Closely observed trains

Foto: Jiří Němec

The Czech prime minister says the state rail passenger and freight companies should be at the centre of expanding international and domestic services with the disruptive impact of competition restrained.

Photo: Jiří Němec
Prime Minister Bohuslav Sobotka met with railway unions this week and his message will have certainly been on the right tracks for them. But the words are unlikely to have gone down so well with the private rail companies wanting to breakdown state rail passenger Czech Railways’ and freight company ČD Cargo’s dominant positions.

Sobotka assured his listeners that there is no question of privatising either of the companies. Far from it, the government, he said, wants to ensure that they continue to play a central role in the rail sector.

The government is keen to pave the way for fast international and domestic passenger rail services to develop. Talks are going on with the regional governments of Bavaria and Saxony about such links and a fast rail link between Prague, Brno, and Ostrava is also a priority, the prime minister said. European funds will be a key for developing fast domestic and international services.

Czech Railways, which has spent heavily in recent years renewing its carriages and improving services, needs to cut its resulting debt burden so that debt servicing costs are reduced, Sobotka said without spelling out exactly how the government can help there.

The prime minister also suggested that closer links be fostered between Czech Railways and regional governments, the providers of subsidies for many domestic rail services which have been sporadically opened to competition.

And market opening moves, demanded by the European Union in Brussels, should be timed so that they do not disrupt the overall rail market too much and should still leave the state passenger and cargo companies as prime players, Sobotka said.

So far, rail passenger competition has been on a relatively slow track in the Czech Republic with only a handful of tenders for services held so far, and Czech Railways often challenging the result if it loses. That, for example, is the case for the most recent tender in Šumava won by rival GW Train Regio.

ČD Cargo has long been losing out to road hauliers. It’s overall turnover has hovered in recent years at around 15 billion crowns, down from almost 18 billion in 2008, and a lot of its rolling stock is dated and ill-suited to potential customer needs. Even so, it made an operating profit of just over 500 million crowns in 2013 and almost the same amount in the first half of 2014, although it carried five percent less cargo in the first six months of the year.

Sobotka’s vision of the future rail market does not chime too well with the fast track competition approach that Brussels has espoused in recent years. But, he has the comforting position of not being alone in seeking to put the brake on. Many other small and big EU members are also in the slow track on rail competition, although their track and rolling stock are often in a better state than locally.