Thanks to the European Union and some of its neoliberal policies (not liberal as in U.S. terms, neoliberal=free-market fundamentalist, economic liberalism like mid-19th-century Manchester liberalism), there are "open access" rules regarding passenger rail in Europe, and in member states implementing this in national regulation, everyone is free to start for-profit passenger rail service if they want to.
In the case of Sweden, this leads to three different passenger rail operators on the Goteborg-Stockholm route, starting on March 17, 2015.
Profitable, for-profit state-owned SJ already competes with Bla Taget (Blue Train), still SJ operates about 19 trains (in each direction) every weekday, while Bla Taget only operates one train, on select days. Since December, tickets are on sale for another, bigger competitor: MTR Express, with 9 trains (in each direction) every weekday, by the HongKong-based rail company already profitably operating different rail services in Asia, Australia and Europe. So far, most of them, like the Stockholm metro MTR operates, those are local services that went out to tender, not self-sufficient intercity services. (Another private for-profit competitor, Citytag (City train) announced starting 3 daily trains in each direction in the near term, though everything seems vague and it doesn't seem like service will start soon.)
Here is an impression of the SJ 2000 trainset:
Here is an impression of the new, modern Stadler FLIRT Nordic trainsets that MTR Express will use in revenue service starting March 17 (while testing in Switzerland):
Stations served by MTR Express:
So to some it may seem, that policy makers in Brussels and elsewhere might think, rail is just another transportation mode like air travel, and as there are different air operators, there should be different rail operators, because competition is good, and private companies do everything better than state-owned companies etc. Also neoliberal media outlets like The Economist might view things the same way.
At the same time, some might think, the past experiences with rail privatization are not these great success stories.
New Zealand reversed its privatization, and made a loss of several millions of hundreds of dollars doing so. Foreign Control Watchdog Inc summed it up the following way:
Further, the record of some privatised assets has not been great. Two examples readily spring to mind – Air New Zealand and Kiwi Rail (formerly New Zealand Railways). Both of these agencies had been previously owned by the State and then sold off to private investors. In both cases, private owners ran the industries into virtual economic and developmental insolvency. Both New Zealand Rail (which became TranzRail) and Air New Zealand were progressively asset stripped and underdeveloped by their private owners to the extent that both would have collapsed if the State had not repurchased them.
And even in some of the pamphlets of ultra free-market think tanks from the US, (while of course maintaining the idea that private companies are just the bee's knees ) it is mentioned that rail privatization in the United Kingdom did not go so well:
In an effort to save money, [privatized Railtrack] deferred maintenance, resulting in a poor on-time record as well as three serious accidents that killed 42 people between 1997 and 2000. As a result, the government bought out Railtrack and now operates the rail infrastructure through a quasi-governmental organization called Network Rail.
And also in those countries where the infrastructure always remained in public ownership, at least some might wonder, if it is really the most efficient way to set up the passenger rail transportation system, to introduce "open access" services.
In Sweden, concrete effects might be:
- While in the past, if one had a flexible SJ ticket, one could hop on any train, now travelers can only use SJ trains with it.
- If there is a delay, in the past, one was just able to hop on the next train departing, now one might have to skip a train or even two, to wait for the next train of the respective train company.
- SJ, though it is state-owned, is profitable, and policymakers also ask it to be profitable. While MTR can just cherry-pick and operate on the most profitable route only, SJ (at least currently) offers "open access" (also meaning financially self-sustaining) intercity services across a wide network. If SJ is generating less profits from its most profitable route, it might eventually decide to cut back service on other less profitable routes, in order to remain at the same level of profitability. This cut back service on other routes might be likely to be then permanently lost, as MTR or others might not come in to those routes, to offer to replace the frequencies that SJ cut.
- The age of rail being simple, just getting to the train station, getting a ticket from the ticket office or vending machine, and getting on the train (any train, and any office/vending machine, because there just is one operator), will be over, as now first the consumer has to inform itself, or otherwise the information deficit also leads to imperfect market dynamics.
- In addition to competition in the form of car travel, air travel, bus travel, now there will be extra competition in rail, though one result could be that the market is not big enough to support several operators in its current size. If the outcome might possibly be in the end, that SJ is cutting back frequencies, and MTR is cutting back frequencies, because there is overcapacity with this level of service, then it might also be an economic inefficiency, as a given market is just split up between different companies creating an extra organizational layer instead of using economies of scale.
- For the consumer, rail gets more and more confusing, the more competing rail operators are in the market. In the United Kingdom, it is often difficult to understand for people not familiar with the matter, which rail company is offering what kind of services on which route, and how the whole rail system works. Of course, with just three operators Goteborg-Stockholm (and Snalltaget "fast train" open access rail Malmo-Stockholm), Sweden will not nearly have the same kind of fragmentation in its rail system, still the mechanism causing all those disadvantages is the same.
- At least some might come to the conclusion, that though some might think transportation is transportation, so the dynamics of air travel should also apply to rail travel, this is an oversimplification of reality, as there are so many characteristics of rail travel that are different from air travel (or other modes).
Many might be interested to follow the developments in Sweden, to see how all of this plays out and to see - in the years to come - the consequences of decisions made many years ago.
More about the topic of rail privatization can be read in the following articles by railroad industrial engineering consultant David Burns:
Edited by beautifulplanet, 19 February 2015 - 07:30 PM.