LAUNCHED at the beginning of this year, Alpha Trains is a relatively new
name in train leasing. However, beneath the fresh branding is a company
that has developed over more than a decade to become the largest train
leasing business in Europe supplying state-owned and private operators
in 14 countries.

Formerly known as Angel Trains International, Alpha
Trains was born in the demerger of the Angel Trains group, which saw its
British and European operations go their separate ways. Alpha Trains is
based in Luxembourg with 400 locomotives and 240 passenger trains
currently on its books. The average age of these fleets is just seven
years, a reflection of the high level of rolling stock investment in
Europe over the last 10 years.
Together with the new brand, Alpha
Trains has a new CEO. Prior to assuming his new role on September 1, Mr
Shaun Mills was CEO of German train and bus operator Abellio, and before
that finance director of former British train operating company GNER.
As such, he has seen the leasing business from both sides of the table.
"Our role is to procure, finance and lease trains, and our approach to
the business is very engineering-focused," he explains. "We don't just
maintain our rolling stock assets, we protect and enhance them, which is
why we have more engineers than other leasing companies."

economic crisis has made financing new trains more challenging, and the
collapse in railfreight volumes in late 2008 and early 2009 had a
dramatic impact on the demand for locomotives, forcing Angel Trains
Europe to adapt quickly to this sudden change in the market. "On the
freight side our main aim was to ensure the work was still out there for
our locomotives and that meant sharing the risk with our customers,"
says Mills. "We allowed contract durations to shrink in line with demand
because operators needed that extra flexibility. Now the market is
recovering we're trying to extend contract terms as confidence returns."

Mills says this strategy was successful, and utilisation of the Alpha
Trains freight locomotive fleet remained high throughout the crisis. At
the time of writing, the electric locomotive fleet is fully deployed,
and most of the diesel fleet is in use. Indeed, as volumes recover Mills
says operators will need to think carefully about their longer-term
traction requirements, particularly as securing finance remains
difficult. "Operators could get caught out if they don't take
locomotives for longer," he warns. "We are not planning to increase the
supply of locomotives in the near future."

The downturn led some
larger freight operators to put their own locomotives into storage, and
in some cases, these operators have been unable to resurrect traction to
meet short-term increases in volumes. This has created an interesting
business opportunity for Alpha Trains, which is able to offer traction
resources that are ‘ready-to-go.'

Mills is frustrated by the
often-protracted certification of new locomotive types, and the national
variations in this process. "Certification is still a lottery," he
asserts. "You can approve an aircraft and fly it anywhere in the world
faster than you can approve a locomotive to operate in two European

Increasingly, freight operators also require locomotives
equipped with ERTMS, and Mills is concerned about national variations in
the application of the technology. "ERTMS is getting contaminated
because countries make their own changes to the specification," he says.
"In the short term it will drive up the cost of locomotives and I can't
see infrastructure managers compensating for this through lower track
access charges."

The concessioning of regional services has driven
demand in the dmu and emu market, not least because many of the
contracts specify the provision of new trains. In Germany this trend
has reduced the average age of regional trains substantially in recent
years, and in areas where new operators have taken over from DB, brand
new trains have often superseded relatively youthful rolling stock.

This has been necessary to allow new operators into the market, but
Mills believes the current level of orders cannot continue indefinitely.
"You cannot continually buy new trains with a 30-year lifespan when
concessions have a duration of 10 or 15 years and as this market matures
the situation will change," he explains. "I think this will lead to
more fluid train use in 10-15 years, with rolling stock transferring
between operators."

This process will take longer in markets where
liberalisation of regional passenger services is less advanced, and
Mills believes significant new opportunities will emerge in countries
such as France. However, Alpha Trains is unlikely to venture into the
market for high-speed trains, where liberalisation is expected to
attract new entrants. "High-speed is not our area of expertise and not
something we're currently considering," Mills explains. "This is a
market that will be dominated by state-owned operators such as DB and
SNCF, and I expect they will generally choose to procure their own