NORWEGIAN operator Flytoget has announced that it will withdraw from the rail market after failing to secure a contract to operate regional passenger services in Eastern Norway.

The Norwegian Railway Directorate has selected national operator Vy Group which made a lower bid than Flytoget for the 10-year direct award contract that starts in December 2023.

Vy Group will now enter final negotiations with the Railway Directorate.

“We believe that both the state and rail travellers are missing out on a long-awaited boost for Norway’s railways,” says Flytoget acting managing director, Mr Nicolai Bryde. “Flytoget made a bid where we proposed a significant improvement of the train service with more frequent departures and making better use of available capacity.”

The state-owned company will continue to operate services to Gardermoen Airport until its current access rights expire in 2028, but will then withdraw from the rail business.

In March 2022 the Ministry of Transport and Communications commissioned the Railway Directorate to directly award the Eastern Norway contract, comprising two separate agreements for Eastern Norway 1 and Eastern Norway 2.

The Railway Directorate says that Flytoget was invited to negotiate for Eastern Norway 2, while Vy Group was first invited to negotiate for Eastern Norway 1.

In December 2022 Vy Group submitted a proposal outlining how services in Eastern Norway could be operated together, arguing that combining the two agreements would be best for passengers and society as a whole.

Vy Group says that splitting Eastern Norway would have resulted in higher costs and less efficient operations that would be more vulnerable to disruption.

Flytoget has expressed its surprise at not being given the opportunity to make a similar combined bid.

Bids were assessed against the objectives of increasing passenger traffic and customer satisfaction, while making better use of network capacity, operating more services and improving service reliability.

The Railway Directorate was also commissioned to seek improved operational efficiency and a lower cost to government, while taking implementation risk into account. One stated aim is that rail services in Eastern Norway should also be coordinated with other modes to form part of an integrated transport system.

Both companies scored highly on quality, reliability and customer satisfaction, says the Railway Directorate. However, Vy Group made the lowest financial offer for both agreements and was also considered to offer lower implementation risk.

According to Mr Knut Sletta, director general of the Norwegian Railway Directorate, Vy Group’s bid for the combined agreements was around NKr 1bn ($US 93.63m), a figure lower than the sum of the bids made separately by Vy Group for Eastern Norway 1 and by Flytoget for Eastern Norway 2.

“This is the best solution for both passengers and the state," he says. “Both Flytoget and Vy have submitted solid and well-prepared offers, and we have had constructive and good negotiations along the way.

“Flytoget came out better on some parameters, but price was the decisive factor.”

"We will have a more comprehensive train service for customers in Eastern Norway at a more reasonable cost to society," says Mr Erik Røhne, executive vice-president for trains at Vy Group.

“Train operations in Eastern Norway are closely intertwined, and it is to everyone's advantage that this is run together. Customers will have a simpler everyday life by having one company to deal with and we can use rolling stock and personnel across different lines, which will make the handling of unforeseen events easier.”