EU - Transport Policy

Written evidence from Association of Train Operating Companies (ATOC) (EU 14).

The Association of Train Operating Companies (ATOC) represents franchised and open access train operators in Great Britain. We are grateful for the chance to submit suggestions to the Transport Committee on EU transport policy. There are three areas we wish to cover:

1. First Rail Package - revision

1.1. Firstly, it should be recognised that the GB model, in terms of structure, access and regulation, is consistent and compliant with present EU Directives. We are seen as one of the leaders in rail liberalisation and we are not subject to the present infraction proceedings being taken forward by the Commission.

1.2. ATOC supports the proposals to strengthen legislation covered by the earlier Directives (relationship of railway undertakings and infrastructure managers; licensing; capacity allocation; regulation) removing a number of loopholes in this area. In particular, ATOC endorses moves to increase transparency and regulatory oversight of the activities of the infrastructure manager; this approach closely aligns with the present GB system. ATOC also supports moves to reinforce greater regulatory independence in the EU.

1.3. However, ATOC is concerned by two significant changes proposed which could increase costs and restrict potential new entrants and investment in the industry.

1.4. In Article 13 the Commission proposes enforced legal separation of the train operating and station/depot functions (service facilities) in order to promote improved, impartial, access to those service facilities.

1.5. ATOC believes it will be an unwieldy and costly method of attempting to achieve this goal. The result will be to reduce the overall efficiency of railway undertakings; neither will it guarantee impartiality.

1.6. The Commission also proposes that the regulatory body should always enforce any third-party access requested to such facilities, irrespective of the circumstances. This completely removes the independence of the regulatory body and denies any impartial review of individual cases. In ‘worst case’ scenarios, where incumbents could be forced out of depot or stabling facilities irrespective of the existence of alternatives, it could result in franchise operators being in breach of their contracts.

1.7. ATOC believes that enforced legal separation of such activities should not be part of the revision and that requests for access should be the subject of regulatory process and oversight. Furthermore, any dispute over the refusal of access to such facilities should be subject to a regulatory review process and decision, as is the case in the GB model.

1.8. ATOC is also concerned that in Article 17 the Commission proposes restrictions on licensing for those railway undertakings with less than 50% shareholding based in the EU. ATOC believes this restricts the free movement of capital and could restrict potential investment in the rail industry. The proposal is only to address competition concerns of smaller Eastern European railways bordering Russia and is modelled on legislation for the airline industry; it is unnecessary to apply this across the whole EU rail sector. Specific protection under competition law would offer a better solution.

2. Liberalisation – market opening

2.1. The Commission is presently reviewing the need to develop domestic liberalisation on rail. ATOC is fully supportive of the Commission’s approach and the findings of their recent report on the means of achieving this aim. However, in terms of the proposals for ticketing and information systems (also covered in the forthcoming Transport White Paper), ATOC does not support the imposition of an EU–wide system which is likely to be both cumbersome and costly to operate, with marginal benefit.

2.2. ATOC advocates a flexible, market-led, approach based on customer needs and cost-effective solutions and which can be tailored to support the White Paper’s parallel 2050 objective of rail transporting the majority of medium distance passenger traffic (300 – 1000km).

3. Forthcoming Transport White Paper – developing EU strategic policy – ‘A Road Map to 2050’

3.1. ATOC understands that the new White Paper aims to develop a longer-term policy (to 2050) for transport, addressing sustainability, information, ticketing and financing.

3.2. Whilst ATOC supports the aim of reducing transport carbon emissions, the proposed targets of reducing CO2 emissions by nearly 50%-70% by 2050 and making city transport carbon-free by the same time will be challenging unless a wider approach is adopted i.e. one that encourages low carbon power generation, investment in electrification etc.

3.3. ATOC fully supports the proposed review of infrastructure pricing to deliver fair track access charges and a system of financing which ensures a sustainable and commercially viable railway for the future.

January 2011