Review article
The Role of the Sectoral Regulator in the Rail Services Market
Nikola Popović
orcid.org/0000-0002-4612-8881
; Croatian Regulatory Authority for Network Industries (HAKOM), Zagreb, Croatia
Abstract
Traditionally and historically, each country has a national and strategic interest in railway infrastructure and rail transport, which explains a somewhat slower liberalization process compared to some other network services in the common EU market (such as in electronic communication). The European Union’s priority is to achieve the Single European Railway Area (SERA), which, in long term, would afford competitiveness for the rail transport. That is possible by easing the procedure of rail transport services, enhancing their quality and eliminating market failures which can lead to inefficient management of public resources.
It is a political and economic challenge to raise the trends of both passenger and cargo rail transport usage in the future. Insufficient investment in railway infrastructure and rail wagon fleets in the past twenty years, especially in the EU Member States, has made rail transport less attractive and outdated, redirecting users to other transport modes, especially to road transport. These trends can be changed by modernizing railway infrastructure and increasing the uplifting transport speed. Where available, very fast passenger trains are becoming a more attractive transport mode compared to intercity air transport in Europe.
Upgrading the efficiency of railways is possible by opening the market to new carriers, for which the independence of railway infrastructure managers and rail needs to be secured. That can be accomplished by separating the accounting for railway infrastructure managers and rail transport carriers if they are part of the same vertically integrated economic subject, or by separating them structurally into separate corporations. In the last fifteen years the EU has enacted three legal frameworks through which the role of regulatory bodies is strengthened and carriers are provided an equal legal position in the market, especially through the procedure of independent allocation of traffic capacities and the levying of charges for their usage. In addition, models of co-financing the development of new infrastructure and enhancing the existing one through EU funds, and enhancing the interoperability and safety of rail transport are being developed. These could facilitate cross-border transport, especially on longer cargo routes, the so-called pan-European corridors.
The role of the regulator is generally to encourage competition by eliminating barriers for market functioning, especially through the regulation of railway services, and to encourage efficient usage of railway infrastructure. The regulator also promotes the interests of railway service users by securing an approach compliant with laws, transparent acts of infrastructure managers and railway service facilities managers, providing legal protection for subjects who submit the request for the allocation of infrastructural capacity, including a mechanism for resolving disputes as needed. In the latter case, the regulatory body acts upon a party’s complaint on a network report, application of that report, procedure for the allocation of capacities and other conditions of entrance, or charges for railway services. Among its other tasks, the regulator continuously observes competition in the railway services market, having the right to collect necessary information from the participants. It is empowered to protect passenger rights in the way prescribed by the EU Regulation. In that regard, it can conduct inspections and decide on passenger complaints against decisions of railway carriers. The Act on the Regulation of the Railway Services Market sets out relevant rules in regard to protection of passenger rights.
Partially limited efficiency of the railway and transport service providers is usually a consequence of a lack of competition which would foster internal restructuring and reduce the needs for conventionally substantial subsidies from state funds.
According to the European Commission, combining an open approach to essential railway resources and having open public invitations for offering public transport services facilitates further market development in the same manner that has already been achieved in freight and passengers transport. A new, fourth railway framework of the EU should attract more rail transport users and make this transport branch more competitive in relation to road and air transport. A larger number of market entities should foster productivity and specialization, as well as innovative business models, followed by increased usage of information technologies. This should help increase the number of transported passengers and freight, and create new jobs in the railway industry.
Keywords
liberalization; railways; regulator; competition
Hrčak ID:
157624
URI
Publication date:
29.4.2016.
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