IN some ways, Germany’s passenger rail sector enjoys many advantages that operators in other countries would be happy to have. The political climate at state and federal level is favourable to rail, encouraging investment and innovation to meet targets to increase modal shift and reduce carbon emissions. The federal government has supported operators during the Covid-19 pandemic and has encouraged passengers to return to rail through its 9-euro ticket initiative, and at the state level transport authorities are growing the network through the competitive tendering of local and regional passenger services, now facilitating the introduction of new, greener technology such as rolling stock powered by battery or even hydrogen.
Bavarian Railway Company (BEG) plans, finances and manages local passenger services in the state of Bavaria, awarding operating contracts on a 6000 route-km network serving 1066 stations. In 2021 local, regional and Munich S-Bahn services accounted for a total of 129 million train-km, with 74% operated by DB Regio and its subsidiaries and the remainder by other operators.
“Over the past year, the number of passengers has been steadily increasing again, but is on the whole still below the level before the Covid-19 pandemic,” BEG says. “Overall, the rail services specified by BEG are largely stable at the moment, but in some areas, particularly in northern Bavaria, temporary replacement services have had to be implemented, as the operating companies have again been reporting a major increase in staff sickness rates, particularly in the second quarter of 2022.”
Mofair is the association of German private passenger operators, and its members including Abellio, FlixTrain, Go-Ahead, MEV, National Express, Netinera, RDC Germany and Transdev, operate long-distance services as well as regional routes under contract. “Demand is recovering steadily,” Mofair says. “Since mid-May of this year, the figures for journeys over 30km have been above the 2019 level.” However, it warns that the rail sector will have to adapt to changes brought about by the pandemic, such as increased home working, through initiatives such as flexible fares for occasional travellers.
Using the funds made available by the federal government under its public transport rescue package, BEG says it was possible to provide financial support to the operating companies and compensate them for a large part of the massive decline in passenger demand and revenue that they experienced during the pandemic. This enabled the operators to stay in business and for local passenger services to be maintained. “In the regional sector, the rescue package has ensured that neither services had to be discontinued nor staffing levels cut,” Mofair says.
But in addition to the loss of revenue due to Covid-19, rail operations are currently suffering from extreme price increases, particularly in staffing costs and the price of energy and materials. BEG also says that the downward pressure on prices usually produced by competitive tendering is now starting to diminish. “Most of the networks are now being put out to tender for the second or even third time,” Mofair continues. “Substantially lower bid prices from rail operators can generally only be achieved in the first invitation to tender.”
“To meet these increased costs the federal government must permanently increase the funding it makes available for regional rail services,” says BEG, which adds that the Bavarian state government is working hard to achieve this in the interests of passengers and operators. Representing some of these companies who bid for regional operating contracts, Mofair agrees that there is an urgent need to increase federal funding to absorb extreme price increases such as those for electricity. “If there is no increase in funding, service cuts will be unavoidable,” Mofair says.
9-euro ticket
Passenger traffic in Germany has been growing again following the lifting of travel restrictions imposed during the pandemic, but another factor has seen passengers returning to the railway in droves. The federal government’s 9-euro ticket initiative, offering unlimited travel on local and regional services for a set period of time, prompted rail journeys under 30km to increase by 42% in June 2022 when compared with June 2019, and journeys between 30 and 100km increase by 58%, according to the Federal Statistical Office.
Demand on commuter routes and those serving tourist destinations has increased enormously, according to Mofair, while weekend travel has increased by 83%. “Occasionally, there have been and still are trains that can no longer continue their journey due to severe overcrowding, but this is the exception,” the group says. “It is a challenging situation for train crews, but they successfully manage it with a high level of commitment.”
All this extra traffic has not been without its consequences, with BEG attributing a significant decline in train punctuality to the introduction of the 9-euro ticket. “In June, the punctuality rate across Bavaria was only around 82%, representing a fall of over 7% compared with the month before,” BEG says. It adds that rail services have not been able to observe their scheduled station dwell times as more passengers board and alight, with delays also caused by the need to attach extra cars to trains to provide additional capacity.
However, “the massive drop in punctuality is not exclusively attributable to the 9-euro ticket,” says BEG, which is currently experiencing a massive increase in delays due to faults that are the responsibility of infrastructure manager DB Network. “The state of the infrastructure on Bavaria’s regional railway lines is unacceptable at the moment,” BEG says. The proportion of regional and suburban services running on time has fallen from an average of 92.4% from January to May to 82.8% in June. The share of delays attributable to infrastructure faults increased from an average of 36.9% between January and May to 45.4 % in June.
This situation is clearly untenable for Bavaria, whose transport minister, Mr Christian Bernreiter, has urged national operator German Rail (DB) and the federal government not to neglect regional lines in favour of major routes, as they risk disconnecting large parts of Germany from the high-performance network. “There is an urgent need for massive investment in the railway,” BEG says. “We urge DB Network to better maintain the infrastructure as a preventive measure to avoid such an accumulation of defects in the first place. It must not be the case that new temporary speed restrictions or even complete line closures are imposed with almost every run of the track measuring train.”
“German rail infrastructure is currently in a disastrous state,” Mofair says. “Capacity bottlenecks, miserable work site management and countless speed restrictions, to name just a few examples, are massively hampering rail operators. These shortcomings pose an acute threat to the transformation of the transport system.”
At the same time, Mofair says that its members are paying “expensive” track access charges based on the full cost recovery model, contributing to the profits of DB Network. It points out that these profits are retained within the wider DB Group, whose train operating businesses are in competition with private operators.
“DB’s infrastructure activities must be merged without delay into a company oriented towards the common good, freed from the profit motive and committed to quality targets,” Mofair says, noting that this is in line with the policy of Germany’s current coalition government. “In the short term, track access charges should be reduced by 20% to compensate operators for their grievances.”
Track access charges
In April 2021 parliament approved a federal government initiative to waive or refund up to 98% of the track access charges paid by commercial rail operators since March 2020, with the arrangement continuing into 2022 for long-distance passenger operators, both public and private. This did not apply to contracted local and regional rail services.
“The track access charge subsidy introduced in 2021 came too late, so that in 2020 almost all long-distance services of operators competing with DB had to be discontinued,” Mofair says. When this subsidy comes to an end, the association would in the long term like to see track access charges reduced to the marginal cost of direct train operations.
One private operator helped by this government support was FlixTrain, which now runs a network of open-access long-distance services across Germany. “The reduction in track access charges enabled us to continue operating in 2021 and expand in 2022,” says Flix CEO, Mr André Schwämmlein.
On May 19 the company launched a Stuttgart - Hamburg service, followed by a new route from Berlin to Wiesbaden on June 2 and FlixTrain’s first international service from Berlin to Basle in Switzerland on June 23. Service frequency on the Munich - Cologne - Hamburg and Hamburg - Berlin - Leipzig routes was also increased under the expansion programme that boosted the total number of destinations served by FlixTrain to 70. “We’re happy with the largest expansion of our network that we have undertaken so far,” Schwämmlein says. “We wanted to be present in every German metropolitan region and we have done that.”
“Capacity bottlenecks, miserable work site management and countless speed restrictions, to name just a few examples, are massively hampering rail operators.”
Mofair
However, FlixTrain notes that passenger numbers are not yet back to pre-pandemic levels, due in part to the 9-euro ticket. “FlixTrain did not form part of the 9-euro scheme for local and regional services, so obviously it has had an impact on us,” Schwämmlein says. “I think it generated additional leisure trips, but I don’t think it replaced many car journeys. There is a window of opportunity for us provided by higher fuel prices, but subsidised tickets is not how to get people out of their cars. It’s not the right measure to achieve modal shift. Ease of access to reasonably priced rail services and the quality of service is more important.”
At the moment, service quality can be at the mercy of the disruption caused by infrastructure work. “We’re not happy about the short-term changes to timetables but we put up with it,” says Schwämmlein. He recognises that work to upgrade the network is necessary, particularly to accelerate digitalisation where much remains to be done. “We have to invest there, because work to date has been under-resourced, under-managed and under-delivered,” he says. One major task is to accelerate the implementation of ETCS across Germany, while many industry systems are still paper-based, including for track access applications.
“It is fair to say that there has not been adequate investment in Germany’s national rail infrastructure and that we need to do something about it,” Schwämmlein says. “The problem is that our infrastructure manager, DB Network, is part of the DB Group and behaves in a very traditional manner, focusing on what is best for the company.”
He believes that the more independent an infrastructure manager is, the more likely it is to invest where the returns are greater and the more it will do to minimise the impact of infrastructure work on its customers, the passenger and freight operators. “An independent infrastructure manager would be incentivised to increase traffic and would build more passing loops, for example, rather than a new underground station in Stuttgart that does little to increase capacity,” Schwämmlein says.
As a realist, he does not expect DB Network to become an entirely separate company, “but there needs to be a clear incentive for infrastructure investment that generates more traffic and the cross-subsidy to DB train operations has to stop,” says Schwämmlein. He does not feel that fundamental change is required, but that the money flows within the industry need to be more transparent. “If we feel the infrastructure manager is helping us then we will be supportive. We are investing for the next 20, 30 or 40 years and so we won’t complain about the work that is being done over the next three years.”
FlixTrain has recently invested to refurbish 140 coaches in order to offer its customers a better travelling experience. “There is a demand for more rail services, and we need more trains,” Schwämmlein says. The company is currently evaluating its future rolling stock needs and believes it will be possible to meet its requirements through procurement on the open market, provided that track access charges are low enough to make the case for investing in new trains.
“Lowering track access charges in Germany on a more permanent basis would be essential to encourage competition,” Schwämmlein says. “Lower track access charges lead to more services and more choice for the customer. Look at Sweden, Italy and Spain, and you can see that the competitive situation is improving. The market develops so much better if access charges are lower. Competition is good for everyone.”
Whether DB entertains the idea of reducing access charges remains to be seen. Its delicate financial situation is well documented, and it appears reluctant to upset the status quo. Ultimately any decision will rest at the door of the federal government. The new coalition talked about major reform upon coming to power, but this has yet to materialise.
