Then in 2015, evidence of serious malpractice emerged in a bid by NS subsidiaries Abellio and Qbuzz for a 15-year concession to operate rail and bus services in the Dutch province of Limburg. The province subsequently stripped the two companies of the concession, which was handed to the second place bidder Arriva.
The Limburg scandal led to the resignation of NS CEO Mr Timo Huges and the president of the board of commissioners Mr Carel van der Driest in June 2015. Four months later, secretary of state for infrastructure Mrs Wilma Mansveld resigned following the publication of the parliamentary inquiry into Fyra, which concluded that the Dutch state and NS had prioritised their own strategic and financial interests, resulting in a long and destructive conflict at the expense of the taxpayer and the passenger.
Following Huges resignation, Mr Roger Van Boxtel, a former government minister, was appointed interim CEO, and was subsequently made permanent last year, when he signed a three-year contract which extends his tenure until 2019. Van Boxtel’s brief is to restore NS’ reputation and performance, ensuring the organisation meets the minimum standards laid down by the Ministry of Infrastructure in the 2015-2025 Core Network Concession, which encompasses the operation of most main line services in the Netherlands as well as domestic services on HSL South.
“2016 was a very difficult year for NS, 2015 even more so,” Van Boxtel told IRJ in an exclusive interview at NS headquarters in Utrecht. “We had to deal with the effects of the Fyra parliamentary inquiry, we still have to deal with some of the aftershocks of Limburg, but I’m glad that we can slowly start closing that book. The people involved are all gone and there has been a lot of sorrow. The impact on people’s personal lives was huge, the impact on colleagues within NS was huge - many of these people had worked together for years. It was like throwing fireworks into a building, but we’ve put the fire out and now we’re looking ahead. I can feel that there is new energy in NS, politicians are more at ease at the moment, but we realise that it’s a thin line. Words don’t count, we will be judged by our achievements.”
Traffic continued to increase last year and NS anticipates full-year results for 2016 will reveal 2-3% ridership growth. By 2021, NS will invest €2.5bn in the renewal and expansion of its rolling stock fleet, and desperately-needed additional capacity is already starting to arrive, with the first of 58 new Stadler Flirt trains entering service last month. This should help to ease overcrowding, which has become particularly acute in the Randstad area around Amsterdam, Rotterdam, and The Hague. From next year, NS will begin to receive a fleet of 118 New Generation Sprinter EMUs from CAF, while a fleet of 79 Inter-City New Generation (ICNG) trains was ordered from Alstom last July, with deliveries due to start in 2020.
In March 2016 NS unveiled a new corporate strategy in response to a call from minister of finance, Mr Jeroen Dijsselbloem for the company to redefine its role in the wake of the Limburg scandal, the collapse of Fyra, and declining performance on the core network. Entitled Back on Track - the passenger as our first, second and third priority the strategy seeks to restore public trust and secure NS’ position in the Dutch passenger rail market. To achieve this, NS is refocusing its activities and investing more than €3bn in three areas:
- improving reliability, quality, rolling stock and frequencies on the core network and associated international services
- enhancing stations with the support of infrastructure manager Prorail, and
- focussing on improvements to the door-to-door journey experience, with upgraded passenger information and new payment methods, which will be rolled out in cooperation with Prorail, other operators and regional authorities.
This renewed focus on the core business means NS is scaling back its activities in other areas. NS will no longer participate in tenders for regional train services, while the company will sell its bus operator Qbuzz and cease to hold shares in urban transport operators. It will also pull out of retail activities in stations, transferring franchise operations to non-railway companies, and the sale of non-strategic assets will continue.
The objective of these measures is to boost passenger satisfaction to 80% (compared with 72.4% in 2015) and punctuality to 92.3% by 2019, when the Ministry of Infrastructure will conduct a mid-term review of the 2015-2025 Core Network Concession, which is based on a much more stringent system of incentives and penalties than the 2005-2015 contract.
Van Boxtel argues that this can only be achieved by aligning objectives across the entire company to ensure that the Key Performance Indications (KPIs) in the concession contract are met. NS plans to do this by simplifying its organisational structure with “less compartmentalisation and less management.” The new strategy emphasises the need to make better use of ideas from employees and empowering staff to demonstrate ownership. “We want connectivity between all of the different activities within NS,” Van Boxtel says. “Whether you buy trains, maintain them, or operate them, cooperation is vital. We need each other, and that’s something NS will put a lot of energy into over the next two or three years - restoring the connection between the different parts in the company. We listen very carefully to our drivers and conductors, because when things went wrong for NS we realised that the distance between the people in operation and the people in policy was too big. Now we are trying to close that gap.”
NS retains its aim of focussing on the door-to-door journey, but the company no longer sees its role as providing everything needed to make that happen. The strategy stresses the need to increase cooperation with other transport operators through joint initiatives such as Transport4Randstad and the new OVNL public transport association, but it also notes that its role in regional rail concessions and Qbuzz means that other operators do not currently view NS as independent. Pulling out of Qbuzz and concentrating on the Core Network Concession are therefore seen as supporting cooperation by reducing direct competition between NS and other operators.
The strategic plan for 2016-2019 includes €300m for enhancements to passenger information, Wi-Fi onboard and at stations, and new methods of payment.
The new strategy also calls for investment of around €300m in stations by 2019. In recent years there has been debate over whether the operation of stations should be considered a core activity, and there have been calls for this sector of the business to be split off, leaving NS to focus on running trains. Van Boxtel rejects the notion of ceding control of stations, which he argues are a critical component of the door-to-door journey concept which is central to NS’ new strategy.
“By rebuilding our stations in the last few years we have given back to the Dutch people well-presented, aesthetically-pleasing, attractive public buildings,” he says. “If you look back to the 1970s and 80s, nobody really took ownership for these spaces and our major stations decayed. Then we decided to restore or rebuild these stations with quality as a priority. If you look at Rotterdam, Amsterdam Central, The Hague Central, Leida, Delft, Arnhem and Breda, everyone is happy with what we did. When we reopened Arnhem station after reconstruction thousands of people came to the opening, it was incredible. What I sensed there was that everyone was happy to get back a great public space, with good shops reflecting the needs of the passengers. This alignment of thinking gives us back a lot from the audience and it’s such a central part of the travel experience, so I will never consider chipping the stations off NS.”
In recent years, NS has had to contend with sustained ridership growth on an already-busy network, to the extent that overcrowding is now a major concern, particularly in the Randstad conurbation, which includes Amsterdam, Rotterdam and The Hague. The issue became so acute that NS resorted to operating buses from Amsterdam Sloterdijk to the towns of Krommenie-Assendelft and Casticum to relieve overcrowded trains, a strategy that achieved limited success.
The delivery of new trains over the next few years should alleviate the situation, but Van Boxtel argues that tackling the issue successfully means looking beyond fleet expansion. “Capacity is not just an issue for NS but for the whole of the Netherlands,” he says. “This has always been a country that is dependent on the quality of our connections. The country’s major hubs still demand the best connections, by air, road, and train. Ultimately, we want to be schedule free, for example running trains every 3-5 minutes between Schiphiol and Amsterdam, because there are so many people making that trip every hour of the day.”
December sees the introduction of “turn up and go” inter-city services the under the High Frequency Rail (PHS) programme, which will ultimately cover most lines in the west of the country. Inter-city (IC) services will be stepped up from two to six trains per hour per direction on the Amsterdam - Utrecht - ’s-Hertogenbosch - Eindhoven route, while Amsterdam - Utrecht - Arnhem - Nijmegen services will be doubled from two to four trains per hour. The frequency of Utrecht - Houten Castellum stopping trains will also be increased.
The rollout of the PHS timetable on these routes is being made possible by infrastructure upgrades, including remodelling of the major rail hub at Utrecht Central and quadrupling the lines from Utrecht to Houten Castellum and Woerden.
Another priority for NS is reducing the carbon impact of its activities. A major step forwards was achieved on January 1, with all electric trains on the Dutch network operating exclusively using renewable energy from this date, a transition which has been achieved a year earlier than originally envisaged. NS is also looking to reduce energy consumption with investment in measures to improve the sustainability of rolling stock, such as more efficient traction systems and LED lighting.
NS has successfully expanded its business outside the Netherlands in recent years through Abellio, but with a renewed focus on domestic operations, there are now clearly-defined limits on the company’s international ambitions. The strategy states that through Abellio, NS will “opt for targeted growth abroad in a limited number of European markets,” with the aim of “achieving financial returns that will benefit our work in the Netherlands.” Abellio made a substantial profit in 2015 and secured a number of notable new contracts in 2016, including Britain’s Greater Anglia franchise and Germany’s Ruhr-Sieg network, Saxony Anhalt Diesel Network, Baden-Württemberg Neckar Network, and Rhine-Ruhr S-Bahn Lot B. Positive operating results are therefore expected to continue consistently over the next few years.
“We always said that we want three things out of running trains and buses abroad,” Van Boxtel explains. “We want to prepare for the possibility of market opening in the Netherlands; learn lessons from abroad which we can apply at home to improve our services, and earn profits for the NS Group, which again benefits Dutch passengers. We’ve learnt a lot from running trains in Britain and we want interaction between Britain, Germany and the Netherlands to intensify because I still think there are many things we can learn from each other, like how we deal with stations, timetables, and quality and service. They are different countries, but in the logistics and how you run trains there are a lot of similarities. Our shareholder is always interested in how we are dealing with things abroad, how we are handling the capital at risk, and up until now we are very happy with how we have dealt with that.”
While knowledge from NS has flowed into Abellio, Van Boxtel admits that Abellio’s experiences abroad haven’t always been applied in the Netherlands. The new strategy seeks to address this, and Abellio and NS Passengers are now working together to explore how NS might improve its commercial, operational and financial performance on the Dutch rail network.
With the current focus on NS’ domestic business, Van Boxtel does not see Abellio extending its activities into new markets, at least in the short-term. “We have frozen the idea of going into other countries temporarily because after Limburg we really have to focus on the Dutch market and the Core Concession, while aiming to do the perfect job in the markets where Abellio is already active,” he says. “In 2016 that paid off, not only in terms of money but in terms of building trust and customer confidence in our ability to do the job.”
Van Boxtel believes 2017 will be the year that passengers start to notice the impact of NS’ turnaround plan and he is confident the company has the momentum to make real strides towards the targets set for 2019. “I don’t know one driver who doesn’t want to drive on time, I don’t know one conductor who isn’t unhappy about a delay, so the spirit is there and that’s what we have to keep up,” he says. “We want to be proud of the company and give good service, because that’s important.”
Exploring the social impacts of automation
THE operation of driverless trains on the Dutch main line network might not be a prospect for the short or even medium term, but it is being taken seriously by NS. This year Prorail will carry out tests on the Betuwe Route dedicated freight line to look at the viability of automated operation, and Van Boxtel says NS is already discussing what impact automation might have on the passenger railway.
“We have started a debate internally, together with the workers council,” he says. “I said we had better start talking about it now together, because if we don’t start the debate now, in five years we will be talking to each other in negotiations, and that’s not a good way to manage the transition.
“We are going to look at where it is already being tried, and we have a big responsibility in terms of human relations management, so if we want to try this in the Netherlands we have to be prepared in social terms. Where are people going to work if they lose their job on the train? We are not there yet, but if you do it in an inclusive way, you can avoid big clashes later on, and driverless operation could be impossible in some circumstances.
We don’t have to be the first runner on this issue and I’m anxious to see experiences with automation elsewhere.”