Competition in Rail Transport: A New Opportunity for Railways?

Throughout Europe, and in many other parts of the world, railways are suffering from declining market share and deteriorating financial performance; consequently there is renewed interest in deregulation and the introduction of competition into rail transport as a way of improving performance. An EC Directive now provides for access to rail infrastructure for third parties to run their own international trains in some circumstances. After a long debate, the British Government in July 1992 published a White Paper (New Opportunities for the Railways) which aimed to go much further. It would both open access to the infrastructure for any licensed operator and franchise out existing passenger services via a competitive bidding process; all freight services would be privatised outright. Draft legislation to implement these proposals, as well as a string of consultation documents on details have also been published, and an Interim Report from the Select Committee of Members of Parliament examining the proposals has appeared. This paper review the debate that is currently raging over the British government proposals. It considers the potential for innovation and cost savings which they offer, as well as the problems of increased transactions costs, lack of competitive bidding and other potential inefficiencies of the new system. The key issue of the charging regime for access to the infrastructure is also addressed. It is concluded that competition in the provision of freight services is desirable, but that passenger services present many more problems, and that the proposals need modification if they are to meet their objectives

European Railway Comparisons – Company Profiles

This work was undertaken as part of a project sponsored by the British Railways Board entitled `European Railway Comparisons'. The aims of this project are as follows: (i)To compare the current efficiency of European railway operators and examine recent trends at both aggregate and disaggregate levels. (ii)To assess the effects of economies of scale and economies of density on European rail operations. (iii)To make an exploratory assessment of the potential for further disaggregation by market type (InterCity, Commuter, Freight) in order to make detailed comparisons of market shares. The main methods employed to carry out this study are as follows: (i)A review of the literature on railway cost and productivity analysis. Preliminary findings are given in Working Paper 354 and a paper presented to the World Conference on Transport Research (Nash, C.A. and Preston, J.M. (1992) "Assessing the Performance of European Railways"). (ii)Collation of published data for 13 European State Railway Operators. (iii)Face to face interviews with managers at the 13 State Railway companies in order to check our understanding of published data sources, gain more infomation at a disaggregate level (administered by a self completion questionnaire) and obtain an understanding of the institutional background. This report summarises some of the background information that was obtained from the interviews undertaken in the summer of 1992. A company profile is developed for each operator under four main headings: Objectives and Management, Finance, the Freight Market and the Passenger Market

Some Guidelines for Evaluating New Local Rail Stations

This paper, based on vark undertaken as part of a Ph.D. studentship on new local rail staticms in West Yorkshire, seeks to offer guidelines for identifying and appraising new local rail station sites, and recommendations for further work on the subject. It outlines three methods of forecasting demand at such stations - a simple method based on mean trip rates at certain distance bands for similar existing new stations, an aggregate regression model, and a combination of a disaggregate mode split model for the journey to work with an aggregate non-work journey model. Whilst the latter models do provide greater accuracy, it is suggested that a simple trip-rate model may be adequate for one-off low-cost stations, although packages of stations and train service alterations need more thorough investigation. On this basis, it is suggested that for new stations with the characteristics of those in West Yorkshire (i.e. suburban stations in residential areas a few miles from major employment centres), sites which are free of significant engineering problems, with good road access, close to an existing bridge or crossing and with a population of at least 2,000 within 800 metres of the site, should be sought. On single track rural branch lines, new stations may be justified at much lower population levels

Urban Transport Market Theoretical Analysis.

1.The Institute for Transport Studies (ITS) was commissioned by the Department of Transport (DoT), the Association of Metropolitan Authorities (AMA) and the Passenger Transport Executive Group (PTEG) to undertake this project in November 1992. 2.The objectives of this study were: (a)to establish a simple economic model of urban transport operations, based on present policies; (b)to estimate, using the model, the theoretically optimal form of intervention in urban rail under the present policy constraints, and differences between this optimum and current procedures; (c)to investigate how improved procedures might be implemented in practice in the light of the kind of data which are currently available or become available in the course of a Section 56 appraisal and to make suggestions for additional data collection

Passenger Rail Statistics Following the Privatisation of British Rail.

In common with other major industries, the rail industry requires significant amounts of high quality information for successful operation. Information relating to the demand and supply of rail services is required to ensure that appropriate services are provided at minimum cost. Given the recent explosion of information technology, data on demand and supply is readily accessible and much improved. The benefits to the industry arising from such improvements should be maintained under the new organisational structures brought about by the 1993 Transport Act. It is the aim of this note to outline current sources of information and key statistics and raise the issue of what provisions are being made to ensure that they are maintained in a consistent and compatible format following privatisation

Rail Privatisation: The Practice – An Analysis of Seven Case Studies

After a brief description of the proposals for rail privatisation in Great Britain, this paper contrasts these with the proposals and experience in other countries around the world. The proposals and experience in other countries contain some elements of the British proposals, however, the 'open access' element that features strongly in the British proposals has never been experienced on any significant scale elsewhere. In conclusion, experience elsewhere may shed light on the likely outcome of some aspects of the British proposals, but other aspects such as 'open access' and vertical separation are still unknowns

Rail Privatisation: The Economic Theory

The purpose of this paper is to examine the relevance of economic theory to the rail privatisation proposals contained in the Railways Act 1993. After a review of the latest rail privatisation literature four major themes emerged: (1) Contestability and Barriers to Entry. (2) Franchising. (3) Vertical Integration. (4) Horizontal Integration. Following a short review of the rail privatisation proposals the paper presents each theme in the context of the proposals. In conclusion, we highlight a number of future issues which will require monitoring and research in the future. In particular, we identify a number of hypotheses, put forward by both those in favour and against the Government's proposals, that should be tested

Barriers to Entry in the Railway Industry

INTRODUCTION The aim of this paper is to examine the degree to which the economic characteristics of the railway industry lead to barriers to entry, in the light of recent theoretical and empirical evidence and in response to policy developments in Britain. In particular, the US railroad industry was deregulated in 1980, the Canadian railroad industry was liberalised in 1987 (Grimm and Rogers, 1991), whilst there have been important organisational reforms in, amongst others, Britain, Sweden and Japan (see, for example, Nash, 1990, Truelove, 1991). In both Britain and Sweden, the intention is to allow competing operators into the market; in both Britain and Japan it is intended to privatize existing operators. Furthermore, in a policy statement issued in 1989, the EEC outlined details of a Community rail policy which includes proposals to separate infrastructure from operations and to allow access to the inhstructure by competing operators (Nash, 1991). The latter issue is now the subject of an EC Directive. Legal rights of access to railway infrastructure in EC countries have been established for: : international groupings of railway undertakings - defined as two or more operations from different countries wishing to run international services between the Member States where the undertakings are based : any railway undertaking wishing to run international combined transport goods services between any Member States. The structure of this paper will be as follows. In section 2, we discuss the economic characteristics of the railway industry and examine likely barriers to entry. In section 3 we examine empirical evidence on economies of scale and the impacts of organisation on the rail industry. In section 4 we go on to examine the current proposals for organisational and regulatory reform for British Rail in the light of this evidence. This leads us, in section 5, to draw some tentative conclusions as to the best way forward for the British railway industry

European Railway Comparisons: Final Report

The Institute for Transport Studies (ITS), University of Leeds and the British Railways Board (BRB) carried out a major comparative study of Western European railways in the late 1970s (BRB and University of Leeds, 1979). Follow-up work was carried out by ITS financed by the Social Science Research Council and reported by Nash (1985). It was deaded to revive this work at ITS for a number of reasons: It is over ten years since the last set of comparisons (for 1981) were made at ITS and therefore a review of the changes in costs and productivity may be timely. There has been a number of technical developments that make the use of statistical cost analysis more promising. These developments include the use of more flexible functional forms such as the translog, and the development of comprehensive total factor productivity indices (see, for example, Dodgson, 1985 and, more recently, Hensher and Waters, 1993). There is increasing interest in the organisational structure of railway industries as a result of the 1988 Transport Act in Sweden, the EC directive 91/4-40 and the publication of proposals for privatising British Rail in July 1992 (see, for example, ECMT, 1993). Given the explosion in information technology, there were some hopes that data availability would have improved. (Continues..

A Review of Rail Research Relevant to the Case for Increased Rail Investment.

The purpose of this paper is to provide a review of rail transport research which has a bearing on the case of increased rail investment. The paper focuses on research which has been conducted on the demand for rail travel, both passenger and freight, rather than the supply side or new technology. The aim is to identify where we believe there to be significant gaps in knowledge and key areas in which further research is required are outlined. The paper deals with the following issues: the investment and funding mechanisms that currently exist for rail; the extent to which changes in the fare and service quality of rail affect the demand for rail travel and also the demand for air and road travel; the environmental and congestion benefits of diverting traffic from road and air to rail; and the links between rail investment and economic development. Where appropriate, the discussion considers inter-urban travel, suburban travel, light rail transit and freight transport separately