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Competition in the passenger rail transport market

Competition in the passenger rail transport market

Since the beginning of the 1990s, profound institutional changes have been introduced in the railway sector of European Union countries, consisting of the division of the previously unified structure and the separation of specialized entities that independently carry out individual railway processes.

The main elements of the new structure include entities managing railway infrastructure and, separate from them, enterprises performing freight and passenger transport. Structural changes create a framework for intra-modal competition, considered necessary to achieve the main goal of railway reforms, which is to restore the capacity for effective functioning in the transport market without unjustified and excessive draining of public budgets.

In light of economic theory, competitive pressure, alongside the commercialization and/or privatization of enterprises, is the main stimulus forcing an increase in the efficiency of economic activity. Therefore, the introduction of a new institutional structure for railways should be accompanied by the development of competition in its two basic forms: competition in the market and competition for the market. This principle also covers the passenger rail transport market, which constitutes a significant segment of railway services in many European Union countries, including Poland. However, the introduction of competition in this market is limited by the necessity of public supervision over the provision of services of a public good nature. Solutions in this regard are introduced in Poland by the Act on Public Collective Transport, in force since March 2011. The article discusses the development of competition in the passenger rail transport market in Poland and attempts to answer the question of to what extent new regulations will influence its shaping.

Public utility and competition in the rail services market
The functioning of passenger rail transport in Poland is determined by serving mandatory transport needs related to the necessity of commuting to workplaces or educational centers, usually concentrated in larger regional centers and provincial cities. This is evidenced by the numbers: 86% of all passengers carried by rail in 2010 were passengers of passenger trains that perform regional connections, i.e., within one voivodeship or connecting neighboring voivodeships (in terms of the number of passenger-kilometers, this share amounted to 55%). The importance of the transport needs served determines the necessity of ensuring an appropriate transport offer, which means continuous access to services on equal terms for all interested recipients and at a level of fees adapted to their payment capabilities. Offered public services should also be characterized by an appropriate quality level. (…)

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Source: Logistyka Magazine

Railway, passenger transport, public services, organizer, competition, regulation, market – PDF file for download