Progressive tendering of regional railway services

Abstract

The European Union’s Fourth Railway Package dating from 2016, introduces a number of substantive reforms with a view to revitalize the rail sector and boost its competitiveness vis-à-vis other modes of transport by completing the process of gradual market opening. Its so-called ‘market pillar’ establishes the general right for railway undertakings established in one Member State to operate all types of passenger services everywhere else in the EU, lays down rules aimed at improving impartiality in the governance of railway infrastructure and preventing discrimination, and introduces the principle of mandatory tendering for public service contracts in rail. These reforms are grounded in the premise that competition in rail passenger service markets would induce railway operators to become more responsive to customer needs, improve the quality of their services and their cost-effectiveness. Not least, competitive tendering of public service contracts would enable cost savings. The introduction of these reforms and general principles, however, takes place against the backdrop of Member States and regions retaining a certain degree of discretion in shaping public service contracts. In other words, both have the basic right to decide which type of services is to be provided under public service obligations, whether such services are to be tendered out under a single contract or divided into several contracts, and whether these contracts should be tendered simultaneously or progressively over time, for instance. In this report, we set out to identify the optimal solution(s) for tendering rail public service contracts, both in terms of contract volume and scheduling of the tenders, while suggesting possible accompanying measures to ensure an optimum outcome.