Railway De-Regulation

The European Union wants to improve passenger transport in general, both within the Member States themselves and  their international connections, and in particular in the service offered by the railway, considered to be the most sustainable and effective means of transport, as well as less harmful to the environment, in the short and medium term. To this end, it has laid down several measures ranging from the deregulation of railway competition to the development of the so-called Priority Corridors, which are part of the Connecting Europe project.

As part of this project, next December 2020 the directive set by the EU within the so-called Fourth Railway Package which “forces” all member States to open commercial passenger transport up to the competition at national level becomes a reality. But that is not the only concern, as the aim is to go further and get the industry in the sector to advance in innovation by applying the new technologies, the digitization of services, essential for the improvement of the service that trains must offer as well as the search and promotion of propulsion through non-polluting energy, running away from diesel, and improving the electrification of the infrastructures, given that there are still thousands of kilometres of non-electrified track in Europe.

Openness to competition is a first step, and although it already existed in some EU member countries, and in the United Kingdom, nowadays outside the Union, it was not approved for general deregulation, which is what will be taking place this year, and which is based on the so-called Fourth Railway Package, which is part of the Trans European Transport Network (TEN-T) project.
The Fourth Railway Package, the cornerstone on which this process of deregulation of passenger transport is based at the commercial level, approved by the European Parliament in April 2016, has six legislative proposals. This document is divided into two pillars: the technical pillar and the market pillar. The first one aims at completing a process of gradual opening of the market that began with the First Railway Package. This pillar also includes several rules to ensure impartiality in the management of railway infrastructures to eliminate any discriminatory behaviour. Also, as of 2023, the compulsory bidding for Public Service Obligations (PSO) contracts will become effective. On the other hand, the content of the market pillar is aimed at increasing the users’ choice of company to travel with and improving the quality of these services.

All these objectives require the alignment of the legislation of each country to make the train more attractive to passengers and goods traffic. The aim is to make European railways much more competitive as a means of transport.

Another aspect highlighted by the entry into force of the new deregulatory guideline is the emergence on the horizon, according to the Commission, of more investment opportunities for manufacturers, as demand for more mobile material is expected. Added to this is the boost that increased rail traffic will mean for sustainable transport, as it is one of the most environmentally friendly systems.

This is highlighted in the latest EU study on railways: “Sixth report to monitor the evolution of the railway market” (2019), which addresses the situation and the importance to be given to this means of transport. Along these lines, it bears in mind that it moves an average of 1.6 billion tons of goods per year; and that it has average annual traffic in the region of 9 billion passengers. It is also highlighted that “the raiway contributes significantly to the Union’s means of transport, offering clean mobility and a high level of efficiency”.
The TEN-T programme plans an investment of around 315 billion euros in terms of public funding by 2030, to reach 700 billion euros in public-private collaboration; state-run and co-financing of European funds. With this and with the projection Connect Europe the aim is to join by rail 94 main ports; 34 airports; and carry out the creation or improvements in 35 border crossings points, as well as taking part in nine priority corridors.

Priority corridors
The nine priority corridors, among which are, on a Spanish level, the Mediterranean and the Atlantic, are those with which it is expected to achieve that mobility that Europe wants to have in the future, with which it is planned to gain traffic efficiency, both of goods and people. Most of the planned investments are aimed at the railway sector.
The first one is the Scandinavian-Mediterranean, an axis between the North and the South that has been classified as “crucial” for the European economy. It departs from Scandinavia and crosses the Baltic Sea, it goes through Germany, Austria, Italy and it reaches the Mediterranean, incorporating Sicily and Malta.

The second is the one that extends from the Baltic Sea to the North Sea, which allows the connection of ports from one coast to the other. Finland communicates with Estonia via ferry, and from there modern railway system infrastructure connects the three Baltic States, on the one hand; and Poland, Germany, the Netherlands and Belgium, on the other.
A third corridor is the one that departs from the North to connect with the Mediterranean. It stretches out from Ireland and the north of the United Kingdom through the Netherlands, Belgium and Luxembourg, towards the Mediterranean via France. This connection depends on the evolution of “Brexit”.

The Baltic connection to the Atlantic is another one of these routes designed by the Connect Europe programme. And it is one of those considered to be a priority by the European Union, as it traverses all central Europe.

They are joined by the one related to the Eastern Mediterranean region, which connects the maritime areas of the North, Baltic and Black with the Mediterranean.

The sixth is the so-called Alpine-Rhine, with which it is planned to keep a more direct and balanced connection, by rail, between the main ports with most European traffic. The seventh of them aims at linking the two most important river basins on the continent. It is about having the connection between the Rhine and the Danube as a central axis, connecting the main central areas that can take advantage of intermodality.

Finally, there are two important connections left for Spain. The first one, that of the Mediterranean, which is born in Algeciras and which reaches Hungary through France. The second one is the Atlantic corridor, where it was agreed two years ago to extend it to Galicia and to allow the Cantabrian coast to participate in it, with connections to the plateau and with communication with the main Portuguese routes.
The development of this magnificent project, which is meeting deadlines in the construction of the required infrastructures, would not be entirely feasible if there was not a new regulation for rail transport, both at goods and people level. This is where the European Parliament’s decision to approve the “mandatory” process of opening up the rail transport markets comes from.
The transport of goods by train both nationally and internationally was already deregulated in 2007. And passengers transport was deregulated internationally in 2010. But in 2020 the aim is to open up all national traffic to competition and to put an end to monopolies.

 European deregulation: how does it work, when does it take place? 

The opening up to the competition of the national passenger services of the member states of the European Union is not mandatory until this year 2020. Although some countries have come ahead of this date and began the deregulation process in advance.

There are currently five countries that have deregulated the operation including both commercial and public service obligation (PSO) routes. These are Germany, Denmark, Poland, Sweden and the United Kingdom – which has ceased to be a member of the EU.

There is another group of States where there is already real competition in the area of commercial services such as Italy, Czech Republic, Austria, Slovakia, Hungary and Latvia. Another significant number of countries have not yet complied with the guidelines and are in the deregulation phase such as Spain, Finland or France.
This development, at a different speed, has enabled to arrive at some conclusions about the advantages and challenges posed by Europe’s new model of rail services. On the one hand, it is worth noting that this deregulation has many benefits for travellers who can see an increase in the number of frequencies in the corridors and an improvement in areas such as the price of tickets or the quality of services provided. At the same time, potential obstacles may also be encountered such as the difficulty of entry that new operators may come across due to network capacity constraints, high amounts in rail tariffs or risks such as the interruption of services that may result non- profitable.



United Kingdom: Pioneer in Europe

In the case of the United Kingdom, which is no longer part of the European Union following the approval of Brexit, we must go back to the year 1992, but the privatization of the sector was completed under the Railways Act enacted in the country in the year 1993.

The functions carried out by the British Railway Board, which managed the public company British Railways were split up, and several regulatory powers were transferred to the new Rail Regulator. Thus, the control of the infrastructures went to the company Railtrack and both the maintenance of the tracks and cargo operations were awarded to different private companies, as was the contest for the operation of passenger trains. Although, in 2001 Railtrack went bankrupt and the State re-nationalized its operations that were taken on by Network Rail.

In these 22 years of deregulation in the United Kingdom, passenger rail operators have been appearing and disappearing. Currently, there are at least 16 franchises. The presence of operators and owners particularly stand out, such as Arriva Rail UK; Abellio; Serco; Govia; First Group, or Virgin, in addition to Trenitalia operated by the C2C company, formerly owned by the National Express transport consortium, owner, among others of the Spanish company ALSA of road passenger transport, and which has been one of the strongest companies in the British rail market. The services offered by Caledonian Sleeper and Nigh Rivera are the only ones that take advantage of the night paths to connect London with Scotland and London with Cornwall.
The privatization process in Great Britain continues. The last call has been that of the competition for the Inter City between the locations of London and Birmingham, the concession of which has been awarded to the consortium comprising First Group and Trenitalia.

Despite the wide openness to the competition, ticket prices are high for the passenger, an aspect that can slow down the option of travelling in this means of transport in the country.


“British deregulation model has managed to increase the demand for passenger rail transport that doubled from the beginning of deregulation until 2015″.

* Source: British Railways. Own production

France: Renewable concessions with regional private companies

The French state-owned company, Societé Nationale Des Chemins de Fer Francois (SCNF) is the one that virtually has the monopoly, although a situation of renewable concessions is maintained with some companies covering regional itineraries, such as Veolia, Transport, Keolis, Transdev, Rtm or Tisseo.

There is an international route operation in cooperation with operators from other countries, such for example with Renfe, with Ellipsos trains; with Belgium’s SNCB, with Thalys and Eurostar; with the Dutch NS; with DB, through Aleo; or with the Swiss CFF, through the Lyria company. And it has opened a strong competition with Trenitalia since 2010, thanks to the services of the company Thello, on the international lines between Italy and France.

“Competition with SNCF on international lines has managed  to increase the profits of rail users”.

Austria: Passenger and goods subsidiaries

The process of opening the national rail passenger market began on 9th January 2008. That year WESTBahn was the first company to register for the provision of commercial services.
However, its activity in the Vienna-Linz-Salzburg corridor was delayed until 2011, the only one exempt from PSO in the country. It currently holds between 20 and 25% of the market share of this route where it also competes with OBB.

The great benefit experienced by the user is that after the purchase of new rolling stock by the private operator, the frequency of services has increased substantially and new high-speed trains are available.
In the country, the public company OBB, of 100 per cent state capital, is also maintained, and it is structured based on a number of subsidiaries according to the routes between the different cities of the country, for both, passenger and goods service. Also, the OBB is present in the Principality of Liechtenstein, as well as in an agreement with the Czech railways, CD, for the high-speed operations of the Railjet linking Vienna with Prague.

“The entry into the private operator market resulted in an improvement in the frequency of services and the incorporation of next-generation high-speed rolling stock.”.


The opening of rail services to different operators has occurred gradually and in two different stages. In the first one, as of 1990, public tenders for concessions were granted on an exclusive basis. In the second one, which began in 2010, together with this modality started the full competition.
Currently, only one route is not open to the free market. This is the line that joins Arlanda Airport with Stockholm Central Station. The private operator (A-Train) is in charge of this stretch until the year 2040.
In this country, infrastructure management is in the hands of a public company and is separate from the state passenger transport service operator, SJ AB, created in 2000.

There is a private MTR operator from Hong Kong, competing on the Stockholm-Gothenburg line, one of the country’s main corridors, with a market share of between 25% and 30%.


“Competition has gradually occurred, gaining advantages for passengers who have been able to choose from market alternatives on routes such as the Stockholm-Gothenburg line.”.

Germany: More than a hundred operating companies

In Germany there are more than a hundred companies at a global railway level that offer different passenger transport services by train; this figure includes urban, suburban, local, provincial, regional and long distance services.

Despite the deregulation of the service that took place in 1994, 80% of the commuter market, goods and part of the long-distance operator is in the hands of the state-owned Deutsche Bahn (DB), so the effects of market opening have been very limited to date. As reflected in the German regulator’s study (BNetzA) of 2018, in this process of deregulation companies that want to enter find some limitations such as the large investments that must be made in rolling stock, the lack of capacity of the infrastructure to make the service profitable on long-haul connections or the advantageous position from which the state operator starts.
However, on long-distance journeys it is possible to count on different private companies in clear competition with DB, such as the Hamburg Cologne Exprexx, the second national long-haul operator; or the S-Bhan Stadt Schnellehbahn, which serves the main suburban areas of the country. As well as Trenitalia’s offers through TxLogístico; or, from SCNF, with Captrain.
They have recently been joined by the passenger transport group, both by train and by bus, FlixTrain.

 “Free competition has led to an increase in alternatives in cases where Public Service Obligations (PSO) are provided”.

Italy: A deregulated market since 2012

Italy has been one of the first countries to adopt community directives and not to wait until 2020 to open up the domestic market to other competitors besides the state-owned competitor. Thus, this market was deregulated in 2012 with the emergence of the company Nuovo TransportoViaggiatori (NTV) and its high-speed Italo trains on the routes between Turin and Salerno; and Venice and Salerno, joining 10 of the country’s major cities and serving in fourteen stations.

The transalpine country created in 2000 the public company Ferrovie dello Stato, which is responsible for managing and maintaining railway infrastructure through the subsidiary Rete Ferroviaria Italiana (RFI), and the commercial passenger service with Trenitalia.
Although its opening to competition has been subsequent to that of the United Kingdom, for example, it is considered of greater importance, given that NTV competes directly with Trenitalia operating in parallel and offering similar journeys in some cases.

“Italian deregulation has achieved, according to reports of train behaviour in the country, a ticket reduction in the region of 40%; and an 80% increase in passenger numbers”.

Norway: Privatization began in the year 2000

The Scandinavian country carried out a reform in its railway services, deregulating all goods and passenger operation in the year 2000, but the same did not apply to infrastructure.

The initial NBS, now called VY, is state-owned, but the railway operation has been adjusted to a number of private operators which offer their services on both regional and Swedish connections. These include Cargo Net and Ofoten Line, dedicated to the transport of goods; Germany’s Hector Rail; Sweden’s Tagakeriet; Sporveien T-banen AS; LKAB Malmtrafik; Go Ahead Nordic, British; and, Flytoget AS.

VY has recently signed an agreement with the Spanish infrastructure administrator ADIF for the exchange of experiences and use by Norway of the knowledge of the Spanish public corporation.

“The inflow of new private operators has increased services in regional and international connections with Sweden”.

Switzerland: special status of collaboration with companies in other countries

Although it is not a member of the European Union, its geographical location is key to railway development throughout the continent. The Swiss railways, SBB-CFF-FFS, the designation they receive in German, French and Italian, are public, although in the year 2009 they changed their structure to distribute their services in four divisions: the cargo transit, the passengers’ transit, the infrastructures and real state.

At present there is a “de iure” deregulation of the railway market, as the legislation does allow new operators to freely enter at the national level, although it has not yet come into effect. At the moment, the country has a fully electrified railway infrastructure and its trains have high occupancy, so users enjoy high quality service despite still being in the hands of a single company.

The SBB-CFF-FFS is part of or owns the following subsidiaries operating either in the national territory or with Italian and French locations. In this respect, Alp Transit Gotthard, construction company of the base tunnel of San Gotardo; Thurbo; SBB Cargo Deutschland; SBB Cargo Italy; SBB Gmbh (Germany); Cisalpino-AG (high speed between Switzerland and Italy) where 50% is SBB’s and the other 50% Trenitalia’s; Tilo, with regional trains between Switzerland and Italy, also 50% with Trenitalia; and TGV Lyria, with routes between Switzerland and France, operated at 74% by SNCF and 26% by SBB.

“In Switzerland, although services remain public, the train has gained market share and there is a special status of collaboration with companies in other countries”.

Czech Republic

This market was deregulated in 2003, but the first competitor, (RegioJet), began trading in September 2011 on the Prague-Ostrava corridor. In 2013 LeoExpress company also entered the market with the acquisition of five new trains. At present, however, the vast majority of passenger services (both long-distance and regional) are run by the public company České Dráhy, (CD) which has the monopoly of these services.

The arrival of these operators has provided a substantial boost to railway traffic as a mode of transport, as the frequencies in this stretch have increased significantly.
Private companies, despite the difficulties with the historical operator, have taken over between 40 and 50% of the market share in the Prague-Ostrava corridor. They have also opened the door to new operators on Slovakia’s main route, between Žilina and Košice. Since December 2014, these three operators in the Czech Republic have competed with the Slovak Railways, on the line between the cities of Prague, Ostrava, Žilina and Košice.


 “The new operators have brought a substantial increase in the frequency of raiway services”.