If you want to travel long distances by train in Germany, you cannot avoid the Deutsche Bahn. In regional transport, the selection is much more colorful. And yet a case in North Rhine-Westphalia shows how difficult it is for competitors.
If a pigeon flies over any main station in this republic, it almost only sees long white trains with a red stripe. From time to time a train may pull in that doesn’t have the two capital letters. In Berlin, for example, green wagons with the white lettering “FlixTrain” can often be seen, in Frankfurt there are white trains with purple accents and the letters SNCF of the French state railway. This means that the list of competitors in German long-distance transport is not quite – but almost – complete.
In regional transport, on the other hand, the choice is greater. “In a European comparison, the liberalization of local rail passenger transport is well advanced – Germany is in the top third,” says Dirk Flege, Managing Director of the non-profit transport alliance Pro-Rail Alliance. But a case from North Rhine-Westphalia shows the difficulties faced by Deutsche Bahn’s competitors.
For years, Abellio Rail’s white and yellow trains could be seen in some North Rhine-Westphalian train stations – until the subsidiary of the Dutch state railway Nederlandse Spoorwegen filed for bankruptcy in early 2022. “Abellio Rail in NRW – like all other railway companies – had to accept massive cost increases in many areas,” Matthias Stoffregen explains to ntv.de. “Its owners, the Dutch State Railways, no longer wanted to put up with the Dutch taxpayers,” says the managing director of mofair, an alliance for fair competition in rail passenger transport, to which Abellio Rail also belongs.
Deutsche Bahn is “completely overwhelmed”
On the one hand, personnel costs have risen massively in recent years. However, the problem was not the nominal remuneration, which is regulated by the collective agreement. The negotiated higher holiday entitlements and shorter working hours had to be cushioned by more staff.
In addition, the ailing rail network has become too great a challenge for Abellio Rail. Because the funds for track maintenance have been increased significantly in the last ten years – actually good news for passengers and rail operators. But that also entails extensive construction sites, which are organized by DB Netz, the rail network subsidiary of Deutsche Bahn.
“Deutsche Bahn is completely overwhelmed with rescheduling due to construction sites. It’s particularly bad in the western region,” explains Stoffregen. Poor planning often leads to delays. And rail operators pay heavily for delayed trains – whether they are responsible for it or not.
Abellio Rail did not receive any higher compensation for these additional costs from its client, the Verkehrsverbund Rhein-Ruhr. Therefore, the Dutch company is now suing for damages. The company wants to claim a whopping 642 million euros, as the “Süddeutsche Zeitung” reports, citing the complaint.
Profitability an illusion?
According to Stoffregen from mofair, the award procedure in local transport actually works relatively well. However, Abellio’s case shows that the model needs to be readjusted. Despite this, Deutsche Bahn’s competitors have a market share of up to 40 percent in regional transport. In long-distance transport, the rate is significantly lower. The competitors’ market share has fluctuated between two and four percent in recent years. “When awarding local transport orders, there is no illusion of economic viability,” says Stoffregen.
Service fees from the public sector create fair competitive conditions so that all competitors, both state and private, have the same opportunities and smaller companies can also enter the market. In long-distance traffic, on the other hand, the operators have to cover all costs through fare income – almost impossible for smaller companies that, unlike DB Fernverkehr, do not have the German taxpayers as shareholders behind them.
“Anyone who enters the competition with DB must bring a lot of time and money with them – and a lot of staying power,” explains Flege from the Pro-Rail Alliance. Firstly, sufficient capital must be raised for the necessary train fleet. This is shown not least by the bill that DB is paying for its new fleet: two billion euros are being spent on 73 new trains.
The rail toll drives up costs
Second, there are high usage fees. All trains that use the rail network in Germany pay a train-path charge. In Germany, this is well above the EU average. The railway operators pay around 8.40 euros for each kilometer used on a medium-speed long-distance route. Germany’s neighbor Denmark only charges 70 cents. In between are France with around 7.80 euros per kilometer and Italy with 3.70 euros.
This has to do with the fact that Germany’s neighboring countries subsidize the maintenance of the rail network with taxpayers’ money. In this country, it is paid 100 percent via the rail toll.
It is true that this also incurs high costs for DB Fernverkehr. But the network operator DB Netz is a subsidiary of Deutsche Bahn AG – a sister of DB Fernverkehr. “So the money stays in the DB Group,” explains Stoffregen. “What DB Long-Distance has to pay, DB Netz takes in.” What other companies have to pay in terms of track costs, on the other hand, does not come back.
Fewer and fewer applicants
The DB Group’s virtual monopoly position makes it almost impossible for other long-distance transport providers to keep up on the market. And that is partly responsible for the stagnant development and the sometimes poor service of the railways in Germany, says Stoffregen. “We assume that more competition in long-distance transport would lower prices and increase the quality of the offer,” says Stoffregen, referring to positive experiences in Italy, the Czech Republic, Great Britain and recently also France and Spain. “We see that ticket prices are falling there because there are several providers on the market.”
The routes previously operated by Abellio Rail in NRW were initially taken over by DB Regio, National Express and Vias Rail after an emergency award. The contracts will be re-advertised. However, it is questionable whether a suitable provider can be found. The number of bidders has been declining for years. According to calculations by the Federal Network Agency, an average of 2.5 companies applied for tenders in regional transport in 2018. In 2021 it was only 1.8.