Europe’s rails: A bumpy ride to a single market

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Two decades into the European single market, getting people or goods from one part of the European Union to another on trains remains a challenge – despite rail's potential in reducing traffic pollution and congestion. The European Commission is considering new ways to reach the end station of a common railway market.

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The European Commission is working on its newest railway package with the aim to further liberalise networks with the aim to further liberalise rail networks, citing rail’s low market shares of about 7% for freight and 12% for passenger services.

But after two decades of trying to create a competitive single market, major hurdles remain. Technological differences, regulatory barriers, underinvestment and debates over how best to manage infrastructure and equipment contribute to the slow pace of change in some countries.

“The fragmentation of the European railway system leads to serious problems of efficiency, flexibility and reliability as well as to high operating costs – limiting rail’s ability to compete against other modes and discouraging private investments by new entrants in the rail market,” Transportation Commissioner Siim Kallas says.

The Commission’s recast of the first railway package in 2001 was adopted in 2012. It consolidates the 2001, 2004 and 2007 legislation and provides for strengthening regulatory oversight and performance of infrastructure operators. It also seeks to improve transparency in rail contracts and operations.

The EU has also proposed price incentives to modernise services, expand the network and encourage the development of quieter and safer trains.

But sceptics of some of the EU executive’s laissez-faire approach say without careful oversight to balance market forces, rail services on well-travelled intercity and transnational routes – the latter were fully liberalises starting 1 January 2010 - will become more competitive while service to small towns or rural areas will be neglected.

Nor is there any guarantee that more competition will bring down prices – as happened with airline services after deregulation in the 1990s. “We can’t just accept that liberalisation of international transportation of passengers has led a crash in prices for this type of service, nor has it led to spectacular development,” says Belgian MEP Isabelle Durant, a vice president of the European Parliament.

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