Major European railways need the right people at the top
THREE of Europe's major railways face some serious challenges in the coming months as they try to grapple with problems ranging from a failure to react to rapid changes in the market, as in the case of French National Railways (SNCF) and German Rail (DB), or a failure to keep costs under control and manage projects effectively as with Britain's infrastructure manager Network Rail (NR).
SNCF's president Mr Guillaume Pepy outlined the threats facing SNCF's high-speed services at the UIC's high-speed rail congress in Tokyo last month. These include car sharing, the advent of long-distance bus competition, and the future introduction of autonomous-driving cars. Such developments are changing travel habits, while at the same time people are becoming more price conscious. These threats are not unique to SNCF, as DB for example is only too well aware.
SNCF is trying to respond to the new business environment in several ways. Its low-fare Ouigo high-speed operation launched in April 2013 has been successful in attracting new business and is now being expanded. SNCF is also increasing the proportion of discounted fares, and has introduced TGV Pop where passengers can vote online for a train service 14 days before they want to travel. At the same time SNCF is adding more seats to its TGV fleet and improving train utilisation to increase profitability.
While this sounds like a sound strategy to revitalise TGV, SNCF has failed to tackle the continuing decline of its conventional long-distance services, many of which are in grave danger of withering away completely. A good example of the poor service on offer is the Nantes - La Rochelle - Bordeaux line where only three trains a day are provided with the first northbound departure not until 10.55, while onerous speed restriction will be introduced soon due to the poor state of the track, which will make the service even less attractive.
The latest plan calls for services to be recast to meet the needs of passengers with higher frequencies on many routes, coupled with investment in new trains and infrastructure in order to improve punctuality, and reduce journey times and operating costs.
Opening up some routes to competition to break SNCF's monopoly is also suggested, although this will face stiff opposition from the unions, and is unlikely to start before the end of 2016. A leadership council is proposed to administer the network, which does not sound very inspiring.
While there is huge potential to develop these services, time is of the essence. A small dynamic team of people with vision and energy needs to be formed, along the lines of the Ouigo management, which can breathe new life into the services and try out new ideas to establish what works best. A visit to Britain and Sweden, for example, would also provide ideas of how to revitalise regional and overnight services.
Across the border in Germany, DB also needs new ideas to combat its disappointing financial performance, and to recover from a series of damaging strikes this year. DB's CEO Dr Rüdiger Grube is planning a drastic restructuring to improve efficiency. One measure under consideration is the part-privatisation of DB, even though this has always faced considerable political opposition in the past.
A substantial reduction in the size of the management board was expected to be announced last month. DB's executive board member for technology and environment, Dr Heike Hanagarth, has already resigned, and according to reports in the German media, DB's head of passenger transport Mr Ulrich Homburg, head of compliance Mr Gerd Becht and head of railfreight Mr Alexander Hedderich, will all leave the board, while head of logistics Mr Karl-Friedrich Rausch, who retires at the end of the year, will not be replaced.
To lose so many key people at once points to serious conflicts within the DB hierarchy over future strategy. It would appear foolhardy for Grube to exclude people from the management board with responsibility for passenger or freight, its two main revenue earners. DB actually needs two passenger board members, one focused on the concessioning of urban and regional services - where DB has lost considerable ground to new private operators - and the other responsible for developing its purely-commercial Inter-City and ICE high-speed services. These two roles need very different skill sets.
In Britain, NR's huge investment plan, and in particular its electrification programme, has come unstuck with costs spiralling and projects running behind schedule. The government has since postponed some of the electrification schemes and appointed new senior managers to tackle the problems.
Behind this unfolding crisis is the sheer volume of work which NR has taken on in an effort to modernise the network and increase capacity to cope with soaring traffic. Good project management and implementation is being hampered by an acute shortage of signalling and electrification engineers. This is a worldwide phenomenon, which has been exacerbated in Britain by the government's opposition, until recently, to electrify main lines in the mistaken belief that some new method of powering trains was just around the corner. This led to an exodus of engineers and loss of expertise, which NR is now having to rebuild.
The potential for rail transport is great, as its market share is still very small, but railways do not have a God-given right to survive. They need skilled people with flair and imagination in the right jobs to prosper.