European rail reform and passenger services - the next steps

Whilst the emphasis of European Union rail legislation to date has been on freight, measures such as separation of infrastructure from operations, infrastructure charging regimes and regulation have major implications for the passenger sector. But implementation of these measures in many countries has been inadequate. Crucial to overcoming these problems is the establishment of strong independent regulators in all member states. There is currently no requirement for competition in the passenger sector except for international services, but there is experience both of open access for commercial services and of competitive franchising. However, even where permitted open access competition has been very limited and there is evidence that undesirable cream skimming may be a problem. Experience of franchising has generally been positive, but in some cases it has failed to drive down costs. It is concluded that a combination of more sensible risk sharing, a determination not to renegotiate, longer franchises and limited open access competition where justified by benefits is likely to be the best way forward.