April 15, 2016

Industry leaders express strong views in Vienna

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This year's International Railway Summit offered an excellent insight to the current state of the railway industry in Europe. David Briginshaw reviews the highlights.

VIENNA was the location for three days of meetings, networking and debate at the International Railway Summit 2016, hosted by IRJ and IRITS Events on February 17-19.

Setting the tone for the discussions that would follow, Mr Christian Kern CEO of Austrian Federal Railways (ÖBB) told delegates during his address at the opening dinner that ÖBB will invest €40bn during the next five years. "This is probably the most ambitious investment programme in Europe in terms of GDP," Kern said. He also claimed that the scale of investment in the railway has helped to prevent Austria from going into recession.

Kern cited the recently-completed main station in Vienna as an example of what is being achieved and the potential such projects have for the wider economy. "The new main station has reduced the cost of operating trains through Vienna and has cut journey time significantly," Kern explained. He said the project cost around €1bn, but a further €3bn is being invested by the private sector to redevelop former railway land to provide homes for 10,000 people and work places for a further 20,000.

IRSHowever, Kern is fearful for the future, pointing to the deteriorating performance of German Rail (DB), which has since announced a loss of €1.5bn for 2015, its first since 2003. "We have to ask if DB is in this situation, what will the future be for ÖBB? I feel our industry is lagging behind other industries such as automotive with the development of driverless cars. We need to speed up development and stay focussed on what we are doing. We need to have a much more efficient railway and we need politicians to back this."

This view was echoed by Dr Josef Doppelbauer, executive director of the European Railway Agency (ERA), who said railways are in a critical situation in Europe at the moment. "Despite the benefits of rail transport, rail still has a low market share of around 7% for passenger and 17-18% for freight. Unit costs for rail are 100% more than for other modes. The cost of the assets is too high and utilisation is low because of the poor availability of the assets and poor maintenance."

Dopplebauer also cited a lack of standardisation as another cost driver. "If we compare air with rail, there are two big families of aircraft with around 4000 Boeing 737s and 3000 Airbus A320s in service, compared with 550 TGVs of seven different types and the Japanese Shinkansen family of 600 trains."


Mr Jean-Pierre Loubinoux, director general of the International Union of Railways (UIC), said that as a global organisation promoting interoperability, innovation and standardisation, including in Europe, he is keen to develop mutual cooperation between the UIC and ERA. However, he was concerned about the possibility of duplication between the UIC's and ERA's work, a point which Doppelbauer was keen to address.

"We don't want to standardise everything because it is not necessary," Doppelbauer said. "It is important to agree with the UIC where we can cooperate and not step on each other's toes. We are very happy that various standards are driven by the UIC and are not subjected to legal standardisation. This helps everyone to operate more efficiently."

Doppelbauer added that it is important that the railway industry continues to push for greater competition and innovation. He pointed out that since the introduction of NTV in Italy, trains now depart between Milan and Rome every few minutes which has all but killed off air traffic between the two cities, demonstrating that competition clearly works in the industry's favour.

Lord Tony Berkeley, board member of the European Rail Freight Association and chairman of the UK Rail Freight Group, pointed out that growth can be achieved in railfreight where there is fair competition. "Railfreight has grown by 60% in Britain, but has dropped by 50% in France during the last 10 years," Berkeley told delegates. "The infrastructure manager must be independent and treat everyone fairly."

Unfortunately this is often not the case, as Berkeley observed. "Single wagon freight accounts for 50% of the freight market in Europe but it is closed to private operators because they are denied access to the terminals. People love monopolies. We need a full liberalisation agenda."

Berkeley urged customers, independent operators and others must challenge the status quo: "We need to support EC transport commissioner Violeta Bulc's vision for the rail sector 'to deliver the investment, efficiency, reliability and keep competitive' with 'new business models for passenger and freight services, and innovation such as digitalisation.' The rail industry should stop complaining about competition with road and air and put its house in order first."


Mr Peter Köhler, who is CEO Europe of Czech opem- access passenger operator Leo Express, explained how it has succeeded in running a privately-financed passenger service in competition with the subsidised incumbent Czech Railways (CD). "Our occupancy rate is double that of CD, our Ebitda has quadrupled and we expect to move into profit this year," Köhler explained. "Passenger numbers between Prague and Ostrava have increased by 50% since private operators entered the Czech passenger rail market. We were the first with a full 'infotainment' system on board. But we had problems obtaining attractive sites for depots and ticket offices in stations – we want access to idle resources."

Leo Express has carried 1.1 million passengers in the first three years of operating its rail service which now connects Prague with Ostrava, as well as Kosice and Presov in Slovakia, supported by bus feeder routes, which it regards as a prelude to expanding its rail network.

Köhler is disappointed that the Fourth Railway Package will not usher in fairer competition as quickly as originally foreseen. "The original plan was to get rid of direct awards for concessions by 2019, but now this has been put back to 2024-2026, which with a 15-year term for some concessions means 2042."

Dr Knut Sauer, vice-president business development, strategy and sales, with Hyperloop Technologies, gave delegates a glimpse into the future with his presentation on the Hyperloop project which foresees passengers travelling totally automatically in pods travelling at up to 1100km/h inside a tube. "Hyperloop is not here to replace rail but to add a fifth mode of transport," he reassured delegates.

Sauer claimed that Hyperloop will use one-third the energy of a high-speed railway, and will provide an on demand, point-to-point service with 25-35 passengers per vehicle.

"The original idea was to build a Hyperloop between San Francisco and Los Angeles, but we believe the first Hyperloop will move freight between a large port and a conurbation – it is easier to get regulatory approval for freight than for passenger," Sauer explained.

"We should have 250 employees and we will prove full system capability before the end of the year. We are looking at passive maglev technology and linear propulsion in a depressurised tube as the air drag is a lot less. We are building a 1200m test track to test the propulsion system and we will have a 3.2km test tube by the end of the year. We are also trying to drive down the construction and operating costs.

"By 2020, we expect to have the first freight Hyperloop and the first passenger Hyperloop in 2021 but the first passenger Hyperloop won't be in the United States," Sauer concluded.

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