COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on "THE FOURTH RAILWAY PACKAGE – COMPLETING THE SINGLE EUROPEAN RAILWAY AREA TO FOSTER EUROPEAN COMPETITIVENESS AND GROWTH"
Date: 2013-01-30
Institutions: European Commission
Subjects: administrative contract, carriage of passengers, competition, intra-EU transport, liberalisation of the market, rail network, trans-European network, transport company, transport infrastructure

EUROPEAN 
COMMISSION 

Brussels, 30.1.2013  
COM(2013) 25 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on 

"THE FOURTH RAILWAY PACKAGE – COMPLETING THE SINGLE 
EUROPEAN RAILWAY AREA TO FOSTER EUROPEAN COMPETITIVENESS 
AND GROWTH" 

(Text with EEA relevance) 

EN 

   EN 

 
 
 
  
 
 
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on 

"THE FOURTH RAILWAY PACKAGE – COMPLETING THE SINGLE 
EUROPEAN RAILWAY AREA TO FOSTER EUROPEAN COMPETITIVENESS 
AND GROWTH" 

(Text with EEA relevance) 

INTRODUCTION  

1. 
The  2011  Transport  White  Paper1  unveiled  a  vision  for  establishing  a  Single  European 
Railway Area (SERA) and set out the Commission's approach to ensuring the competitiveness 
of  EU  transport  in  the  long  term,  while  dealing  with  expected  growth,  fuel  security  and 
decarbonisation.  An  important  aspect  of  the  policy  is  to  enhance  the  role  of  rail,  given  the 
difficulty  of  reducing  oil  dependence  in  other  sectors.  But  this  can  only  be  achieved  if  rail 
provides efficient and attractive services, and if we eliminate regulatory and market failures, 
barriers  to  entry  and  burdensome  administrative  procedures  which  hamper  efficiency  and 
competitiveness. 

The  European  rail  industry  generates  turnover  of  €73bn 2  and  has  800000  employees3.  Each 
year public authorities invest considerable sums in the rail sector. In 2009 this amounted to 
€20bn  in  government  payments  for  public  service  obligations  (PSOs)  and  €26bn  in  public 
investment for infrastructure4. 

In  most  EU  Member  States  (MS),  public  payments  have  increased  substantially,  while  the 
growth  in  passenger-kilometres  has  been  more  moderate.  Overall  passenger-kilometres 
increased by 4.3% between 2005 and 20105. Substantial public sector investment, particularly 
in the newer EU Member States where subsidy payments more than doubled in six years, has 
not in itself secured equivalent increases in rail demand. This is partly due to an inability to 
curb operational inefficiencies caused by a lack of appropriate competitive incentives. Yet in 
some MS, public funding is awarded directly without competitive tender. Efficiency gains are 
desperately needed to create sustainable growth and for the benefit of the public purse.  

Although  there  have  been  positive  developments  in  some  markets  the  modal  share  of  rail 
freight has decreased from 11.5% to 10.2% since 20006. Over the same period passenger rail 
in  intra-EU  transport  has  remained  fairly  constant  at  around  6%.  The  development  of 
domestic rail market segments has been uneven among MS, ranging from a decline of more 
than 10% in Hungary to a greater than 20% increase in Sweden from 2005 to 20107. This is 

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Roadmap to a Single European Transport Area - Towards a competitive and resource efficient transport 
system COM (2011) 144 final 
Includes Infrastructure Managers (IMs) that are integrated with Railway Undertakings (RUs) (holdings) 
463000 working in passenger railways 
IA on the opening of the market for domestic passenger transport services by rail (IA) 
2011 Transport White Paper 
SWD(2012) 246 final/2 
SDG Report - Further action at European Level (2012) 

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despite  the  introduction  of  circa  6000  track  km  of  high-speed  line  over  the  period8.  High-
speed networks have gained market share over air transport, becoming the preferred passenger 
choice over certain routes and allowing rail to compete more efficiently on numerous routes. 
Over the period 2020 – 2035 high-speed rail is expected to have the highest growth in demand 
of  any  transport  mode9,  providing  significant  growth,  investment  and  employment 
opportunities, which this package aims to develop further. 

The latest Eurobarometer10 survey suggests that only 6% of Europeans use the train at least 
once a week11. Among consumers12 rail services are ranked 27th out of 30 services markets, 
with particularly poor scores on comparability and satisfaction. The market records the second 
highest number of problems with a wide divergence existing across the EU. Consumers do not 
believe  that  problems  can  be  satisfactorily  solved.  Since  the  mid-1990's,  in  parts  of  the  EU 
(relatively  newer  MS  in  particular)  underinvestment  has  created  a  vicious  cycle  of  decline, 
with the decay of infrastructure and rolling stock rendering rail unattractive, especially given 
the  wealth-driven  high  growth  of  car  ownership.  Cars  have  a  large  share  of  urban  transport 
and 59% of Europeans never use suburban trains. Against this background and the fact that 
the  EU27  has  a  75%  urbanisation  rate,  there  is  a  huge  market  development  potential  for 
suburban  and  regional  passenger  rail  transport,  especially  given  the  rising  congestion  on 
roads.13 

2. 

WHERE DO WE STAND  

With  the  goal  of  establishing  an  internal  market  for  rail  and  thus  a  more  efficient  and 
customer-responsive industry, early EU legislation laid down the basic principles guiding the 
improvement of rail efficiency via progressive market opening, establishment of independent 
Railway Undertakings and Infrastructure Managers and separation of accounts between them. 
Since 2000, these principles have been progressively translated into reality, not least through 
the adoption of three successive packages of EU legislation. However the modal share of rail 
has  remained  modest,  partly  due  to  suitability  issues  (for  example  rail  is  not  practical  for 
many  short  distance  urban  journeys  such  as  trips  to  the  supermarket)  but  also  because  of 
obstacles to market entry hampering competition and innovation. 

In  2012,  parts  of  this  legislation  were  simplified,  consolidated  and  further  reinforced  by 
Directive  2012/34/EU  establishing  SERA  14,  bolstering  existing  provisions  on  competition, 
regulatory oversight and financial architecture of the rail sector. This strengthens the power of 
national regulators, improves the framework for investment in rail, and ensures fairer access 
to rail infrastructure and rail-related services. It entered into force on 15 December 2012 with 
transposition required by mid-2015.  

In  parallel  to  market  opening,  other  EU  measures  have  improved  the  interoperability  and 
safety of national networks. A more European approach to rail is intended to facilitate cross-
border  movements  to  enable  rail  to  exploit  its  competitive  advantage  over  longer  distances 
and to provide a single market for rail equipment suppliers with lower costs. For example, the 
Shift2Rail15 initiative would contribute to developing rail as a transport mode by promoting 

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Everis study on regulatory options on market opening (2010) 
SDG Report - Further action at European Level (2012) 
http://ec.europa.eu/public_opinion/archives/ebs/ebs_388_en.pdf 
http://ec.europa.eu/public_opinion/flash/fl_326_en.pdf 
http://ec.europa.eu/consumers/consumer_research/cms_en.htm 
IA on the opening of the market for domestic passenger transport services by rail 
Directive 2012/34/EU 
http://www.unife.org/page.asp?pid=194 

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step-change  innovations  for  passenger  rolling  stock,  freight  transport,  traffic  management 
systems and rail infrastructure. 

Large sums have been invested in rail infrastructure. The new TEN-T policy16 aims to achieve 
a highly efficient European transport network with strong core rail arteries. The Commission 
has  proposed  a  new  infrastructure  financing  instrument  for  the  next  multi-annual  financial 
framework supporting these priorities: the Connecting Europe Facility (CEF)17. The new EU 
infrastructure policy provides the necessary regulatory framework and financing to complete 
the rail core network as the backbone to the internal market. Infrastructure investment is vital, 
but not alone sufficient to realise rail's potential. This also requires structural changes to boost 
operational  efficiency  and  service  quality  through  more  robust  and  transparent  governance 
and market opening. 

At the European Council on 28-29 June 2012, the Heads of State or Government adopted the 
'Compact  for  Growth  and  Jobs18,  which  seeks  to  deepen  the  single  market  by  removing 
barriers  in  order  to  promote  growth  and  jobs  in  network  industries.  The  Commission 
consequently identified the Fourth Railway Package as a key initiative to generate growth in 
the EU when adopting its Single Market Act II in October 201219.  

This package has been prepared to tackle the remaining barriers to SERA.  

3. 

WHERE ARE WE GOING 

3.1 Infrastructure governance 

Although  some  parts  of  the  world  (notably  North  America)  have  competing  rail 
infrastructures,  most  of  the  EU's  network  was  designed  at  country  level  to  be  a  single 
network. Further, efficient use of infrastructure relies on its intensive use. So infrastructure in 
the  EU  is  and  is  likely  to  remain  a  natural  monopoly.  Existing  EU  legislation  therefore 
requires a degree of separation between IMs, which run the network, and RUs which run the 
train  services  on  it,  with  the  aim  of  ensuring  fair  and  equal  treatment  of  all  RUs.  Full 
independence  of  charging  and  capacity  allocation  is  required,  as  these  were  seen  as  key  to 
ensuring equal access.  

Nevertheless as natural monopolies, IMs do not always react to the needs of the market and 
evidence  from  users'  suggests  that  the  current  governance  does  not  provide  sufficient 
incentives  for  them  to  respond  to  users'  needs.  In  particular  in  the  case  of  IMs  in  holding 
structures  there  is  strong  criticism  from  new  market  players  that  IMs  have  sometimes 
increased  track  and  station  access  charges  for  passenger  services  considerably  compared  to 
rates asked of incumbents. 

Information  asymmetries  lead  to  competitive  advantages  for  incumbents  and  there  is  a 
persistent  risk  of  cross-subsidisation  due  to  the  lack  of  complete  financial  transparency.  An 
illustration of such an advantage can be found in a PSC for rail in Saxony-Anhalt which was 
awarded to Deutsche Bahn (DB) on the basis of a commitment by DB's subsidiary DB Regio 
to  compensate  any  rise  in  track  access  charging  for  15  years20.  These  additional  costs  of 
access  charges  for  the  RU  would  then  be  compensated,  at  the  level  of  the  holding,  by  the 

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COM (2011) 650final/2 
COM/2011/0665 final 
EUCO 76/12 / EUCO 156/12 
COM(2012) 573 final 
Governance IA 

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increased  revenues  stemming  from  these  same  charges  collected  by  the  IM.  Such 
compensation is available only to integrated railway structures. 

Existing  separation  requirements  do  not  prevent  conflicts  of  interest,  and  functions  not 
currently defined as essential (such as investment planning, financing and maintenance) have 
resulted  in  discrimination  against  some  new  entrants.  The  Italian  Competition  Authority  for 
example sanctioned Ferrovie dello Stato (FS) and imposed a fine amounting to €300000 after 
finding that FS, put in place through its subsidiaries a 'complex and unified strategy' to keep 
Arenaways, (a competitor that was bankrupt by the time of the decision) out of the profitable 
route  between  Milan  and  Turin  between  2008  and  201121.  In  the  same  manner,  the  French 
Competition Authority recently sanctioned SNCF imposing a fine of €60.9 million for various 
anti-competitive  practices  after  opening  of  the  French  rail  freight  market  in  2006.  As 
delegated infrastructure manager, SNCF collected confidential information on the requests of 
train  paths  submitted  by  its  competitors  and  used  it  in  the  commercial  interest  of  its  freight 
subsidiary, SNCF Fret.22 

Under the current system, there are no incentives for European and intermodal cooperation. A 
core EU rail system maximising positive network effects is required. While the Commission's 
existing  TEN-T  policy  and  new  proposal  for  CEF  together  with  the  existing  rules  on  Rail 
Freight  Corridors23  (RFCs)  are  aimed  at  increasing  rail's  capacity,  efficiency  and 
attractiveness for customers, potential gains from these measures can only be fully achieved if 
the  obstacles  to  the  efficient  operation  of  IMs  are  eliminated  and  they  acquire  a  truly 
European dimension. 

Moreover,  existing  separation  requirements  ensuring  the  independence  of  IMs  have  proven 
difficult to transpose and enforce. Several infringement proceedings are now pending before 
the Court of Justice of the  European  Union.  As current legal frameworks are insufficient to 
remove risks of conflicts of interest and possible distortion of competition, there is a need for 
further legislative intervention.  

On  the  other  hand,  there  are  criticisms24  that  existing  arrangements  can  result  in  inefficient 
operations  and  inappropriate  long  term  investment  decisions.  The  Commission  does  not 
consider  that  these  studies  show  that  separation  is  necessarily  inefficient.  They  do  however 
imply that to achieve efficiency, IMs must be responsible for all the core tasks of running the 
infrastructure,  from  long  term  investment  planning,  through  timetabling  and  real-time  train 
management to maintenance. Equally, appropriate cooperation must be facilitated between the 
IM and all RUs using a particular route so that proper governance structures ensure alignment 
of interests of an increasing number of players in an open market 

Several incumbent rail operators presented studies to prove that integrated rail companies can 
achieve  significant  growth  in  the  market,  but  this  must  be  balanced against  strong  concerns 
that rail companies with dominant positions protected by integrated structures in their "home" 
market  could  obtain  financial  benefits  giving  them  an  unfair  competitive  advantage  when 
competing  elsewhere  in  the  EU  or  even  domestically  against  new  market  entrants. 

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Governance IA. This decision of the Italian Competition Authority was recently subject to an appeal by 
FS companies to the regional administrative tribunal (TAR) which has not yet ruled on the case. 
Decision 12-D-25 dated 18 December 2012. 
Regulation (EU) No 913/2010 
EVES-Rail Economic effects of Vertical Separation (Nov 2012) 
Realising the potential of GB Rail (Sir Roy McNulty May 2011) 

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Maintaining national markets as systems dominated by integrated incumbents will also hinder 
the development of long distance pan European services. 

The  Commission  is  proposing  to  amend  the  Directive  establishing  SERA  to  ensure  that  IM 
can perform all functions needed to run the infrastructure in an optimised, efficient and non-
discriminatory manner. Since this is the simplest and most efficient solution to create a level 
playing field among transport operators, the Commission proposes an institutional separation 
of infrastructure management and transport operation. However, where Member States wish 
to maintain existing holding structures with infrastructure manager's ownership, it proposes to 
introduce  strict  safeguards  to  protect  the  independence  of  the  infrastructure  manager  with  a 
process of verification by the Commission to ensure that a genuine level playing field for all 
railway undertakings is put in place. 

It will create common rules for a governance structure of IMs that treat all RUs on an equal 
footing and guarantee proper involvement of public authorities and users of infrastructure in 
the  preparation  of  decisions  having  an  impact  on  them.  IMs  will  need  to  establish  a 
coordination body with RUs, customers and public authorities making them central players in 
investment  planning  and  the  drive  for  efficiencies.  It  will  set  economic  incentives  and 
performance indicators to measure and to improve the efficiency of IMs and, finally, it will 
establish  a  European  Network  of  IMs  to  promote  cross-border  cooperation,  with  particular 
attention paid to operations along RFCs and international passenger transport routes. 

3.2 Opening of the market for domestic passenger transport services by rail 

Improvements  in  service  quality  and  efficiency  are  needed  to  make  rail  a  more  attractive 
choice for passengers and to encourage modal shift. Better value for money can be achieved 
for scarce public funds. 

Markets for rail freight services have already been fully opened to competition since January 
200725  and  those  for  international  passenger  transport  services  as  of  1  January  201026,  yet 
national markets for domestic passenger transport services by rail remain largely closed and 
are the bastions of national monopolies27.  

Ensuring high quality, integrated services providing wider social benefits and lower external 
impacts compared to other modes will continue to require a large proportion of rail services 
across the EU (66% of passenger-km) to be provided under public service contracts (PSCs), 
specified and subsidized by MS, regional or local authorities.  

Removing  the  legal  barrier  by  only  allowing  open  access  would  have  rather  limited  effects 
given  that  most  domestic  services  are  covered  by  PSCs.  Competition  on  domestic  markets 
should therefore be addressed at two levels with competition 'in the market' for those services 
that  can  be  provided  through  open  access  and  competition  'for  the  market'  to  allow  the 
transparent and cost-efficient award of PSCs, as experienced today in some MS. 

Existing rules give competent authorities (CAs) extensive scope to directly award PSCs in rail 
transport, avoiding competitive tendering procedures (which are generally required for PSCs 
in  other  modes  of  public  transport)28.  Directly  awarded  PSCs  constitute  42%  of  all  EU 

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Directive 2004/51/EC amending Directive 91/440/EEC 
Directive 2007/58/EC amending Directive 91/440/EEC 
The UK, Germany, Sweden and Italy, have unilaterally opened their domestic markets 
Regulation 1370/2007 

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passenger-kilometres29,  contributing  to  the  fact  that  in  16  out  of  25  MS  with  rail,  the 
incumbent holds above 90% market share30. 

Evidence of competition for PSCs in Germany, Sweden and the Netherlands has shown that 
tendering  accrues  savings  for  CAs,  sometimes  up  to  20-30%31,  which  can  be  re-invested  to 
improve  services  or  be  used  elsewhere.  Experience  in  other  liberalised  markets  such  as 
Sweden  and  the  UK  has  shown  improvements  in  quality  and  availability  of  services  with 
passenger satisfaction rising year on year and passenger growth of over 50% over ten years. 
Improved services would bring clear benefits to passengers and savings of some €30-40bn to 
taxpayers32. 

Stakeholders report that access to rolling stock (trains) is a major constraint for new entrants. 
In at least eight MS, ownership of rolling stock continues to be dominated by incumbent RUs, 
which are unable or unwilling to make it available on attractive commercial terms. In Austria, 
for  example,  several  new  entrants  complained  to  the  national  regulator  Schienen-Control 
about ÖBB’s strategy of scrapping unnecessary rolling stock, or selling it exclusively to RUs 
operating outside Austria, on condition that they did not resell it to Austrian new entrants.  

Mandatory ticketing systems run by national incumbents, such as those in Germany and the 
Czech  Republic,  charge  commissions  of  up  to  25%  on  all  ticket  sales.  This  discriminatory 
effect discourages new market entry. Reimbursement to new entrants in some MS takes up to 
two years whereas in others payments are made within eight days at 1.5% commission33. 

To  eliminate  legal  barriers,  the  Commission  proposes,  through  amendment  of  the  Directive 
establishing  SERA,  to  open  up  the  market  for  domestic  passenger  transport  services  by  rail 
with the possibility to limit access when the economic equilibrium of a PSC is compromised. 
By amending the Regulation34 dealing with public service obligations in public transport by 
road  and  by  rail,  the  Commission  aims  to  introduce  mandatory  tendering  of  public  service 
contracts as of December 2019. The scope of those contracts and the underlying PSOs are to 
be defined in compliance with criteria based on general Treaty principles. To avoid excessive 
geographic  scope  of  contracts  being  used  to  foreclose  markets,  the  Commission  proposes  a 
flexible  definition  of  maximum  contract  volume.  A  minimum  threshold  below  which 
contracts  may  be  awarded  directly  will  enable  competent  authorities  to  avoid  organising  a 
tendering  procedure,  if  the  expected  savings  of  public  funds  would  not  exceed  the  costs  of 
tender.  Contracts  directly  awarded  after  the  adoption  of  this  legislative  package  will  not  be 
able to continue beyond31 December 2022. 

To  ensure  that  Member  States  and  regional/local  contracting  authorities  establish  public 
service  contracts  in  a  coherent,  integrated  and  efficient  manner,  the  proposed  provisions 
contain  the  obligation  for  competent  authorities  to  establish  public  transport  plans  setting 
objectives  for  public  passenger  transport  policy  including  general  supply  performance 
patterns  for  public  passenger  transport.  These  plans  should  be  drafted  in  line  with  the 
requirements  of  urban  mobility  action  plans35.  Any  additional  administrative  burdens 
competent authorities related to bidding procedures for are normally be offset by the expected 
savings in subsidies. To ensure maximum transparency, competent authorities will be required 
to provide certain operational, technical and financial data to all potential bidders for a public 

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IA on the opening of the market for domestic passenger transport services by rail 
Market share below 50% only in the UK, Sweden and Estonia 
Domestic Passenger Rail Markets IA 
SDG Report  
Domestic Passenger Rail Markets IA 
Regulation (EC) 1370/2007 repealing Council Regulations (EEC) Nos. 1191/69 and 1107/70 
COM(2009) 490 final 

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service  contracts,  enabling  them  to  prepare  a  well-informed  offer,  thereby  enhancing 
competition and enabling benefits for citizens to be achieved.  

To  preserve  network  effects,  MS,  CAs  and  RUs  will  be  encouraged  to  set  up  integrated 
ticketing schemes at national level subject to non-discrimination requirements. 

In MS without well-functioning leasing markets for rail rolling stock, CAs will be required to 
take  the  necessary  measures  to  ensure  non-discriminatory  access  to  suitable  rolling  stock  in 
order to facilitate a high level of market contestability for PSCs. 

In summary, these proposals will encourage modal shift from road and air, create better value 
for  money  for  the  public  funds  used  and  complete  the  circle  of  market  opening  already 
achieved in the freight, international passenger and other transport markets. 

3.3 Interoperability and safety 

Statistically  rail  is  far  safer  per  passenger  kilometre  than  road  travel  (with  62  passenger 
fatalities in 2010, compared to 31,000 on EU roads36) and has continued to improve in the last 
decade. So safety benefits would accrue through modal shift. 

While  the  current  technical  standards  and  approvals  system  creates  a  very  safe  system,  it  is 
fragmented between the European Railway Agency (ERA) and national authorities, creating 
excessive administrative costs and market access barriers, especially for new entrants and rail 
vehicle manufacturers. In particular national technical and safety rules remain alongside EU 
Technical  Specifications  for  Interoperability  (TSIs),  creating  unnecessary  complexities  for 
RUs. ERA estimates that there are currently over 11000 such rules in the EU37.  

Procedures to authorise new rail vehicles can last up to two years and cost up to €6 million, 
compared to much shorter periods and lower costs for authorising aircraft. Stakeholder figures 
suggest  procedural  authorisation  costs  account  for  up  to  10%  of  costs  of  locomotives  per 
country,  so  authorisation  of  vehicles  for  use  in  up  to  three  Member  States  could  constitute 
30% of the purchase price. 

Moreover, to obtain safety certificates, RUs are required to pay the National Safety Agencies 
(NSAs), and this has in some cases been known to cost RUs two man-years and up to €70,000 
for  administrative  and  advisory  costs38.  Excessive  red  tape  in  the  market  entry  process  has 
been identified as being particularly acute for new RUs, as this category of operators are more 
vulnerable  to  complexity  and  delays  in  procedures,  given  their  limited  human  and  financial 
resources. 

There are marked discrepancies between how NSAs conduct vehicle authorisation and safety 
certification  processes  and  established  periods  for  issuing  certificates  and  authorisations  are 
systematically circumvented by certain NSAs through requests for additional documentation 
and tests.  

To realise the potential of the single market, a higher level of harmonisation is necessary at 
EU level, so the Commission proposes revising the ERA Regulation to transfer to the Agency 
competence  for  issuing  vehicle  authorisations  for  placing  on  the  market  and  for  safety 
certification for RUs. While legal responsibility would lie with ERA, it would work in close 
cooperation with the relevant NSAs. At the same time it would have an enhanced role in the 

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Eurostat data 
Interoperability and Safety IA 
Interoperability and Safety IA 

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supervision of national rules and monitoring NSAs, as well as in facilitating the deployment 
of the European Rail Traffic Management System (ERTMS). The proposed changes to ERA's 
role  will  be  reflected  in  amendments  to  the  Railway  Safety  and  Interoperability  Directives, 
providing  an  opportunity  for  clarifying  and  simplifying  existing  provisions,  consolidating 
previous amendments and updating the legislation. Besides these changes, ERA's governance 
structure  and  internal  operating  methods  will  be  improved  and  aligned  with  the  recently 
adopted Joint Statement and Common Approach on EU decentralised agencies39. 

The aim of these proposals is to achieve a 20% reduction in the time to market for new RUs 
and a 20% reduction in the cost and time taken to authorise rolling stock. This should lead to 
€500  million  savings  over  five  years 40  and  contribute  to  the  European  rail  industry's 
competitive edge and leading position on world markets. 

3.4 

The social dimension 

The  rail  sector  will  in  the  next  decade  face  simultaneously  the  challenges  of  an  ageing 
working population and the efficiency effects of market opening. Approximately 30% of all 
rail workers will retire in the next 10 years41 leading to workforce shortages, while at the same 
time  several  RUs  may  need  to  be  restructured  to  improve  productivity  and  efficiency.  IM  / 
RU  separation  will  require  more  people  to  do  complementary  tasks  in  the  short  term.  It  is 
important to enable the rail sector to improve its attractiveness as an employer for innovative 
and highly skilled professions with an adequate level of remuneration.  

To provide the necessary safeguards to workers after market opening, existing legislation such 
as  the  Transfer  of  Undertakings  Directive42  lays  down  the  conditions  for  the  mandatory 
transfer  of  staff  when  a  PSC  is  awarded  and  assets  such  as  rolling  stock  are  transferred  to 
another RU. The PSO Regulation enables CAs to require that staff be transferred43 and/or to 
set standards and criteria when a PSC is awarded to another railway company. The effect of 
open access operation is likely to be rather progressive with new entrants encouraging growth 
and labour market opportunities. 

Via their European social partner organisations, European RUs may take part in the Railway 
Social Sectoral Dialogue Committee. 

The availability of a skilled and highly motivated labour force in the sector is essential for the 
supply  of  efficient  and  competitive  transport  services.  Without  tackling  the  issue  of  job 
quality,  optimal  progress  towards  a  sustainable  transport  system  is  unlikely  to  be  achieved. 
Competition,  where  introduced,  has  not  led  to  a  deterioration  of  salaries  in  the  rail  sector44. 
Examples taken from open markets prove that new entrants offer attractive salary conditions 
to ensure they attract the best staff and grow their services. Employment levels after market 
opening are not expected to decrease, as has been the experience in MS whose national rail 
markets are already fully open such as the UK and Sweden45. In fact, employment levels have 
fallen faster in countries with closed markets. Increased productivity and attractiveness of rail 
transport will lead to demand increases and investments, e.g. in new rolling stock, from which 
workers are likely to benefit. 

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40 
41 
42 
43 
44 
45 

Council of the EU (2012) 11450/12 
Interoperability and Safety IA 
Domestic Passenger Rail Markets IA 
Directive 2001/23/EC 
Beyond application of Directive 2001/23/EC 
Domestic Passenger Rail Markets IA 
Domestic Passenger Rail Markets IA 

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4. 

THE 4TH RAILWAY PACKAGE 

The 4th Railway Package comprises legislative proposals to amend: 

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Directive  2012/34/EU  of  the  European  Parliament  and  of  the  Council  of  21 
November 2012 establishing a Single European Railway Area (Recast) 

Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 
October 2007 on public passenger transport services by rail and by road  

Regulation (EC) No 881/2004 of the European Parliament and of the Council of 29 
April 2004 establishing a European Railway Agency  

Directive  2004/49/EC  of  the  European  Parliament  and  of  the  Council  of  29  April 
2004 on safety on the Community's railways  

Directive  2008/57/EC  of  the  European  Parliament  and  of  the  Council  of  17  June 
2008 on the interoperability of the rail system within the Community  

and  to  repeal  Regulation  (EEC)  1192/69  on  common  rules  for  the  normalisation  of 
the accounts of railway undertakings. 

5. 

THE NEED FOR A STRATEGIC INTEGRATED APPROACH 

The low efficiency and quality of some rail services are mainly the result of low competition, 
remaining  market  distortions  and  suboptimal  structures.  Long  and  costly  procedures,  access 
barriers  for  new  entrants  and  different  market  access  rules  in  MS  are  all  addressed  in  the 
Fourth Railway Package, which adopts a holistic approach.  

The initiatives in the package are mutually reinforcing: they all contribute to creating a more 
efficient and customer-responsive industry and improving the relative attractiveness of the rail 
sector  vis-à-vis  other  modes.  All  measures  facilitate  the  entry  of  new  operators  into  the 
market.  Synergies  will  be  achieved  via  the  combined  effects  of  the  individual  initiatives. 
Effectiveness  of  de  jure  market  opening  depends  on  ensuring  that  certain  'framework 
conditions' are in place and are effective, such as non-discriminatory access to infrastructure, 
to suitable rolling stock, to stations, or train path allocation including traffic management. To 
ensure that market opening is a success, the benefits of network effects need to be preserved. 
Some  of  these  framework  conditions  will  be  addressed  through  the  initiatives  related  to  the 
opening  of  the  market  for  domestic  passenger  transport  services  by  rail  and  others  via  the 
proposal  on  enhanced  infrastructure  management.  To  lower  the  access  barriers  for  new 
entrants,  synergies  are  expected  through  reducing  discrimination  in  access  to  infrastructure 
and  providing  simplified  procedures  for  issuance  of  safety  certificates  for  RU  and  vehicle 
authorisations for placing on the market.  

These  changes  will  raise  the  level  of  competition,  guarantee  full  financial  transparency  and 
remove  any  risk  of  cross-subsidisation  between  (often  publically  funded)  IMs  and  train 
service provision by RUs. They should result in fair financing conditions and reduce risks of 
conflicts of interest. Fair market access and the increasing number of operators will ultimately 
generate  new  business  activity  and  additional  traffic.  Increasing  competitive  pressure  and 
specialisation  of  the  market  players  will  also  have  a  positive  effect  on  productivity  and 
efficiency and lead to increases in investment into rail transport infrastructure.  

A combination of 'open access' and competitive tendering of PSCs will allow further market 
opening as has already been achieved in the freight and international passenger market, with 
evidence in the more  mature freight  market  that it has led to a higher market share for rail. 
The proposal is a key step in the completion of SERA. 

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Increased  competition  should  enhance  the  attractiveness  of  rail  and  make  the  sector  more 
responsive  to  customers'  needs,  allowing  rail  operators  to  compete  with  other  modes. 
Passenger  high  speed  services  will  make  rail  more  competitive  with  regard  to  air  and  rail 
freight increasing market share and contributing to achieving climate change targets. 

Growth  of  rail  activity  will  increase  the  demand  for  qualified  rail  workers  in  RUs  and 
operators  of  rail  services  facilities  but  also  the  demand  for  rolling  stock,  therefore  creating 
new jobs in rail manufacturing. 

Making  the  safety  certification  and  vehicle  authorisation  processes  more  efficient,  ensuring 
that  safety  certificates  and  vehicle  authorisations  are  granted  and  recognised  on  a  non-
discrimination  basis  across  the  EU  and  making  national  legal  frameworks  more  consistent 
will help to ensure that the time to market for new RUs is shorter and more responsive. 

The  Fourth  Railway  Package  delivers  an  integrated  approach  that  will  create  conditions  for 
growth of overall rail traffic, increasing its market share as it becomes more reliable and more 
efficient. It will make for better services and will allow rail to fulfil its underused potential so 
that it becomes a real and attractive alternative. 

The Fourth Railway package also includes: 

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Commission Report on the progress made towards achieving interoperability of the 
rail system;  

Commission Report on the profile and tasks of other train crew members;  

Commission  Report  on  the  implementation  of  the  provisions  of  Directive 
2007/58/EC on the opening of the market of international rail passenger transport; 

Commission  Staff  Working  Document  on  the  Impact  Assessment  related  to  the 
revision of the ERA regulation; 

Commission Staff Working Document on the Impact Assessment related to opening 
of the market for domestic passenger transport services by rail;  

Commission  Staff  Working  Document  on  the  Impact  Assessment  related  to  the 
governance of railway infrastructure in the single European railway area. 

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