3.1 The issues connected to the inter-regional trains
So far we have illustrated the situation of the Veneto Region. Veneto is very important, both for its size and urban density, hence the importance of the issues exposed and their playing as examples for the remaining Italian regions.This last part of the article will discuss some specific problems of two other north-eastern autonomous Regions (Trentino Alto Adige, comprising the two autonomous Provinces of Trento and Bolzano, and the Region of Friuli- Venezia Giulia). The special nature of the problems these two regions face is due both to their political and administrative organisation (see note 2), and their geographic position vis-à-
vis their “strong neighbour” (Veneto). Set on the periphery,
both regions represent areas with relatively weak traffic but strongly gravitate towards Veneto, to which they are linked by very important railway connections (the Brennero line and the lines Venezia-Udine-Tarvisio and Venezia-Trieste). The two regions are given less space here due to the limited scope of the issues involved.
V I T T O R I O A . T O R B I A N E L L I
regions in the north-eastern part of Italy are running late compared to the others with ordinary statutesin terms of the acquisition of competencies for railways, because of a more complex legislative procedure (see note 2).
Thanks to a legislative decree, the two autonomous provinces of Trento and Bolzano acquired their railway service competencies as early as in July 2001. However, the law was not immediately followed by a State-Region framework agreement, at least not until 2002, and the same is true for the service contract. In these Provinces, the relations with the railway operators is still managed by the state, although there are some agreements between the regional body and Trenitalia on tariff integration and the setting up of certain new trains between the region and the railway company. Friuli-Venezia Giulia, in a way, lags even further behind, due to the lengthy procedure required for the formal adoption of the regional law by the Parliament. The law adoption procedure calls for a qualified majority and is, as such, time- consuming.
For the special statute regions, an important problem for the implementation of the reform lies in the conferral of competencies for inter-regional trains that travel across the territory of two or more regions. For example, the law conferring railway competencies to the Autonomous Provinces of Trento and Bolzano requires that bordering regions reach an agreement over the assignment of these services, prior to the stipulation of service contracts.
Generally, reaching agreements is complex because of the overlapping of many market segments. A detailed observation shows the situation between Veneto and Friuli- Venezia Giulia on whose territories inter-regional trains perform both the role of urban transport and feeder service for long-distance trains (where Venezia-Mestre is the hub). In this context, it should not be forgotten that for the lines leading to the country’s “outskirts” (Friuli-Venezia Giulia and Trentino-Alto Adige), there are very few long-distance trains planned, because of the weak demand and low revenues (considering that these services cannot be subsidised). Therefore, long-distance passengers in Friuli-Venezia Giulia using inter-regional trains as the initial or final portion of their journey with a connection train in Mestre, could face serious problems in terms of timetables and connections if the trains were managed (e.g. within an SMFR framework) by the Veneto Region, taking into consideration only the needs of metropolitan passengers, to the detriment of those travelling long-distance.
Currently, the two regions are involved in a controversy over future conferrals of inter-regional services, given that the Veneto Region seems to have no intention of giving up the competency over these trains.
3.2 The ministerial guidelines for the period of
transition
To conclude with the issues regarding the special statute regions and their running late with competency transfer procedures, it should be mentioned that the Transport
Ministry recently drafted guidelines for provisory contracts between the regions and Trenitalia, to temporarily regulate the production of services while awaiting the definitive devolution of competencies to the regions. Although the contract has temporary validity, notably until the definitive transfer of competencies to the regions, the guideline drafts can be criticised from several view points. The planning criteria and the identification of the criteria for the definition of the contribution seem very rigid. The indications on the service to be produced, as against contribution, are given only in terms of train-km (a fixed subsidy is set and valid in any case, at the national level), while neglecting the basic and distinctive features of the services (peak and off-peak, etc.) as regards the cost of production. Furthermore, there is no specific regulation for loss of revenues due to special tariff reductions (social tariffs). And service quality rules are weak. In spite of contract’s temporary nature, it would probably have been useful to includesolutions complying with the principles that the regions will try to apply when they are entrusted the competence over these services. More specifically, an analysis could have been made to look into the most interesting solutions adopted by those regions that already approved their service contracts, and to include them in the draft contract. If the temporary contract does not acknowledge the true requirements of the regions now, it runs the risk of loosing the opportunity to anticipate and facilitate the transition from old to new models. Should the draft contract remain unaltered, the regions that still await the conferral of services will have to overcome the biggest hurdle - including in their relations with Trenitalia - instead of following a smoother path traced by a central authority more strongly focussed on the future. Transport policy and a legislative culture are hardly matters that can be made up and applied overnight through the formal adoption of a law.
4. Conclusion
To conclude, notwithstanding the latest legislative changes, the Railway Reform in one of the economically most important Italian areas is still at the pre-development stage. The main cause for concern is that, in spite of good intentions and expectations, the practical application of experimental service contracts does not seem able to solve, indeed neither to diminish, the problem of asymmetric information that is still strongly benefiting incumbent operators. This persevering of asymmetric information is critical, as it is slowing down or blocking local authorities’ efforts to obtain the information necessary to prepare the tenders. The latest examples of service contracts applications raise the question whether there is need to envisage stricter rules, at national level, regulating the release of information by local transport incumbents or, alternatively, to carry on studies aimed at assessing the efficient-cost level for railway operation on regional networks. These studies should be co-ordinated at national level and supported centrally by the public sector. However, the results of the case study analysis lead to believe that the regional authorities themselves are interested in
maintaining very good relationships with the incumbents over the preparation of the tenders. Indeed, the incumbents may provide the necessary support for the setting up of regional companies, subject to local authority’s control, which seem to be a long term implicit objective of the local authorities. In Veneto, the SFMR project and the recent acquisition of Ferrovie Venete have launched a signal that should not be underestimated. There is still much to do, even in the developed and effective north-eastern Italy, to achieve an environment of true competition in the railway sector.
NO T E S
1See, on this issue, Musso and Ferrari., op.cit
2 The special status regions (“autonomous” regions) have a higher
degree of legislative autonomy compared to regions with ordinary status. However, their greater autonomy is counterbalanced by a stronger control of regional laws by Parliament, checking their compatibility with the Constitution. This implies longer and more complex control procedures, compared to those applied to laws adopted by Regions with ordinary status.
3Regione Veneto, Regional Law no 25 dated 30 October 1998 (BUR no
99/1998).
4As regards Veneto, the railway company Adria-Mestre is a remarkable
case. This local-level company has been commissioned by the state and since 2002, after a number of misadventures, has joined a regional-level company with rather broad objectives (“Sistemi territoriali” S.p.A.).
5Framework Agreement between the Transport Ministry and the Veneto
Region for the Enactment of the Devolution Act envisaged by Art. 9 of the Legislative decree no 422/97; Framework Agreement between the Transport Ministry and the Veneto Region for the Enactment of the devolution Act envisaged by Art. 8, Par. 3 of the Leg. D. no 422/97
6 The minimum quality standard is defined by: cleanliness of stations
and onboard trains, punctuality, crowding and comfort, reliability and information system. Furthermore, the continuous monitoring of the service standards and a periodical survey, taken at least once a year to collect comments by the clientele on the quality perceived, are compulsory.
7 For tariff integration problems in Veneto see: Veneto Regional
council, 2002, The tariff system of the local public transport -documents and analysis, Venice.
8Net Engennering, (2001), p. 105.
9See, on this issue, Edoardo Marcucci. op.cit.
BI B L I O G R A P H I C R E F E R E N C E S
BOITANIA., ANDC. CAMBINI, (2001), La riforma del trasporto
pubblico locale, problemi e prospettive, Workshop Antitrust, Milan, 22nd June.
BOITANI, A., AND C. CAMBINI, (2002), “Il trasporto pubblico
in Italia”, Marcato Concorrenza Regole, Vol. 4, n°1, pp. Net Engineering, 2001, Il sistema ferroviario metropolitano
regionale dell’area centrale veneta. Sintesi degli Studi e del progetto, Venice, October.
Trasporti Europei
1. Introduction
The production of railway services is characterised by economies of scale and by technical indivisibility. Such rigidity, as well as its non-lucrative character related to capital remunera- tion due to the use of public investments, has histo- rically guaranteed the
development of the railway system within a natural monopolistic environment dominated by the presence of state-owned companies.
As a matter of fact, apart from the USA, where railway management was given to private companies within a strictly regulated regime, nationalisation was the solution adopted in all European countries, the Soviet block and the Third World countries. Relatively recently, however, the rigidly vertical structure of the railways has often been the object of discussion. This is because technological progress has contributed towards the reduction of that rigidity that has characterised the organisation of the production of services. In other words, despite the presence of unrecoverable investments (sunk costs) and average costs that decreased so greatly as to make competition inapplicable, the technical limitations that force the concentration of the market on the supply side have been weakened.
This situation, as well as increasing subsidy levels, drove the Governments of many countries to undertake reforms in this field in order to design organisation schemes that could overcome the pre-existing unity of the railway enterprises. Japan’s strategy for introducing a certain level of competition in the market was the creation of individual private firms, six of which are dedicated to local passenger traffic, one to the transport of goods, one to high speed connections, and others to the management of regional railway networks.
In South America and Africa the restructuring of the railway system, carried out by the World Bank, had as its main objectives the geographical fragmentation of the networks and the achievement of a higher level of competitiveness thanks to the transfer of services management to private companies operating in a market controlled by an independent regulator.