13

Over here Ben Southwood makes a case against nationalizing the British train lines:

[..]

Returning it to centralised state control would be a step backwards and a mistake.

Instead we should end the practice of franchising, which creates private monopolies, and allow real competition and diversity.

[..]

The solution to our current problems is not more state bungling, it is a return to diversity, competition and open markets.

Are there (modern) examples here nations have adopted a true free market approach to the railways, which includes "real competition and diversity"? Most nations that I'm familiar with have some sort of private railway, but no real competition/free market since on most lines you can "choose" just one company (which is exactly the situation in the UK).

If such examples exist, how do these systems work? (e.g. one of the problems with organising a true open market is that you can't run two trains on the same track at once).

  • 2
    "no real competition/free market since on most lines you can choose just one company" - there's an implicit assumption there, that you are the customer. The problem is that passenger trains are not cost-competitive with cars. The franchise model is an open market, but a monopsony. The subsidy giver making passenger trains possible is the real customer. They can choose which operator runs on a given line. – MSalters Apr 25 '17 at 18:49
  • Do you mean for passenger rail or freight rail? – cpast Sep 14 '17 at 14:54
  • AFAIK, US freight railroads are (fairly) free market, and in open competiton. Of course with any railroad, freight or passenger, the competition is not usually with other railroads, but with other means of transport: planes, busses and cars for passengers, trucks, barges, and pipelines for freight. – jamesqf Sep 14 '17 at 17:54
7

I do not think there is an entire nation/country that can have private operated railways without any subsidies, as railways in the countryside typically require subsidies.

The country that is the closest to what you are asking seems to be Japan:

Beyond the astonishing size and quality of the networks, Japan's three major metropolitan areas, sometimes called the Tokaido megalopolis after its Edo-era road, are also home to a vibrant free market in transportation.

[..] the private railways proved to be more efficient than those run by the state, which were hemorrhaging cash. It was understandable that lines outside the big cities might need subsidies, but there was no excuse for operating losses in the dense Tokaido megalopolis.

Besides the successful private held companies operating the metropolitan area, there are also smaller companies that operate smaller lines:

Shorter lines, called "third-sector" railways, have been devolved to local governments and private investors. Profit-making private firms exist outside of the three metropolitan areas just as there are third-sector railways within, but they are the exception to the norm.

Wikipedia mentions the major private railways and they are quite a lot (16) to have a competition, however the market is not exactly free since the government may still step in and regulate the fares:

Private rail lines were encouraged to compete with each other as well as the national rail lines with the government's role limited to regulation of fares.

Also, it is not clear if companies may share their railway lines.The same article suggests that each company controls its own area:

By allowing private corporations to control transit oriented developments as well as railway lines, planned communities were facilitated allowing private railway operators to establish a vertically integrated business of developing residential, business, industrial and retail land and the commuting methods used by the populace to travel between such areas.

| improve this answer | |
  • 2
    If they have their areas and doesn´t share the rail lines or at least the same destinations there is still the problem with the monopolies. Each company controls an area and can do 'whatever they want'. On the other side would be difficult to share the rail lines – Ivan Sep 14 '17 at 15:08
  • @Ivan - yes, sharing is clearly difficult, but government regulations may limit doing "whatever they want". – Alexei Sep 14 '17 at 15:18
-2
  • "open market"
  • "true free market approach"
  • "real competition and diversity"

Well, it all goes down to the weight and exact meaning you give to words, but yes, there can be at least one example: Italy.

As far as I know, there are at least three different companies:

There could be additional railways companies in the south of Italy, I think I've heard about them in the context of a couple of bad accidents, but I'm not so sure about it.


Note that, as I said at the beginning, the exact level of "real competition and diversity" and all the other things you are asking for in your question can be subjective. Moreover, I don't know enough precise details of how much they operate to give you an exact level of "competition".

Just to be a bit more clear: FS is the national railway company, privately owned by the state and other private companies, of which many are mostly owned by the state or from close friends of politicians. It has the most extensive network of rails, covering all Italy.

FNM is a group of private companies, partially owned by the state, partially owned by FS, and partially owned by the same friends as before. It has its own set of rails, mostly in north-east Italy, but cross share part of the rails system with FS (meaning that FS can use part of FNM's rails and vice versa) Are they really competing? I'm not sure, but at the end of the day their tickets are 10% cheaper so when possible I choose them.

.Italo, finally, is the commercial name of "Nuovo Trasporto Viaggiatori", a totally private company which focus on high speed transportation all over Italy, rents only the rails from FS and runs its own set of AGV trains. So, yes, they are totally competitors. (apart from being the same friends of friends as before, ok)

| improve this answer | |
  • But are these companies actually in competition? Or do they all operate in separate areas? If so, how does that competition work? Do they have their own tracks? Do they share tracks? – user11249 Apr 25 '17 at 9:23
  • Well, given that you explicitly asked for companies in competition, it would be a poor answer if it lists companies which are not in competition, don't you think? ;-) – motoDrizzt Apr 25 '17 at 9:37
  • From the perspective of someone who is an outsider to Italian public transport, can you provide any sources for these claims? – Bradley Wilson Apr 25 '17 at 9:58
  • The EU First Railway Directive might be a good research starting point for improving this answer. – Philipp Sep 14 '17 at 15:34
  • From my personnal experience in 2016: there are three different companies operating on the Milano-Verona-Venice line, at least two being private. As far as I understand, they share the same tracks. Neither the fares nor the service were impressive compared to the monopolistic state-owned French train company... – Evargalo Sep 15 '17 at 8:24

You must log in to answer this question.