The Supervisory Board of Deutsche Bahn AG has approved a multi-year program proposed by the DB Management Board for a fundamental renewal of rail operations in Germany.
“Cleaning house” program will include personnel and structural changes, as well as the elimination of excessive complexity, for example with a simplified brand profile. DB’s restructuring program and medium-term planning will be noticeable on the company’s balance sheet. DB’s CEO Dr. Rüdiger Grube expects non-recurring items worth a total of EUR 2 billion on this and next financial years’ books. Of this total, EUR 1.3 billion will result from special write-downs in rail freight transport. An additional EUR 700 million in provisions will be formed for restructuring measures. These figures will be finalized as the financial statements for 2015 and 2016 are completed.
DB plans to grow in its international business at DB Schenker Logistics and DB Arriva. That was one of the reasons why DB will be investing EUR 55 billion across all its business units over the coming five years: for better quality, more customer focus and greater economic success. As in the past, the investment will center on Germany, with some EUR 50 billion invested there, including nearly EUR 40 billion invested in infrastructure. The investment will include some EUR 20 billion from DB’s own cash flows.
DB will be restructuring its workflows to make its train service considerably more punctual – particularly in its long-distance passenger services. This will include deploying digital technology and mobile task forces to substantially lower the number of technical defects in rolling stock and infrastructure, designing more reliable timetables and reallocating buffer time. Digital switch diagnostics will be introduced to lower the number of rail switch failures by up to 50%. DB will also improve punctuality by deploying a towing service for locomotives in the medium term, improving vegetation management and introducing new digital driver assistance systems for train drivers. Next year, the company plans to raise average punctuality to 80% in long-distance transport in Germany – a considerable increase over 2015.
In 2016, DB will introduce a new technical platform step by step to provide all its passengers with on-time, accurate information. Inconsistent or lacking information about platform changes or changes to train car sequence will be a thing of the past. Customers will be able to obtain reliable information no matter if they are using mobile apps, digital information channels or information from DB employees on the train. Starting in 2016, new technology will also enable platform displays at all the major long-distance stations to display more lines of information. And big data analytics will help step by step to further improve projections for estimated times of arrival and departure.
Between now and 2020, DB will also be building the largest mobile WiFi network in Germany, setting up a uniform WiFi portal (“WLAN@DB”) that will be available at stations and on all the long-distance and regional trains that are equipped for wireless internet. The network will be based on the ICE Portal that DB recently introduced, which lets passengers access live travel information and current news updates. Starting in 2016, the ICE Portal will also include a broad selection of movies and music, as well as access to the internet. Going forward, DB plans to offer the same types of services for customers at the station, on IC trains and – with the support of public transport authorities – on regional trains. DB will also begin equipping its ICE trains with new receiver technology in 2016, which will improve both cell phone and wireless internet reception.
A far-reaching program to improve comfort and convenience on board DB trains will make noticeable improvements to on-board food service and lavatories starting in 2016. Additional mobile maintenance teams will be deployed, and train crews will no longer be responsible for as many operational tasks, meaning that they can offer additional services to customers on board.
DB will also be launching short-term measures in 2016 to make time spent at stations more pleasant. These measures will make elevators and escalators at stations in high-population areas more reliable, and waiting areas at large stations will be modernized and equipped with WiFi access. Additionally, DB will be renovating 31 underground S-Bahn stations over the coming years, which will benefit some two million commuters. And the company plans to offer direct rail connections to another two million people living in smaller German cities and towns as an additional 350 stations are built by 2025.
DB Schenker Rail to have new business model
DB Schenker Rail will have a new business model for rail freight transport, which will realign the business. The production system will be simplified dramatically to make it less prone to disruption. The objective is to reach 95% fulfilment of the service commitment made to customers. To this end, a stable quality network, with an annual timetable and set frequencies of service, will be introduced for a large percentage of the traffic operated. DB will also continue to offer ad hoc service as well. Higher quality and lower production costs will raise the capacity utilization of the network. Sales and yield management will also be modernized and the European network expanded to help enable DB Schenker Rail to outpace European market growth by 1% starting in 2018.
To reduce competitive disadvantages, DB will be focusing more on flexibility throughout the entire Group. There will be more flexible shift schedules, for example to improve train maintenance by deploying mobile maintenance teams. DB will also allow its managers and employees to share more in joint business success. Performance-based pay for managers will see a fundamental shift in 2016. Customer satisfaction, along with joint overarching quality and service targets, will receive the same weight as economic targets in performance-based pay.