Private Operators and Open-Access Rail in Europe
AndyBTravels discusses the approach to open-access rail in several European countries and examines private train operators who have brought real change to the industry.
In many countries across Europe, several thriving private train operators have significantly improved the rail sector, with competition leading to lower fares and higher-quality services.
This was made possible by separating the infrastructure from railway operations, which is one of the few measures introduced by the EU that has, on the whole, worked reasonably well. Broadly speaking, the state provides the infrastructure, while in theory the free market supplies the train services.
As I mentioned in my previous Substack on private operators and open-access rail in the UK, there remain numerous complexities, nuances, and even some rather bizarre aspects, as is so often the case with most matters concerning the railways. Indeed, as we shall see, significant differences still exist in the way private operators are approached in different countries.
Italy: the best in Europe?
Perhaps the most interesting country to examine when discussing private operators in Europe is Italy, where the national operator Trenitalia is competing directly with the private operator Italo on the high-speed railway network.
Italo began operations in 2012, and the Italians immediately started putting up barriers to protect Trenitalia’s interests. In Rome, Italo was at first denied access to the main station, Roma Termini. Even at stations where access was granted, the authorities made life difficult for them, with station managers, for instance, refusing to announce their train departures. However, Italo remained persistent and refused to give in, aided by the fact that they had strong financial backing.
Fast forward to the present, and Italy now has a system that functions well, with both Italo and Trenitalia operating high-quality trains reliably. Perhaps Trenitalia, as the incumbent with an initial monopoly on long-distance high-speed services, had been resting on its laurels, resulting in fares that were too high and service quality that fell short. However, they significantly improved their performance once Italo entered the scene.
What also happened was that as soon as Italo began operating, fares on the Rome–Milan high-speed line fell, and passenger numbers started to rise. Interestingly, this has not come at Trenitalia’s expense. A Trenitalia service that previously ran at around 60% occupancy when the company still held a monopoly would now reach over 90% following Italo’s entry.
This is primarily due to the lower fares driven by competition, but also to the growing appeal of train travel. The arrival of Italo and the ensuing fierce competition created a PR boost for the railways as a whole, leading to fewer people driving and a significant reduction in domestic flights between Rome and Milan. The only people who still take these flights are primarily those with a connecting flight at one of the airports, as point-to-point travellers have found that the high-speed train is faster from city centre to city centre, more affordable, and more comfortable. It has been a huge success story.
Cherry-picking
When examining private or open-access operators, it is important to keep cherry-picking in mind. Private operators will always target the high-revenue routes where they know there is money to be made. Unsurprisingly, Italo initially focused on the lucrative Milan–Rome corridor when it began operating. Once Italo had established itself, it expanded its network significantly and now competes with Trenitalia on virtually every long-distance, high-speed route.
Setting aside a few politically driven routes to outlying regions, even Trenitalia’s high-speed trains are now fully commercially operated, meaning that unprofitable services can be withdrawn. In effect, we now see two commercial companies competing with each other.
Yet even Italy has its own nuances. Services below the high-speed daytime trains, such as InterCity services, are not commercially operated and remain subsidised by the state. In this market, there has been no competition from private railway companies so far. The story is largely similar in the regions, although some private operators have begun to emerge. Arenaways is a notable example in the Piedmont region of Italy, where it has even been awarded a highly sought-after PSO contract, and reopened some old railway lines. This private railway company has even expressed interest in operating InterCity services across Italy, but it is somewhat unclear why they – or any other private or open-access operator – have not done so to date.
Of course, it may simply be that no private operator believes it can earn significant profits on these routes, or has yet to find the right set of circumstances to enter the market – given that they have the luxury of cherry-picking the most lucrative services.
A look at the unusual situation in Spain
Interestingly, Trenitalia has now followed a path similar to Italo by effectively entering foreign markets as a private operator. Trenitalia currently operates domestic high-speed trains in France under its own brand name, and in Spain as the majority stakeholder in the private high-speed operator Iryo.
Spain, in particular, presents an interesting situation: alongside Iryo, Ouigo España – owned by SNCF, the French national railway – operates as an open-access operator. As a result, the Spanish national operator Renfe now competes with the French and Italian national railways on their own home turf, blurring the lines between private and national operators. And remember Arenaways, which I mentioned earlier? Renfe now holds a 33% stake in that private Italian railway company. It is all rather bizarre.
Are national railways now effectively subsidising trains outside their own domestic markets? Can they still be considered truly open-access operators? Is this a sustainable situation in the long term?
Trends in Spain
So far, competition on the Spanish high-speed rail market has led to much lower fares, a significant increase in frequency, and, in most cases, an improvement in service quality. Even more striking is the shift from road and air transport to rail. The famous Madrid–Barcelona “Puente Aéreo” route, which had 55 daily flights in 2012, now operates just 86 flights a week.
While the benefits of high-speed rail over air travel are often emphasised, its competition with road transport is frequently overlooked, despite being equally important. Low-cost high-speed trains have been particularly effective in drawing passengers away from buses and private cars. Only after SNCF launched domestic low-cost high-speed services in Spain under the Ouigo brand did the Spanish national railway respond with its own Avlo low-cost trains. Competition from private operators once again demonstrates that it drives innovation.
Once again, we also see cherry-picking, with private operators primarily focusing on Spain’s main high-speed corridors (Madrid–Barcelona, Madrid–Córdoba–Seville/Málaga). It would be interesting to see competition on routes such as Barcelona–Valencia as well.
France
France is also an interesting market to examine, as it is largely a case of the national operator SNCF competing with itself through a variety of services. Their high-speed TGV trains are divided between inOui and Ouigo TGV services, with inOui representing their premium high-speed trains and Ouigo serving as their low-cost product. SNCF has also introduced locomotive-hauled conventional Ouigo trains on some routes.
Even though these services also compete with one another, each targets a distinct passenger group: inOui trains cater mainly to bureaucrats and business travellers whose expenses are fully covered, while the locomotive-hauled Ouigo trains are primarily aimed at drawing passengers away from cars and buses.
Although the French can be quite innovative, they also create many barriers to competition on their domestic market. Only recently have we seen Trenitalia gradually allowed to operate domestic services in France, running high-speed trains between Paris, Lyon, and Marseille. For some reason, the French are extremely protective about granting access to their network. Is it because it is too saturated? Or do they have an operational system not designed for high-frequency traffic?
When the railway line between Basel and Mannheim was temporarily closed and alternative routes for freight trains had to be found, the most obvious option was via Strasbourg. However, the French could manage barely three train paths per hour, while the Germans handled ten. It is partly protectionism, but I also believe genuine operational constraints are involved.
Then again, I never thought I would see private operators competing with SNCF on domestic routes in France in my lifetime, so I am genuinely impressed that Trenitalia persevered and secured access! If it follows the model we have seen in Italy and Spain, it will likely result in lower train ticket prices in France and more passengers choosing rail over other forms of transport.
RegioJet
One of my favourite private operators is the Czech company RegioJet – which runs some truly fantastic trains, which are among the best in Europe. They are genuinely innovative. What they have achieved for the railways in the Czech Republic and neighbouring countries such as Slovakia is remarkable. On the routes where they compete with the national operators, prices have