European Commission Putting Pressure on Goverment to Tender Rail Services

[Jamie2k9]

The contract to run rail services in Ireland should be put out to international tender, the European Commission has proposed, a move that could have serious ramifications for Iarnród Éireann.

The Government is strongly resisting the idea, amid concerns it could cause major financial and industrial relations problems for the State.

Iarnród Éireann’s 10-year contract to run Ireland’s rail services is up for renewal in 2019. The contract is typically awarded to the State-owned body Iarnród Éireann, but the European Commission is arguing the Irish transport sector needs to liberalise further.

http://www.irishtimes.com/business/transport-and-tourism/state-under-pressure-to-put-rail-services-up-for-tender-1.2301270

There is some support from other members.

[Mark Gleeson]

It was expected that the NTA would tender part of Irish Rail's operation in 2019 anyway. Many countries have done this already, plenty of railways in Germany operating under contracts and the service works.

This is not privatisation

Multiple major railway operators have looked at Ireland already and given the poor operating standards of Irish Rail its only a matter of time before they get replaced.

Cant wait until these guys tenders for the Dublin commuter belt https://en.wikipedia.org/wiki/MTR

[comcor]

Should they tender it as multiple parcels, how would it go?

The obvious break is between the Connolly and Heuston networks, but I can see how it would be desirable to have a single operator for all Dublin Commuter services, meaning you could break it into Connolly InterCity, Heuston InterCity and Dublin Commuter. Cork Commuter would be a grey area in that breakdown. It doesn't really fit with InterCity, but it's probably too small to be tendered in its own right and is geographically separated from Dublin Commuter.

I assume there wouldn't be anything smaller than that as any operator would need scale for it to be worth coming in.

[Mark Gleeson]

It's actually a mess

Looking at 4 groups
Dublin Belfast (remains with IE/NIR unless Stormont agree)
Dublin Connolly based services
DART
Rest of country

From a customer perspective splitting commuter and intercity will finally end the weekly theft of commuter trains on Fridays

[berneyarms]

I've always felt Limerick would be a good location to put out to tender:
- Limerick/Dublin directs
- WRC
- Limerick/Waterford
- Limerick/Ballybrophy

[Mark Gleeson]

I've always felt Limerick would be a good location to put out to tender:
- Limerick/Dublin directs
- WRC
- Limerick/Waterford
- Limerick/Ballybrophy

At least one operator has looked at this already, but Limerick Junction shuttle only, not to Dublin

[Jamie2k9]

I see both good and bad points to this however our infrastructure is so poor realistically who would bother looking at Intercity routes outside Cork/Limerick and commuter.

Stone age speeds and single lines = inability to provide a fast, efficient and reliable service and I expect lack of willingness on IE's part outside Cork/Belfast routes to change this once bare minimal work (speed changes 2 years ago) is carried out.

[Mark Gleeson]

Bear in mind this is not open access this is PSO, so the operator will be under contract to operate a service specification from the NTA

If they want to run more that's a commercial decision

[Jamie2k9]

Bear in mind this is not open access this is PSO, so the operator will be under contract to operate a service specification from the NTA

If they want to run more that's a commercial decision

It's still sort of pointless, nothing will change just a paint job on a train, fares won't fall, service will unlikely increase as the general points I refer to above are not in place so will we really benefit, reliability will be the same as will punctuality and so on.

The only possible upside is IE may get themselves together but I don't think they will be to bothered if they lose a line or two...

[James Howard]

If it works as well as competition in the electricity market did, it would be best if things stay as they are. It will also end up costing an absolute fortune to buy the unions off. Either that or Irish Rail will end up with a massive amount of redundant staff they can't afford to make redundant.

The Luas is a different case entirely. Firstly, it was new and secondly, it is a different mode of transport to either the buses or the railway, so it wouldn't necessarily fall under the wings of either Dublin Bus or Irish Rail.

[James Howard]

The unions are digging their heels in already

http://www.irishtimes.com/business/unions-to-oppose-flawed-eu-plan-to-tender-rail-services-1.2302146

It maintained that the EU proposal, which it described as “flawed ,” would do nothing to assist rail users and had the potential to undermine the operation of our coherent and integrated transport system.

Jaw somewhat dropped on reading that sentence.

Theoretically, there is not much wrong with the idea of the NTA contracting an organisation other than Irish Rail to operate part of the rail system, but practically speaking, it would probably leave the entire country without any public transport for a month while the Industrial relations issues were resolved.

[ACustomer]

I can see that in Germany, France or the UK (among others), the rail system is so large that one can break it up into separate components for tendering purposes. Most of these components would be larger than the entire Irish Rail operation. Irish rail could only be split up into very small franchises with complex management and costly overheads for such a small system. So would you put the lot out for a single franchise operator?

Nobody has mentioned freight, which might be a better place to start.

Why does the EU get so concerned about this? I can see that in mainland Europe there are cross-border aspects to competition and franchising which need to be addressed at the European level. But Ireland is a small island whose rail system does not interact with other EU systems in any meaningful way (and which has a unique track gauge for heaven’s sake!), so why is it any concern of the EU?

There are times when the EU gives a huge gift to eurosceptics by wanting to meddle in things where they are really of little relevance and are a potential nuisance.

[Mark Gleeson]

Its the small bits where the real difference is

See this http://www.bbc.com/news/business-12058364 very small undertaking really http://www.der-meridian.de/strecken-fahrplaene/streckennetz

But the service is excellent, clean trains, good staff and immediate pa for even the slightest unexpected delay.

[markpb]

It's still sort of pointless, nothing will change just a paint job on a train, fares won't fall, service will unlikely increase as the general points I refer to above are not in place so will we really benefit, reliability will be the same as will punctuality and so on.

I think you're fundamentally misunderstanding the point of tendering for state services. The point is that the service may be provided to the state at a lower cost than doing it themselves. This is not about competition (or any benefit) for the consumer, it's about trying to spend less tax money.

The reason the EU are pushing governments down that path is because there's no reason for a government to automatically exclude private companies from operating a service that is currently being operated by a semi state. This is not to say they should be forced to hire a private company over a semi-state, just that private companies should be considered equally.

Of course, where the consumer might benefit, is that the winning tender should feel under pressure to deliver a good service so they can retain the contract (or earn bonuses if KPIs are met). If the contract automatically goes to a semi-state, there's a risk that the company (from top to bottom) will be complacent about the service they're providing because there's no disincentive to being mediocre.

[Mark Gleeson]

Firstly clearly there is a goal to reduce costs through a competitive tender process. As we have seen with Irish Rail its amazing the cost reductions you can get when the screw is turned.

We are expecting a far more rigid contract and tighter targets and performance specifications

Revenue will likely go to NTA direct and the operator is paid a fixed fee to provide the service with options and risks at the operators side if they want to go beyond the contract. Bonus etc for exceeding targets and so on.

A good example of this would be LOROL in London, aka London Overground, run by MTR/DB that turned out to be one of the best moves made in transport in London in recent memory.

MTR just got the contract for London Crossrail operations and its MD is the Irish Rail manager who gave you hourly Cork services...


Potential bidders are everything from
Translink (mad but know the turf and have RSC approval)
MTR (Hong Kong Metro),
DB (aka Arriva),
Keolis (SNCF),
Stagecoach,
Abellio (Dutch Railways),
National Express,
First Group

Many of these were involved in the bidding for Metro North

[Jamie2k9]

Firstly clearly there is a goal to reduce costs through a competitive tender process. As we have seen with Irish Rail its amazing the cost reductions you can get when the screw is turned.

There is reducing costs but then there is the free travel scheme, realistically IE would be in a good position if it paid up, private operators are not exactly going to be pleased taking unlimited free travel for buttons. Surly changes will have to be made to the scheme to facilitate private operators bidding?

[berneyarms]

There is reducing costs but then there is the free travel scheme, realistically IE would be in a good position if it paid up, private operators are not exactly going to be pleased taking unlimited free travel for buttons. Surly changes will have to be made to the scheme to facilitate private operators bidding?

That won't be their concern - just like the buses, the operator will be paid a fixed fee to operate the services based on what the NTA dictate.

[Jamie2k9]

That won't be their concern - just like the buses, the operator will be paid a fixed fee to operate the services based on what the NTA dictate.

The point been private operators won't want to take loads of free pass holders, what they will be offered will not meet requirements by a long shot. They will want fare paying passengers and not to increase capacity to carry people for free. There is even no data to back up usage on any lines.

Private operators won't be pushovers like IE are.

Paying lump sums will not work on heavy rail, it will work on services such as Luas/Metro and perhaps Dublin commuter because of the volume of customers and the fact that seats are not expected by anybody who uses such services.

Remember it's more acceptable for IE to make losses as they are not profitable companies such as outside operators who are profit focused. We all know if IE was profit focused there would only be 3 or 4 lines left.

[Mark Gleeson]

This is likely to be a fixed price contract operation. The operator doesn't have to carry a single passenger to get paid provided the deliver the agreed service.

Every cent of fare box for PSO services will be handed to the NTA, the NTA set the fares and conditions. The NTA take the fare box risk.

On the other side is the carrot and stick

Bonus payments for beating targets (paid logically enough out of the increase in revenue that will result from a better service)
Heavy fines for failing targets

[Jamie2k9]

This is likely to be a fixed price contract operation. The operator doesn't have to carry a single passenger to get paid provided the deliver the agreed service.

Every cent of fare box for PSO services will be handed to the NTA, the NTA set the fares and conditions. The NTA take the fare box risk.

On the other side is the carrot and stick

Bonus payments for beating targets (paid logically enough out of the increase in revenue that will result from a better service)
Heavy fines for failing targets

Would be a good set up for operators but the taxpayer will still end up taking the hit with possible losses the NTA will make and somebody will have to fill the funding gap.

I am all for competition however I just can't see much savings for the taxpayer which is why I remain skeptical about the plans.

[dowlingm]

Let's say a service is determined by IE to cost 1000 Euro right now (round numbers for simplicity) for which they get 1000 Euro in revenue and subsidy under current arrangements.
Veolia come in and say "we are willing to deliver this for 900 Euro" which represents their estimate that it will cost them 700, providing 200 in profit to the company - as we've so oft noted in discussing these matters, these companies ain't charities.

While the actual figures are clearly different, this amounts to a substantial reduction. What I don't get is this: how does Veolia (for example) get that 300?

The other issue is: while I know there is some PSO/non PSO split within IE right now, is a move to franchising likely to change the landscape for special services such as GAA and concerts?

[Eddie]

While the actual figures are clearly different, this amounts to a substantial reduction. What I don't get is this: how does Veolia (for example) get that 300?

Staff Costs: I imagine new train crews would not have final salary pensions, and have lower base rates of base pay and PRP.

They may also want to offer more dynamic ticket pricing that maximises revenue. The Irish Rail ticketing website appears very broadbrush, and I doubt it achieves this.

[dowlingm]

Eddie: that scenario involves no transfer of personnel or obligations to the franchisee. The question then becomes what do IE do with the employees who used to work on these services. some might be redeployed to non franchised services but that will only go so far,

[Mark Gleeson]

Irish Rail faces bankruptcy if it loses tender, Government warns
EU Commission wants changes that would open up sector to competitors

State-owned train operator Irish Rail (Iarnród Éireann) is likely to face bankruptcy if it loses the right to run services as a result of proposed changes to the way the EU rail sector is run, the Government has warned.

http://www.irishtimes.com/business/transport-and-tourism/irish-rail-faces-bankruptcy-if-it-loses-tender-government-warns-1.2305992

[berneyarms]

Staff Costs: I imagine new train crews would not have final salary pensions, and have lower base rates of base pay and PRP.

They may also want to offer more dynamic ticket pricing that maximises revenue. The Irish Rail ticketing website appears very broadbrush, and I doubt it achieves this.

Eddie: that scenario involves no transfer of personnel or obligations to the franchisee. The question then becomes what do IE do with the employees who used to work on these services. some might be redeployed to non franchised services but that will only go so far,

It's not a realistic proposition to expect that there would be completely new staff taken on though, particularly when it comes to drivers.

There would have to be TUPE provisions involved.

It's totally unrealistic to expect that drivers would not transfer and not retain their existing pay and conditions, given how long it takes to train new drivers - it's a specialised job being able to retain appropriate route knowledge.

[Colm Moore]

Eddie: that scenario involves no transfer of personnel or obligations to the franchisee. The question then becomes what do IE do with the employees who used to work on these services. some might be redeployed to non franchised services but that will only go so far,In a contract for service, all operational staff (may not include some management) that the departing contractor doesn't want to retain would transfer.

It would be different for a contract for goods or works.

[Jamie2k9]

Ireland will not agree to the mandatory opening of domestic rail to privatisation “under any circumstances”, Minister for Transport Paschal Donohoe has said.

Mr Donohoe told Sinn Féin transport spokesman Dessie Ellis that Ireland and a number of other European Union countries have “fundamental concerns” about the proposed EU reforms to open the market to privatisation.

The Minister said he had met the Commissioner in Brussels a fortnight ago “and pointed to the difficulties posed to the Irish rail sector and indicated that Ireland could not agree to mandatory opening under any circumstances”.
Mr Donohoe said: “I believe we will find a solution that will not pose risks to the Irish rail sector.”

Mr Ellis said the Minister should write off Irish Rail’s €150 million losses in the past seven years and “we should not place demands on the rail network to meet its debts”.

While I'm a person who feels there should be no freebies given, if for example it was written off would us the customer benefit in anyway, in terms of IE having additional money to spend in improvements.

Having it on the books can be a good tool when in discussions with unions all the same.

http://www.irishtimes.com/news/politics/oireachtas/ireland-will-not-agree-to-railway-privatisation-says-minister-1.2363998

[Mark Gleeson]

Its not the Ministers decision, Brussels decides.

The current direct award contract is unacceptable.

Has the NTA ever fined Irish Rail for any breech of contract or EU regulation, Nope

[Colm Moore]

Has the NTA ever fined Irish Rail for any breech of contract or EU regulation, NopeIn circumstances where there is essentially only one operator, fining the operator for poor performance might not be the best way to proceed, as it removes money that could be spent on the railway.

Putting in a place a scheme where management and staff can benefit modestly (or suffer) from an incentivisation scheme may be more meaningful, with safety, journey times, reliability, punctuality, customer service and cost management as key indicators.

[dowlingm]

an environment without TUPE...
http://www.thestar.com/news/gta/2015/10/01/contract-flipping-leaves-york-transit-employees-feeling-like-temporary-workforce.html