Communication from the Commission to the Council and the European Parliament - Towards an integrated European railway area
Date: 2002-01-23
Institutions: European Commission
Subjects: carriage of passengers, common transport policy, international transport, rail transport, transport safety

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 23.1.2002
COM(2002)18 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE
EUROPEAN PARLIAMENT

Towards an integrated European railway area

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE
EUROPEAN PARLIAMENT

Towards an integrated European railway area

Contents

Introduction: The White Paper and the need for a new railway package................................... 3

1.

1.1.

1.2.

1.3.

1.4.

1.5.

Five proposals for rapid progress towards an integrated European railway area

Developing a common approach to rail safety............................................................. 8

Bolstering the fundamental principles of interoperability ......................................... 12

Setting up an effective steering body: the European Railway Agency...................... 14

Clarifying the role of the Community in OTIF.......................................................... 16

Completing the internal market in rail freight services.............................................. 18

List of measures proposed in this package............................................................................... 21

2.

2.1.

2.2.

Ways to make the railway market more dynamic and improve quality: future
action

Conditions for success for rail freight........................................................................ 23

Developing high-quality international passenger services......................................... 30

List of measures proposed........................................................................................................ 33

ANNEX 1: Lines of action to improve the performance of European rail freight

Developments and shortcomings in the rail freight market ..................................................... 36

The alarming deterioration in the performance and quality of rail freight............................... 39

Overcoming entry barriers to the rail freight market ............................................................... 44

Providing high-quality infrastructure for a more efficient rail freight sector in Europe.......... 47

Improving the environmental performance of rail freight services.......................................... 50

ANNEX 2: Situation with international rail passenger services

The existing Community legal framework............................................................................... 53

Current market situation for international rail passenger services ........................................... 55

Improving the quality of international passenger services....................................................... 57

Abbreviations ........................................................................................................................... 61

__________

2

INTRODUCTION: THE WHITE PAPER AND THE NEED FOR A NEW RAILWAY PACKAGE

The Stockholm and Göteborg European Councils established further reform of Europe's
railways, with the presentation of a second package of measures by the end of 2001, as a
priority objective.

This was taken a step further in the White Paper "European transport policy for 2010:
time  to  decide"  adopted  by  the  Commission  on  12 September  20011,  in  which
revitalising  the  railways  is  one  of  the  key  components  in  the  strategy  proposed  by  the
Commission to shift the balance between modes.

However,  the  situation  reported  in  the  White  Paper  is  patchy,  to  say  the  least.  Rail's
market share is continuing to decline, while quality standards for goods services remain
far from sufficient and, in some cases, are deteriorating. Beyond doubt the greatest cause
for concern is the state of rail freight services since their share of traffic, taking all modes
together, stands at 8% today compared with 21% in 1970 and, looking at inland transport
alone, at 14% from  35%.  Despite  a  number  of  promising  developments, new initiatives
on the market and restructuring of  the  historic railway undertakings in  various  Member
States, the pace of change has not been fast enough.

For  this  reason,  the  White  Paper  proposes  an  ambitious  action  programme  revolving
around three types of measures to revitalise the railways:

– 

– 

– 

First, a fair system for charging for all modes of transport must be put in place to
reflect the full value of the cleanest modes.

Next,  development  of  the  trans-European  transport  network  must  continue,
giving  strong  priority  to  rail  and  concentrating  on  removing  bottlenecks  and
adding  new  major  railway  projects  to  the  list  of  priority  projects  adopted  in
Essen, taking account of the need to improve access to the outlying regions and
to regions suffering from geographical handicaps.

Finally,  a  legally  and  technically  integrated  European  railway  area  must  be
constructed.

The  measures  proposed  in  this  communication  come  under  the  third  of  these  lines  of
action in the White Paper.

One key phase in progress: implementation of the infrastructure package

The measures proposed in this communication presuppose establishment without delay of
the  framework  mapped  out  by  the  "infrastructure  package"  -  Directives  2001/12/EC,

1

COM(2001) 370. See, in particular, the action programme (p. 105) and Chapter I.B "Revitalising
the railways".

3

                                                
2001/13/EC and 2001/14/EC2 - which entered into force on 15 March 2001 and must be
implemented by 15 March 2003 at the latest.

These directives clarify the roles and responsibilities of all the players, i.e. of the railway
undertakings providing the transport services, of the infrastructure managers responsible
for  developing  the  infrastructure  and  providing  access  to  it  on  clear,  appropriate  terms
and,  finally,  of  the  supervisory  bodies  with  the  task  of  arbitrating  potential  conflicts
between railway undertakings and infrastructure managers. Relations between these three
players  must  be  set  in  a  framework  ensuring  a  transparent  flow  of  information  to  the
operators, legal certainty in contractual relations between them and neutrality in essential
functions  such  as  licensing  railway  undertakings,  allocating  infrastructure  capacity  and
charging  for  use  of  infrastructure.  These  are  the  minimum  preconditions  if  existing
operators are to mount pan-European services and new prospective operators are to start
running railway services.

Beyond  that,  the  financial  relations  between  these  different  activities  must  be  clearly
identified by effective separation of the accounts to enable railway undertakings to keep
closer  tracker  of  the  costs  of  their  operations  and  to  avoid  cross-subsidisation.  Such
clarity in the accounts is the minimum which European taxpayers can expect as they see
35 billion  euros  injected  into  Europe's  railway  system  every  year  in  the  form  of
investment  in  infrastructure  and  compensation  for  public  service  obligations.  Here  too
transparency is a must.

The legal framework must ensure this, both in the form of the clear rules in the European
directives  which  the  States  have  to  incorporate  into  their  national  legislation  equally
clearly  as  early  as  possible  and  by  implementing  the  Community  rules  on  competition
applicable to undertakings and State aid.

Directive  2001/12/EC  also  provided  for  the  Commission  to  set  up  a  system  for
permanently monitoring developments on Europe's railways.

Accordingly,  the  Commission  has  laid  the  foundation  for  a  market  surveillance
mechanism based on permanent monitoring of relevant statistics and indicators allowing
rapid detection of trends in the railway sector as a result of the measures already taken.

This mechanism, devised together with the Member States and all involved in the railway
industry, is a valuable means of gauging how fast the railway industry is adapting to its
new European dimension. It will be extended to the candidate countries from the start of
2002. It can be used to underpin the new measures proposed in this second package and
to monitor them in the field.

Shortcomings remain in the legal and technical framework.

Lack  of  interoperability  on  the  European  network  is  one  of  the  biggest  obstacles  to
providing  pan-European  services,  particularly  for  goods.  Since  the  early  '90s  the

2

OJ L 75, 15.3.2001.

4

                                                
European Community has been working intensively  in this field, starting with the high-
speed  network  now  being  developed.  Adoption  in  the  near  future  of  the  technical
specifications for interoperability for high-speed rail services, the fruit of five years' work
by hundreds of experts from the railway industry, railway undertakings and infrastructure
managers  mobilised  by  Directive  96/48/EC,  will  clear  the  way  for  transferring  this
expertise to the conventional railway network. Adoption of Directive 2001/16/EC by the
Council  and  the  European  Parliament  allowed  an  immediate  start  to  be  made  on  the
necessary technical work, which is now underway.

The  discussions  within  the  Council  and  the  European  Parliament  on  the  infrastructure
package  and  on  the  interoperability  of  conventional  rail  services  coupled  with  the
experience  gained  from  developing  the  technical  specifications  for  interoperability  for
high-speed  rail  services  have  brought  to  light  a  number  of  shortcomings  which  could
seriously  impair  effective  implementation  of  the  rules  decided.  In  particular,  it  is  time
vigorously  to  tackle  the  complexity  of  the  railway  system  which  is  still  suffering  too
much from the conservatism and protectionism of a century ago. Admittedly, the railways
have  a  long  history  and  the  excuse  of  the  long  service  life  of  their  infrastructure  and
equipment.  But  to  give  railways  a  chance  in  the  new  Europe  being  built,  a  sense  of
urgency must be breathed into them and a framework set up to galvanise the industry to
seek  solutions  to  problems  which  are  difficult  but  not  insurmountable  if  appropriate
mechanisms are put in place.

In this context, there is a need to reinforce the existing framework in the following areas:

– 

– 

– 

– 

rail safety, currently based on national rules adopted at different levels or by the
undertakings  themselves,  must  be  guaranteed  by  rules  which  are  made  public
and  which  everyone  can  understand  and  the  national  systems  in  force  should
move towards mutual recognition or towards European harmonisation;

interoperability implies participation by all concerned in order to adopt optimum
specifications and ensure effective application; it is currently limited to the trans-
European network, but must be extended to the entire railway network on which
free access to provide international freight services will have to be opened up by
15 March 2008;

effective  implementation  of  the  rules  on  safety  and  interoperability  calls  for
establishing  mechanisms  for  rapid  intervention  in  the  event  of  differences  of
opinion  between  the  various  national  authorities  responsible  for  these  fields  in
order  to  find  the  most  appropriate  solutions  to  the  problems  created  by  the
internationalisation of railway services; this role will be delegated to the railway
agency  which  must  provide  a  constant  driving  force  for  progress  towards
harmonisation of the technical regulations and safety rules;

accession  by  the  Community  to  OTIF  (Intergovernmental  Organisation  for
International  Carriage  by  Rail)  which  can  draft  rules  of  law  providing  useful
additions to the Community provisions and/or extending them to other European
and non-European states;

5

– 

– 

– 

extension  of  rights  of  access  to  infrastructure  for  domestic  freight  services  to
reduce empty journeys to the absolute minimum;

opening-up  the  international  passenger  market,  taking  account  of  the  links
between these services and the public service obligations applicable to national
and cross-border services;

guaranteeing the quality of service to be provided by means of recognition of the
rights and obligations of customers vis-à-vis railway undertakings.

Scope of this communication and of the proposals made

This communication is divided into two parts:

– 

– 

part 1 entitled "five proposals for rapid progress towards an integrated European
railway  area"  provides  a  concise,  consistent  overview  of  all  the  legislative
measures proposed by the Commission in this package. There are five proposals
forming a whole: (1) the proposal for a Directive on safety, (2) amendments to
the  Directives  on  interoperability  on  the  high-speed  and  conventional  rail
systems, (3) the proposal for a Regulation on the European Railway Safety and
Interoperability  Agency,  (4)  the  draft  recommendation  for  a  Council  Decision
authorising  the  Commission  to  negotiate  the  conditions  for  Community
accession to the Convention concerning International Carriage by Rail (COTIF)
and  (5)  amendments  to  Directive  91/440  to  extend  rights  of  access  to  railway
infrastructure to domestic freight services;

part  2  entitled  "ways  to  make  the  railway  market  more  dynamic  and  improve
quality:  future  action"  contains  analyses  of  the  situation  with  rail  freight  and
international  passenger  services  which  have  prompted  the  Commission  to
consider  taking  legislative  and  other  non-binding  measures  in  due  course  to
improve the quality of service and make rail transport in general more attractive.
These measures follow up the White Paper "European transport policy for 2010:
time to decide"3.

All the measures proposed or planned in the railway sector must, of course, fit in with the
other measures not covered by this communication such as the Community programmes
to  promote  the  trans-European  railway  networks  (TEN  budget,  support  from  the
Structural  Funds,  including  the  Cohesion  Fund  and  ISPA,  EIB  loans),  intermodality
(Marco  Polo)  and  measures  for  other  modes,  particularly  for  charging  for  use  of  road
infrastructure. Of particular importance is the role of both technical and strategic research
and  innovation,  which  are  of  critical  importance  to  the  success  of  the  New  Railway
Package. The continued development of the European Research Area  together with the
Research  Framework  Programmes  and  the  establishment  of  European  Rail  research
Advisory Council (ERRAC) will provide the necessary instruments in that field. Finally,

3

COM(2001) 370.

6

                                                
all  the  measures  proposed  take  full  account  of  the  railway  systems  in  the  accession
countries.

(cid:1) (cid:1) (cid:1)

7

1.  FIVE  PROPOSALS  FOR  RAPID  PROGRESS  TOWARDS  AN  INTEGRATED  EUROPEAN
RAILWAY AREA

1.1. Developing a common approach to rail safety

1.1.1.  Safety in an integrated area: the need for a common approach

Since  the  first  steps  towards  a  single  market  for  rail  transport  services  were  taken  with
Directive 91/440 it has been evident that safety is one of the main obstacles on the way to
further  market  opening.  Differences  in  railway  safety  regulation  and  different  national
safety requirements are principal reasons behind the fact that international  rail transport
still  is  mainly  managed  in  the  old  way,  by  national  operators  handing  over  trains  and
responsibilities at the borders.

Through  the  directives  on  interoperability,  96/48  (on  the  high-speed  rail  system)  and
2001/16  (on  the  conventional  rail  system),  essential  requirements  for  safety  on  sub-
system  level  have  been  defined  and  further  specified  by  technical  specifications  for
interoperability  (TSI).  The  TSI  are,  however,  not  applicable  to  the  existing  railway
equipment  and  do  not  cover  overall  requirements  on  safety  and  the  managerial  and
regulatory aspects.

Directives  95/18,  on  licensing,  and  95/19,  which  among  other  issues  deals  with  safety
certification  of  railway  undertakings,  did  very  little  to  improve  the  situation.  They
provide that an EU licence should be issued and that it could be combined with national
safety certificates covering the different territories of operation by a railway undertaking.
However,  there  are  few  –  if  any  –  examples  of  a  railway  undertaking  carrying  out
international services under the provisions of the directives.

The  infrastructure  package,  Directives  2001/12,  2001/13  and  2001/14,  introduced  only
minor adjustments to the safety regulatory framework by obliging the Member States to
take  responsibility  for  laying  down  and  enforcing  safety  rules  and  standards  and  for
ensuring  that  accidents  would  be  investigated.  When  agreement  was  reached  by  the
Council on the infrastructure package  in  December  1999  the  Commission  consequently
announced its intention to complete the legislative framework with a Directive on railway
safety.

Currently there  are different national approaches  to  railway safety,  different  targets  and
different  methods  applied.  Technical  standards  as  well  as  requirements  on  staff  and
management organisation differ from Member State to Member State and the process to
approve rolling stock or certify staff or railway undertakings has not been adapted to the
needs  of  an  integrated  European  rail  system.  Even  though  there  are  many  safety
requirements  that  emanate  from  technical  and  operational  differences  of  the  networks
there is also in the sector a lack of understanding of the different national approaches and
sometimes mutual suspicion that have their origins in lack of knowledge and absence of
transparency.

8

The  restructuring  of  European  railways  has  led  to  the  separation  of  functions  between
infrastructure managers and railway undertakings, a process that is still  evolving. Many
regulatory functions have been transferred from the railway bodies themselves to public
authorities, bringing rapid changes also to the way safety is regulated and managed in the
sector. During this transition it is essential that the roles of the different players be clearly
defined  and  that  responsibilities  for  managing,  regulating  and  enforcing  safety  are
redistributed in a similar and harmonised way in Europe.

Safety  performance  of  the  rail  transport  mode  in  Europe  is  generally  very  good,  in
particular  in  comparison  with  its  main  competitor,  road  transport.  Introduction  of
centralised traffic control, automatic train protection systems, more crashworthy vehicles
and modern safety management has reduced fatality rates substantially during the last 30
years.  The  number  of  passengers  killed  in  accidents  average  around  100  a  year  in  the
Member States and total fatalities (primarily car occupants on level crossings) are about
800-900, whereas more than 40 000 people are killed on the roads each year.

Safety levels of rail as compared to other modes

Deaths per 100 million persons
km

Deaths per 100 million
hours

Motorcycle/moped

Foot

Cycle

Road (Total)

Car

Ferry

Air (public transport)

Bus and coach

Rail

16

7.5

6.3

1.1

0.8

0.33

0.08

0.08

0.04

Motorcycle/moped

Cycle

Foot

Car

Air (public transport)

Road (Total)

Ferry

Bus and coach

Rail

500

90

30

30

36.5

33

10.5

2

2

Exposure data for travel risk assessment: current practice & future needs in the EU, ETSC, Brussels, 1999

Accidents happen however and  whenever they  occur they reveal weaknesses  in railway
safety and illustrate further risk reduction potentials. The high impact on public opinion
of  multiple-fatality  rail  crashes  is  evident  and  pictures  from  the  accident  scenes  of
Eschede (Germany) and Ladbroke Grove (Paddington Station, United Kingdom) remind
us of the possible catastrophic consequences of human errors or technical failures in rail
transport. In a society where such accidents are less and less tolerated, efforts should be
made to further  reduce  risks  without  endangering  the  competitiveness  of  the  rail  mode.

9

With  the  emerging  single  market  for  rail  transport  services  and  supply  of  railway
equipment such efforts need to be coordinated and harmonised at European level.

1.1.2.  The proposal for a directive on rail safety

The  proposed  directive  on  the  regulation  of  safety  and  investigation  of  accidents  and
incidents on the Community’s railways addresses four main problem areas related to the
development of safe railways in Europe.  It applies a  gradual approach to harmonisation
and the development of common principles, taking into account the great differences that
exist between the Member States.

The first and most important task in the evolving restructuring of European railways is to
modernise  and  harmonise  the  safety  regulatory  structure  and  the  content  of  safety
rules in the Member States and at European level. This is to ensure that responsibilities
are defined and  distributed in  a  common manner  and  that safety  is  ensured  through  the
restructuring  process.  The  directive  states  that  infrastructure  managers  and  railway
undertakings bear the immediate and operational responsibility for safety on the railway
networks  and  for  the  control  of  risks.  It  provides  for  the  creation  of  authorities  in  the
Member  States  with  responsibility  to  regulate  and  supervise  safety  and  for  their
coordination at European level. A common minimum set of tasks for these authorities is
outlined.

By applying the gradual approach the directive defines procedures for the development of
common  inspection  and  assessment  methods,  common  safety  methods  (CSM).  It
establishes  a  mechanism  for  migration  towards  common  safety  rules  by  a  notification
procedure, which requires European acceptance of new national safety rules.

The  second  problem  addressed  by  the  directive  is  the  removal  of  barriers  to  further
market opening and the creation of a single European rail system. The safety certificate,
granted to the railway undertaking for operation on a specific network, is still recognised
as  the  means  to  achieve  access  to  infrastructure.  In  this  directive  the  concept  is  further
developed  by  introducing  common  requirements  for  and  common  elements  of  a  safety
management system that must be implemented also by infrastructure managers.

With a common safety management system for railway operations a certificate granted in
one  Member  State,  accepting  the  safety  management  system  of  a  given  railway
undertaking,  should  be  valid  throughout  the  Community  for  equivalent  rail  transport
operations. In addition the railway undertaking would still need to declare its intention to
adhere to national rules and be granted an acceptance of the rolling stock and staff used
for each of the networks it intends to operate on.

For  the  creation  of  the  single  European  rail  system  it  is  equally  important  to  increase
confidence between players on the market and between Member States. For that purpose
the  directive  introduces  a  mechanism  to  adopt  common  safety  targets  (CST)  that  all
railway systems should be able to meet. The common safety methods (CSM) will also be
used to assess if the targets are met.

10

The third problem area addressed by the directive concerns transparency, information
and the application of due process in railway regulation. The world of the old state-
owned  monopoly  railways  was  from  many  aspects  a  closed  world.  It  was  mainly  self-
regulatory and there was no real need to give information to the public on safety and to
apply transparent  decision-making rules. With an open market and  regulation  by  public
authorities the requirements on the rail sector will increase. It must develop in the same
direction as other modes of transport.

The  directive  introduces  common  principles  for  decisions  by  the  railway  authorities,
requires  availability  of  rules  and  regulations,  stages  timetables  and  makes  mandatory
provisions for players to be allowed to appeal against all decisions.

Common  safety  indicators  (CSI)  are  laid  down  by  the  directive  and  will  be  further
developed  through  the  committee  procedure.  These  indicators  will  render  it  possible  to
monitor the development of railway safety in the Member States and at Community level.
Railway  undertakings  and  infrastructure  managers  will  be  obliged  to  submit  annual
reports on the development of safety to their national safety authority which in turn must
publish a report each year and make it available to the European Rail Agency. This will
further open up the closed structure and enable  all players to share experience and  gain
confidence.

The fourth area addressed by the directive is investigation of accidents and incidents. It
has  showed  that  there  is  a  great  variety  in  Member  State  legislation  on  accident
investigations. In many cases accidents are still investigated by the national state railway,
or  by  the  police,  whereas  in  some  Member  States  independent  accident  investigation
bodies have been set up. Influenced by legislation for accident investigation in aviation,
as provided for at Community level by Directive 94/56, many Member States are moving
towards  independent  accident  investigation  for  other  transport  modes  as  well  and,  in
some  cases,  towards  the  creation  of  multi-modal  investigation  boards,  modelled  on  the
National Transportation Safety Board (NTSB) in the USA.

The creation of a single market for rail transport and railway equipment renders it more
important to share information and learn lessons from accidents and incidents. Technical
failures  and  operational  and  managerial  deficiencies  could  be  more  easily  detected  and
avoided if information were available and spread within the sector. To achieve this it is
important  to  separate  the  safety  investigation  from  the  judicial  (police)  inquiry.  The
safety investigation aims at establishing root causes to avoid future occurrences, whereas
the police investigation aims at finding the person responsible for a criminal offence, if
there is one. The two types of investigations deal with different problems, apply different
methodologies and require different skills by their investigators. If they are not kept apart
the appropriate lessons will never be learned.

For the sake of public trust in a safety investigation, as well as the confidence of parties
involved, an independent body must carry it out. Since root causes of an  accident often
can be traced back to the regulatory framework for safety the investigation body should
also  be  independent  of  the  safety  regulator.  The  directive  sets  out  the  principles  of
mandatory  investigations  of  serious  accidents  and  incidents,  above  a  defined  threshold

11

level,  and  provides  for  the  establishment  of  independent  investigation  bodies  in  the
Member States.

is  similar 

The safety directive should not be seen as an isolated piece of legislation. It continues on
system  level  what  the  interoperability  directives  introduced  on  sub-system  level  and  it
relies  on  the  same  committee  as  is  used  for  the  development  of  the  TSI.  Thus
interoperability  and  safety  will  be  developed  in  a  consistent  and  coherent  way.  The
gradual  approach 
the
interoperability of the conventional rail system and will depend heavily on the support of
players in the sector and on the European Rail Agency, proposed in this same package.
The migration from national rail networks to a single European rail system will take time
and  require  great  efforts  from  all  involved  and  interested  in  the  development.  With
simultaneous progress of market and safety performance the rail transport mode will be
strengthened and given the possibility to exploit its inherent advantages on the transport
market.

introduced  by  Directive  2001/16  on 

that 

to 

Proposal No 1

Proposal for a directive on rail safety

1.2. Bolstering the fundamental principles of interoperability

In  addition  to  putting  into  place  a  clear  framework  for  safety,  construction  of  an
integrated railway area also entails putting interoperability into action for both high-speed
and conventional rail.

High-speed rail

Adoption of Directive 96/48/EC of 23 July 1996 set in motion the process of developing
the  technical  specifications  for  interoperability  (TSI)  essential  in  order  to  achieve
interoperability on  the  high-speed  rail  network.  First,  however,  this  literal  revolution  in
technical  harmonisation  in  the  railway  sector  called  for  new  working  methods  and  for
striking new balances between the various players involved.  In particular,  infrastructure
managers,  railway  undertakings  and  the  railway  industry  met  within  the  European
Association for Railway Interoperability (AEIF) and had to learn to work together to draft
TSI. Since these new procedures and instruments had to be fine-tuned, it took longer than
the  original  estimate  of  three  years  to  develop  the  TSI.  They  are  now  expected  to  be
adopted by the end of 2001 and to enter into force towards mid-2002. A programme for
developing the corresponding European  standards was launched in 1998 and is updated
regularly in the light of the preparatory work on the TSI.

Meanwhile the network continues to develop, with a series of new services expected to be
introduced in the  next five  years,  and  the  process  of  putting  interoperability  into  action
must be speeded up by taking measures on three fronts:

–  coordinate  investment  by  different  Member  States  in  cross-border  projects  more
closely: the return on such projects is  greater if the  full capacity of the infrastructure
can be used as soon as it is brought into service. In 2002 a mechanism for coordinating

12

investment  will  be  proposed  as  part  of  the  measures  to  coordinate  the  policies,  as
provided for in Article 155(2) of the EC Treaty;

–  apply  the  TSI  before  they  are  published  to  major  maintenance  work  and  renewal  of
high-speed lines already in service. This was  not  explicitly provided  for in Directive
96/48/EC  but  was  added  for  conventional  rail.  It  has  been  included  in  the  annexed
proposed amendments to Directive 96/48/EC;

–  provide  financial  support  for  application  of  the  TSI  from  the  budget  for  trans-

European networks.

Conventional rail

Like  the  directive  on  high-speed  rail,  the  directive  on  the  interoperability  of  the
conventional rail system4, adopted on 19 March 2001, introduced Community procedures
for preparing and adopting TSI and common rules for assessing conformity with them.

The directive requires a first group of priority TSI to be adopted within three years, i.e. in
2004, in the following areas: control/command and signalling; telematic applications for
freight  services;  traffic  operation  and  management  (including  staff  qualifications  for
cross-border  services);  freight  wagons;  and  noise  problems  deriving  from  rolling  stock
and infrastructure.

Drawing  on  the  experience  gained  with  high-speed  rail,  the  Commission  did  not  wait
until  the  directive  was  published  to  make  a  start  with  the  preparatory  work.  The  AEIF
experts  are  already  working  on  identifying  the  critical  components  in  terms  of
interoperability.  Six  months  after  the  directive  was  published,  the  Commission  has
already  obtained  formal  agreement  from  the  regulatory  committee  on  the  first  work
programme, on the designation of the  AEIF  as  the  joint representative body  and on  the
AEIF's mandate to develop the first group of TSI.

Although lessons can be learned from the experience already acquired, the difficulties of
adoption of TSI for conventional rail should not be underestimated. The system already
exists  and  is  not  yet  to  be  built,  there  are  more  and  bigger  technical  and  operational
differences and the players involved are more diverse.

These  reasons  have  led  the  Commission  to  propose  progressive  adoption  of  the  TSI,
starting with those expected to bring the greatest socio-economic benefits. Nevertheless,
care must be taken to manage firmly the process of drafting and revising the TSI.

The need to update the interoperability directives

Several  factors  prompted  the  Commission  to  propose  amendments  to  the  two
interoperability directives:

4

2001/16/EC.

13

                                                
–  in its resolution of 17 May 2000 the European Parliament called on the Commission to
present  proposals  for  revision  of  Directive  96/48/EC  along  the  lines  adopted  for  the
directive on interoperability of the conventional railway system;

–  a number of lessons learned from the work on developing TSI in the high-speed sector
led the Commission to propose amendments to the two interoperability directives;

–  the annexed proposals to establish an agency and adopt a directive on railway safety
mean  that  some  provisions  of  the  two  interoperability  directives  need  to  be
reformulated;

–  the complete opening up of the railway network to freight services implies the need for
interoperability  on  the  whole  network.  It  is  therefore  necessary  to  extend  the
geographical scope.

For  this  reason,  this  package  includes  a  proposal  for  a  directive  amending  Directives
96/48/EC  and  2001/16/EC  and  giving  full  details  of  the  reasons  for  each  individual
amendment.

Proposal No 2

Proposal amending Directives 96/48/EC and 2001/16/EC

1.3. Setting up an effective steering body: the European Railway Agency

1.3.1.  The need for neutral expertise at European level

One feature of the reform of the railways has been redefinition of the roles of the players
on the market and of the public authorities. In the past when national public monopolies
existed  side  by  side  it  was  impossible  to  distinguish  clearly  how  these  responsibilities
were  shared.  In  most  cases  technical  standards  and  safety  regulations  were  set  by  the
railway undertakings themselves.  This posed  no problem  from  the  competition  point  of
view since the markets were not open in any case. At international level, this model gave
rise  to  private  cooperation  between  national  operators  who  laid  down  the  technical
regulations and rules on international traffic jointly within the UIC.

With  the  opening-up  of  rights  of  access  and  the  progressive  establishment  of  a  truly
European rail market, regulation by the public authorities has become necessary to create
equal conditions of competition for all operators on the market. Direct regulation by the
historic  operators  must  therefore  be  replaced  by  regulation  by  the  public  authorities  at
European level, particularly for drafting technical and safety rules.

Naturally, rules of this kind cannot be conceived and drafted without direct participation
by experts from the industry. A new balance will therefore have to be struck ensuring not
only representative participation by the industry in drafting European rules but also that
these rules fit into the Community legal system and are adopted by the public authorities
within that framework.

14

In  response  to  this  new  demand,  the  public  authorities  must  be  given  the  means  to
perform this regulatory task in a balanced dialogue with the industry. In order to achieve
this, the first step must be to put an end to one major imbalance in terms of expertise: at
the  moment  there  is  no  public  centre  of  technical  expertise  at  European  level  while  in
many Member States the Ministry of Transport or regulatory agencies do not always have
the resources to conduct technical talks with the industry on equal terms.

For  this  reason  the  Commission  proposes  creating  a  centre  of  technical  expertise  on
railways at European level in the form of an agency.

In  particular,  the  specialisation  and  expertise  required  are  arguments  against  direct
involvement by the Commission. The White Paper on European governance5 served as a
reminder  that  the  Commission  must  concentrate  on  the  tasks  conferred  on  it  by  the
Treaties and avoid having to assign resources to over-technical tasks.

It  therefore  became  clear  that  the  most  appropriate  instrument  for  performing  these
technical tasks with experts from the industry would be an agency. This solution had been
under  consideration  since  19966  and  was  recommended  again  in  NERA's  study  for  the
Commission  on  railway  safety7.  This  approach  was  confirmed  by  the  September  2001
White Paper on "European transport policy for 2010: time to decide"8 which opted for the
principle of a Community structure.

1.3.2.  An agency to serve all players

The  Community  spends  approximately  € 2 600 million  a  year  on  financing  railway
projects (TEN, Cohesion Fund, Structural Funds, ISPA, Research Programme, etc). The
Agency's  estimated  annual  budget  is  equivalent  to  less  than  0.6%  of  this  total  and  will
allow far more efficient use of the Community resources by ensuring the interoperability
of the projects funded and allowing a common approach to safety.

The proposed railway agency will have no autonomous decision-making powers. It will
provide technical support for decision-making and act as an advisory body.

In order to draft the texts provided for by the directive on rail safety and to steer the work
on  interoperability,  the  public  authorities  need  a  technical  body  to  prepare  and  support
decision-making. The Agency will therefore be responsible for steering and coordinating
all  these  tasks  and  for  maintaining  contacts  on  technical  matters  with  the  relevant
professional bodies.

The figure below shows how the Agency's primary technical support function fits into the
decision-making process.

5

6

7

8

COM(2001) 428, 25 July 2001.
Commission White Paper "A strategy for revitalising the Community's railways" (COM (96) 421
final).
NERA final report "Safety regulations and standards for European railways" (February 2000).
COM(2001) 370.

15

                                                
The procedure  is  the  same  for  all  recommendations  made  by  the  Agency:  the  technical
parts will be prepared and drafted by  groups of  experts from organisations representing
the industry, such as the AEIF for the work on interoperability today. These groups will
be  steered  and  coordinated  by  the  Agency.  The  drafts  will  be  submitted  to  the
Commission for approval  following  the  procedure  laid  down  by  the  relevant  directives,
i.e. with the approval of a committee of representatives of the Member States.

In  this  role  of  supporting  decision-making  the  Agency  will  have  to  consult  the  social
partners  through  the  existing  channels  for  social  dialogue  and  will  have  to  consult
representatives of railway customers.

The  Agency's  second  function  is  to  advise  on  matters  relating  to  rail  safety  and
interoperability.  Primarily  this  entails  giving  the  Commission  and  the  Member  States
technical advice within the committee set up by the interoperability and safety directives.

Directive 2001/14/EC calls on the Member States to set up regulatory bodies to monitor
the conditions for access to the market in particular. In addition, the committee set up by
Directive  2001/14/EC  could  be  asked  to  give  an  opinion  on  cases  concerning  rights  of
access to infrastructure. Safety or interoperability issues could arise in the cases drawn to
the attention of these regulatory bodies or of  this committee when  players from  several
Member States are involved.

It is therefore essential to be able to ask for a neutral technical opinion in such cases. The
national authorities will be able to ask the Agency for an independent technical opinion.

Finally,  the  Agency  must  be  at  the  hub  of  a  network  for  gradually  building  up  greater
mutual  knowledge  of  the  national  railway  systems,  making  it  possible  to  build  up
confidence  and  dynamic  working  relations  between  all  concerned.  In  order  to  achieve
this, the Agency will, for example, be responsible for organising cooperation between the
national  safety  authorities  or  between  the  notified  bodies  designated  under  the
interoperability directives.

The Agency will therefore serve all players in this sector, whether institutions or on the
market. In all its tasks, the Agency must take full account of the enlargement process and
of rail links with third countries. The Agency will also be open to participation by non-
EU European countries.

Proposal No 3

Proposal for a regulation establishing a European Railway Safety and Interoperability
Agency

1.4. Clarifying the role of the Community in OTIF

The Intergovernmental Organisation for International Carriage by Rail (OTIF) has as its
members  all  the  Member  States  of  the  Union,  all  the  candidate  countries  which  have
railways  and  some  countries  in  Africa  and  Asia  (40  countries  in  all).  The  instrument
applied by OTIF is the Convention concerning  International Carriage by Rail, signed in

16

Bern on  9 May 1980 and  amended  by the  Vilnius  Protocol  signed  in  Vilnius  on  3  June
1999.

The Convention, as amended by the Vilnius Protocol, covers:

–  Uniform rules concerning the international carriage of passengers by rail (CIV), a field
in  which  the  Community  has  not  yet  taken  action  but  intends  to  do  so  to  reinforce
passengers' rights, as it has done already in the case of air transport;

–  Uniform rules concerning the international carriage of goods by rail (CIM), a field in
which  the  Community  has  not  yet  taken  action  but  intends  to  do  so  to  promote  the
quality of rail freight services;

–  Regulation concerning the international carriage of dangerous  goods  by  rail  (RID), a
field  in  which  the  Community  has  incorporated  the  results  of  the  work  done  by  the
OTIF into the Community legislation (cf. Directive 96/49);

–  Uniform  rules  concerning  contracts  of  use  of  vehicles  in  international  rail  traffic

(CUV);

–  Uniform  rules  concerning  the  contract  for  use  of  infrastructure  in  international  rail
traffic (CUI): this field is partly covered by Directive 2001/14 which contains rules on
relations  between  the  infrastructure  manager  and  the  railway  undertakings;  the
Community intends to go far further than provided for in the CUI;

–  Uniform  rules  concerning  the  validation  of  technical  standards  and  the  adoption  of
uniform technical prescriptions applicable to  railway  material  intended  to  be  used  in
international traffic (APTU) and uniform rules concerning the technical admission of
railway material used in international traffic (ATMF): these fields are now covered by
rail  system)  and  2001/16
Directives  96/48 
(interoperability  of  conventional  rail)  and  can  be  considered 
the  exclusive
responsibility of the Community.

(interoperability  of  high-speed 

The Vilnius Protocol is open for ratification, but no Member State has ratified it to date.

Community  competence  in  the  railway  sector  has  evolved  considerably  since  the
signature  of  the  Vilnius  Protocol,  as  the  Council  and  the  European  Parliament  have
adopted  the  railway  "infrastructure  package"  (Directives  2001/12/EC,  2001/13/EC  and
2001/14/EC)  and  Directive  2001/16  on  the  interoperability  of  the  conventional  rail
system.  A  number  of  areas  in  these  fields  are  now  the  exclusive  responsibility  of  the
Community, particularly matters concerning railway interoperability.

Consequently, the Member States can no longer ratify the Vilnius Protocol on their own
outside the framework of the Community institutions now that some of the provisions fall
within  the  Community's  exclusive  responsibility.  To  allow  ratification  of  the  Vilnius
Protocol, it is therefore essential that the Community accede to this protocol.

17

To add to the interest of accession to the OTIF by the Community, a large number of the
remaining members of the OTIF will be joining the Community in the near future.

Article 38  of  the  1999  Protocol  provides  that  accession  to  the  Convention  is  open  to
regional  economic  integration  organisations,  an  explicit  reference  to  the  Community.
This directly raises the question of the Community becoming a party to the Convention
and  to  the  organisation  that  administers  it.  The  question  was  clearly  posed  in
communication  COM(1999)617  presenting  the  proposal  for  a  directive  on 
the
interoperability  of  the  conventional  rail  system,  which  has  now  become  Directive
2001/16.  This  stated  that:  "The  Commission  will  study  the  case  for  Community
membership of the Central Office for International Carriage by Rail (OTIF) and present
its position in 2001".

The  Commission  recommends  that  the  Community  accede  to  the  COTIF  and  OTIF  in
order to exercise its exclusive powers in the railway sector and to coordinate the Member
States' positions more closely in the areas for which they share responsibility.

Proposal No 4

Commission  recommendation  for  a  Council  Decision  authorising  the  Commission  to
negotiate the conditions for Community accession to the COTIF

1.5. Completing the internal market in rail freight services

The  proposal  is  to  bring  forward  the  timetable  for  opening  the  rail  freight  market,  for
reasons  which  have  become  far  clearer  since  adoption  of  the  infrastructure  package
opened up the market for international freight services only, sending a clear signal on this
emerging  market.  The  White  Paper  "European  transport  policy  for  2010:  time  to
decide"  adopted  by  the  Commission  on  12 September  20019  sheds  light  the  present
shortcomings as well as the potentialities for rail.

This  fits  also  into  the  context  created  by  the  clear  and  urgent  request  made  to  the
Commission  by  the  European  Parliament,  during  the  conciliation  procedure  with  the
Council,  to  propose  opening  the  freight  market  without  restrictions  to  build  on  the
measures already taken to open it in a number of Member States.

Potential operators and investors cannot understand why restrictions still prevent wagons
from  taking  on  loads,  a  situation  which  cannot  fail  to  put  rail  at  a  competitive
disadvantage over road. Innovative, encouraging schemes in a number of Member States,
where new rail operators of all sizes are appearing, must be allowed to develop without
economically unfounded legal restrictions in order to instil confidence in all stakeholders,
particularly  consignors,  who  expect  this  opening  of  the  market  to  improve  quality  of
service and take greater account of their requirements. It is also important for Candidate

9

COM(2001) 370. See, in particular, the action programme (p. 105) and Chapter I.B "Revitalising
the railways".

18

                                                
countries to take the suppression of these barriers into account, in order to maintain their
present modal shift for rail freight, that is already threaten by road transport.

All these arguments are discussed in greater depth below.

1.5.1.  The freight market and the rail freight sector in the EU

Quantitative  data  illustrate  the  particularly  dynamic  development  of  freight  activities  in
Europe and the poor performance of rail freight. In the 1990s, freight transport in Europe
was  growing  significantly  faster  (ca.  3%  per  year)  than  GDP  (ca.  2  %  per  year)  hence
underlining  the  high  freight  mobility  intensity  of  economic  growth.  In  1999,  transport
demand  was  2970  billion  tkm  or  on  average  about  20  tkm  per  person  and  day.  Since
1970,  this  corresponds  to  a  growth  of  121%.  Rail  freight  could  not  participate  in  this
transport  boom.  Its  modal  share  dropped  from  21%  in  1970  to  8%  in  1999  and  even
absolute transport volumes decreased over this period (see graph). At the same time, road
haulage  increased  its  share  from  31%  to  44%  reflecting  its  relative  strong  competitive
position on the market.

1400

1200

1000

800

600

400

200

m
k
-
e
n
n
o
t
n
o
i
l
l
i

m
0
0
0
1

0

1965

Development of EU freight market in
absolute transport volumes per mode
1970-1998

1970

1975

1980

1985

1990

1995

2000

Year
Source: (EUROSTAT & ICAO)

Road

Rail

Inland Waterways

Pipelines

Sea (intra-EU)

Air

The decrease of rail freight transport volumes goes hand in hand with a reduction of the
length of the rail network in the Community by ca. 10% since 1970. Also the number of
private sidings and terminals in Europe is in sharp decline (5% per annum), with the rate
in  the  EU  consistently  exceeding  the  European  average10.  Many  customers  abandon
existing  private  sidings  or  do  not  construct  them  when  setting  up  a  new  plant  due  to

10

Symonds Group (2001), A study of single wagonload rail traffic, commissioned by the European
Commission Directorate-General for Energy and Transport.

19

 
 
                                                
relatively  high  construction  and  maintenance  cost  as  well  as  land  use  legislation  often
lacking any requirement to set up the plants near railway infrastructure.

Up to the year 2010, the Commission expects an increase of the goods transport volume
in  the  EU  by  38%  in  a  business  as  usual  scenario  without  taking  any  specific  policy
measures.  The  volume  of  road  haulage  would  rise  by  50%  whereas  rail  freight  would
perform much lower growth (13%) which would result in a modal share of 7%. Against
the  background  of  an  enlarged  Community  and  further  globalisation  it  is  important  to
underline  that  international  traffic  will  continue  to  grow  in  significance  in  the  years
ahead.

Such  a  development  would  clearly  threaten  the  efficiency  of  the  European  transport
system,  as  congestion  effects  would  aggravate  due  to  serious  infrastructure  capacity
constraints.  In  the  same  vein,  the  trend  of  the  “all  road”  runs  counter  the  objective  of
sustainable mobility as the contribution from road transport to environmental degradation
is  the  highest  of  all  modes.  As  the  2001  White  Paper  has  clearly  pointed  out,  modal
contributions to freight transport must be more balanced than in the past. Modes whose
potential is not being fully exploited (such as rail freight) should be put in a position to
absorb a higher share of future transport growth. For this to happen rail freight in Europe
has to increase its competitiveness.

1.5.2.  Opening of domestic rail freight markets including the possibility of cabotage to
stimulate competition and innovation

The completion of an integrated market for  rail freight services remains a major aim  of
the Community’s transport policy. The possibility to enter the rail freight market should
lead to a more efficient and competitive industry, that is closer to the customer. It should
attract  new  capital  and  enterprises,  and  stimulate  the  development  of  new  services
responding  to  the  requirements  of  the  customers.  This  is  necessary  if  the  continuing
decline  in  the  railways'  modal  share  is  to  be  stopped  and  their  financial  situation  to
improve.

In the case of rail transport, the application of the principle of freedom to provide services
implies  rights  of  access  for  individual  railway  undertakings  to  the  EU  rail  network.
Directive  91/440  took  a  first  step  in  this  direction  by  establishing  rights  of  access  for
individual  railway  undertakings  operating  international  combined  transport  services.
Directive 2001/12, part of the first railway package, extended these rights to all types of
international rail freight network, albeit confined to a specified trans-European rail freight
network  for  a  transitional  period  until  2008.  In  fact,  the  rights  of  access  set  down  in
Directive  2001/12  represent  the  culmination  of  a  long  debate  stretching  back  to  a  1995
Commission proposal for the liberalisation of both international and domestic freight and
for  international  passenger  services.  Directive  2001/12  was  as  far  as  the  Council  was
prepared to go in the context of the railway package as  a whole and  as  the basis for  an
overall compromise at that time.

Be  that  as  it  may,  there  nevertheless  remains  a  pressing  need  to  apply  single  market
disciplines  right  across  the  railway  market.  The  need  is  particularly  acute  in  the  rail

20

freight sector which, by virtue of continuing restrictions on market entry, is hampered by
the lack of effective spurs to improvement in performance which competition, or merely
the threat of it, are typically able to  provide. Moreover, protectionism renders rail freight
unable  to  compete  effectively  with  other  modes,  especially  road,  which  are  no  longer
constrained by territorial  considerations. The next  step,  therefore,  is  to  facilitate  greater
parity  of  competition  with  road  haulage,  where  the  artificial  distinction  between
international, cabotage and domestic hauls has effectively disappeared. Accordingly, we
propose the opening up of all domestic and cabotage rail freight markets. The need to act
is given added urgency by the conclusions of the Lisbon European Council of June 2000
that liberalisation of sectors such as transport should be speeded up. In addition, there are
increasing  calls  not  only  from  rail  freight  customers,  but  from  railway  undertakings
themselves, for full implementation of the right to provide rail freight services.

Access to rail freight networks for domestic services by railway undertakings other than
the national operators is already possible in a number of Member States such as Austria,
Italy, Germany, the Netherlands, Sweden and the UK, on the basis of national law.  The
experience with the effects of market opening on competitiveness and service innovation
are generally positive. There are good reasons for this:

(cid:1)  The liberalisation of access for both international and domestic services is necessary to

allow operators to offer comprehensive services with full logistic support;

(cid:1)  Competition for international and domestic services will provide incentives to improve

the quality of the services;

(cid:1)  The opening of domestic markets would promote the emergence of short line operators
with a local base and provide incentives to improve the performance of feeder services
to increase, for instance, the viability of (European) wagonload services;

(cid:1)  The  possibility  of  cabotage  would  increase  the  scope  for  increasing  the  wagon  load
factor  through  a  reduction  of  empty  backhauls.  This  would  help  the  railway
undertakings to increase the efficiency of wagon use.

Hence, the Commission proposes that all railway undertakings established and licensed in
the  European  Union  will  be  granted  access  to  the  railway  network  for  domestic  and
international  rail  freight  services  from  the  date  of  implementation  of  this  Directive  on.
The concept of limiting access for international rail freight services to the trans-European
rail  freight  network  (TERFN),  introduced  in  Directive  2001/12/EC  as  a  transitional
arrangement until 2008 at the latest, will be repealed.

Proposal No 5

Proposal amending Directive 91/440/EC to open up access to the infrastructure
for national services in order to open up the rail freight market completely

21

List  of  measures  announced  in  the  White  Paper  "European  transport  policy  for
2010: time to decide"11 and proposed in this package:

Proposal No 1

Proposal for a directive of the European Parliament and of the Council
on railway safety

Proposal No 2

Proposal for a directive of the European Parliament and of the Council
amending Directives 96/48/EC and 2001/16/EC

Proposal No 3

Proposal for a regulation of the European Parliament and of the Council
establishing a European Railway Safety and Interoperability Agency

Proposal No 4

Recommendation for a Council Decision authorising the Commission to
negotiate  the  conditions  for  Community  accession  to  the  Convention
concerning  International  Carriage  by  Rail  (COTIF)  of  9  May 1980,  as
amended by the Vilnius Protocol of 3 June 1999

Proposal No 5

Proposal for a directive of the European Parliament and of the Council
amending Directive 91/440/EC

Proposal
annexed

Proposal
annexed

Proposal
annexed

Proposal
annexed

Proposal
annexed

11

COM(2001) 370.

22

                                                
2.  WAYS  TO  MAKE  THE  RAILWAY  MARKET  MORE  DYNAMIC  AND  IMPROVE  QUALITY:
FUTURE ACTION

2.1.  Conditions for success for rail freight

The foregoing analysis of the rail freight situation and the further details set out
in  Annex  1.1  point  to  the  need  for  further  action  to  make  this  sector  truly
dynamic. Quality is the key to attaining the desired shift of the balance between
modes. The legislative measures proposed in Part 1 are the essential conditions
for creating the framework needed for developing rail freight. However, they are
not enough and must be backed up by a series of legislative and other measures
already announced in the White Paper "European transport policy for 2010: time
to  decide"12  and  discussed  in  further  detail  here  to  open  a  dialogue  with  all
concerned.

2.1.1.  Ensuring high-quality rail freight services

According  to  customer  surveys13  one  of  the  most  important  reasons  for
customers’  dissatisfaction  with  rail  freight  services  is  the  mediocre  and  still
worsening  service  quality,  especially  for  international  services.  The  average
commercial speed of international rail freight services, punctuality and reliability
of service are far from satisfactory. The operators of combined transport report a
dramatic  deterioration  of  the  punctuality  of  combined  transport  trains  over  the
last few years (see table x) causing significant costs to railway undertakings due
to  claims  from  unsatisfied  customers,  inefficient  asset  utilisation  and  profit  on
lost turnover.

The  importance  of  high-quality  rail  freight  services  for  improving  the  environmental
performance of freight transport, in particular in mountainous regions

Rail  freight  transport  has  to  contribute  more  than  hitherto  to  easing  the  environmental
pressures  of  road  transport,  particularly  in  sensitive  areas  such  as  mountainous  regions
(e.g.  Alps  and  Pyrenees).  The  eco-point  system  for  road  haulage  crossing  the  Austrian
Alps is trying to cap environmental impacts on the Austrian Alpine valleys. This scheme
will expire in 2003. Therefore, alternative measures to marry the needs for environmental
protection  of  mountainous  areas  with  the  traffic  needs  of  an  efficient  transport  system
will have to be found.

The  Community  already  supports,  in  the  framework  of  the  trans-European  network
policy, the development of major new rail infrastructure across the Alps (Mont-Cenis and
Brenner tunnels). However, the size and the cost of the projects are very high and it is of

12

13

COM(2001) 370.
See, for instance, Symonds Group (2001), A study on single wagonload rail traffic, p. 95 et seq.

23

                                                
vital  importance  that  rail  operators  are  able  to  draw  maximum  benefit  from  this  future
infrastructure to make them profitable. Moreover, these projects will be  completed only
in the long  term.  It is therefore  necessary  to  improve  the  existing  infrastructure  (by  the
removal  of  bottlenecks  on  the  lines  crossing  the  Alps  and  on  their  accesses)  as  well  as
quality of services on these axes to make rail more attractive against road.

Both the Alps and Pyrenees present a natural barrier between important economic regions
of Europe, which witness strong traffic growth. Combined rail transport through the Alps
accounts for 25% of total traffic; for the Pyrenees, the figure is much lower, around 5%.
These  figures  show  that  road  transport  still  has  a  prominent  part  in  this  traffic.  On  the
other hand, the traffic flows crossing these mountains lend themselves well to combined
transport. The overwhelming part is long-distance transport, and consists of manufactured
or  semi-manufactured  goods.  As  there  are  only  a  few  passes  through  the  mountains,
traffic  tends  to  be  concentrated  naturally,  and  thus  offers  good  opportunity  for  block
trains and shuttles.

It is now time that the service quality of rail improves so that it can make full use of its
competitive and environmental advantages to take traffic from road.

The  quality  problem  is  particularly  acute  on  certain  corridors  such  as  the  North-South
Alpine  crossing  between  Germany,  Austria  and  Italy  where  the  lack  of  locomotives
frequently causes huge delays at the border. The appalling performance of rail freight has
serious repercussions on the other transport sectors and thus on environmental impacts of
transport  activities  in  Alpine  regions.  As  road  haulage  generally  takes  over  the  goods
transport  lost  by  rail,  Alpine  countries  such  as  Austria,  France  and  Switzerland  suffer
increasingly from air pollution and noise emissions from road transport. These countries
claim  urgent  and  effective  measures  for  reducing  the  number  of  trucks  crossing  their
territory and for shifting freight from road to other more environmentally friendly modes
such as rail.

A  study14  commissioned  by  UIRR,  the  international  association  of  combined  transport,
and  co-financed  by  the  Commission  under  its  PACT  programme  analysed  the  quality
problems  of  rail-based  combined  transport  on  8  major  European  transport  corridors
taking  into  account  more  than  18 000  annual  train  movements.  The  study  highlighted
clearly that 2/3 of the punctuality problems are caused by malfunctioning rail operations.
The report issued a number of recommendations at structural level, at institutional level
and at operational/procedural level. The major recommendation on structural measures is
to  open  rail  freight  markets  in  order  to  promote  competition.  The  Commission  fully
shares this conclusion. The policy advocated by the Commission of charging for the use
of  transport  infrastructure,  on  the  basis  of  the  “user  pays”  principle,  can  only  be  fully
effective, if there is a competitive alternative to road transport through the Alps. In order
to  fulfil  the  expectations,  adequate  rail  infrastructure  capacity  has  to  be  ensured,
investment  in  appropriate  rolling  stock  has  to  be  made  and  most  important  of  all  the

14

UIRR (2000), A Quality Strategy  for  Combined  Transport  –  The  beginning  of  a  transformation,
Final report, 21 November.

24

                                                
quality  of  rail  services  has  to  be  improved  swiftly.  Wider  introduction  of  piggyback
services  (Rollende  Landstraße)  can  be  seen  as  a  quick  solution  to  Alpine  transport
problems;  however,  it  does  not  constitute  a  strategy  to  stimulate  modal  shift  for  long-
distance  traffic.  On  the  contrary,  it  tends  to  add  to  the  attraction  of  long-distance  road
haulage.

The Commission proposes a number of measures to address the issues of environmental
impacts  of  goods  transport  and  modal  shift  in  mountainous  regions  and  in  particular  in
Austria as announced in the report from the Commission on the transit of goods by road
through Austria (COM(2000) 862, paragraph 1.6.3):

A European approach to securing a high level of quality for rail freight services in

-
Europe is explained in more detail in this chapter.

-
The  Commission  intends  to  present  a  Framework  Directive  on  transport
infrastructure  charging  including  the  pricing  for  environmental  effects  of  transport
activities for all transport modes.

-
In  the  context  of  the  trans-European  transport  network  policy,  the  Commission
has decided to intensify its support for the development of cross-border rail infrastructure
in areas characterised by natural barriers.

-
The Commission has launched a large-scale thematic network “Alpnet” within the
fifth framework programme for R&D activities and will, after conclusion of this exercise
at  the  end  of  2002,  make  full  use  of  the  knowledge  gained  to  encourage  further  rail
transport in and through the mountains.

-
The  Marco  Polo  programme,  which  should  be  operational  by  2003,  will  give
important  support  to  all  suitable  actions  in  the  market  improving  the  quality  and
performance of rail transport in these sensitive areas.

Punctuality of UIRR trains compared to programmed arrival time 1999 – 2001 (in %)

Trains on time

Trains delayed

Trains delayed

Trains delayed

Delayed 
<0.5 h

60

48

42

1999

2000

2001 
semester)

(1st

Source: UIRR (2001)

by

by > 0.5 h

by > 3 h

by > 24 h

40

52

58

17

28

32

3

5

7

25

One major reason for the low quality performance is the lack of responsibility of any one
railway  undertaking  for  the  good  execution  of  the  entire  international  service  in  the
traditional  cooperation  mode.  Various  quality  initiatives  by  the  railways15  have  shown
that rigorous quality management on specific corridors can improve quality significantly.
However,  railway  undertakings  have  not  generally  applied  such  quality  management  to
all  international  services.  The  objective  for  railways  must  be  to  regain  an  image  as  a
reliable,  high-quality  service  in  order  to  compete  successfully  and  to  absorb  a  higher
share of expected future growth on the freight transport market.

The  Commission  expects  that  the  complete  opening  of  rail  freight  markets  and  the
ensuing  increase  of  competition  will  provide  the  necessary  incentives  to  railway
undertakings to improve the quality of their services. However, market opening is likely
to  show  tangible  effects  only  in  the  medium  term,  as  the  rise  of  competition  will  be
gradual. In the short term, specific measures to improve service quality must be taken in
order to re-establish the confidence of customers in rail freight services. The Rail Market
Monitoring Scheme set up by Directive 2001/12 will closely monitor the development of
service  quality  on  the  European  rail  freight  markets  on  the  basis  of  a  number  of  key
indicators.

The Commission proposes three specific measures to address the quality issue.

(i)
The Commission intends to propose an amendment of Directive 2001/14 in order
to enable authorised  applicants other than  railway undertakings  to  apply for  train  paths.
An  authorised  applicant  in  rail  freight  could  be,  for  instance,  a  shipper  or  a  forwarder
with an interest to use the rail mode to transport significant and, over time, fairly stable
cargo  volumes.  If  the  shipper  cannot  find  an  offer  from  a  railway  undertaking  on  the
market  place  satisfying  his  needs,  he  himself  might  apply  for  a  train  path.  This  would
enable him to design and organise a service, for which he would subcontract the traction
to  a  railway  undertaking.  The  provision  of  authorised  applicants  in  the  regulatory
framework would significantly strengthen the position of rail freight customers vis-à-vis
the railway undertakings and thus contribute to improving service quality.

(ii)
The  Commission  expects  the  European  rail  industry  to  undertake  a  number  of
voluntary  measures  to  improve  the  incentive  structure  for  service  quality.  In  particular,
the  European  railway  undertakings  should  undertake  systematically  to  include  service
quality  commitments  in  their  contracts  with  customers  in  a  fair  and  non-discriminatory
way.  Based  on  a  common  understanding  between  railway  undertakings  and  customers
such  quality  criteria  shall  include,  for  instance,  regular  and  reliable  service,  market
conform  arrival  and  departure  time,  punctuality,  transparent  invoicing,  etc.  (for  railway
undertakings)  and  timely  presentation  of  wagons  and  cargo  to  the  take-over  point,  etc.
(for customers). Performance regimes between  cooperating railway undertakings  should
provide effective incentives for ensuring high quality and making all partners responsible
for  those  risks  under  their  control.  Furthermore,  European  railway  undertakings  should

15

For instance, the UIC quality project SAPPI Gmbh in 1999 and various national projects.

26

                                                
undertake  voluntary  action  to  improve  their  operational  procedures  especially  for
international services in a joint effort with their customers.

(iii)
Complementarily, the Commission intends  to  propose  a  Regulation  that  will  lay
down  the  terms  of  compensation  in  case  of  non-compliance  with  contractual  service
requirements.  This  legal  act  will  provide  effective  incentives  to  both  parties,  railway
undertaking  and  customer,  for  ensuring  a  high  level  of  service  quality.  Such  incentives
will be defined according to common principles. They should be financial in the form of
a  compensation  scheme  or  a  “bonus/malus”  performance  scheme  with  appropriate
sharing of risk and reward, avoiding rewards for simply doing what was contracted. The
incentives  should  apply  to  the  whole  product  rather  than  to  just  parts  and  they  should
embrace risks that are controllable by the railways and the customers respectively.

The elements of a future European approach to service quality in rail freight are discussed
further in Annex 1.2.

2.1.2.  Overcoming entry barriers to pan-European rail freight services

The  past  experience  with  attempts  by  railway  undertakings  to  enter  the  market  for  rail
freight  services,  either  at  national  level  or  at  international  level,  has  shown  that  new
entrants, including existing operators outside their country of origin, face a multitude of
entry  barriers.  Especially  newcomers  have  to  spend  a  considerable  amount  of  time  and
resources  to  overcome  such  hurdles  before  they  can  start  providing  services.  Here  is  a
typical example: each railway undertaking needs traction for its wagons, but newcomers
will have difficulties to obtain the traction they need, as there are only a few, very small
second-hand  markets  or  markets  for  leasing  locomotives.  If  they  get  a  locomotive,  the
locomotive driver cannot cross borders routinely as national regulations  governing their
training  curricula  and  examination  conditions  are  different.  The  locomotive  has  to  be
equipped with an automatic train protection system (ATP) to obtain the safety certificate.
However,  ATP  systems  usually  all  differ  from  country  to  country  and  it  is  difficult,
especially  for  a  small  railway  undertaking,  to  buy  and  to  fit  such  a  system  to  its
locomotives  as  there  are  no  second-hand  markets.  In  addition,  monopolistic  suppliers
charge very high prices and have long delivery times.

Once  operational  and  after  having  received  a  train  path  the  railway  undertaking  also
needs access to service facilities to get, for instance, traction current, diesel fuel, access to
stations and to shunting services as well as maintenance and repair services. Often there
is  a  risk  that  the  independent  railway  undertaking  does  not  obtain  the  service  for  a
competitive price or not on the same conditions as the national rail operator.

A further challenge for railway undertakings that want to carry out international services
can  be  the  customs  transit  procedures.  National  railway  undertakings  have  been  taking
advantage of a specific simplified transit procedure. This procedure provides among other
facilities for the waiver of guarantee and of transit-related border formalities that ease the
provision of international services significantly. However, the conditions that have to be
complied with to qualify for the simplified procedure (e.g. the requirement to carry goods
in each country by a separate railway undertaking, to break down transport costs for each

27

of the countries whose territory is entered during a given transport operation and to hold
records  for  inspection  by  customs  in  a  central  accounting  centre  to  be  set  up  by  the
railway  undertaking  in  each  country)  cannot  be  fulfilled,  or  only  under  economically
unreasonable conditions, by independent railway undertakings or for transport operations
under  open  access  conditions.  Thus  these  conditions  are  hindering  the  development  of
open European rail freight markets and impeding competition.

In order to reduce market entry barriers, the Commission proposed three concrete actions:

i) 

ii) 

iii) 

the  same 

Swift,  coordinated  implementation  of  the  European  Rail  Transport  Management
System  ERTMS  will  be  instrumental  in  overcoming  the  entry  problem  with
national ATP systems. The ERTMS command and control system will be able to
fulfil 
the  national  ATP  systems.  Coordinated
implementation would also have the advantage of reducing the costs of backward
compatibility with existing national command and control systems. Therefore, the
Commission,  in  cooperation  with  the  Interoperability  Committee,  intends  to
ensure coherent national ERTMS deployment plans for conventional rail systems.

functions  as 

The Commission considers that non-discriminatory  access to service facilities is
vital to foster competition on rail freight markets. Regulatory bodies will have to
play a decisive role in this. In order to enable national regulatory bodies to fulfil
this role, the Commission intends to make a proposal to amend Directive 2001/14
to  reinforce  the  powers  of  rail  regulators  with  respect  to  ensuring  non-
discriminatory access to services and service facilities.

The  Commission  intends  to  make  proposals  in  2002  for  defining  the  conditions
under  which  all  railway  undertakings  can  benefit  from  simplifications  of  the
Community  customs  transit  procedure  in  a  transparent  and  non-discriminatory
manner taking due account of the liberalised regulatory framework for European
rail freight. This would also foster the competitiveness of transit traffic by rail in
particular through Switzerland.

Entry barriers and measures to overcome them are discussed in more detail in Annex 1.3.

2.1.3.  Developing the infrastructure for efficient European rail freight services

Inefficient use, lacking interoperability, low priority for freight in train path allocation as
well  as  technical  and  physical  insufficiencies  are  major  stumbling  blocks  to  the
development  of  European  rail  freight.  In  order  to  promote  swift  penetration  of
interoperability  specifications,  the  Commission  will  establish  a  link  with  Community
financial  support  to  trans-European  rail  infrastructure  projects,  i.e.  introduce  an
interoperability  condition  for  Community  funding.  Rail  infrastructure  managers  have  to
cooperate  internationally  in  order  to  ensure  better  utilisation  of  existing  infrastructure.
Instrumental in that would be better harmonisation of (slow and fast) traffic flows when
allocating  international  and  national  train  paths  while  attributing  due  importance  to
international  freight.  In  order  to  optimise  the  network,  the  concept  of  a  European  core
network  for  high-quality  rail  freight  services  should  be  further  developed.  The  concept

28

envisages using the existing infrastructure but attempting to separate where possible the
different  types  of  traffic,  mainly  according  to  speed,  and  to  give  priority  to  freight  on
certain major axes. Upward harmonisation of key quality parameters such as train length,
loading  gauge  and  axle  load,  in  the  framework  of  the  interoperability  process,  would
allow a significant improvement of service economics and performance.

The  Europeanisation  of  rail  freight  services  increases  the  needs  of  competitive  railway
undertakings  and  infrastructure  managers  for  efficient  data  exchange  and  information
systems (e.g. for fleet management, timetabling, tracking and tracing, customer relations,
etc.). Although there are national information systems, problems arise when it comes to
international  traffic.  The  protocols  defining  the  data  format  and  the  network  interfaces
generally  do  not  match.  In  order  to  address  the  technical  aspects  of  interoperable
information systems the Commission has mandated AEIF swiftly to develop the technical
specifications  for  a  European  rail  data  exchange  system  in  the  framework  of  the
interoperability process for conventional rail systems. Turning to the operational aspect,
the  Commission  encourages  the  enterprise  sector  (e.g.  railway  undertakings,  logistics
integrators,  or  forwarders)  to  take  the  initiative  to  set  up  a  commercially  managed  data
exchange  platform  once  the  technical  specifications  for  freight  telematics  applications
become available. For implementation of such a concept fostering intermodal transfer, the
industry could request Community support under the future Marco Polo programme.

Annex  1.4  provides  further  details  on  the  measures  envisaged  to  improve  the
infrastructure for European rail freight.

2.1.4.  Improving the environmental performance of rail freight to foster its contribution
to sustainable mobility

Rail is a relatively environmentally friendly mode of transport. However, rail freight must
improve  its  performance  in  terms  of  noise  emissions  and  diesel  engine  emissions  if  it
does  not  want  to  fall  behind  other  modes  such  as  road  haulage  that  recently  have  been
making  significant  progress  in  their  environmental  performance.  Noisy  freight  wagons
that wake up urban dwellers when passing through the city at night and smoking diesel
locomotives are at  the  centre of criticism  from  a  European  population  that  is  becoming
more and more aware of environmental issues.

The Commission intends to address the noise issue for new freight rolling stock through
ambitious  noise  limit  values  set  in  the  framework  of  the  interoperability  process.  The
Commission  also  intends  to  take  account  of  cost  effectiveness  when  working  towards
such  values.  In  order  to  exploit  the  potential  for  reducing  atmospheric  emissions  from
diesel locomotives, the Commission will propose to amend Directive 97/68 on emissions
from  internal  combustion  engines  to  include  (light  duty)  rail  diesel  engines  and  to  set
cost-effective  but  bold  emission  limit  values.  Emissions  from  heavy-duty  diesel  rail
engines  will  be  tackled  through  limit  values  within  the  interoperability  process  for
conventional  rail.  Member  States  are  encouraged  to  combine  the  limit  value  approach
defining a minimum abatement level with an economic instrument such as an emission-
based infrastructure charge in order to reach higher levels of abatement if desired.

29

However,  it  is  essential  for  an  effective  policy  on  rail  freight  noise  to  act  also  on  the
existing  fleet  especially  as  the  investment  cycles  for  rail  rolling  stock  are  particularly
long. The Commission will enter into a dialogue with the industry to assess cost-effective
options  including  voluntary  measures  by  the  industry  for  rolling  stock  noise  abatement
(e.g.  through  retrofitting  with  less  noisy  composite  brake  blocks)  and  the  reduction  of
atmospheric emissions from diesel rail engines (e.g. through retrofitting or ex-post engine
optimisation).

The  environmental  measures  for  European  rail  freight  are  discussed  in  more  detail  in
Annex 1.5.

2.2.  Developing high-quality international passenger services

Active  provision  of  high-quality  passenger  services  will  be  one  of  the  best  means  to
achieve  a  modal  transfer  from car  and  plane towards  train  services  and  to  contribute  to
the  objectives  of  the  common  transport  policy  and  the  White  Paper.  To  achieve  this
transfer,  it  will  be  necessary  to  have  a  common  analysis  and  understanding  of  the
problems  which  occur  in  the  provision  of  passenger  services,  and  to  develop  and
implement measures to address these problems and to solve them. For the Commission,
this  is  not  a  new  problem.  As  a  matter  of  fact,  the  Commission  has  received  and  still
continues to receive many complaints and requests from individual citizens and interest
groups to address the problems in this sector and to draft proposals aimed at improving
the current service  levels. The  complaints  and  suggestions  vary,  but  mostly  address  the
punctuality of services; the availability of information on fares, timetables and delays; the
accessibility of trains for persons with reduced mobility (PRMs) or for persons travelling
with  their  bikes.  Healthy  and  secure  travel  conditions  as  well  as  security  and  safety  in
trains  and  on  stations  are  frequently  mentioned  in  complaints  addressed  to  the
Commission.  Finally,  complaint  handling  procedures  for  insufficient  service  levels  or
unfair contracts as well as the lack of involvement of the users in consultation procedures
concerning  timetables  and  opening  or  closures  of  services  or  entire  lines  have  been
quoted by different user organisations.

This  leads  the  Commission  to  consider  two  aspects  to  improve  the  situation.  First,  the
introduction  of  regulated  competition  for  both  national  and  international  passenger
services  and,  second,  the  affirmation  of  passenger  rights.  A  detailed  description  of  the
current situation in relation to international passenger services, the Community’s existing
legal framework as well as the new proposals is given in Annex 2 to this communication.
A substantial input to the description of the current situation has been provided by a study
carried  out  by  OGM-consultants  and  a  hearing  for  user  and  passenger  organisations
organised by the Commission in Brussels on 15 October 2001.

2.2.1.  The case for a progressive opening of the market

First of all, the present legal situation allows for access rights for international groupings.
Directive  91/440  gives  access  rights  for  international  groupings  which  provide
international  rail  passenger  transport.  According  to  Directive  95/18,  a  licensed  railway

30

undertaking may request a licence in a Member State and form a grouping with another
licensed railway undertaking or even with an affiliated railway undertaking.

Second,  experience  within  the  Member  States  shows  that  regulated  competition  is
associated with more efficient and attractive passenger rail services. Sweden and the UK,
the  two  States  that  have  made  most  use  of  regulated  competition,  are  also  the  States
where passenger rail traffic has grown most rapidly since the mid-1990s. Other Member
States  that  have  used  regulated  competition  on  a  smaller  scale  for  regional  services  –
including Germany, Portugal and the Netherlands - also report good results.

For  these  reasons,  in  2000  the  Commission  adopted  a  draft  Regulation16  on  public
services in public transport. This states that in almost all cases financial compensation or
exclusive  rights  for  the  operation  of  passenger  rail  services  should  be  awarded  through
regulated competition. This proposal is currently under consideration by the Council and
the  European  Parliament.  Not  only  will  it  lead  to  better  rail  service,  it  will  also
substantially  reduce  the  risk  of  existing  subsidies  and  exclusive  rights  for  rail  operators
being challenged and overturned under the provisions of Community competition law.

The  provisions  of  this  draft  Regulation  apply  to  international  as  well  as  domestic
services. However,  a  study  on  the  development  of  international  rail  passengers  markets
by OGM17 showed that there is a widespread view that international rail services do not
receive financial compensation and are not protected by exclusive rights. This assessment
will need to be revisited following the adoption of the draft Regulation.

In  the  light  of  this  situation,  it  is  appropriate  to  consider  the  options  available  for  a
meaningful opening of the market for international rail passenger services.

The  thorough  assessment  of  the  structure  and  size  of  the  market  for  international
passenger  services,  as made  in  the  OGM  study,  allows  the  identification  of  5  segments
with distinct features and addressing different users. The first segment is made up of the
regional cross-border services for commuting or tourist trips, which do not go beyond 80-
90 km. These services mainly serve citizens living in border areas of one Member State
who  work  in  another.  Long-distance  intercity  services  are  to  be  found  in  the  second
segment. This type of services is, together with the international high-speed services, the
best known, and mainly serves the leisure and business traveller markets. The high-speed
services segment only started with the introduction of dedicated high-speed lines. It is a
segment which has been very successful in achieving a modal transfer. The best example
of  this  can  be  provided  by  the  dramatic  shift  from  air  and  car  travel  to  rail  on  the
Brussels-Paris link. A fourth segment is made up of "regular niches": night trains and car-
sleeper trains, which are of great importance to the leisure market. Finally, the market for

16 

17 

COM(2000)0007 Proposal for a Regulation of the European Parliament and of the Council on action
by  Member  States  concerning  public  service  requirements  and  the  award  of  public  service
contracts in passenger transport by rail, road and inland waterway (presented by the Commission),
OJ C365E, 19 December 2000, p. 169.
OGM  study  on  the  development  of  (international)  rail  passengers  markets  and  policy,  to  be
published in 2002.

31

                                                
occasional  services  should  be  mentioned,  which  consists  of  seasonal  services  to
wintersport areas or coastal resorts.

Besides the possibilities for market opening offered by the existing Directive 91/440 and
the Regulation on public service obligations, additional measures for enhancement of rail
passenger services would be more efficient once the regulatory structures foreseen by the
infrastructure  package  directives18  are  implemented.  Such  enhancement  could  be
achieved through the following steps:

–  The first step consists of full opening of the market for regular niches, such as  night
trains  and  car  sleepers,  with  the  possibility  for  cabotage,  as  well  as  the  occasional
services.  The  Paris-Vienna  night  service  for  example  has  many  domestic  travellers
without whom this service could not be run on a profitable basis. This market segment
is very limited: less than 20% of all international services are night services, many of
which  do  not  allow  domestic  passengers.  Private  operators  who  hire  staff  and
equipment  for  the  service  from  the  incumbent  operator  already  carry  out  occasional
services;

–  A  second  step  to  further  market  opening  is  the  full  opening  of  all  international
services, including long-distance and high-speed services, without cabotage. The high-
speed  services  between  Brussels,  Paris  and  London  are  a  good  example  of  this
segment: the proportion of domestic passengers on these services is extremely small;

–  The last step of the market opening process could then be full opening of the market
for all international services with the possibility for cabotage - at least in cases where
this would not undermine the effectiveness of exclusive rights awarded following the
regulated competition to be introduced by the Regulation on public services in public
transport.

The  question  of  the  availability  of  and  fair  access  to  rolling  stock  for  new  operators
should  also  be  examined  in  further  measures  to  be  considered  for  ensuring  fair  market
access.  The  Commission  will  examine  further  all  these  issues  with  a  view  to  making
proposals as appropriate.

2.2.2.  Improving passenger rights

As  announced  in  the  White  Paper,  the  Commission  intends  to  propose  in  2003  a
Regulation  on  passenger  rights  which  would  include  provisions  on  fair  terms  and
conditions  of  contracts  and  their  transparency;  consumer  consultation;  complaint
handling and out-of-court dispute settlement, as well as compensation and assistance for
delays,  cancellations,  missed  connections  and  seat  reservations  not  being  honoured.
Improved availability of information in  electronic  form  on fares,  tickets,  timetables and
services will be addressed as well.

18 

Directives 2001/12, 2001/13 and 2001/14 of 26 February 2001, OJ L 75 of 15 March 2001.

32

                                                
In  this  context,  it  will  examine  the  links  between  national  and  international  rail  travel
with  a  view  to  determining  whether  and  to  what  extent  the  rights  of  consumers  in
international  and  national  rail  travel  can  in  practice  be  separated.  The  effects  of  the
proposed Regulation on consumer rights in the candidate countries will also be examined.

The Commission will also examine the case for legislation requiring transport operators
to offer passengers minimum standards of service integration.

The  rail  industry,  notably  the  operators  and  the  manufacturers,  will  be  encouraged  to
improve service levels by providing better information in electronic form on fares, tickets
and timetables. They will also be encouraged to improve quality, safety and security on
international services and at stations by providing safe, comfortable and accessible rolling
stock for these services.

In particular, rail operators will be encouraged to develop a voluntary charter on service
quality covering such issues as punctuality, provision of information in electronic form,
accessibility  for  groups  with  special  needs,  such  as  persons  with  reduced  mobility  or
persons travelling with their bike, and protection of non-smokers.

In  addition, the  Commission  will promote  the setting-up of  a European platform  of  rail
passengers  organisations,  which  would  negotiate  with  and  be  consulted  by  the  railway
undertakings and participate in the establishment of regular customer satisfaction surveys.

(cid:1) (cid:1) (cid:1)

33

List  of  measures  announced  in  the  White  Paper  "European  transport  policy  for
2010: time to decide"19 and proposed in Part 2 "Ways to make the railway market
more dynamic and improve quality: future action"

Measure No 1

The  European  Commission  intends  to  propose  legal  measures  and
suggest  complementary  voluntary  actions  to  provide  a  comprehensive
system of quality incentives.

2002

Measure No 2

Extension of the scope of the term "applicant" in Directive 2001/14/EC
to  allow  greater  numbers  of  players  to  reserve  railway  infrastructure
capacity.

2003/2005

Measure No 3

Amendment  of  Directive  2001/14/EC  to  extend  the  powers  of  the
regulatory bodies provided for in Article 30 of the Directive to services
provided to railway undertakings to ensure non-discriminatory access to
such services.

Measure No 4

Establish a plan for Europe-wide deployment of the traffic management
system (ERTMS).

Measure No 5

The Commission intends to make a proposal for defining the conditions
under which all railway undertakings can benefit from simplifications of
the Community transit procedure in the framework of the revision of the
rail transit procedures.

2002

2002

Measure No 6

The Commission will propose measures to reduce noise emissions from
new freight wagons.

2003/2005

Measure No 7

The  Commission will propose measures  to reduce  emissions  from  new
diesel locomotives.

2003/2005

19

COM(2001) 370.

34

                                                
Measure No 8

The  Commission  will  enter  into  a  dialogue  with  the  industry  to
implement  voluntary  measures  reducing  noise  and  emissions  from  the
existing fleet.

Measure No 9

The  Commission  will  propose  to  open  gradually  the  international
passenger services market.

Measure No 10

2002

The  Commission  will  propose  actively  to  promote  existing  passenger
rights  to  the  public,  and  propose  a  regulation  in  order  to  strengthen
passenger rights.

35

1.  ANNEX 1: LINES OF ACTION TO IMPROVE THE PERFORMANCE OF EUROPEAN RAIL

FREIGHT

1.1. 

Developments and shortcomings in the rail freight market

As  a  result  of  nationally  organised  markets  rail  freight  can  be  described  as  a  very
fragmented  sector  with  often  outdated  operational  techniques  and  incompatible
equipment and, where they exist, largely outdated and incompatible IT systems. It often
fails  to  respond  to  the  needs  of  customers,  and  delivers  services  that  are  often  not
competitive especially in international transport. Railway undertakings are often not able
to  tell  their  customers  the  whereabouts  of  their  consignments  and  services  are
astonishingly unreliable. Rail freight despite some good examples is on the whole not a
benchmark for others. Of course, global figures hide differing performance whether it is
between  different  segments  of  the  rail  market  or  different  companies  operating  in  that
market20.

Wagonload  formed  the  traditional  core  of  rail  freight  traffic.  Wagonload  services  by
railways compete with road haulage for the market of small to medium-sized, high-value
shipments. This freight market segment achieves a particularly dynamic growth rate and
is expected to do so in the future. However, wagonload services are not competitive for
various reasons (e.g. high cost especially for marshalling and delivery services at the end
point of production, unreliability, lack of customer focus, inappropriate rolling stock, lack
of  wagon  positioning  information  for  customers,  etc.).  As  a  consequence,  their  relative
importance  has  declined  considerably,  particularly  over  the  past  four  decades.  Even  as
recently as the late 1980s, wagonload traffic in the EU accounted for nearly  45% of all
rail freight traffic. By the late 1990s, its share had declined to about 35%.

Some  railway  undertakings  are  abandoning  low-volume  customers  and  reducing  the
number of sidings and stations that their wagonload system serves with the objective of
cutting  costs.  A  reduction  of  traffic  volumes  and  of  connected  customer  sidings  has  a
negative  effect  on  the  economics  of  the  system,  hence  on  its  cost  competitiveness.
Clearly, this market segment needs a new European vision to be developed by the market
players  and  better  framework  conditions  to  improve  its  performance  on  the  transport
market.

Combined  transport  was  perceived  by  many  railways  as  a  solution  to  the  traditional
problems of wagonload operations. The tendency was to establish autonomous combined
transport  organisations  within  railway  companies  (frequently  selling  space  on  trains  to
third  parties  for  retail  to  customers).  However,  the  inherent  change  of  mode  adds  extra
costs,  which  cannot  be  recouped  over  short-distance  rail  movements.  Furthermore,  the

20

See,  for  instance,  Observatoire  des  politiques  et  des  stratégies  de  transport  en  Europe  (2001),
Dossier n°2 Le fret ferroviaire en Europe, October.

36

                                                
payloads which can be carried by each unit are less than those which  can be carried by
modern wagons, limiting the suitability of  combined transport solutions for bulk traffic,
particularly for low-value traffic. The greatest success for intermodality has not been in
supplanting wagonload traffic, but in entirely new traffic to and from ports, driven by the
continuing  growth  of  deep-sea  container  traffic.  This  is  growing  at  sustained  high  rates
and is not penalised by a modal transfer to road at the port end.

Trainload operations are  well  suited  to  rail,  and  it  has  been  in  this  sector  of  the  freight
market that rail has performed best over past decades to the extent that it now comprises
almost two-thirds of all rail freight traffic. These services have lower total operating costs
than  equivalent  wagonload  or  intermodal  services,  and  usually  offer  faster  and  more
reliable transit times. It is also this segment where new entrants – in general, independent
railway undertakings - usually try to position themselves.

It is clear that the freight market is not homogenous. Different sectors have substantially
differing requirements with regard for example to price, speed, reliability and punctuality.
The  economics  of  shipment  to  the  final  destination  mean  that  in  the  vast  majority  of
situations at least a part of the journey will be carried out by road. The economics of rail
freight seem to indicate that larger loads over longer distances ought  to show  a relative
advantage for rail freight. However, the level of infrastructure charges affects the ability
of  railway  undertakings  to  compete  with  road  haulage  to  a  great  extent.  With  low
infrastructure charges based on social marginal cost, the break-even point between road
and rail corresponds to a distance of ca. 450 km for a single wagonload in international
traffic.  With  high  infrastructure  charges  covering  full  costs,  break-even  is  around  700
km21.

The ability of the sector to compete in the various market segments will be influenced by
many factors. Effective management and understanding of costs and their drivers, as well
as  measures  to  control  and  reduce  costs  are  primary  requirements  for  competitive  rail
freight services.

Factors that contribute to the poor performance of rail freight:

i) 

21

22

Railway undertakings are often out of tune with customers’ quality requirements
in  terms  of  speed,  reliability  (e.g.  to  ensure  just-in-time  delivery)  and  other
service  characteristics  such  as  additional  value-added  services  (e.g.  packaging,
warehousing,  distribution,  customer  information,  etc.).  For  instance,  punctuality
of  trains  operated  for  combined  transport  on  major  European  corridors  has
deteriorated  dramatically  in  the  last  few  years.  In  1999,  only  60%  of  all  trains
were on time (i.e. they were delayed by less than 30 minutes)22. In the first half of
2001,  the  percentage  of  trains  on  time  dropped  further  to  42%.  The  quality
problem is particularly acute on certain corridors such as the North-South Alpine

Nelldal/Troche/Wajsman  (1999).  How  the  railways  should  solve  Europe’s  transportation
headaches, Centre for Research and Education in Railway Engineering, Stockholm.
Letter dated 29 August 2001 from UIRR to Commissioner Loyola de Palacio.

37

                                                
ii) 

iii) 

iv) 

v) 

23

24

25

crossing  between  Germany,  Austria  and  Italy  where  the  lack  of  locomotives
frequently causes huge delays at the border.

Service  prices  are  often  not  competitive  either  and  vary  significantly  from
operator to operator. Case studies on transport of petrochemical goods comparing
prices between national railway undertakings and new entrants show that prices of
national "flag carriers" can be double those charged by new entrant companies for
the same type of service requiring similar resources23.

Inefficiencies in operation, the use of rolling stock and of infrastructure, are still
an  important  handicap  for  the  railway  sector.  According  to  the  findings  of  a
Community  research  project24,  potential  cost  savings  (i.e.  some  25%  of  total
current costs or 15 billion per year) could be achieved if all players performed as
well as the best. Of this, one third could be allocated to the operation of services
and  two  thirds  to  the  operation  of  the  infrastructure.  Mercer  consultants25
estimated  the  potential  savings  from  better  utilisation  of  rolling  stock  and  staff
including a potential to increase loads per wagon by 30%, to reduce maintenance
costs  per  wagon  by  40%,  to  increase  locomotive  productivity  by  25%  and  to
increase  crew  productivity  by  15%.  Clearly,  some  railway  undertakings  have
made  considerable  efforts  in  recent  years  to  tap  this  potential.  However,  a  long
road still remains ahead to realise the full potential.

There  is  still  very  little  competition  on  national  and  international  rail  freight
markets. Although the  national  legislation  allows  competition  in  some  countries
only  very  few  companies  are  actually  competing  with  the  national  railway
undertakings. Their market share seldom exceeds  a  couple of percentage points.
According to current European legislation, international groupings and combined
transport  operators  could  run  international  services  in  open  access  mode.  Only
very  few  examples  of  such  services  have  materialised.  Due  to  the  low  market
share  of  competitors  to  the  national  rail  carriers  the  market  provides  little
incentive for innovation and productivity increases.

National  railway  companies  or  infrastructure  managers  -  often  at  the  request  of
Member States' governments - have employed priority rules to determine the use
of rail infrastructure. These generally favour passenger over freight services and
vary from country to country. Implications for freight are that rail freight services
are slower, less reliable and make poorer use of capacity. This makes a discussion
at European level desirable  to  render  existing  priority  rules  more  consistent  and
less anti-freight.

IG&H Management Consultants (2001), EPCA rail benchmarking study, 30 October.
Halcrow  Fox  (1999),  Profitability  of  rail  transport  and  adaptability  of  railways  (PRORATA).
Project  funded  by  the  European  Commission  under  the  4th  Framework  Programme  for  transport
research.
Reinhardt M./D. Schneiderbauer/M. Kadar (1998), Levers of Value Creation for Freight Railways,
Mercer on Transport, Volume VI, Number 2.

38

                                                
vi) 

Infrastructure  charges  represent  a  significant  proportion  of  overall  production
costs  for  rail.  The  proportion  depends  on  the  level  of  utilisation  of  the
infrastructure  and  the  type  of  service  but  realistically  can  reach  about  30%.  A
good  understanding  and  the  correct  attribution  of  these  costs  are  essential  to
ensure  that  rational  decisions  are  made  about  the  operation  of  services.  It  is
important that this is carried out in a way that does not price marginal traffic off
the infrastructure.

vii)  Where trains cross from the network of one infrastructure manager to another, or
trains  are  exchanged  between  two  railway  undertakings,  or  control  authorities
(e.g. safety, customs) are involved, then there is likely to be a need for electronic
data  exchange.  These  data  needs  may  increase  as  more  railway  undertakings
perform services, but in any case today’s paper-based systems of data transfer are
not appropriate to the needs of the 21st century and lead to delays and unreliable
services.

viii)  Capacity  constraints  may  constitute  a  threat  to  the  development  of  rail  freight.
Even at modest growth rates the situation will arise where for certain parts of the
rail infrastructure commercially attractive capacity can no longer be found, even
after steps have been taken to rearrange traffic.

ix) 

Rail freight’s competitiveness suffers to some extent from unbalanced intermodal
framework  conditions.  The  absence  of  a  consistent  and  comprehensive
infrastructure  charging  framework  and  non-internalised  external  costs  in  other
sectors such as road haulage leads to a certain distortion of competition between
the modes. Additionally, rail freight is put at a disadvantage by the insufficiently
enforced social legislation in other sectors such as road haulage.

1.2. The alarming deterioration in the performance and quality of rail freight

According to customer surveys26, the competitiveness of European railways suffers from
a number of problems such as uncompetitive prices, unacceptably late fare quotes, lack of
customer orientation and often unavailable information about the whereabouts of wagons
and  cargo.  However,  the  most  important  reason  for  customers’  dissatisfaction  with  rail
freight  services  is  the  mediocre  and  still  worsening  service  quality,  especially  for
international  services.  According  to  estimates  by  the  Symonds  Group  the  average
commercial  speed  of  international  rail  freight  services  on  major  North-South  and  East-
West corridors is typically around 20 km/h in Europe27. The punctuality and reliability of
service are also far from satisfactory.

In 1999, only 60% of all combined transport trains were on time (i.e. they were delayed
by  less  than  30  minutes).  In  the  first  half  of  2001,  the  percentage  of  trains  on  time
dropped  further  to  42%.  The  quality  problem  is  particularly  acute  on  certain  corridors

26

27

See for instance Symonds Group (2001), A study on single wagonload rail traffic, p. 95 et seq.
Symonds Group (2001), A study on single wagonload rail traffic, p. 43.

39

                                                
such as the North-South Alpine crossing between Germany, Austria and  Italy where the
lack of locomotives frequently causes huge delays at the border.

Lacking service quality causes significant cost to the railways. For instance, it has been
estimated that under-performance of rail-based, UIRR-sponsored international combined
transport  operations  caused  a  total  cost  of  €  41  million  in  199928  (including  asset
utilisation  inefficiency,  claims  by  combined  transport  operators  and  profit  on  lost
turnover).29  It  is  sometimes  argued  that  this  situation  is  satisfactory  as  long  as  the
customers have a choice, for instance by turning to a road haulier. From a broader policy
perspective,  however,  this  is  not  acceptable  as  the  poor  performance  by  a  dominant
railway company results in additional burdens on society.

It  is  vital  for  the  future  of  rail  freight  to  take  a  consistent  set  of  measures  to  introduce
incentives  for  high-quality  service  provision  into  the  business  relationships  between
railway  undertakings  and  with  other  market  players  such  as  the  clients  and  the
infrastructure  managers.  For  this  purpose,  the  Commission  proposes  a  comprehensive
European  approach  to  service  quality  in  rail  freight,  which  addresses  railway
undertakings, infrastructure managers and rail freight customers.

Directive  2001/14/EC  requires  establishment  of  performance  regimes  that  make
infrastructure  managers  and  railway  undertakings  responsible  for  the  quality  of  their
services and contribute to efficient utilisation of the rail network. Such incentives have to
be  extended  to  all  providers  of  international  rail  freight  services.  In  the  absence  of  a
sufficient  level  of  competition  such  a  mandatory  scheme  based  on  a  legal  act  would
provide incentives to improve the performance of European rail freight operations. Some
railway undertakings have already agreed to sign performance contracts with their clients
for national services30. However, in many countries this is not yet the case. Only very few
performance contracts for international freight services have been concluded.

Alternatively,  the  Community  could  take  a  compensation  approach  and  determine
through  Community  legislation  the  conditions  and  level  of  compensation  payments  in
case of non-compliance with service obligations.

The  European  Commission 
legal  measures  and  suggest
complementary  voluntary  actions  to  provide  a  comprehensive  system  of  quality
incentives.

to  propose 

intends 

28

29

30

The sum corresponds to some 6% of total international UIRR revenues of around € 650 million.
UIRR/Booz Allen & Hamilton (2000), A quality strategy for combined transport, The beginning
of a transformation, final report, 21 November, p. 40.
Mainly for combined transport operations but also for some big customers.

40

                                                
This European approach to rail freight service quality consists of 5 elements:

1)

Monitoring of rail service quality

The  Rail  Market  Monitoring  Scheme  (RMMS)  will  monitor  implementation  of  this
European  approach to rail freight service quality with the help of  appropriate indicators
that  it  will  collect.  If  this  approach  turns  out  not  to  be  viable,  the  Community  will
legislate in order to establish rail freight service indicators.

2)

Voluntary contractual quality commitments

The  European  railway  companies  undertake  systematically  to  include  service  quality
commitments  in  their  contracts  with  customers  in  a  fair  and  non-discriminatory  way.
Based  on  a  common  understanding  between  railway  undertakings  and  customers
contractual quality criteria shall at least include:

For railway undertakings:

(cid:1)  a well defined schedule for departure and arrival times (obligatory)

(cid:1)  punctuality (obligatory)

(cid:1)  clear responsibility towards the customer for the entire transport chain (obligatory)

(cid:1)  safe and damage-free transport (obligatory)

(cid:1)  providing appropriate and timely information to the customer (obligatory)

(cid:1)  regular and reliable service (obligatory)

(cid:1)  market-conform transport times (optional)

(cid:1)  market-conform arrival and departure time (optional)

(cid:1)  transparent billing (optional)

(cid:1)  adequate and clean rolling stock as well as timely provision of rolling stock (optional)

For customers:
(cid:1)  timely presentation of wagons and cargo to the take-over point (obligatory)

(cid:1)  proper and timely documentation (obligatory)

(cid:1)  earliest notice to railway undertakings of any delays or changes (optional)

(cid:1)  hand-over of cargo in the form and packaging agreed between the parties (optional)

41

3)

Legally binding incentives for ensuring a high level of service quality

The  contractual  commitments  shall  be  complemented  by  legally  binding  incentives  to
both  parties  for  ensuring  a  high  level  of  service  quality.  Such  incentives  should  be
defined  according  to  common  principles.  They  should  be  financial  in  the  form  of  a
compensation scheme or a “bonus/malus” performance scheme with appropriate sharing
of  risk  and  reward,  avoiding  rewards  for  simply  doing  what  was  contracted.  The
incentives  should  apply  to  the  whole  product  rather  than  to  just  parts  and  they  should
embrace  risks  that  are  controllable  by  the  railways  and  the  customers  respectively.  A
the
“bonus/malus”  performance  scheme  shall  be  conceptually  compatible  with 
performance regime between railway undertakings and infrastructure managers that is to
be set up in compliance with Directive 2001/14 in order to assign risk appropriately in a
back to back manner.

4)

Voluntary performance regimes between cooperating railway undertakings

The  European  railway  undertakings  should  commit  themselves  to  put  in  place  a
performance  regime  among  themselves  in  the  case  of  international  rail  freight  services
provided  in  cooperation  mode.  The  system  should  provide  effective  incentives  for
ensuring high quality levels and making all players responsible for those risks under their
control.  This  regime  shall  be  conceptually  compatible  with  the  performance  regime
between  railway  undertakings  and  infrastructure  managers  that  is  to  be  set  up  in
compliance with Directive 2001/14 in order to assign risk appropriately in a back to back
manner.

5)

Improving operational procedures of railway undertakings

The  European  railway  undertakings  should  undertake  voluntary  action  to  improve  their
operating  procedures  for  national  and  international  services  in  a  joint  effort  with  their
customers. These efforts revolve around the following commercial and operational issues:

(cid:1)  Improved planning procedures between railway undertakings and their customers, for
instance  using  common  service  request  templates  and  joint  phased  planning
procedures;

(cid:1)  Clear  and  common  booking  rules  and  procedures  to  address  timing  norms,

overbooking and late acceptance issues;

(cid:1)  Joint planning of diversionary routes when main ones are closed for maintenance;

(cid:1)  Appointing  a  lead  railway  undertaking  as  responsible  for  each  service  provided  in
cooperation so as to provide a clear and accountable interface with the customers.

Reinforcing  the  position  of  rail  freight  customers  through  allowing  authorised
applicants to apply for train paths

An  authorised  applicant  in  rail  freight  could  be,  for  instance,  a  shipper  or  a  forwarder
with an interest to use the rail mode to transport significant and, over time, fairly stable

42

cargo  volumes.  To  do  this  the  shipper  might  choose  to  contract  with  a  rail  freight
operator,  but  if  he  cannot  find  an  offer  on  the  market  place  satisfying  his  needs,  he
himself might apply for a train path and start to design and organise a service, for which
he would subcontract the traction to a railway undertaking.

Authorised applicants imply a customer-oriented shift in influence on the definition of the
transport service from the (traditional) railway undertaking towards the freight customer.
The possibility for a shipper to present its needs both to the infrastructure manager and to
one  or  more  potential  railway  undertakings  is  moreover  important  for  innovation  and
service development. Allowing authorised applicants in the rail freight sector also means
that the customers can act in the same way vis-à-vis all transport modes. If they cannot
find a suitable offer on the market place it is always possible to design and launch tailor-
made  logistic  solutions,  including  everything  from  transport  planning  to  operation  and
ownership of the vehicles.

The  independence  of  essential  infrastructure  management  functions  such  as  train  path
allocation  from  the  business  of  railway  undertakings  constitutes  a  prerequisite  for  the
beneficial  effects of allowing authorised  applicants  on  the  rail  freight market.  It will  be
instrumental in creating a climate of cooperation characterised by mutual trust and long-
term commitment. The Commission will meanwhile monitor closely the effectiveness of
the  existing  sectoral  framework  in  facilitating  fair  and  non-discriminatory  access  to
infrastructure.

Ensuring efficient functioning of the freight wagons market and of their  allocation
rules in international use

Since  the  seventies,  a  large  reduction  of  the  wagon  fleet  has  been  observed  in  the  EU.
During  the  nineties,  rationalisation  of  the  fleet  accelerated  and  in  1997  it  consisted  of
only some 550 000 units compared to 1.5 million in 1970. Approximately one third of the
fleet are privately owned wagons.  In Western Europe, most rail freight wagons in 1995
were in the 16-26 year age category, while Eastern European fleets, which were replaced
with  greater  consistency,  were  6-16  years  old.  Private  wagon  fleets  are  generally  of  a
lower average age than the state-owned fleets. As the average age of wagon is high their
technical characteristics are often out of tune with today’s market requirements.

The  general  characteristics  of  European  freight  operations  are  such  that  wagon  fleet
productivity  is  severely  constrained  and  below  that  reached  by  American  and  Russian
operators.  For  instance,  the  average  for  Europe  of  350  000  net  tonne-km/wagon/year
compares with around 4 million net tonne-km/wagon/year  in  the  USA.  This  reflects,  in
part, the respective average lengths of run, which are 250 km and 1350 km respectively,
but  also  the  technical  constraints  in  Europe  (e.g.  lacking  interoperability,  emphasis  on
mixed  passenger  and  freight  operations).  One  particular  productivity  issue  is  the  empty
running  time  of  wagons.  Almost  50%  of  wagons  on  the  European  network  run  empty
generating  no  sales  revenues  for  the  railways.  There  is  considerable  potential  for
improving cost competitiveness as the costs of freight wagons account for about 20% of
the total production cost of a rail freight company.

43

The  Commission  encourages  the  industry  to  set  up  an  efficient  system  of  wagon
allocation  for  international  use  to  diminish  empty  backhauls.  The  allocation  of  wagons
for  international  use  between  railways  could  be  made  more  efficient  by  using  IT
techniques taking into account empty running charges to get them to the point of use in
order to satisfy demand. This scheme could be complemented by a system of auctions of
rail wagon capacity for backhauls31.

1.3. Overcoming entry barriers to the rail freight market

Any freight train operators who would like to provide European services continue to face
a number of significant market entry barriers.

i) 

ii) 

31

The access to service facilities is a major issue. In some networks for instance, the
traction  current  provided  by  the  national  railway  undertaking  is  much  more
expensive  than  on  the  normal  electricity  market.  Often,  the  traction  current
provider  does  not  provide  for  the  distribution  of  electricity  by  alternative
suppliers. On other networks, access by private railway undertakings to important
facilities  such  as  stations,  shunting  yards  and  parking  tracks  is  sometimes
“reserved”  for  the  national  operators  through  long-term  contracts.  Sometimes,
there  is  no  non-discriminatory  access  to  essential  services  such  as  towing
services.

If  new  rail  operators  want  to  establish  themselves  successfully  on  the  market
against  dominant  national  railway  undertakings  to  enhance  competition  they
clearly  need  some  support  to  face  the  petty  market  entry  barriers.  National
regulatory  bodies  have  an  important  role  in  monitoring  and  assessing  such
structural  barriers  and  in  taking  appropriate  action  to  overcome  them.  In  cases
where  the  competence  of  a  national  regulator  would  not  cover  the  crux  of  the
problem,  for  instance  in  the  case  of  international  services,  it  is  important  that
regulatory  bodies  cooperate  internationally.  Additionally,  the  Commission
proposes to reinforce the powers of the national regulatory bodies with respect to
ensuring non-discriminatory access to services and services facilities.

One  important  barrier  for  starting  up  private  rail  services  is  the  lack  of  a  well
functioning  market  for  traction.  There  are  only  a  few,  very  small  second-hand
markets  or  markets  for  leasing  locomotives.  Some  railway  suppliers  and  rolling
stock  leasing  companies  are  active  on  the  European  market.  If  they  exist,  the
supply  is  often  not  sufficiently  well  developed  to  meet  the  demand.  Different
certification  and  admittance  procedures  in  the  Member  States  create  significant
risks and costs for the rental or leasing company as the rolling stock can, a priori,
only  be  used  on  the  national  network.  The  lease-takers  are  usually  interested  in
short-term  contracts;  however,  the  depreciation  period  is  rarely  below  20  years.

This  could  either  be  accomplished  by  shippers  placing  bids  for  empty  space  on  trains  as  in  a
traditional  auction,  with  a  reserve  price  (i.e.  the  marginal  cost  difference  between  handling  the
traffic and hauling empty trains) or, alternatively, the shippers could offer a price that the railway
undertakings either accept or reject.

44

                                                
Therefore, as the leasing company has to carry the residual risk the leasing rates
are generally so high that they are often not interesting for a new entrant.

To  address  this  problem,  the  Commission  proposes  to  provide  initial  start-up
support  to  all  logistics  operators  who  transfer  transport  volumes  from  road  to
other modes such as rail. A  new  intermodal support programme (“Marco Polo”)
covering the period up to 2010 is going to be proposed soon. In particular, catalyst
action  (i.e.  measures  that  help  overcome  structural  barriers  and  foster  efficient
functioning  of  transport  markets  such  as  the  rail  freight  market)  will  be  eligible
for financial and administrative support by the Commission.

iii) 

Locomotive  drivers  cannot  yet  cross  borders  routinely.  Different  national
regulations  governing  their  training  curricula  and  examination  conditions
constitute a major barrier for those intending to set up competitive, international
services  as  they  need  drivers  who  have  a  licence  for  all  networks  crossed.
Harmonisation  of  drivers'  training  conditions  would  eliminate  one  important
market barrier and foster the creation of an internal market in rail services.

iv) 

v) 

The proposal for a rail safety directive together with swift implementation of the
interoperability directive for conventional rail systems will lead to approximation
of  training  curricula  and  examination  conditions  for  locomotive  drivers.
Additionally, the Commission encourages the industry to set up an open European
locomotive  driver  training  centre.  Such  an  initiative  can  be  promoted  through
support  from  the  EU  social  funds  and  through  the  6th  Community  Framework
Programme for RTD defining innovative methods for European driver training.

Railway  undertakings  providing  open  access  services  abroad  and  private  wagon
owners  currently  face  the  hurdle  of  having  to  return  their  rolling  stock  to  their
home  stations  in  case  of  a  defect  or  a  periodic  overhaul.  Current  rules  do  not
permit repair  or maintenance on  site.  By  contrast,  road  vehicles  can  be  serviced
and  repaired  anywhere  in  Europe.  Such  requirements  raise  the  cost  of  rail
operations  and  contribute  to  diminishing  the  competitiveness  of  rail  services
compared to road haulage. In order to tackle this problem the proposed European
Rail  Agency  will  help  to  promote  mutual  recognition  of  maintenance  workshop
qualifications and a system of workshop certification.

The requirement for small railway undertakings entering the market to install an
automatic  train  protection  (ATP)  system  is  a  great  (and  often  insurmountable)
barrier  and  thus  puts  the  new  entrant  at  a  competitive  disadvantage  against
national  operators.  Problems  have  arisen,  for  instance,  in  Dutch-German  rail
traffic,  in  German-Danish  traffic  and  with  traffic  on  the  Öresund  bridge.  One
common complaint is that ATP systems take an excessive time to obtain and fit.
Prices of such national systems, which are often produced by monopoly suppliers,
are  generally  high  and  vary  enormously  from  country  to  country.  One  of  the
reasons  for  the  monopolistic  supply  situation  is  the  absence  of  second-hand
markets for rolling stock and ATP systems. Swift implementation of ERTMS and

45

the  appearance  of  second-hand  locomotives  equipped  with  ERTMS  are  likely
gradually to solve the problem.

vi) 

Private  railway  undertakings  are  currently  discriminated  against  compared  to
State-owned  railway  undertakings  as  they  have  no  access  to  the  European
Company for the Financing of Railway Rolling Stock (EUROFIMA). The current
State  guarantee  for  the  national  railway  undertakings  gives  them  a  competitive
advantage over private railway undertakings.

Maintaining  simple  customs 
supervising functions for the customs authorities

transit  procedures  while 

fulfilling 

legitimate

National railway undertakings have long  been taking  advantage of  a  specific  simplified
customs  transit  procedure.  This  procedure  provides,  among  other  facilities,  for  waiving
the guarantee and transit-related border  formalities. The simplified  transit  procedure  for
railways was set up at a time when the railway undertakings were public enterprises. In
this  framework  a  number  of  (public)  customs  functions  were  delegated  to  the  railway
undertakings. This enabled them to simplify customs procedures to the mutual benefit of
all  concerned,  rail  undertakings,  exporters  and  customs  authorities  (e.g.  reduced  cost
through  less  staff  for  customs  handling,  higher  commercial  speeds  of  international
services as border stops could be avoided, etc.).

The main conditions which must be met for access to this simplified procedure are:

(cid:1)  keeping records for inspection by customs in a central accounting centre to be set up

by the railway undertaking in each country;

(cid:1)  use of the rail transport document as the customs declaration;

(cid:1)  goods  to  be  carried  in  each  country  by  a  separate  railway  company  which  acts  in
cooperation  with  all  the  other  companies  involved  in  the  transport  operation;
breakdown of transport costs for each of the countries whose territory is entered during
a given transport operation;

(cid:1)  for  all  transit  operations  the  railway  company  must  accept  the  legal  customs

responsibilities which implies, in particular, completion of the formalities.

Since  the  emergence  of  international  services  provided  by  one  sole  rail  operator  under
open  access  conditions,  it  has  become  apparent  that  these  railway  undertakings  cannot
meet the conditions for access to the simplified procedure. Some of the conditions such as
the  obligation  to  cooperate  in  providing  an  international  service  or  to  provide  a
breakdown  of  transport  costs  for  each  of  the  countries  entered  clearly  run  counter  to
Community internal market objectives in the transport sector and competition rules.

Railway undertakings that want to take advantage of the  recent EU rail market opening
have to use at present the standard customs transit procedure, which is open to all modes
of transport. As it does not take account of the special nature of transit operations by rail,
this standard procedure is more costly and involves (in principle) more formalities, even

46

though  the  standard  procedure  also  provides  for  certain  simplifications  (authorised
consignor, authorised consignee, comprehensive guarantee or guarantee waiver), subject
to fulfilling the necessary legal conditions.

The question of simplification of the customs procedure applying to rail transport and of
the conditions of access to the simplified procedures is of vital interest to all rail freight
service  operators  subject  to  a  customs  transit  procedure  in  the  EU.  The  number  of
international (transit) services has increased significantly in the past and is most likely to
continue  to  do  so  in  the  light  of  further  rail  freight  liberalisation.  The  question  is  most
pressing  for  services  between  two  points  in  the  Community  through  Switzerland.  The
cost of the standard transit procedures can constitute a significant cost factor which may
create further burdens for new rail freight services.

For  some  time  it  has  been  felt  that  an  overall  reform  of  the  simplified  procedure  is
necessary taking into account the following:

(cid:1)  the present provisions do not reflect the liberalisation of the rail freight sector;

(cid:1)  the conditions for access to the simplified procedure have not all been published in a

transparent way and should therefore be integrated into the relevant legislation.

In this context, the Commission will formulate staged solutions for modernising the rail
customs 
liberalised  rail  freight  sector  as  many
simplifications of the customs transit procedure as can be reconciled with the legitimate
requirements of customs authorities to control international transport.

transit  procedure  granting 

the 

First, as an intermediate measure the Commission will make a proposal for defining the
conditions  under  which  railway  undertakings  can  take  advantage  of  the  simplified
Community  transit  procedure  in  order  to  increase  the  transparency  of  the  existing
procedural framework.  Second, in  the  short  to  medium  term  the  introduction  of  NCTS,
the electronic data exchange system between customs authorities and transport operators
will  bring  about  a  modern  electronic  procedural  environment  for  all  operators,  to  the
benefit  also  of  the  railway  undertakings.  The  Commission  considers  that  in  about  two
years  NCTS  will  be  implemented  on  a  large  scale  so  that  all  railway  undertakings,
including  those  that  want  to  operate  under  liberalised  market  conditions,  can  enjoy
meaningful  customs  simplifications  on  a  non-discriminatory  basis.  In  order  to  attain  an
equivalent  level  of  simplification,  as  in  the  case  of  the  simplified  transit  procedure  for
rail,  in  2002  the  Commission  will  propose  an  amendment  of  the  Customs  Code  that
would allow for a general guarantee system for transit by rail (including for independent
railway  undertakings).  These  provisions  will  ensure  a  simple,  transparent  and  non-
discriminatory procedural framework that will create no unnecessary barriers for railway
undertakings  in  international  transport  and  that  takes  into  account  the  control
requirements  of  customs  authorities  according  to  EU  rules.  The  Commission  will
endeavour  to  make  the  specifications  for  NCTS  compatible  with  the  future  TSI
“telematics applications for freight” to ensure interoperability in international rail freight
operations.

47

1.4. 

Providing  high-quality  infrastructure  for  a  more  efficient  rail  freight  sector  in

Europe

Developing an efficient European network with rail freight priority enabling a high
level of service quality

Major  stumbling  blocks  to  the  development  of  European  rail  freight  are  inefficient  use
and  technical  and  physical  insufficiencies  of  the  rail  infrastructure.  Incompatibility  of
slow  and  fast  trains  as  well  as  technical  and  operational  differences  between  national
networks in combination with a low priority for freight trains in train path allocation and
daily  train  path  management  limit  the  growth  potential  of  rail  freight  services.
Infrastructure  saturation, for  instance at national  borders,  in  the  vicinity  of  major  urban
and industrial conglomerations and on major freight corridors, worsens the situation.

A  first  step  towards  a  more  efficient  European  rail  freight  network  will  be  to  render  it
gradually  interoperable.  With  each  new  investment  or  upgrading  project  on  the  trans-
European rail network the technical specifications for interoperability (TSI) provided for
by  Directives  96/48  (high-speed  rail  systems)  and  2001/16  (conventional  rail  systems)
should  be  applied.  In  many  cases  Member  States  receive  Community  financial  support
for such projects out of the TEN  budget or other financial  instruments.  Past  experience
has shown, however, that in some cases Member States do not apply the TSI when they
commission new or upgraded rail infrastructure, energy systems or command and control
systems.

In order to promote swift penetration of  interoperability  specifications,  the  Commission
therefore  has  to  ensure  a  link  with  Community  financial  support  to  trans-European  rail
infrastructure  projects,  i.e.  introduce  an  interoperability  condition  for  Community
transport  funding.  This  link  has  to  be  more  clearly  affirmed  in  all  the  financial
instruments of the Community.

Secondly,  infrastructure  managers  should  cooperate  internationally  in  order  to  work
together  for  better  utilisation  of  existing  infrastructure.  This  could  be  achieved,  for
instance,  through  better  harmonisation  of  (slow  and  fast)  traffic  flows  when  allocating
international  and  national  train  paths  while  attributing  due  importance  to  international
freight.

Thirdly,  if  rail  freight  is  to  play  a  more  prominent  role  in  the  future  to  render  the
European  transport  system  more  efficient  and  to  contribute  to  sustainable  mobility,
operation  of  the  rail  freight  network  must  be  redesigned  to  allow  attractive  and  high-
quality services at European level.

Working towards a pan-European rail information exchange system

Data  exchange  and  information  systems  are  the  Achilles  heel  of  international  freight
services.  The  data  exchange  needs  of  modern  railways  are  significant.  They  include
information  related  to  the  operation/production  of  the  service  (e.g.  train  planning,  fleet
management,  timetabling),  location/status  reporting  and  commercial  applications  (e.g.
consignment notes, bookings by the customer, invoicing, etc.).

48

National information systems cover these functions more or less. Problems arise when it
comes  to  international  traffic.  The  protocols  defining  the  data  format  and  the  network
interfaces  generally  do  not  match.  International  systems  based  on  UIC  leaflets  and  the
existing  cross-border  transmission  networks  such  as  Hermes  Plus  and  HOSA  could
theoretically provide a framework for achieving data interoperability for cross-border rail
freight  services.  However,  most  national  railway  operators  have  not  adhered  to  these
systems, often considered too costly, and have preferred to set up bilateral arrangements.
In  addition,  private  operators  and  third-party  service  providers  have  no  access  to  these
networks  and  have  now  built  their  own  systems  (e.g.  the  combined  transport  operators
work  with  the  CESAR  system).  The  emergence  of  new  market  entrants  is  unlikely  to
increase the acceptance of UIC-based systems.

However,  the  need  for  interoperable,  open  exchange  systems  for  operational  data  and
customer  information  is  vital  for  the  competitiveness  of  European  rail  freight.  Among
other things they would allow:

(cid:1)  A rapid European rate/tariff quotation system;

(cid:1)  Improved  IT  links  between  railway  undertakings  to  facilitate  transfer  of  wagons  or
trains  between  cooperating  operators,  including  paperless  transfer  of  consignment
information and better consignment status information;

(cid:1)  An integrated European daily train planning and timetabling system to operate freight

services flexibly on a wide scale.

Outside  Europe,  the  US  data  exchange  system  sets  standards  providing  real-time
information  from  a  central  database  via  electronic  data  exchange  and  the  Internet.
RAILINC,  a  stand-alone  organisation  (a  former  wholly  owned  subsidiary  of  the
Association  of  American  Railroads)  manages  this  process  to  the  satisfaction  of  the
stakeholders 
fleet
owners/managers). Railway undertakings pay a charge to RAILINC for the data transfer
services, whereas the information is generally provided free of charge to rail customers.
The American example shows that data exchange can be a viable business if the players
on the market take a common commercial approach.

(railway  undertakings,  customers,  customs, 

regulators  and 

Although Europeans can learn a lot from the US experience, the European approach must
be based on the existing infrastructure and the specific framework conditions in Europe
(e.g.  division  into  national  networks,  separation  of  essential  functions  from  train
operation, etc.). Ideally, the future system should build on the existing national systems to
optimise  investment,  defining  the  interface  specifications  and  providing  a  European
superstructure for storing, processing and exchanging the data.

In  September  2001  the  Commission  mandated  AEIF  swiftly  to  develop  the  technical
specifications for a European rail data exchange system in the framework of the TSI for
freight telematics subsystem of Directive 2001/16/EC (interoperability of trans-European
conventional rail systems). This TSI describing mandatory procedures,  message  format,
data  type  and  data  capturing  means  of  the  system  should  draw  as  much  as  possible  on

49

existing standards and best practice. The TSI for  freight telematics could be adopted by
2004.

The Commission  encourages the  enterprise  sector (e.g. logistics  integrators,  forwarders,
railway undertakings, etc.) to  take the initiative  to set  up a commercially  managed data
exchange  platform  once  the  TSI  for  freight  telematics  becomes  available.  A  high-level
consensus-finding  conference  would  be  instrumental  in  this  respect.  Although  currently
industry seems to be reluctant to launch itself into this venture, the Commission expects
that the opening of the rail freight market proposed in this railway package will trigger a
process of converging the business strategies of European railway undertakings towards
real  cooperation.  Then  there  will  be  sufficient  economic  incentives  to  set  up  a
commercial European data exchange platform either by railway stakeholders or by other
parties such as logistics integrators.

For  implementation  of  such  a  concept  fostering  intermodal  transfer,  the  industry  could
request Community support under the Marco Polo programme.

1.5. Improving the environmental performance of rail freight services

Rail  is  a  relatively  environmentally  friendly  mode  of  transport.  Studies  on  the  external
costs  of  transport  modes32  underline  this  statement.  One  major  advantage  of  rail  with
respect  to  energy  consumption  is  its  low  rolling  resistance  compared  to  road  transport.
This translates into a relatively favourable energy efficiency record. Thus, for instance, in
1999, the energy intensity of rail freight in the EU was on average ca. 0.03 koe per tonne-
km compared with 0.05 – 0.11 koe per tonne-km for trucks33.

However,  the  railways  have  done  little  in  recent  times  to  sustain  this  position  in  the
future. The performance of rail freight in terms of noise emissions, energy efficiency and
diesel emissions  is hardly  improving, also due to the  long investment  cycles  for  rolling
stock (25 to 40 years). This is worrying especially knowing the load factor of rail freight
wagons  is  low  (ca.  50%  of  wagons  run  empty).  Other  modes  such  as  road  haulage  are
making  significant  progress  in  their  environmental  performance.  Trucks  are  becoming
quieter,  more  energy  efficient  and  cleaner  thanks  to  stricter  emission  standards.  Hence,
there  is  a  serious  risk  that  the  railways  could  lose  the  environmental  bonus  that
constitutes one of their advantages.

1.5.1.  Railway noise

The  most significant  source of noise  from  rail  rolling  stock  is  the  rolling  noise,  i.e.  the
noise created by the wheel-rail interaction. This concerns, of course, both passenger and
freight services, but the problem is much more acute in the case of freight. The iron brake

32

33

For  instance,  INFRAS/IWW  (2000),  External  costs  of  transport  (accident,  environmental  and
congestion costs) in western Europe, March or TRL Ltd (2001), A study on the cost of transport in
the EU in order to estimate and assess the marginal costs of the use of transport, commissioned by
the European Commission, Directorate-General for Energy and Transport.
TERM 2001 indicators on transport and environment.

50

                                                
blocks of freight wagons scratch the surface of the wheels, which aggravates the rolling
noise. The continuous use of these iron brake blocks could lead to operating restrictions
(e.g.  during  the  night)  imposed  by  national  authorities  to  protect  the  population  against
sleep disturbances and other health impacts of noise. Therefore, there is a serious risk that
international  rail  freight  traffic  could  be  hampered  by  national  measures  and  that  the
railways could lose further competitiveness against road haulage.

Today modern  brake  blocks  based  on  composite  materials  (e.g.  K-block  and  LL-block)
can reduce the  noise  emissions  by  8dBA  to  10dBA.  Railway  undertakings  consider  the
equipment of new freight wagons with K blocks and the retrofitting of  existing  wagons
with  LL  blocks  as  cost-effective.  New  freight  wagons  equipped  with  K-blocks  are
currently being purchased  by  some  national  railway  companies.  However,  the  technical
development of LL blocks seems to be encountering problems. Retrofitting with K blocks
is deemed too expensive by the industry. Beside this technical problem a major challenge
to  the  environmental  record  of  rail  is  the  critical  noise  performance  of  wagons  from
accession  countries  that  circulate  freely  on  the  Community  networks.  Any  meaningful
rolling  stock  noise  abatement  strategy  has  to  include  those  wagons.  The  UIC  has
estimated that out of the existing ca. 1 million freight wagons in Europe 700 000 would
need retrofitting.

The Commission undertook a study to investigate cost-effective railway noise abatement
measures34.  The  project  recommends  a  set  of  actions  such  as  defining  limit  values  for
new  rolling  stock,  a  voluntary  agreement  on  retrofitting  brakeblocks  for  the  existing
wagon  fleet  and  the  introduction  of  an  emission-based  track  access  charge  to  provide
incentives for investment.

In September 2001 the Commission mandated the AEIF to develop TSI that define cost-
effective but ambitious noise emission limit values for new rolling stock and appropriate
maintenance rules to tackle the noise problem in the framework of the implementation of
Directive 2001/16/EC (interoperability of trans-European conventional rail systems). The
working  group  on  railway  noise  set  up  in  the  framework  of  the  Commission’s  new
approach to noise policy will assist the AEIF in this endeavour.

Acting  on  the  existing  fleet  the  Commission  will  enter  into  a  dialogue  with  industrial
players  to  assess  cost-effective  options,  including  voluntary  measures  by  industry  for
noise  abatement  in  the  existing  rail  wagon  fleet  and  specific  measures  for  the  rolling
stock in accession countries.

1.5.2.  Atmospheric emissions from diesel train engines

At local or regional level emissions from diesel train engines can constitute a significant
nuisance  as  diesel  locomotives  ensure  ca.  13%  of  all  rail  traction  in  Europe.  Modern
diesel  engine  technology  for  trucks  and  non-road  mobile  machinery  brought  about  a

34

Ødegaard&Danneskiold-Samsø  A/S  (2001),  A  study  of  European  priorities  and  strategies  for
railway noise abatement, Study for the European Commission, Directorate-General for Energy and
Transport.

51

                                                
significant  improvement  in  particulate  emissions,  CO,  HC  and  NOx  emissions.  The
technology  is  available  for  both  modes.  The  basic  problem  of  the  poor  performance  of
rail in this respect is the long service life of diesel locomotives (30 to 40 years) compared
with  trucks  (10  to  15  years)  which  slows  down  the  spread  of  new  technologies  in  the
fleet.  Therefore,  the  Commission's  approach  must  be  twofold,  addressing  new  rolling
stock as well as the existing stock.

On new locomotives:

The Commission proposes to revise Directive 97/68 on measures against the emission of
gaseous  and  particulate  pollutants  from  internal  combustion  engines  to  be  installed  in
non-road mobile machinery in order to include (light-duty) diesel train engines and to set
cost-effective but ambitious emission limit values.

In 2002 the Commission intends to mandate AEIF to develop technical specifications for
interoperability  for  the  rolling  stock  subsystem  defining  cost-effective  limit  values  for
heavy-duty diesel engines.

On existing locomotives:

The Commission will enter into a dialogue with industrial players to assess cost-effective
options including  voluntary measures by  industry  to  improve  the  emission  performance
of  existing  diesel  locomotives,  for  instance  through  retrofitting  or  ex-post  engine
optimisation.

52

2.  ANNEX 2: SITUATION WITH INTERNATIONAL RAIL PASSENGER SERVICES

This  annex  is  based  on  a  study  of  the  market  for  international  rail  passenger  transport,
which  assessed35  the  supply  and  demand  in  the  market.  The  different  markets  for  rail
passengers will be described with respect to their current developments and potential.

2.1. The existing Community legal framework

An international rail passenger service is defined as a service which crosses at least one
internal EU border.

The limitations and opportunities of international groupings
It seems that the access rights according to Directive 91/440 have hardly been used.36 In
practice,  international  rail  passenger  services  within  the  EU  are  carried  out  by  railway
undertakings cooperating on the basis of their existing domestic market access rights. The
limitations of the “international grouping” as a means of fostering the freedom to provide
rail  transport  services  was  acknowledged  in  the  Commission’s  1996  White  Paper  A
Strategy  for  Revitalising  the  Community’s  Railways:  “the  effectiveness  of  the  access
rights created by Directive 91/440 has been limited by …the condition of belonging to an
international group.” It seems clear, for the short term at least,  that most  intending new
entrants  to  the  international  passenger  market  will  be  dependent  upon  an  incumbent  in
order to access the network. This is hardly satisfactory.

However, in that connection, it should be borne in mind that the concept of “international
grouping”  is  not  confined,  as  some  parties  have  maintained,  to  the  type  of  joint
arrangement  typically  engaged  in  by  the  incumbent  operators.  On  the  contrary,  it  is
settled  case  law  that  “international  grouping”  is  capable  of  very  wide  interpretation
indeed.  In  European  Night  Services  Ltd37,  the  Court  found  (paragraph  182  of  the
decision) that the definition of international grouping in Article 3 of Directive 91/440:

“…does not lay down any specific mandatory form…The essential feature which
is clear from that definition is merely that it must be a form of association under
which  the  provision  of  international  transport  services  is  possible.  The  Court
therefore considers that, failing a precise definition…use of the term…cannot be
confined to “cooperative associations” among railway companies (“traditional
joint  operation  agreements”),  to  the  exclusion  of  any  other  form  such  as  a
cooperative, or even concentrative, joint venture.”

35

36

37

OGM study, 2001
COM(1998) 202 on the implementation of Directive 91/440.
Joined cases T-374/94, T-375/94, T-384/94 and T-388/94.

53

                                                
It should also be underlined that the fact of belonging to an “international grouping” does
not confer any anti-trust immunity whatsoever.

Public service obligations and exclusive rights

Exclusive rights can protect an operator from competition from one  type  of competitor,
while permitting competition from others.

Today, any exclusive rights for the provision of rail passenger services must take a form
that permits international groupings to seek to enter the market and must be treated on a
non-discriminatory basis. ‘Grandfather rights’ used in the capacity allocation process do
not  exist.  Infrastructure  managers  may  conclude  framework  agreements  with  railway
undertakings  to  give  some  multi-annual  guarantees  on  capacity.  However,  these
framework  agreements  cannot  have  an  exclusive  nature  and  therefore  imply  that  a  new
grouping may always have a possibility to enter the market and reserve capacity, even if
current capacity seems to be fully used.

On  international  rail  passenger  services,  cabotage  is  allowed  only  for  railway
undertakings having domestic market access.

According  to  Regulation  1191/6938  –  as  amended  by  Regulation  1893/9139  -  public
service contracts must be concluded for international rail passenger services if financial
compensation  for  public  service  obligations  is  paid.  The  Commission  has  submitted  a
proposal40  to  replace  this  Regulation,  according  to  which  these  public  service  contracts
can only be awarded – with limited exceptions - following tendering.

People  need  rail  services  that  cross  administrative  boundaries.  To  achieve  this,
neighbouring  authorities  need  to  cooperate.  Within  a  Member  State,  if  competent
authorities  fail  to  cooperate,  national  authorities  can  take  remedial  action  to  protect  the
interests  of  passengers.  The  same  does  not  apply  for  regional  services  that  cross
international  borders.  Therefore,  the  draft  Regulation  on  public  services  in  public
transport  has  a  specific  provision  to  make  it  easier  to  develop  cross-border  regional
services.

Exclusive  rights  for  passenger  rail  services  can  be  granted  in  ways  that  still  allow  a
limited amount  of competition from  open  access  services.  This is already the  case  with
respect to “91/440” services (no exclusive right can protect an operator from competition
from such services).

38

39

40

Regulation 1191/69 of 26 June 1969, OJ L 156, 28 June 1969, p. 1.
Regulation 1893/91 of 20 June 1991, OJ L 169, 29 June 1991, p. 1.
COM(2000)0007 Proposal for a Regulation of the European Parliament and of the Council on action
by  Member  States  concerning  public  service  requirements  and  the  award  of  public  service
contracts in passenger transport by rail, road and inland waterway (presented by the Commission),
OJ C 365E, 19 December 2000, p. 169.

54

                                                
2.2. Current market situation for international rail passenger services

It  is  estimated  that  approximately  5%  of  the  turnover  of  the  railway  undertakings  is
generated  by  international  rail  passenger  services,  which  account  for  approximately
€ 1.3 billion41.

The  rail  market  must  function  and  develop  in  an  environment  which  is  not  always
favourable  to  this  mode  of  transport.  Though  rail  transport  continues  to  receive  a
considerable  amount  of  State  aid  for  domestic  services  (see  table  at  the  end  of  this
section),  it  is  at  a  competitive  disadvantage  compared  to  other  modes  due  to  external
reasons,  such  as  unequal  infrastructure  charging  levels  between  rail,  air  and  road
transport and the fact that important external costs of road are not allocated to the users.
VAT  is  not  levied  for  international  air  services,  whereas  VAT  for  rail  services  varies
between 0 and 16%, as the latter are not harmonised. There are no kerosene fuel taxes for
air  services.  It  should  also  be  remembered  that  the  liberalisation  of  aviation  has  led  to
low-cost carriers on routes traditionally served by rail.

Moreover, public authorities have difficulties in cooperating on the international services
to conclude international public service contracts for cross-border rail services. A sign of
this  is  the  small  number  of  public  service  contracts  concluded  for  these  services.  The
same  problems  occur  within  Member  States  where  regional  public  authorities  have  to
cooperate on concluding such public service contracts.

For  international  rail  passenger  services,  5  major  market  segments  can  be  identified,
though it was not possible to determine precise market shares:

(1) 

Regional cross-border services

Regional  cross-border  services  usually  serve  commuters  working  in  one  Member  State
but living in another. Roughly, these services consist of international trips not exceeding
80 kilometres, and they often have a domestic function as well. Examples can notably be
found in Luxembourg (commuters from France, Belgium and Germany) or in the south-
eastern part of the Netherlands (commuters to and from Germany and Belgium).

For  these  services,  there  is  obviously  a  potential  market  as  the  number  of  cross-border
workers  has  increased  considerably.  It  is  now  estimated  that  approximately  2.5  million
Europeans commute to another Member State. However, in the (recent) past, many lines
allowing these services have been closed down, and it seems that the lack of cooperation
between public authorities on both sides of the border is part of the explanation. Replies
to  a  questionnaire  on  public  services  in  rail  transport  sent  by  the  Commission  to  the
Member States reveal that only in very few cases was a public service contract concluded
for cross-border services as these services are usually not profitable. In one case42 public

41

42

According to data provided over 1999 by the UIC, the turnover of incumbent railway undertakings
for rail passengers totals € 24.878 million, with no data available from DK, IRL and L.
Groningen – Leer service between The Netherlands and Germany.

55

                                                
authorities tried to tender such a service but failed to let the service start because of a lack
of consensus between the two public authorities on financing the service.

(2) 

International long-distance services

Long-distance services are probably the best known international rail passenger services.
Examples  are  Paris–Madrid  or  Amsterdam–Milan.  For  distances  from  300  kilometres,
train services can compete on price and speed with air and road travel, which represents
an  enormous  potential  that  can  be  exploited,  if  the  negative  effects  of  borders  can  be
overcome. These services have an important domestic component as well.

(3) 

International high-speed services

These services are relatively new and often use new dedicated high-speed lines, such as
the  Paris–Brussels,  Paris-London  and  Brussels–London  services.  These  services  are
currently operated by Thalys and Eurostar, joint ventures of railway undertakings sharing
mainly  marketing  facilities  (international  groupings  as  defined  by  Directive  91/440).
Trains  and  rolling  stock  are  still  owned  and  controlled  by  the  participating  railway
undertakings SNCF, SNCB and Eurostar UK. Thalys has managed to win a 53% modal
share  between  Brussels  and  Paris  and  is  currently  offering  Air  France  customers  the
possibility to start their flight from Paris-CdG at Brussels Midi station by means of code-
sharing. The business market is important for the profitability of this segment and  yield
management on fares is widely applied.

(4) 

Niche services, night trains, car trains

These are regular services that serve a very special part of the market. Night trains can be
good value for passengers wanting to arrive in the morning in city centres. Car trains are
of great value for longer distances, e.g. to tourists as well as people with reduced mobility
who need their own car. Not all these services run all year round.

Night services have been in a difficult position for years but recent efforts show that if set
up and marketed well these services have good growth potential.43

(5)  Occasional services

Occasional services are services that are not run all year round with the same times and
schedules.  These  services  have  value  for  tourists  or  are  used  for  incentive  travellers.
Travel  agencies  have  traditionally  been  involved  in  such  transport  by  taking  the
commercial  risks  for  hiring  complete  trains  from  railway  undertakings  and  selling  the
tickets on their own account. This market has become smaller, largely due to competition
with,  for  example,  air  transport.  However  there  are  signals  that  in  specific  parts  of  the
market there is still demand for occasional travel.

43

The  OGM-study  showed  10%  yearly  growth  in  the  DB  night  services  market  since  DB
restructured  its  services.  Recently  DB  extended  its  initiative  to  Austria  and  Switzerland  in
combination with ÖBB and SBB.

56

                                                
The table below clearly shows the relative importance of the market segments for each of
the targeted groups of travellers.

Market
segments
international
rail
passengers/
Train
products
Commuters
Business
travellers
Leisure
market

Regional
cross-border

Intercity,
long-distance

High-speed
services

Occasional
services

Regular
niches
services:
Night trains
Car trains

***

*
**

**

*
***

**

*

***

***

***: very important; ** important; * less important

2.3. Improving the quality of international passenger services

Both the study as well as the hearing on passenger rights organised by the Commission
showed  significant  underperformance  in  certain  segments  of  the  international  rail
passenger market.

However,  there  is  considerable  evidence  that  international  rail  passenger  services  could
be largely improved. The market for international passenger travel and services in general
can  grow  considerably  because  of  the  increase  on  the  demand  side:  enlargement  of  the
EU; the increasing number of cross-border and other migrant workers;  growing tourism
and the growing number of retired people with sufficient resources and time, who prefer
safe and comfortable travel. The supply side of transport services has been improved by
the  introduction  of  high-speed  services  as  shown  by  the  market  success  of  new
international  high-speed  services  such  as  Thalys  and  Eurostar,  or  the  new  occasional
services  for  incentive  travel  offered  by  GVG.  The  recent  successes  of  new  night  trains
undertaken  by  DB/ÖBB/SBB and  the  success  of  cross-border  public  service  contracts
where  they  are  applied,  e.g.  between  Copenhagen  and  Malmö,  also  indicate  that  the
market structure itself allows an increase in passenger services.

A number of issues seem particularly important to make this mode more attractive:

(a) 

Travel  information  and  booking  (timetables,  preboarding,  real-time
travel information)

During the hearing on rail passenger rights, the lack of good information was the
most frequently quoted problem.  Both passengers and  travel agents  have many
difficulties  in  finding  information  on  timetables,  scheduled  services,  fares  and
fare  structure,  real-time  travel  information  and  service  facilities  offered,  for
example for bikes or for people with reduced  mobility  (PRM).  However,  some

57

railway  undertakings  have  successfully  developed  online  ticketing  systems,
through a multilingual website, and offer free home delivery services.

(b) 

Punctuality of services and compensation in case of delay

Punctuality of services is regarded as low, and for international services there are
indications that it is even lower than for domestic services. On the other hand it
must  be  added  that  recently  the  competing  air  mode  has  also  been  facing
considerable delays.

Railway undertakings do sometimes compensate their passengers for late trains,
but  this  varies  widely  and  the  railway  undertaking  sometimes  put  a  lot  of
constraints on this (e.g. when the delay is beyond its control).

(c) 

Complaint handling

During the hearing, examples of studies were given presenting considerable lack
of  good  responses  to  complaints.  For  rail  travel  especially,  where  passengers
usually have no alternative, this can be regarded as monopolistic misbehaviour.

(d)  Accessibility for persons with reduced mobility (PRM)

Accessibility levels on stations and trains are still insufficient. Sometimes trains
are equipped to allow easy access for PRMs, but stations have no escalators to
move PRMs from one platform to another.

(e) 

Accessibility for bikes

A  study  by  the  European  Cyclists  Federation44  showed  that  the  possibilities  to
transport bikes vary widely within the EU but are, in general, rather limited.

The  Commission  will  table  a  proposal  on  rail  passenger  rights  laying  down  the  basic
consumer  protection  rules  for  international  rail  passenger  services.  The  range  of  topics
that  will  be  addressed  in  this  Regulation  has  been  described  under  section  2.2.2  of  this
communication.

Besides, the railway industry will be encouraged to improve service quality standards and
to develop quality commitments by developing a voluntary charter on service quality (see
section 2.2.2). The interoperability of the services with domestic services and with other
modes should be improved as well. The effectiveness of this quality commitment should
be  one  input  to  the  evaluation  of  the  implementation  of  market  opening  to  assess  the
necessity and feasibility of further opening of the market concerning cabotage services.

44

Bicycle Transport on International Trains, report on the arrangements for the carriage of bicycles
on international long-distance trains, 40 p. + annexes, ECF - UCI, published by ECF, December
1999.

58

                                                
Basic data on State aid (1999), turnover and passenger km per Member State45

Member State

State aids under
Regulation 1191
in million €

Total State aids,
in million €

Passenger
km
(billion)

Turnover by
railway
undertakings on
passengers in
million €

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

UK

UK Northern Ireland

336

476

4504

0

234

1550

102

1567

70

234

641

50

38

64

2399

16

TOTALS

13472,00 €

2119

757

9982

530

1395

6127

180

5389

182

1806

656

100

39

824

2506

16

32608

7.6

5.4

72.8

1.6

19.2

66.5

1.4

41

0.3

14.3

8.1

4.3

3.4

7.4

38.8

483

9187

42

812

4761

1879

1210

503

115

62

642

5182

292.1

24 878

45

Source:Annual questionnaire on State aids (columns 1 and 2), UIC (columns 3 and 4).
Column 1: State aid given according to Regulation 1191/69 – data from EC provided by Member
States.
Colum 2: State aid for rail passenger, rail infrastructure, rail freight  - data from EC provided by
Member States.
Column 3: number of passenger-kilometres per network – data from UIC.
Column 4: amount of incumbent railway undertakings turnover on passenger services – data from
UIC.

59

                                                
ABBREVIATIONS

AEIF: European Association for Railway Interoperability

ATP: Automatic Train Protection

COTIF: Convention concerning International Carriage by Rail of 9 May 1980

ERTMS: European Rail Traffic Management System

ETCS: European Train Control System

OTIF: Intergovernmental Organisation for International Carriage by Rail (see COTIF)

RMMS: European Rail Market Monitoring System

RIV: Regolamento Internazionale Veicoli

TSI: Technical specifications for interoperability

UIC: International Union of Railways

UIRR: International Union of combined Rail-Road Transport Companies

60