Liberalisation of rail market continues

Free travel boosts ZSSK prospects amid increased competition.

More competition on rails is expected. More competition on rails is expected. (Source: Sme)

PRIVATE firms began running Slovak passenger rail transport just a few years ago when the Czech firm RegioJet took over one of the country’s southern routes and the Transport Ministry is now planning to put another rail line in private hands. However, the poor condition of infrastructure and a government policy granting free travel to half the population is hindering further competition.

“We consider the competition positive, mainly for the travellers either in terms of the offer of connections, convenience of travelling or price politics,” Martin Kóňa, the spokesman of the Transport Ministry, told The Slovak Spectator. “Better services and thereby higher satisfaction of the travellers can attract much more people to the buses and trains, get them out of cars and partially relieve the crammed roads. However, the success in the competition depends on each particular provider.”

The state-owned passenger railway company Železničná Spoločnosť Slovensko (ZSSK) confirms that the arrival of competition has improved services. Jana Morháčová, the spokeswoman of ZSSK, specified that currently competition exists in the field of commercial unsubsidised trains, so-called IC trains, on the route Bratislava-Žilina-Košice. Apart from ZSSK, the Czech company RegioJet also runs IC trains on this route.

“The arrival of the competition resulted in service improvement,” Morháčová told The Slovak Spectator. ZSSK introduced new types of carriages, flexible prices on the internet where passengers can save up to 40-50 percent of the ticket, new stops, and other changes.

Now the ministry plans to liberalise the passenger transport on the 230 km long rail line between Bratislava and Banská Bystrica. It has already published a preliminary announcement for the bidding process.

“We believe that the competition will attract enough participants, and that they will generate the best conditions for the state and the travellers,” said Kóňa.

Private carriers have already shown interest in the Bratislava-Banská Bystrica route, while they also want to speed up liberalisation.

“Our arrival is just the beginning,” RegioJet spokesman Aleš Ondrůj told The Slovak Spectator.

Private carriers see it as an opportunity to offer good service with the financial help of the government.

“[The competition] is a way to improve services for travellers and at the same it is more cost effective thanks to the state subsidy,” Ondrůj said. “In case the tender is successful, travellers can look forward to improvement of services and taxpayers will save money.”

However, ZSSK pointed out that the government must also focus on the less frequented, and thus less profitable, lines.

The winner of the competition will be offered a contract on transport services with the government, based on the law on railroad transport. The government will provide financial compensation for losses and the sum will depend on the degree of fulfilment of the contract. Also, the provider will have to meet technical and quality requirements.

Another Czech company, Leo Express, will also decide on entering the competition after reading the conditions and there is also interest on the part of České Dráhy (the Czech state carrier), the sister company of Deutsche Bahn – Arriva, British National Express and ZSSK.

“ZSSK will decide on participation in the competition after detailed study of the conditions,” Morháčová said. “We have a long-term interest to operate on the route between Bratislava and Banská Bystrica.”

ZSSK versus private carriers

Currently ZSSK provides 97 percent of passenger rail transport in Slovakia, about 1,045 trains a day. They operate under the state-subsidised scheme within which the state orders via the Transport Ministry. Until recently they held a monopoly position, but in 2011 the government allowed RegioJet to operate the line between Bratislava and Komárno. RegioJet also operates IC trains on the line Bratislava-Žilina-Košice. Another Czech company, Leo Express also operates on the line Košice-Žilina-Prague, which puts pressure on the state provider in terms of passenger services.

Two bands of ZSSK services are now changing amid the heightened competition: more flexible schedules and improved comfort. In the future there should be more wifi connections and baby facilities on the carriages, special offers on tickets purchased via internet, and discounts, Morháčová said.

However, ZSSK is limited by the state contract and legislation, and therefore cannot afford the benefits offered by some of the private carriers. ZSSK cannot solve the problems with infrastructure, which is in the competence of the railway operator ŽSR and other companies, but they are trying to improve the quality and variety of services for the passengers.

Rail careers and free travel

Last November Prime Minister Robert Fico’s government created free train travel for students and pensioners as one of measures of the so-called first social package. In January, the cabinet offered discounted travel also to working people who commute daily.

But RegioJet perceives this as a countermeasure introduced in response to the state’s failure to properly handle the arrival of competition. Ondrůj said that it violates open competition rules and introduced discriminatory measures against travellers and carriers.

Free rail transport increased the number of people travelling by train by about 20 percent compared to the previous year, which was is in line with forecasts. Some 40 percent of all passengers travel free, according to Morháčová.

“The main goal of the free travel was to help the socially disadvantaged groups of people and relieve their costs,” said Kóňa, adding that the goal was fulfilled because 60 percent of the travellers are students and pupils commuting to school.

However, the free train passage harmed some bus transport providers and some lines were even cancelled. The government therefore started preparing a similar scheme for bus traffic, although the Institute of Transport and Economy has labelled it an attempt to please regional governments that operate many of those lines.

The free travel affected mainly the bus lines where parallel train connection exists.

“Many lines were closed and bus companies have huge financial problems, as they have to pay for leases,” said Róbert Huran, the chairman of the Slovak Union of Motor Carriers.

“The government promised to lower the [motor vehicle] tax already in March 2014 but it has not come in to effect yet,” Huran said.

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