First, it is worth reviewing the rather muddled situation pertaining in Europe, which ranges from complete separation in countries such as Britain, Netherlands, Poland, the Nordic countries, and Spain, to the holding company structure adopted in Germany, Italy and Austria, and complete integration in small countries like Ireland and Luxembourg.
But the situation is more complex than this, because private open-access operators, predominantly freight but now joined by a growing number of passenger companies, run trains on most national networks. The big state-owned railways also run trains through subsidiaries in neighbouring countries.
However, there is little correlation between the degree to which each country is open to competition and the structure of the national railway. Indeed, Germany with its holding company structure claims to have the greatest number of open-access operators, while Spain, which is held up by the integrators as one of the most completely separated rail systems, currently has virtually no open-access operators. This is perhaps more to do with Spain's different track gauge and its relative isolation, than the structure it has adopted.
The integrators received a boost in September when the European Court of Justice ruled that German Rail (DB) and Austrian Federal Railways (ÖBB) were not contravening European legislation on liberalisation and that the European Directive 91/440 does not require institutional separation and their holding company structure is legally sound.
However, this was short-lived, because Mr Siim Kallas, vice-president of the EC responsible for transport, says he wants to complete the separation of infrastructure from operations as part of his vision for a single market for rail and greater competition.
"There is no way that a return to the integrated railway structures that we had in Europe 20 years ago can realistically be seen as any kind of way forward," Kallas asserted on September 24 at an EC conference in Brussels on the Fourth Railway Package. "Infrastructure management functions which are potential sources of discrimination should be kept apart from the operation of transport services. These have to be exercised in an independent and neutral way."
The CEO of DB, Dr Rüdiger Grube, and the director-general of SNCF, Ms Sophie Boissard, shared a platform in Brussels on October 15 with Mr Andreas Schwilling, partner at Roland Berger Strategy Consultants, to back the case for integrated railways.
Roland Berger was promoting its study of integrated railways in Canada, the United States, Russia, China and Japan, which extols their technical and economic benefits. "The results show that integrated management of infrastructure and train operations is not an obstacle to improving a railway's efficiency and performance," Schwilling explained. Roland Berger highlights how technical benefits accrue from integration because it allows a railway to manage the all-important wheel-rail interface effectively, thereby helping to keep costs under control.
But is the comparison between huge countries like Canada, the United States, Russia and China and the small diverse countries in Europe valid, considering their very different railway history and economic and political climate? In the Roland Berger study, nearly all the senior railway managers questioned said they would not enter Europe because of its lack of technical uniformity, very complex rail regulations,
and lack of reliability and consistency of regulations and reforms. But these reasons have nothing to do with whether the railways are separated or not, rather the historical legacy of each country doing its own thing, the consequences of which the EC is trying to grapple with.
Neither Grube nor Boissard criticised the deregulation already introduced in Europe, stressing that they support railway liberalisation. Instead, they said they didn't want the EC to take decisions in haste and called for a cost-benefit analysis ahead of the Fourth Railway Package.
"The EC seems to think that third-party access isn't working," Grube said. "So how could it work? There is sufficient regulation in place, but it's not implemented."
"Our arguments should not be seen as reproaching the EC," Boissard said. "We are simply asking them that, when looking at further unbundling, they take things one step at a time."
These calls to slow down, consolidate the gains made, and enforce existing regulations certainly have merit, but they are not quite the line in the sand that some railway managers would like to see. As one manager told me: "The EC should consider the reality for once. I'm disappointed that the EC spends so little time thinking about the customer." And yet Kallas believes his reforms will increase rail traffic and benefit the customer. Only time will tell who is right.