STANDING next to the newly-unveiled jet black and gold Leo Express emu at InnoTrans in September, Mr Leoš Novotny, chairman of the board of the fledgling open-access operator, cannot help but smile. As he tells the gathering crowds that the Czech Republic's latest open-access operator is due to begin operation on time, he also speaks with pride about the company's new Stadler Flirt trains.
"It goes very well with our concept," Novotny said. "It is Swiss-made, which is what we will be marketing to our customers. Stadler understood that we needed something to differentiate us from the competition, and I remain very content and very convinced by the qualities of our new trains."
Leo Express will launch its first services this month following the winter timetable change on December 9. The new operator is going head-to-head with Czech Railways (CD) and fellow open-access operator, RegioJet, on the Prague - Ostrava line, offering 16 services per day, and a competitive pricing structure. And despite some difficulties with submitting certification documents for its new rolling stock to the rail authority, the operator began trial runs with passengers in mid-November, and was optimistic as IRJ went to press that its service would begin on time.
Inaugural venture
Speaking to IRJ onboard the second of five, five-car 160km/h Flirt emus which Leo Express ordered in a deal in September 2010, Novotny says that his investment business Aakon Capital is always looking for new ventures which are interesting and could generate a return.
Leo Express is the private equity investment company's inaugural venture into rail, and its most visible to date, and Novotny is convinced that it is the right move to make.
"Every year we look at executing an investment in one or two new projects out of around 100 or so business proposals that we receive," Novotny says. "We saw that in the Czech Republic and in central Europe there are a lot of opportunities to enter the passenger rail sector and not many people are really taking advantage of it.
"Somebody forgot to penetrate the central and eastern European rail market following the fall of the Soviet Union in the 1990s and the opening up of the region to business investments. It is unbelievable that in 2012 we are still one of the first private rail operators to begin work in central Europe."
Novotny says that he was keen to differentiate the Leo Express service from its competitors through its rolling stock concept. Novotny visited a range of operators across Europe to look at how they work and settled on buying new rolling stock rather than leasing locomotives and coaches because of the improved efficiency of the vehicles. He says that the operating costs of the new emus is around half that of locomotive-hauled trains.
"This train was built to be competitive in the central European market," Novotny says. "20-30 years ago there was no competition in mind when developing rolling stock. It was locomotive-hauled coaches and there was no real appetite for innovation. This might have been the old solution, but we chose to do something more modern. We want to combine quality of service and safety with passenger comfort."
Three classes
Indeed Leo Express is offering three classes of travel for 237 passengers in a single train, with up to six passengers in premium class, 19 in business and 212 in economy. Novotny says that the company came up with 20 criteria ranging from the quality of its seats to availability of at-seat power sockets and air-conditioning. He says the aim of this was to be better or at least equal to the service provided by its competitors.
"I look at it as comparing two taxi drivers," Novotny says. "One is driving a 20-28-year-old classic car which has no air-conditioning and the windows don't work. The other car is more comfortable, but it is last year's Skoda. It is not junk, but it is not a Mercedes. It is the same for us. We are not operating an AGV here, but we are offering something that provides a very good service to the market we will be serving."
In parallel to developing its rolling stock design concept, Novotny says that the financial arrangements for buying rather than leasing rolling stock were better suited to the company's business model because the debt level would be easier to service. However, it is in leasing that he sees great potential for further investment in the rail sector.
InnoTrans was the launchpad for Aakon's latest venture, Leo Pool, a rolling stock leasing business that will similarly target the central and eastern European rail market. Novotny says he thinks that Leo Pool will clinch its first deals in 2013-14, and expects the company to provide rolling stock both for future Leo Express ventures and third parties.
He says that he sees great potential for additional open-access services in the Czech Republic, as well as other central European countries and cross-border services in central Europe. Already there is talk of launching services from Prague to Usti nad Labem, Plzen and Vienna, and investing Koruna 7.25bn ($US 376.2m) in new equipment and trains.
Indeed, Novotny says that Leo Express' inaugural service promises to be just the beginning. "We have a lot of work still to do to reinvent central European railways," he says.
