The minister told the Dutch Parliament that without the government's intervention HSA, a joint venture between NS and airline KLM, would be declared bankrupt by the middle of the year. HSA is reportedly losing €385,000 per day, while services are not meeting the conditions set in the concession agreement, which grants HSA exclusive rights and obligations for operation of domestic services on the high-speed line.
HSA's dire financial situation first became apparent in 2010, and forced the government to seek a solution. On November 18, the government revealed plans to allow NS to continue operating the concession in its current form until 2015, when it will be merged into the national core network concession for 2015-25, which will also be awarded to NS. The government has considered various other solutions, including opening the line to full competition, tendering a revised high-speed concession, and allowing HSA to file for bankruptcy.
Bankruptcy was ruled out because it was opposed by the Infrastructure Ministry, which calculated the cost to the state would be around €2.4bn. The solution put before parliament will cost the government around €390m.
In an effort to minimise the financial impact, the concession fee for high-speed operations (de facto the charges for infrastructure use), will be cut from €160m per year to €101m. The minister has determined that high-speed fares can be a maximum of 30% higher than the price of a ticket on the conventional network. At present a second-class high-speed ticket can cost up to 65% more than the equivalent fare on a standard service.
The performance criteria are also reduced. The number of off-peak high-speed services will be cut from five to four trains per hour. Plans for a Fyra service from The Hague Central to Brussels Midi via Breda have been dropped, and there will instead be a Fyra shuttle between Breda and Antwerp.
While this may appear an elegant solution to a complex problem, it is in reality tangled in legal complexities. The government originally awarded HSA the concession in 2001 following a public tender that was contested by a number of consortia. As NS failed to meet the tender specification with its initial bid, it was allowed by the government to submit a second offer, which was duly accepted.
Even before the present minister of infrastructure made a decision on the future of HSA, some of these bidders threatened to take the government to court over the merger of the two concessions. The rescue of HSA has been sharply criticised, and interesting legal questions have emerged from the case. Should there be a review of the minister's decision, especially after such a public tendering procedure? Do the revised financial arrangements constitute illegal state support?
The decision to award NS the core network contract for 10 years from 2015 is interesting in that it excludes any form of competition from the domestic long-distance and regional passenger market. In return for this exclusive arrangement, NS will pay an €80m annual concession fee, of which €50m will be reinvested in the network. Under the terms of its current concession, NS pays the government €20m a year.
The agreement requires NS to invest in better access for passengers with disabilities, improve services at stations, and enhance late-night train services. The minimum service on all core network lines is two trains per hour.
Merging both the high-speed and core network concessions opens up new possibilities and NS is expected to launch new domestic inter-city services, which will run on the HSL South without a passenger surcharge on fares. These are likely to include a Rotterdam Central - Almere service, using the northern section of HSL South, and The Hague Central - Eindhoven trains, running on the southern section of the high-speed line.
However, NS Passenger, the NS subsidiary operating on the core network, does not currently have suitable rolling stock for operation on HSL South, which requires trains with 25kV 50Hz power supply and ETCS Level 2. All of the 160km/h VIRM double-deck emus have been modified to run under 25kV electrification in addition to the conventional Dutch 1.5kV dc system, but are not equipped with ETCS. This means that at present it is not known which trains will be used for domestic inter-city operations via HSL South.
Nonetheless, this more flexible approach will prompt a change in the model of passenger operation on the core network, together with the further development and implementation of the High-Frequency Train Service Programme (PHS). In its concession agreement with the government, NS is committed to introducing 10-minute interval peak inter-city services on the Schiphol - Almere, Schiphol - Utrecht Central - Nijmegen, and Alkmaar - Amsterdam Central - Eindhoven corridors. Furthermore, NS has to offer 30-minute intervals for regional services on the Dordrecht - Breda, Roosendaal - Dordrecht, Leeuwarden - Meppel (- Zwolle) and Arnhem - Ede-Wageningen lines.
The concession agreement also requires NS to stimulate international operations, from which the railway had largely retreated in the 1990s and 2000s. This concerns the development of Maastricht - Liège, (Eindhoven -) Sittard - Aachen and Eindhoven - Venlo - Düsseldorf services, and the retention of all-station services between Roosendaal and Antwerp.
NS will also be obliged to provide toilets on all trains. The issue of toilet facilities on trains is a contentious one at present, with politicians and passengers venting their frustration at the delivery of Sprinter suburban emus that are not equipped with toilets.
These new trains must be now be retrofitted with toilets (accessible for people with disabilities) during overhauls, due between 2018 and 2025. Step-free access is another condition of the core network concession, and again there are challenges with rolling stock.
This issue affects not only the new Sprinters but also the large fleet of VIRM double-deck emus. Modifications to the latter were found to be impractical, and adding a new coach to each VIRM set would cost an estimated €800m, which is considered too expensive. This means that the VIRMs will not be modified, and given that these trains are likely to remain in service until the 2040s, it will be many years before NS has a fully-accessible fleet.
While private operators have won concessions to operate regional lines in the Netherlands, the Dutch government has so far resisted allowing NS core network services to share tracks with other operators. However, with NS set to benefit from the government's decision on the future of HSL South, the minister has agreed to allow regions to tender some mainline regional services. Five regional routes currently included in the core network, and therefore operated by NS, will be decentralised, with legal powers and finances devolved from central to regional governments.
The first services to come under regional control will be Roermond - Maastricht and Sittard - Heerlen, followed by Eindhoven - Weert, Zwolle - Groningen, and Apeldoorn - Enschede. The latter three are subject to further study in relation to the impact of the PHS timetabling project, harmonisation of tariffs and tickets, and the impact of multiple operators sharing infrastructure.
A mid-term review is promised by the minister, which may pave the way for further services to be decentralised. NS reportedly opposes the plans, as it is against sharing publicly-tendered services on the core network.