European rail operators adapt to life with COVID

Privatized UK rail network essentially is back under government control; other nations pump in significant funds to offset lack of ridership
RELATED TOPICS: INTERNATIONAL | PASSENGER | FUNDING | CORONAVIRUS
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A yellow 'mask' has been applied to the front of the Avanti West Coast ‘Pendolino’ train at left, seen at London’s Euston station in late July 2020. Several rail company have applied masks to trains to encourage mask usage, which is mandatory on all trains and public transit.

Keith Fender

LONDON — The COVID-19 pandemic has brought major changes, and increased government funding, to European rail operators.

In Britain, the officially privatized rail network is now back under government control, according to British government’s official statistics office. It has reclassified almost all passenger rail as government controlled since emergency contracts were put in place during the UK’s COVID lockdown in March. Private companies still operate most trains under a management contract that pays a 2% margin on agreed expenses, but all revenues and risk is now held by the government. Two of the UK’s franchise operators (East Coast operator LNER and the “Northern” regional/commuter-rail network in Northern England) had already been replaced by a directly government-run company before the lockdown.

The “Emergency Measures Agreements” that have replaced the original franchises are costing the UK government nearly $1 billion a month and will be replaced in the fall by new arrangements — although none of the private companies with franchises are willing to take on revenue risk, so further direct operation of services by government-owned companies remains likely. Longer-term plans to change the franchise system in place since privatization were in progress before the pandemic. In the future, the current revenue risk-sharing franchise contracts are likely to be replaced by concession-style contracts, similar to those in the U.S. under which Keolis operates the commuter rail services of the Massachusetts Bay Transportation Authority and Virginia Railway Express.

In most cases, passenger services are operating at 75% or more of the pre-COVID schedule; however, passenger numbers are substantially reduced. In part this was due to the effectiveness of the British government’s messaging during the lockdown, which was to avoid all public transit and rail usage to ensure space was available for key health and other workers.

Similar situation throughout Europe

In the rest of Europe, where either state-owned railways run all services or concession contracts are widely used, the situation is a little different. However, the common factor is that like Britain but unlike the U.S., all major European countries had multi-week COVID lockdowns between March and May, and governments are providing billions of dollars to fund rail services.

In France, where state company SNCF runs almost every train, the government has promised to provided “several billions”  in extra funds, and is cutting the amount rail freight companies have to pay to use the rail network – including a complete abolition of such charges in 2020. In 2021, the fees will be half of pre-COVID levels. The French government hope to increase the amount of freight carried by rail as a result.

In Germany, where most regional services are funded via concession contracts, many of the services continued during the lockdown period, and train operators continued to be paid by regional authorities, who fund most of the cost via grants from the federal government. Extra federal funds were provided to regional governments to make up for missing passenger revenues. State owned rail operator Deutsche Bahn has received over $2 billion as compensation for running for-profit longer distance services during the lockdown, at the government’s request. It is in line to receive up to $8 billion more in the next three years, as well, while being allowed to borrow more. Normally profitable DB posted half-year losses of nearly $5 billion between January and June of this year.

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