Joaquín de Fuentes Bardají.
The author writes on the process of liberalization of the railway transport of travellers, and defends that its feasibility depends on four principles that are fundamental for competition.
In February 2010, Renfe Operadora took the decision to raise AVE (Spanish High Speed trains) fares drastically with the argument that a company operating under a monopoly system maximizes profits by keeping prices high. The measure, which was used by the airline companies to regain share in the transport market, remained until February 2013 when the Administration tutoring Renfe, the Ministry of Development, gave the instruction to lower prices again in order to address the fall in occupancy of trains.
The measure has served to revive demand but also probably to worsen the financial results. The question to be asked at all is: who is right? the managers of AVE/Renfe, or the tutoring Ministry by assuming the definition of the trade policy of a substantial part of the system of public passenger transport?
The situation has a precedent that may be useful to remember: until 2008, when it was put into operation the Madrid-Barcelona AVE, a single journey between these two cities in the airlift could cost 220 euros. The AVE and the rest of the airline competition has caused to reduce the average ticket paid on this journey to 60 euros (this saving, of nearly one billion euros annually in the form of consumer surplus, should certainly be taken into account by those denying the profitability of investments in AVE). Market sharing -60% for the train, 40% for the plane- has in turn an uneven distribution: while airlines compete between themselves as well as with the AVE, Renfe has no competitor but itself within the railway system. The situation seems comfortable for the public monopoly: its chairman recently stated that “this runner will win more than 80 million euros this year.”
We hope that the way to introduce the competition shall be better than that used in the transport of goods”.
This situation, with its contradictions and inconsistencies, has been kept for almost six years. However, the current Government has announced the introduction of principles of competition in the market for rail transport services of passengers. We hope that the way to introduce the competition shall be better than that used in the transport of goods in 2005, where competition has not flourished and Renfe continues to reap huge losses which are lumbered to the public treasury.
The design of the liberalization process for travellers should be intended mainly for its feasibility, ie, its ability to provide long-term and stable mechanisms improving the efficiency and quality of the service. In the opinion of the professional group making up Future Rail, this feasibility shall be only possible with the generation of competition rules containing four fundamental principles:
“The persistence of situations from the stage of the monopoly would be a poison for the health of the system”.
“Administrative, technical and technological barriers must be obstacles to be removed”.
It is likely that to progress in this direction with these and some other measures of organization of the new rail system could help to create a space of competition capable to offering better transport services to the citizens and where the mechanism of fixing balanced pricing should be the market rather than political authorities or officials of services whose professional future is not subject to the risk of consequences of their decisions.
From these perspectives is how we think, from Future Rail, that the process of liberalization of the railway sector in Spain has to be undertaken. In that respect it is good to consider past experiences, either successful or otherwise, both in Spain (telecommunications, electric…) and in other countries (UK or, soon, Turkey).