Market forces on the railways are a bad idea, the government claims. Is that right?

Arnhem station: to transfer between NS and Arriva you have to check out and check in again.Statue Marcel van den Bergh / de Volkskrant

Why is the cabinet on a collision course with the European Commission and transport companies?

The cabinet wants to award the new rail concession, the permit to drive on the largest part of the Dutch railways, to the NS. In this way, the rail company will also be protected from competition between 2025 and 2035. But Arriva, Keolis and QBuzz, among others, are also targeting the so-called main rail network. The subsidiaries of foreign transport companies now serve lines in Groningen, Overijssel, Gelderland and Limburg; about 5 percent of the market.

The companies are trying to break the NS monopoly with lawsuits. They believe that a direct award is prohibited. The companies have a striking ally: the European Commission is also strongly opposed to the award. There is a threat of a lawsuit if the cabinet does not also consider other transport companies.

Why is the European Commission so eager to get more carriers on the rail?

The European Union is a strong advocate of market forces. After all, Brussels sees Europe as a single market rather than a collection of countries. In theory, competition produces better and cheaper products or services. And so, under pressure from Europe, the member states had to say goodbye to the state-owned companies with their monopoly positions in recent decades. A wave of liberalization swept across the telecom, postal and energy markets, among others, with varying degrees of success.

The rail market has also been prepared for more competition in the past twenty years. In the Netherlands, the railway company was privatized on paper (although all NS shares are owned by the state). Rail management was placed with ProRail. It fourth railway package – new European regulations – must give the final push. From now on, governments are not allowed to give anyone preferential treatment, such as through a private award to the NS. This also gives other companies a chance.

That sounds fairer. What do the cabinet, NS and trade unions have against this?

Quite a few financial interests are at stake for NS: the ten-year concession has a turnover value of 20 billion euros. ‘The outside world is cutting at our chair legs,’ warned the previous NS director Bert Groenewegen last month. “Inconceivable, inadmissible, and I will resist that to the end.” The rail company believes that the rail network is too compact to split up: if that happens, travelers would have to change trains more often.

The trade union FNV is also standing on its hind legs. ‘Marketing is not cheaper, but ensures a return on investment. Conductors and drivers are the victims of this,” FNV union director Henri Janssen told the House of Representatives last month. State Secretary Vivianne Heijnen of Infrastructure is also cautious. The government is prepared to allow competition on a number of international routes, but the most important domestic rail connections must remain in the hands of the NS. More market forces would endanger the ‘continuity and quality of services’.

Is market forces really such a bad plan?

Yes and no. The Netherlands is a small country with relatively many trains. Most of them run between Amsterdam, Utrecht, The Hague and Rotterdam. Anyone who allows a second (or even third or fourth) party to drive on the track in that area is asking for problems. That is what associate professor Wijnand Veeneman (TU Delft), an expert in the field of market forces in public transport, says. ‘We know from England, where many different parties use the railways, that things can quickly become very complex.’

Competition is much less problematic outside the Randstad, says Veeneman. He points to train connections that the commercial operators currently operate. They managed to transform the lines into thriving routes, where more traffic is driven and more passengers are transported. The provinces, the passenger organization Rover and even the NS confirm that the service has undeniably improved. The carriers have now set their sights on replacing the NS slow trains in Noord-Brabant, Zeeland and Noord-Holland, among others.

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What would that mean for travelers?

Travelers who travel longer distances will probably have to change trains more often: from the regional train to an NS intercity. Traveler organization Rover is nevertheless not unsympathetic. ‘We see that decentralization brings improvements for the traveler’, says director Freek Bos. ‘High frequency, more early and late trains, faster start-up after disruptions. What works in the north and Limburg can also work out well in Zeeland, Brabant and North Holland.’

Bos and Veeneman emphasize that guidance by local authorities is crucial. Veeneman: ‘The province of Friesland, for example, prescribed in tenders exactly how often a train had to run where. A lot of love and attention is put into this regionally. That pays off.’

Isn’t the Netherlands the nicest boy in the class?

That the Netherlands listens best to Brussels, as is regularly claimed, is not true, says scientist Veeneman. That is Germany, which has liberalized the rail market for over ten years. Nevertheless, the national railway company has not lost its omnipotence. ‘There are commercial carriers, but Deutsche Bahn runs a train every half hour. He does his best to compete everyone out of the market.’

The NS has also reaped the benefits of the liberalization. Abellio, a subsidiary of the NS, was for many years the operator of various train connections in, among others, Germany and the United Kingdom. In 2019 – the last year before corona – more than half of NS turnover came from abroad, 3.4 billion euros.

How is this going now?

Within a few weeks, summary proceedings brought by transport companies will be filed. Meanwhile, Brussels continues to exert pressure behind the scenes. They both demand that the cabinet conduct a so-called market survey. In that case, an independent party will investigate which railway lines should be awarded privately to NS and which should be put out to public tender.

To date, the government has rejected such an investigation. On Tuesday evening, State Secretary Heijnen hinted in the House of Representatives that he would consider carrying out a ‘concise analysis’. This on revised advice from the state attorney. A final decision on this has not yet been taken.

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