  amounts  to  an  enormous  cultural 
revolution.  However,  complacency  is  not  an  option:  rail  has  to  change  if  it  is  to 
survive  as a  major  transport  mode  into  the  next  century.  It  is  on  this  basis  that  the 
Commission  is  tabling  the  attached  programme  of  action  to  be  carried  out  at 
Community level.  The Commission calls on all involved to contribute to this initiative 
and  take  complementary  action  so  that  rail  will  be  able  to  play  a  valuable  role  in 
Europe's  transport  system. 

COM(96)  331 final  adopted on  10.7.96. 

-  35 

TIMETABLE  FOR  ACTION 

Over the next two  to  three  years, the  Commission  will  concentrate  on  these  activities: 

until  end  1996 

-  promote  the creation  of  rail  freight  freeways  with  immediate  open access; 

-  publish  a Communication  on the promotion  of  intermodality; 

until  end  1997 

-  report on the progress made by  Member  States in reducing debt and  improving  finances; 

-  propose  modification  of  Community  legislation  to require  the  separation  of  infrastructure 

management  and  transport  operations  into  distinct  business units; 

-  study the best practical ways of introducing market forces into domestic passenger transport, 

including  public  service; 

-  study  further  general  principles  for  infrastructure  charges and  capacity  allocation; 

-  in  the  case  of  freight  traffic,  study  how  to  eliminate  delays  at  frontiers  caused  by 
administrative controls and the railways' own procedures, in consultation with the relevant 
international  bodies; 

-  promote  synergies  between  the different  Community  and  national  R&D programmes; 

-  publish a White Paper  on the  sectors (including  rail) which were excluded  from  Directive 

93/104  on working  time. 

-  examine whether  clarification  is needed  of the scope for,  and conditions of exemptions  for 

cooperation  agreements  between  railways  and  will take  any  measures  needed. 

until  end  1998 

-  develop  rules  and  guidelines,  as  required,  for  linking  the  authorization  of  State  aid  to 

restructuring  programmes; 

-  propose modification  of  Community  legislation  on public service obligations to  generalise 

public  service contracts; 

-  make  proposals  on  the  introduction  of  market  forces  into  domestic  passenger  transport, 

including  public  services; 

-  propose  general  principles  for  infrastructure  charges and  capacity  allocation; 

36 

assess implementation of Community  legislation on normalisation of railway accounts and 
its relevance  to present circumstances; 

continue the process of  standardisation  for conventional  and light rail; 

study how relevant aspects of the technical harmonisation process for high speed rail might 
be adapted to conventional  rail; 

examine technical measures needed to increase accessibility for the disabled and the elderly; 

examine  the  scope  for  improving  interoperability  on  major  international  routes  in  cost-
effective  ways and consider  the  use of  TENs  funds to  support projects  involving  several 
railways; 

in the revision of the TENs guidelines, assess the improvements needed to infrastructure to 
facilitate  freight transport and make recommendations; 

investigate  instruments  for  reducing  railway  noise,  in the context  of  general  Community 
policy on noise; 

in calls for proposal under the Transport Research Programme, emphasise  socio-economic 
study proposals to support the transition from national  to Europe-wide systems; 

promote demonstration projects in priority technical areas, in particular the continuation of 
ERTMS activities and full-scale  validation tests; 

examine the possibilities the European Social  Fund can offer  in the future  for  facilitating 
the adaptation required by industrial restructuring  for example in the railways. 

study  various  options  for  the  improvement  of  the  institutional  framework  for  future  rail 
development (including the setting up of a European Railway Agency). 

37 

38. 

ANNEX 1/1 - E.U.  RAILWAYS'  BASIC DATA 

Employees 
1994 

Route (km) 
1994 

Passenger  traffic 
(passenger-km) 
95/85 
95 
(%) 
million 

Freight  traffic 
(tonne-km) 

Traffic  Units 
per employee1 

95 
million 

95/85 
(%) 

1994 

Traffic  receipts 
per  employee 
(real ECU)2 
1994 

Asset  Intensity3 
1994 

BR 

UK 

118,066 

16,564 

29,801 

-1,5 

13,797 

-14,0 

CFL 

CH 

CIE 

CP 

DB 

H 

IRL 

3,289 

12,006 

11,219 

14,270 

D 

327,076 

DSB 

DK 

20,044 

FS 

NS 

ÔBB 

NL 

RENFE  E 

SJ+BV 

SNCB  B 

SNCF  F 

VR 

FI 

140,249 

26,561 

63,867 

41,137 

21,856 

42,729 

185,690 

17,368 

275 

2,474 

1,947 

2,699 

41,401 

2,349 

16,002 

2,757 

5,636 

12,641 

9,661 

3,396 

32,275 

5,880 

1,568 

-9,5 

1,328 

+29,8 

529 

306 

575 

•11,7 

-58,0 

-4,3 

4,809 

-16.0 

2,020 

+68.9 

60,514 

-7,1 

69,483 

-42,3 

4,818 

+6,0 

1,984 

+1,3 

49,700  +32,9 

22,243  +32,0 

13,977  +55.2 

3,097 

-5,3 

9,625 

+32,0 

13,715  +21,5 

15,330 

-4,1 

9,605 

-15,9 

6,219 

-5,6 

18,523  +6,9 

6,757 

+2,8 

7,307 

-11.7 

55,222 

-10,8 

47,953 

-17.9 

3,184 

-1,2 

9,559 

+18,5 

351.2 

296.4 

143.5 

163.0 

486.0 

403.0 

380.5 

490.4 

648.0 

355.9 

569.7 

1143.6 

379.4 

578.5 

752.2 

29.9 

36.5 

4.6 

35.0 

12.2 

37.8 

35.3 

26.4 

37.4 

20.2 

21.3 

43.9 

17.4 

33.7 

29.5 

1.46 

0.93 

5.56 

1.1 

3.19 

5.22 

7.23 

1.36 

3.02 

3.75 

2.06 

1.08 

2.58 

2.02 

Total 

EU 

1,045,427 

155,962 

262,858  +2,5 

220,692  -20,1 

Source  :  Union Internationale  des Chemins de Fer - Mercer  Management  Consulting 
1  Traffic  units per  employee = (Passenger  KM + Ton  Km)/employees 
2  Traffic  receipts per  employee = total traffic  receipts  (Mio ECUs  1994)/employees 
3  Asset Intensity  = Total  Capital  (equity + debt)/total  costs (including  operating  costs and debt interest). 

Shows the number of units of capital  needed for  each unit of activity 

N.B.  : Values for  BR include  Railtrack. 
The accountancy systems differ from one undertaking to the other.  Therefore comparisons between undertakings have to be interpreted 
with caution. 

-  39-

ANNEX 1/2 - RAILWAY  DEBT  IN  1994 

Railway debt 
million  ECU 

Railway  debt/ 
GDP(%) 

Public debt/ 
GDP(%) 

Govt  borrowing/ 
GDP(%) 

Railway  debt/ 
equity ratio1  (%) 

6.8 

2.2 

12.1 

2.0 

5.8 

2.5 

3.5 

9.0 

3.2 

4.4 

6.9 

10.8 

5.3 

5.8 

6.3 

5.5 

621 

44 

48 

58 

89 

283 

50 

51 

36 

28 

70 

73 

47 

78 

14 

542 

BR 

CFL 

CH 

CIE 

CP 

DB 

DSB 

FS 

NS 

ÔBB 

RENFE 

SJ+BV 

SNCB 

SNCF 

VR 

Total 

UK 

L 

H 

IRL 

P 

D 

DK 

I 

NL 

A 

E 

S 

B 

F 

FI 

EU 

10.7092 

168 

937 

323 

1,529 

5,7953 

2,782 

42,067 

2,807 

2,892 

8,140 

1,958 

3,539 

28,731 

166 

112,543 

1.2 

1.4 

1.1 

0.7 

2.1 

0.33 

2.3 

4.9 

1.0 

1.7 

2.0 

1.2 

1.8 

2.6 

0.2 

1.8 

Source  Mercer  Management  Consulting. 

1  Railway  debt + (debt + equity). 

2 

incl.  Railtrack. 

after  recapitalisation  DB;  1993 debt  DB: 33.788. 

54.0 

5.9 

110.4 

91.1 

71.6 

50.4 

76.0 

125.6 

77.6 

65.0 

63.1 

79.9 

136.0 

48.4 

59.4 

71.2 

40 

ANNEX 1/3 

EU  15 Freight  Transport  - (1000 million  tonne-kilometres) 

Road 

Rail 

Inland 
Waterways 

Pipelines 

Total 

1970 

1975 

1980 

1985 

1990 

1993 

1994 

431 

526 

661 

711 

915 

964 

1061* 

283 

259 

287 

275 

255 

205 

220 

110 

103 

113 

103 

113 

106 

115 

66 

79 

92 

71 

71 

82 

83 

890 

969 

1153 

1161 

1355 

1358 

1479 

1970-94 

+  146,2 % 

- 22,3 % 

+  5,0  % 

+ 25,6% 

l 

+ 65,5  % 

sources: ECMT, UIC,  DIW,  national  statistics,  estimates 

*  change  in time  series  in 

Germany 

Average  Annual  Growth Rate  (%) 

Road 

Rail 

Inland 
Waterways 

Pipelines 

Total 

1970-80 

1980-90 

1990-94 

+ 4,3 

+  3,3 

+  3,8 

1970*94 

+ 3,8% 

+ 0,1 

-  1,1 

-3,7 

; -U 

+ 0,3 

+  0,0 

+ 0,3 

+  0,2 

+3,3 

-2,4 

+ 3,7 

+ 0,9 

+ 2,6 

+  1,6 

+ 2,2 

+ 2,1 

*  change  in time  series  in Germany  (a new survey  method introduced  in  1994 showing  ca. 
20% more road transport than old method)  ** growth rate EU  15 without  Germany 

Modal  Split  (%) 

Road 

Rail 

Inland 
Waterways 

Pipelines 

1970 

1975 

1980 

1985 

1990 

1994 

48,6 

54,5 

5.7,4 

61,3 

67,5 

71,7 

31,7 

26,7 

24,9 

23,7 

18,9 

14,9 

7,4 

8,2 

7,9 

6,1 

5,3 

5,6 

12,3 

10,6 

9,8 

8,9 

8,3 

7,7 

41 -

ANNEX 1/4 

EU  15 Passenger  Transport 
(1000 million  passenger-kilometres) 

Car 

1569 

1923 

2292 

2496 

3146 

3419 

3482 

Bus 

262 

306 

341 

346 

359 

360 

363 

1970 

1975 

1980 

1985 

1990 

1993 

1994 

Railways 

Air 

Total 

216 

241 

253 

262 

274 

267 

270 

43 

69 

96 

144 

204 

233 

254 

2090 

2539 

2981 

3242 

3983 

4279 

4368 

1970-94 

+  121,9 % 

+ 38,6 % 

+ 24,7  % 

+ 490,7 % 

+  109 % 

sources: ECMT, UIC, DIW, national  statistics,  estimates 

Car 

+  3,9 

+ 3,2 

+ 2,6 

+  1,8 

+  3,4 

Car 

75,1 

75,8 

76,9 

77,0 

79,0 

79,7 

1970-80 

1980-90 

1990-94 

1994 

1970-94 

1970 

1975 

1980 

1985 

1990 

1994 

Average  Annual  Growth  Rate (%) 

Bus 

+ 2,7 

+ 0,5 

+ 0,2 

+ 0,9 

+ 1,4 

Railways 

Air 

+  1,6 

+ 0,8 

-  0,4 

+  1,2 

+ 0,9 

+  8,4 

+ 7,8 

+ 5,4 

+ 9,0 

+ 7,7 

Total 

+  3,6 

+ 2,9 

+ 2,3 

+ 2,1 

+ 3,1 

Bus 

12,5 

12,0 

11,4 

10,5 

9,0 

8,3 

Modal  Split (% 

Railways 

Air 

2,1 

2,7 

3,2 

4,4 

5,1 

5,8 

10,3 

9,5 

8,5 

8,1 

6,9 

6,2 

-42  -

ANNEX  II 

Implementation  of  Directive  91/440/EEC 

(as in July  1996) 

The  following  Member  States have transposed  Directive  91/440/EEC 

-  Austria 
-  Denmark 
-  Finland 
-  France 
-  Germany 
-  Ireland 
-  Netherlands 
-  Sweden 
-  United  Kingdom 

The  following  Member  States have  only partially  transposed  the  Directive  : 

-  Belgium 
-  Italy 
-  Luxembourg 
-  Portugal 

-  Spain 

(lacking access rights) 
(lacking access rights) 
(lacking access rights) 
(lacking  separation  of  infrastructure  management  and  transport 
operations) 
(lacking access rights) 

Greece  has not  notified  transposai. 

Infringement  proceedings  have  been  launched  against  the  Member  States  that  have  not 
transposed  completely. 

43  -

ISSN 0254-1475 

COM(96) 421 final 

DOCUMENTS 

EN 

07 

Catalogue number  : CB-CO-96-424-EN-C 

ISBN 92-78-07964-2 

Office  for Official  Publications of the European Communities 

L-2985  Luxembourg