Renfe and Rivals in Liberalised Rail Market:The Spanish Doubts

By Pedro Sanchez

Less than a month for interested operators to submit their offers to provide passenger transport services, rail liberalization is torn between the foreseeable benefits of the rupture of a historical monopoly and the doubts generated by the multiple barriers to access the sector.

The opening of the passenger transport market by rail continues, at the same time, crossing milestones and generating doubts. Just under a month before those interested in entering to compete with Renfe in one of the few monopolies that remain in the Spanish market, there is a certain consensus around the benefits of the process, demanded and supervised from the Government of the Union European
But certain aspects continue to subtract hours of sleep from those willing to make their way on an unknown path.

Among them, where will the necessary trains to cover the routes by which the new actors bid. And, above all, when they will be available.

Someone who knows perfectly the field of railway manufacturers is Álvaro Rengifo, president for more than seven years of the Spanish subsidiary of the Canadian giant of the Bombardier sector. His intervention in a conference on rail liberalization organized by the National Commission of Markets and Competition (CNMC) did not go unnoticed, especially when he emphasized those aspects of the process that still generate uncertainty.

“Nobody, except Renfe, has the approximately 50 trains that would be needed to cover the first two lots offered by Adif,” said Rengifo, who added that the situation will be the same in December next year, when the market is opened effectively

“From my experience in Bombardier, it takes 36 to 40 months for a train to be manufactured. Only Renfe can arrive on that date with the trains ready.”

Rengifo also mentioned the French public operator SNCF, which works to address the Spanish market, while Renfe also seeks to gain a foothold in the French. For the third lot, destined mainly to the low-cost model, Rengifo estimates that some 15 units would be necessary to begin operations. “The transition period is too short, which makes it difficult for liberalization to be effective from the start.”

The Italian example

Experience in other markets demonstrates that the opening of the market results in a substantial increase in the use of infrastructure, for which there must be trains available for circulation, with the aggravating factor that there is no leasing market, as in other areas .

One of those examples of liberalized markets is Italian. The president of the Transport Regulatory Authority of Italy, Andrea Camanzi, explained on the said day part of the effects of the end of the railway monopoly in the country. Without going any further, all high-speed routes have increased their offer since 2010 above 150%. In some cases, such as that between Rome and Naples, the evolution has gone above 350%.

“Before the opening of the market, 80% of the trips between Rome and Milan were covered by plane. Now, the situation has changed completely and it is the railroad that has that quota. The private flight option is hardly used” , said Camanzi, who mentioned as one of the key points for the success of the process the removal of all types of barriers to entry.

In the case of the railroad, some of these barriers are imposed by the high investments that the business of operating the different corridors entails. Among them, those necessary to meet the cost of fees for the use of infrastructure. It is estimated that, to date, this item accounts for approximately 40% of the expenses for an operator.

“In reality, the fee is still a tax that, in addition, in the Spanish case is discriminatory because it does not take into account factors such as the weight of the convoy or its occupation,” said Rengifo, which included this point among those who add uncertainty. to the process

In reality, the fee is still a tax that, in addition, in the Spanish case is discriminatory because it does not take into account factors such as the weight of the convoy or its occupation “

Joaquín López Vallés, director of the Competition Promotion Department of the CNMC, referred precisely to those natural barriers of the rail business and the need to act. “In this case, we have an incumbent operator (Renfe) that starts with an advantage because it knows the market and also has the rolling stock. The process must introduce mechanisms to minimize those advantages.”

In the field of rolling stock it seems complicated, as well as in maintenance, through the framework agreements, precisely one of the points that also concern in Brussels about the liberalization of the Spanish railway market.

This article was first published in Spanish The original article can be read here-

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