GERMANY is missing a big opportunity to open the long distance rail market

Passengers, taxpayers & environment will suffer

BERLIN, 23rd July 2020: Earlier this month, it was announced that the German state-owned rail operator Deutsche Bahn („DB“) – which already has 99% share of the long distance market – will ‚acquire‘ 30 new ICE high speed trains for €1 billion[1].

In a truly competitive market, new trains would be a good development. However, these ones are being financed under questionable circumstances and will further strengthen DB’s dominant market position thus effectively closing the market for another generation. As a consequence, passengers, taxpayers & the environment will suffer.

There is a distinct pattern emerging: in 2019, under the guise of tackling climate change, the German government announced it will be pumping €11 billion of equity into DB until 2030[2]. This year, DB will receive an additional equity increase of at least €5 billion euros in order to help it cope with the COVID-19 pandemic[3]. With €16 billion in directly awarded financial support, it is easy to afford €1 billion for new trains.

“How can new privately funded long distance competitors – which have to finance their trains themselves – compete against DB if it is gifted new ICE trains by the government?“ asks ALLRAIL Secretary General Nick Brooks: „This is a major disincentive to all future private investment – it is impossible to compete against the scale & volume of such public funding.“

With this will come all the disadvantages that are the hallmark of one dominant operator: (1) inefficiency leading to increased taxpayer subsidy, (2) higher fares for passengers & (3) modal shift away from passenger rail to less sustainable transport modes.

Italy has demonstrated that the opposite approach can stimulate significant benefits. Since the privately owned operator NTV-Italo entered the high speed market in 2012, average fares have fallen by 40% while frequencies and quality have improved – leading to positive modal shift to rail with a doubling of passenger numbers. Furthermore, COVID-19 state aid has been fairly applied between both publicly & privately owned operators.

Germany is missing a big opportunity to open up the long distance rail market. If climate change funds & COVID-19 state aid were to be spent in a non-discriminatory manner, then other operators would probably be able to procure new high speed trains as well.

Mofair President Christian Schreyer comments: „Then Germany would experience the same modal shift as has happened in Italy. Market opening in long distance rail is needed more than ever – not only is it the most effective solution in order to help the environment and the EU Green Deal but it is also necessary for future generations.“





Portrait von  Dr. Matthias Stoffregen

Dr. Matthias Stoffregen

Geschäftsführer mofair e. V.

Tel +4930509313041