April 01, 2017

Hot rail topics under discussion in Paris

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This year’s International Railway Summit staged by IRJ focussed on some of the subjects of key concern to the railway industry namely the huge changes taking place in the European passenger rail market, research and digitisation. David Briginshaw reports on the lively discussions which took place.

THE Eiffel Tower in Paris was the backdrop for the International Railway Summit staged by IRJ and IRITS Events at the International Union of Railways’ (UIC) headquarters in February. During the three-day event delegates were treated to two days of highly informative debate and discussion as well as two site visits organised by Paris Transport Authority (RATP), to tour the modernised Line 9 metro workshops at Boulogne-Bilancourt, and French National Railways (SNCF) with a look behind the scenes at Paris St Lazare station.

One subject of contention during the first day of the conference was the market pillar of the Fourth Railway Package, which was adopted by the European Union at the end of last year. This is supposed to make it compulsory for member states to open the market for domestic passenger services by December 2019, while competitive tendering for Public Service Obligation (PSO) rail services will be obligatory in the majority of cases from December 2023.

Mr Michel Quidort, who is a member of the board of the French National Transport Users Association (FNAUT), claimed we have been “deceived” by the Fourth Railway Package. “It is not good news for rail users,” Quidort explained. “The transition period is too long. In some countries the rail market won’t open until 2035. Our rail users are in favour of regulated competition to reduce costs and improve quality.”

Quidort cited France, which has shied away from all forms of competition for passenger rail services. He says operating costs are double those in Germany which has embraced the concessioning of PSO services. “Around 500km of lines and 300 stations have opened in Germany since concessioning began and more people are travelling by rail than when German Rail (DB) had a monopoly. Competition is not an end in itself but a tool to reach the desired result.”

Dr Erich Forster, CEO of Austria’s open-access inter-city passenger operator Westbahn, described his own country as a centre of non-competition for PSO services with only direct-award contracts being granted at present. “Direct-award contracts are not the right way forward,” Forster said. “Competition is the way ahead otherwise you won’t get the best price.”

This view was echoed by Mr Leos Novotny, the founder of Czech inter-city open-access operator Leo Express. “If you are spending taxpayers’ money why wouldn’t you want to have tenders [for PSO services] that are transparent with multiple bidders?” Novotny asked. “The status quo favours the incumbent.

“The Fourth Railway Package has been diluted so that it does not oblige member states to tender services,” Novotny continued. “Competition will not arrive until 2024-25 or even 2034-35. In the Czech Republic one quarter of the routes should have been tendered by 2015, but no tenders have been completed yet.”

Both Forster and Novotny explained how difficult it was when they launched their first open-access services in 2011 and 2012 respectively. Both operators had to endure several years of running at a loss, but Forster says Westbahn achieved a positive Ebit in 2015, while Novotny says Leo Express is now self-sustaining, it can fund growth and it will break even for the first time this year.

“We have always been able to double or even triple ridership when we entered a market,” Novotny said. “It is not necessarily about making a profit. We can leverage competition for the overall good of the rail sector.”

Forster says Westbahn carried more than 4.5 million passengers in 2016 and expects traffic to reach almost 10 million by 2018. Westbahn will introduce a new hourly fast Vienna - Linz - Salzburg service in December which will operate from Vienna Main Station, complementing the existing hourly service from Vienna West Station to Salzburg, which has more intermediate stops. Alternate fast services will be extended from Salzburg to Innsbruck for the first time.

But Austrian Federal Railways (ÖBB) is not resting on its laurels either, as Mr Kurt Bauer, head of long distance traffic, explained. “We have had a strong marketing emphasis to create three strong brands.” Commuter services are run under the name Cityjet, long-distance trains with a maximum speed of 230km/h operate as Railjet, and overnight services are branded Nightjet. ÖBB took over the operation of several overnight services in Germany in December following German Rail’s (DB) decision to pull out of this market. “So far, night train figures are above budget,” Bauer revealed.

Europe’s Shift2Rail research project was another topic of discussion at the summit. Mr Carlo Borghini, executive director of the Shift2Rail joint undertaking, described the programme as a new approach to research and innovation in rail. “Shift2Rail must deliver a different type of mobility. What we create will provide the opportunity for industry to produce products which clients will want to buy. We must focus on the key priorities and demonstrate that Shift2Rail can deliver solutions so that we can build a case for Shift2Rail Two.”

“Shift2Rail is touching all railway CEOs because of its size, but we do need to do all of it,” urged Prof Andy Doherty, chief rail technology officer with Britain’s infrastructure manager Network Rail. “If we do everything in Shift2Rail do we really need Hyperloop? For me, there is too much hype in Hyperloop.”

Mr Pierre Izard, deputy CEO and chief technology and rail systems officer with SNCF, said Shift2Rail represents a major boost to railway research. “I am excited that the first results will be delivered in the early 2020s.”

“Railways have been criticised in the past for being too slow to implement things, so we must change this,” said Mr Simon Fletcher, UIC board member and European region coordinator.

Digitisation is another challenge for railways. “The digital revolution is only at the beginning of the beginning,” Mr Francis Bedel, the UIC’s IT manager, told delegates. “Usually start-ups are not very keen on rail because they think it is from the past. We need to change this way of thinking as we need them.” Bedel said that this is possible, as demonstrated by the UIC’s first digital awards announced in December recognising the sharing of knowledge between railways and start-ups. “We received 40 proposals and we chose three winners from France, Russia and Iran. You will be surprised by the quality and originality of the projects.” More information is available on the digital platform section of the UIC’s website.

DB has adopted what might be described as an aggressive approach to digitalisation. “Disrupt yourself before others disrupt you,” declared Mr Marius Pigulla, who is responsible for new digital business with DB’s new Digital Ventures subsidiary. Pigulla explained that DB has set up DB Digital Ventures with €100m of capital to fund new ventures and provide the right environment in which to flourish.

DB Digital Ventures is pursuing four courses of action:

  • direct investment in existing ventures which are beyond DB’s core business but still connected with mobility
  • “Beyond 1435” powered by DB and Plug & Play, United States, to accelerate start-ups by encouraging developers to come to Berlin for three months of due diligence starting this month
  • business innovation to encourage people within DB who have game-changing ideas but who have been unable to develop them up-to-now, and
  • joint venture developments using different business models.

“We need to transform our business with digital transformation as the backbone, but we also need to develop new digital ventures which sit alongside the core business,” Piguella explained to delegates.

Mr Keith Dierkx, IBM’s global industry leader for rail, said railways are very data-rich but information and insight poor and he urged the industry to be bolder. “Success is based on failure, not huge failures, but if you don’t have any failures you are probably not pushing hard enough.” Dierkx said. “The ability to innovate does not depend on the size of the organisation but the attitude of its management.”

This is also something close to Piguella’s heart. “We need to spend a lot of time educating management,” he added.

However, Dierkx also sounded a note of caution at the end of the conference. “For all the digital transformation, if you don’t run the trains on time and safely, you will fail,” he said. “Running an excellent railway on time is of high value. You can’t be a mobility provider if you don’t run the core business well - reliability is key. You need to operate the core business efficiently in parallel with digitisation.”

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