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Subsidies for improving European railway performance

Staff writer |
Understanding the most effective model for allocating public subsidies between infrastructure managers and train-operating companies is critical for improving railway performance in Europe.

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This is according to a new report by The Boston Consulting Group (BCG) "The 2015 European Railway Performance Index: Exploring the Link Between Performance and Public Cost".

For national railway systems in Europe, public subsidies provide essential funds to support infrastructure maintenance and passenger and freight operations. Some countries allocate the lion’s share of public subsidies to either infrastructure managers or train-operating companies, while others allocate subsidies relatively evenly between these organizations.

"Our study indicates that the model for allocating public subsidies correlates with a railway system’s performance," says Sylvain Duranton, a BCG senior partner and a coauthor of the report.

"Simply put, countries that get the most value from public spending on railway systems also allocate the highest percentage of subsidies to infrastructure managers."

"This correlation does not mean that more effective subsidy allocation is a magic bullet for improving railway performance," cautions Agnès Audier, a BCG partner and a coauthor of the report.

"However, it suggests that national governments and railway companies can gain valuable insights into what drives railway performance by taking a fresh look at their country’s model for allocating public subsidies."

The relationship between public funding models and railway performance is central to the analysis in BCG’s 2015 European Railway Performance Index (RPI) study.

In tier one, six countries have high-performing railway systems: Switzerland, Sweden, Denmark, France, Finland, and Germany.

In tier two, nine countries perform generally well, but their results vary widely among the three dimensions: Austria, Great Britain, Czech Republic, the Netherlands, Luxembourg, Spain, Italy, Belgium, and Norway.

In tier three, ten countries have low overall ratings, in most cases because of poor safety: Slovenia, Ireland, Lithuania, Hungary, Latvia, Slovakia, Romania, Poland, Portugal, and Bulgaria.

Overall, the results of BCG’s 2015 study are consistent with the first study, in 2012. For example, Switzerland, Sweden, France, and Germany are still among the countries with the best-performing railway systems, while ratings for safety continued to show the greatest variation among countries.

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