The railway: still a very national matter

05/09/2021 – By Frédéric de Kemmeter – Railway signalling and freelance copywriter – Suscribe my blog
(Version en français)
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International traffic between EU Member States was set to grow considerably with open borders and the Schengen area. Has this really benefited the railways?

Since the creation of the European institutions in 1957, it has often been said that for such a small continent compared to others in the world, it was a matter of opening up the borders to make Europe a single area. But this beautiful idea has only been partially realised.

After 10 more countries joined the European Union in 2004, 100 million rail passenger cross-border journeys were counted across internal EU borders in 2007, an increase of 27% since 2001. That made believe that Europe without borders was becoming a reality and get huge potentials. But an EU report from 2019 explains clearly that rail passenger traffic is mostly domestic, with only 6 % crossing borders in 2016.

Except a minority of ‘stateless’ or expatriate citizens, as well as a business clientele from the higher socio-professional categories, most of European citizens are quite simply content to live at home and only visit ‘foreign lands’ for their annual holidays. Cross-border workers also represent only a minority of workers.

All of this makes it clear, as do the European figures, that domestic traffic predominates in Europe. International traffic – apart from cross-border traffic – is still much less important than it would have us believe. This is true if we dare to compare a few operators:

  • Thalys took 20 years to build up a traffic of 7.5 million passengers, all international, which is a great performance;
  • But NTV-Italo, a newcomer, took 8 years to double that number, i.e. 14 million passengers in Italy, but only on national territory;
  • It was the same for the private Czech company RegioJet, which has built up a customer base of 10 million passengers since 2012, mainly in the national segment, although the operator has a good result internationally.

The point here is not to compare private companies with subsidiaries of state-owned companies. The aim is to demonstrate that building up a national clientele is much more profitable than internationally. The SNCF has amply demonstrated this by taking part in the Spanish liberalisation, which only concerns domestic traffic. It has already recorded almost 400,000 passengers in three months. Flixtrain is also basing its policy on this basis. Its trains, both in Sweden and Germany, have so far only been domestic mainline services. Flixtrain has not yet crossed any borders.

Why is railway such a national affair?
For the first 200 years, Europe’s railways developed as national systems, often state-owned they were designed to move people and goods around the country. Interoperability was never considered, and when it was it was often opposed by governments with no wish to make the logistics of invasion easier during first half of the twenty century, largely marked by wars and mistrust between nations. Fortunately this dark period has changed and a lasting peace has been established.

In 1954, the Dutchman Den Hollander wanted to create Trans Europ Express (TEE) with a unique equipment. This was immediately blocked: it threatened the industry and national sovereignty. The TEE was born in 1957 with four different diesel railcars! Only the German and Austrian networks were technically interoperable, because of their technical proximity, allowing Austrian locomotives to go up to Munich.

At that time, there was no international billing but a kind of generalized barter between operators: you give me a train, I give you another. All international traffic was managed in this way, without any state involvement. The deficits were drowned out by a national whole. But in the 1990s and 2000s, European directives and, above all, the adoption of IFRS accounting rules as part of public finance policies, eliminated this way of doing things…

On the technical side, although there have been efforts at interoperability over the last 100 years under the aegis of the UIC, only freight cars and wagons have benefited. With customs obligations and trains stopping at borders, it was much more profitable to change locomotives. It was not until the year 2000 that the manufacturers took it upon themselves to develop a truly international locomotive that could be sold to everyone. The result was Bombardier’s TRAXX, a locomotive that sold 3,000 units from Stockholm to Lisbon.

Little interest for international business
Even today, many operators buy non-interoperable rolling stock, seeing no interest to crossing borders. The SNCF operates its TGV Ouigo in Spain after transferring 14 TGV Duplex trainsets « that will never come back to France » and with 100% Spanish staff. A purely national policy, while having a parent company in another country, we’ll have to get used to it.

But you can’t blame the incumbents. Often it is the governments that impose a refocusing on the national area to reframe activities within the limits of public finances. Many have asked ‘their’ operator, as in Germany, to get rid of the large number of foreign subsidiaries because they are not contributing to the country. But as illustrated above, doing business abroad means also bringing money back to the main shareholder…

By contrast, Austria can be mentioned as an exception. The state-owned operator ÖBB has built its Nightjet night train policy with the aim of spreading Austrian know-how throughout Europe. It can be said that this is a success. Trenitalia seems to want to follow the same policy with the launch of Frecciarossa between Milan and Paris, and in Spain in 2022.

Finally, there is the debate on the qualification of international traffic as a public service. It must be not forget that public service is paid for by strictly national taxes and that Europe has no power over this issue. Public service is something that does not have the same definition between countries, because subsidies are based on national taxation. It therefore necessarily requires the agreement of two or more governments to operate an international public service. The failure of a night train between Malmö, Cologne and Brussels shows that this is not easy. The Dutch had to pay 6.4 million euros to ensure that the Nightjet would operate to and from Amsterdam station for four years. After that, they will have to renegotiate…

At the same time since 2000, low-cost aviation was spreading rapidly. Not because of the lack of VAT on kerosene, but simply because this sector, unlike the railways, is completely internationalised. Only one technical language is spoken – English – and the overwhelming majority of flights in Europe are international. It is precisely these flights that many Europeans enjoy for their annual holidays alone. That was all it took to marginalise rail.

Will the climate targets change this?
It is unlikely. Firstly because rail is only one instrument among others for achieving climate targets. The train has no chance of becoming the dominant transport again, as it was in the 1930s, because the car is preparing for a transition with more sustainable motorisation. Private transport still has a bright future. And secondly, because the means to achieve the climate objectives are left to the discretion of the Member States, for obvious cultural and therefore political reasons. Measures taken in one country are not necessarily those of the neighbouring country. Just look at the nuclear issue…

The first priority for the railways would be to unify train signalling and detection as much as possible so that Bombardier’s TRAXX and Siemens’ Vectron can get rid of all the national systems that are still compulsory on board. We are slowly getting there….

High speed trains remain a national matter

05/09/2021 – By Frédéric de Kemmeter – Railway signalling
Suscribe my blog

(version en français)

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