TRAM SYSTEM CASE

Tram System Case



Tram System Case

1. Introduction

The railway sector is in a state of transition in UK, as it is not long since railways were monopolies operated by government-owned railway companies. In recent decade railway transportation markets have been opened to competition, one major motivation is to decrease CO2 emissions of transports (based on Malyshev (2009) one-third from the world's future energy usage growth is accountable for transportation). The British Government has been active in deregulating railway transport, as it has argued that opening the railway freight transport market to competition is a must for railway transport competitiveness (which is lagging seriously behind the US in such aspects as market share compared with road transport; see Vassallo, 2005). The EU has imposed railway legislation and has carried the sector towards a free market and competition. The starting point of community legislation was a so-called railway development directive, which was issued in 1991. In the British Government Member States, international railway freight transport was deregulated in March 2003 on the basis of the first railway package. Some countries have suffered delays in implementation. The first railway package included regulation of the railway capacity allocation process and rules for processing safety certificates and operating licenses. The second EU railway package dealt mostly with safety and interoperability, but also deregulated domestic railway freight transport as of 1 January 2007 (Directive, 2001; British Commission, 2001, 2006, 2008; Railway Act, 2006; see also Ludvigsen and Osland, 2009; Mäkitalo, 2007; Ojala et al., 2005; Everett, 2006). Although, the railway deregulation process in a world context is new phenomenon, it should be remembered that railway structures have been in a constant state of change since its appearance in the 1830s as the second major innovation wave industry, following steam engine and industrialization (Ayres, 1990; Dator, 1999). In the UK, for example, railway organizations could not respond to productivity growth during the late nineteenth century, and inefficiencies existed, especially in comparison with the US (Crafts et al., 2007).

British railway transport policy and legislation have followed in the footsteps set by the aviation legislation and air transport competition. In spite of all this, British railway transport legislation does not safeguard the predominant market conditions with grandfather rights, as it does in aviation. On the contrary, train timetables and markets are allocated annually from a scratch. In aviation, airline companies will have the same slots the following season, if they have sufficiently used their given slots during the previous season (British Commission, 2001; IATA, 2008; Koolstra, 2005; Mäkilä et al., 2004; see also Fennes, 2008; Savolainen and Hilmola, 2008).

The British railway sector could be described as pluralized, where a number of actors from the public and private sectors interact (Tuominen and Ahlqvist, 2010) in order to ensure that the transportation system produces its output. However, this is not the case in other regions, where railway companies typically own railway infrastructure, as is the case in the US, Canada, Mexico, Latin America, Japan, New Zealand and ...