IMPLEMENTATION DEFICIT IN EU RAILWAY POLICY

Implementation deficit in EU railway Policy

Table of Content

INTRODUCTION3

LITERATURE REVIEW3

Implementation deficit in EU railway Policy3

Addressing the rail crisis by deep EU reforms8

Reforming railways for the benefit of public budgets?12

Market failures in European railways16

Economies of scope, and intermodality17

Railway infrastructure as an essential facility19

Rail services and market failures23

CONCLUSION31

REFERENCES33

Implementation deficit in EU railway Policy

Introduction

Today, Europe's railways appear to be experiencing a revolution, yet many customers, experts and observers are questioning if we are seeing a new dawn. This is particularly apparent given glacial progress on some important issues, due largely to the political opposition of certain vested interests. Failures in governance and resources issues are raising questions on whether the current round of policy targets, as outlined in the various EU Railway Policy Packages, have been too ambitious. Nevertheless, there is new interest in the railway sector; with the expansion of glamorous high speed rail services linking the continent's major cities and the development of the rail equivalent of a Trans European Network (TEN) of rail motorways, (Bente, 2003, 22) uniting Europe like never before.

Literature Review

Implementation deficit in EU railway Policy

Railways in the EU are not at all doing well. The decline in market share is large and seems irreversible. Extrapolation would spell extinction for freight rather soon, and at best a static position in passenger rails, as a marginal player in transport. A few highlights exemplify the dramatic nature of these trends. For the last 30 years, in the presence of steady passenger and freight transport growth of 2.5- 3% annually in Europe, EU railway transport has been in steep decline. For the transport sector as a whole, growth was led by cross-border freight. The deepening of the internal market in the late 1980s and 1990s has reinforced this trend. However, the rail sector did not benefit from this development. In the case of freight transport, railways lost market share not only in relative but even in absolute terms. It is estimated that during the period 1990-2001, measured in tonnes/(Bente, 2003, 22) kilometres, freight transport in general rose by 25%, and road transport increased by 35% while rail freight transport decreased by 6%. During the period 1970-2001, rail's market share collapsed from 21% to 7.8%. (See figure 1)

The case of passenger transport is less dramatic but the trend is downward, too. During the period 1970-2001, rail's share in passenger transport decreased from 10% to 6%.

It is alarming to observe the incapacity of railways to absorb traffic demand in times of economic growth. The establishment of the Internal Market was accompanied by buoyant economic growth that only saw a halt in 2001. In the period between 1995 and 2001 the European economy's real GDP grew by a cumulative 16%. Over the same period, traffic units transported by rail grew by 11% for freight and 13% for passengers, pointing to the failure to capture potential markets1. (Bylund, 2003, 187) The reasons for this loss (especially in freight transport) are diverse, some exogenous and some endogenous to the ...