One step closer to an open domestic rail passenger market in the EU

Written on 18 Oct 2016

On 17 October 2016, the Council of the European Union announced that it had formally adopted the market pillar of the Fourth Railway Package, bringing a Single Market for rail services one step closer.

What is the Fourth Railway Package?

The European Commission adopted its Fourth Railway Package on 30 January 2013.  The package of legislative proposals is intended to remove any remaining obstacles to creating the Single European Railway Area in which rail markets are open to competition, barriers to entry are removed and innovation is encouraged.  In turn, this should make rail travel cheaper and better quality for rail passengers.

As we have previously explained, the Commission proposed that the Fourth Railway Package would build on earlier legislation.  It seeks to streamline the
system for safety and technical approvals in the EU, strengthen the separation between train operators and infrastructure managers, and open up the domestic passenger markets to competition, particularly through better access to rolling stock and non-discriminatory access to integrated ticketing systems.

The package itself consists of six legislative proposals, split into a “market” pillar and a “technical” pillar.  The three proposals comprising the market
pillar are:

  • Regulation governing the award of public service contracts for domestic passenger rail transport services;
  • Directive to establish a single European railway area, regarding the opening up the market of domestic passenger rail transport services and the governance of the railway infrastructure; and
  • Regulation to repeal the rules on the normalisation of accounts of railway undertakings.

The three proposals comprising the technical pillar are:

  • Regulation on the EU Agency for Railways;
  • Directive on the interoperability of the rail system within the EU; and
  • Directive on railway safety.

Council’s adoption of the market pillar

Having been informally agreed between the Council and European Parliament in April 2016, the proposals went through the usual legislative procedure through the Council and Parliament.

As expected, following political agreement in September 2016, it has now been announced that the Council has adopted the three market pillar proposals at its first reading.

The proposals facilitate entry into the market for new rail operators, making it easier for new entrants to offer rail transport services,
resulting in more choice and cheaper fares for passengers.  However, a new operator’s right of access can be limited if the new service would compromise the “economic equilibrium” of an existing public service.  The Council considers that this will ensure continuous and well-functioning services.

The proposals also make competitive tendering as standard for public service contracts, albeit subject to some exceptions allowing direct
awards.

Moreover, the independence and impartiality of infrastructure managers will be strengthened to ensure non-discrimination of
access to tracks and stations, creating fairer conditions for train companies seeking access to the rail network.

The Council considers that the Fourth Railway Package will give rail companies better access to rail markets throughout the EU, which in
turn will increase competition, choice and quality for passengers.  It confirms that the package and reforms will be introduced gradually.  It is currently
proposed that:

  • Infrastructure managers must comply with the independence and separation requirements within two years;
  • The access rules enable operators to launch new commercial services on 14 December 2020; and
  • Competitive tendering will come in seven years after the proposals are published.

The Council’s press release and position on the three legislative proposals under the market pillar can be found here.

What happens now?

The proposals will now go back to the Parliament for its second reading, where it is expected to be formally approved and adopted.  Once signed by the Parliament and Council, the approved texts will be published in the Official Journal of the EU, which is anticipated by the end of 2016.