The European Parliament and the EU Council of Ministers have reached on the 19th of April an agreement on the Fourth Railway Package. This is a series of measures to make European railways more innovative and competitive. The agreement will in particular improve the performance of rail services in the EU to the benefit of passengers with a gradual opening of the domestic rail markets. The agreement now needs to be endorsed by the Member States and the European Parliament in the coming days. Once adopted, the package will complete the single European rail area and therefore deliver on this Commission’s agenda of a fairer and deeper internal market.
“This agreement opens a new chapter for European railways. For too long, the rail sector had no incentives to adapt to consumer-demand and as a result the market share of rail steadily declined. Gradual market-opening will improve the performance of rail services. This agreement will also create new investment opportunities and foster job creation in the sector. Finally, it should encourage Europeans to make a greater use of rail, contributing to our decarbonisation objectives. When railways become more attractive, everybody wins”, said EU Commissioner for Transport Violeta Bulc.
Following the agreement, the Fourth Railway package will gradually open domestic passenger rail markets to competition. Gradual market opening will bring a number of benefits to passengers, public authorities and to the European economy as a whole. It will in particular:
1. Revitalise domestic rail markets. Over the last decades, rail traffic has experienced a steady decline, with the persistence of domestic monopolies. With the fourth railway package, all EU railway undertakings will be able to offer rail services throughout the EU. For “commercial” services, new entrants will be able to operate as of 2020. As of 2023, competent authorities should award public service rail contracts through competitive tenders opened to all EU railway undertakings, except in specific cases.
2. Make railways more responsive to market and consumer demand. Market-opening will favour the emergence of new business models, and offer more choice to consumers. Competitive pressure from new entrants will also force incumbents to adapt and become more consumer-oriented. Competition is however not an end in itself and Member States will still be able to directly award public service rail contracts, provided that performance targets (quality, punctuality, etc.) are met. Passengers will reap the benefits of these developments. Experience from the Member States having already opened their domestic market suggests increased frequencies, better services and lower fares.
3. Deliver on President Juncker’s political priorities. In their letter of intent to the Presidents of the Parliament and the Council of the EU, Commission President Juncker and First Vice-President Timmermans stressed the importance of the Fourth Railway package to the realisation of the Commission’s priorities. By gradually opening domestic rail markets, the package will complete the internal market for rail services, and thereby directly deliver on the Commission’s priority of a fairer and deeper internal market. It will also foster investments in the rail sector and evidence from liberalised Member States suggests that market opening had a positive impact on job creations. Finally, rail is by far the most sustainable form of transport and by making it more attractive, the fourth railway package should enable a shift from other more polluting transport modes towards rail. This would contribute to the EU’s decarbonisation objectives.
The agreement must now be approved by the Member States and the European Parliament in the coming days. The package will then have to be formally adopted by the European Parliament and the Council of the EU. This is expected to be done by autumn 2016.