Why are minor and regional branches in countries like Germany and Denmark operated by private companies like Arriva?

[RailWonderer]

Normally you expect the state to run lines that make a loss and the private companies to run the profitable routes, instead in the countries mentioned you get private operators on minor routes.

Arriva's European rail operations include vast amounts of regional routes, in Poland and the Netherlands (which is like one glorified suburban network really) and surely can't all turn a profit.

 

[Watershed]

Almost all rail services other than Intercity ones are subsidised across Europe. Even many Intercity ones are subsidised. Thus it's irrelevant whether the state operator or a private company runs the line - either way they will be getting a fair amount of subsidy through a contract with the regional or national government, depending on the arrangements in the area and country concerned.

In many countries, you thus end up with subsidised regional and local services contracted out to private firms (e.g. because the state operator made an uncompetitive bid, thinking it would be a shoe-in) whilst Intercity services remain in the hands of the state operator.

The only privately operated, subsidy-free services are open access Intercity ones like what you see on the ECML in the UK, or Flixtrain in Germany, Italo in Italy and so forth. In any event there's often an element of indirect subsidy through track access charges that don't necessarily reflect the full cost of building, operating and maintaining the railway.

 

[DanielB]

In the Netherlands the situation was that NS makes a profit on the main network and this profit was used to finance the less profitable lines and pay the state for the franchise as well. This will however change in the new franchise where also NS is getting some subsidy.

On the now privatised lines NS used to offer a rather poor service and some where even candidate for closure (for example Arnhem - Tiel, which was served by a rail replacement bus in the evening in the last years NS served it).
The provincial government was often not satisfied with the service. Change started in the nineties when a project was started to get a more integrated network in the rural area in the east of Gelderland: NS, Keolis and Connexxion cooperated in the new company Syntus (which has its name actually derived from "SYNergy Train and bUS"). The railway gained importance as buses where no longer running parallel to trains but instead connecting to the trains at stations.

In 2000 the "Transportation act 2000" became effective, making the provinces (and some metropolitan regions) responsible for tendering public transport. This started with buses and a few railways, but over the years more and more railways where decentralised from state to province. And in later years also multimodal franchises where introduced.
Now the province had its own budget and was setting the requirements for the service level. The regional bus operators, most of which had already been bought by foreign transportation companies, gradually all started with operating trains also using knowledge from their parent company.

Their franchises are all subsidised more or less, so they don't make profits on them. But I've once heard the foreign parent companies actually use the Netherlands to develop and test new concepts which are valuable knowledge for the parent company.
And every now and then there are significant losses due to bidding too cheap on a franchise. About all operators have had such a situation in the past.

The newest development are open access services. Arriva already uses their knowledge to run open access night trains from Maastricht and Groningen to Schiphol and Qbuzz (originally Dutch, now owned by Trenitalia) has plans as of 2025.

And how NS lost those regional lines... They often didn't bid or were too expensive with their guard on every train (required by the unions which have less power at the regional operators).
NS has (had) some however: they used to run Apeldoorn - Zutphen as RegioNS and still run Gouda - Alphen aan den Rijn.
They did bid on the Limburg franchise now held by Arriva via their daughter Abellio. However fraud was discovered (they used a former Veolia Limburg employee as consultant for inside knowledge) and lost the franchise before it started. After that case Abellio Netherlands was liquidated and Qbuzz sold to the Italians. And NS no longer involves itself in regional transport.

 

[nwales58]

Very interesting summary of the Netherlands.

The model of regional government tendering rail and (non-city) bus on the same basis seems to me the best way to achieve good services and accessibility for the whole population, within funding constraints. (Non-)transparent infrastructure cost allocation may push most things to bus in practice, of course.

In Britain the institutional-cum-legal framework that has evolved over the last 30 years gets in the way of trying almost anything sensible.

 

[LNW-GW Joint]

On the continent the tendency is for specific routes or batches of routes to be put out for tender for 5-10 years, and the lowest cost wins.
Not exactly franchises but close - the service spec and nature of provision is defined by the local authority.
The regional/local operators tend to come from adjacent countries/regions with similar services, with the "state" or long-distance operator not bothering to bid, or bidding too high.
It's a way of getting some competition and focus on specific routes, as well as one in the eye for the (expensive) incumbent with lower costs for the region.
It doesn't always work, however, and there's been a spate of withdrawals by the incoming operator with the routes being handed back to the "state" operator, much like our Operator of Last Resort setup.

 

[rvdborgt]

On the continent the tendency is for specific routes or batches of routes to be put out for tender for 5-10 years, and the lowest cost wins.

The best scoring offer wins. How much the price counts in the score depends on how the tender was specified.

 

[Bletchleyite]

Very interesting summary of the Netherlands.

The model of regional government tendering rail and (non-city) bus on the same basis seems to me the best way to achieve good services and accessibility for the whole population, within funding constraints. (Non-)transparent infrastructure cost allocation may push most things to bus in practice, of course.

In Britain the institutional-cum-legal framework that has evolved over the last 30 years gets in the way of trying almost anything sensible.

What one needs to remember is that the UK equivalent of German/Dutch regional Governments is our nations, i.e. England, Scotland, Wales and NI - and they indeed do (sort of) follow that model.

Don't make the error of comparing those regions to the likes of County Councils (though such confusion is kind-of understandable given that the former Metropolitan Counties can and do purchase upgrades to rail services on the mainline).

As to why they're tendered rather than just purchased from the national operator, it's an EU mandate is it not?

 

[Gloster]

Private railways (privatbaner) have existed in Denmark for many years, even though they have for long been majority or entirely owned by local authorities and the state: calling them private, which some of them had been originally, was to differentiate them from the wholly state owned DSB. Many of the private owned lines closed in the fifties and sixties, while in more recent years the remainder have amalgamated into a small number of groups that are part of the local transport authority. So the idea of branch and local services operated by these companies is nothing new to the Danes.

The take over of former DSB lines in west Jutland by Arriva in 2003 was, in my (and many others) opinion, a political decision based on the belief that DSB needed competition: some saw this as a way to force DSB to get its act together, while others were quite simply hostile to state-owned companies. Policy has continued to lean towards the private sector and lead to an extension of Arriva Tog’s operations.

(I am not as up to date with Danish matters as I was a few years ago.)

 

[DanielB]

As to why they're tendered rather than just purchased from the national operator, it's an EU mandate is it not?

It is, EU requires purchases (of services in this case) by a government to be tendered. There are four exceptions Amsterdam, Rotterdam, The Hague and Utrecht are allowed to tender under private contract to their local operators according to an addendum to the Transportation Act from 2012.
For Utrecht this came too late as a tender was already ongoing. But the other three have contracts with the "Vervoerregio Amsterdam" and "Metropolitan Region Rotterdam-The Hague" respectively. Though the type of contract is the only real difference. (And, before COVID struck, the Rotterdam metro was a special case being the only franchise which wasn't subsidised as the revenue from ticket sales was sufficient to pay for the operation)

 

[Sir Felix Pole]

Private railways (privatbaner) have existed in Denmark for many years, even though they have for long been majority or entirely owned by local authorities and the state: calling them private, which some of them had been originally, was to differentiate them from the wholly state owned DSB. Many of the private owned lines closed in the fifties and sixties, while in more recent years the remainder have amalgamated into a small number of groups that are part of the local transport authority. So the idea of branch and local services operated by these companies is nothing new to the Danes.

The take over of former DSB lines in west Jutland by Arriva in 2003 was, in my (and many others) opinion, a political decision based on the belief that DSB needed competition: some saw this as a way to force DSB to get its act together, while others were quite simply hostile to state-owned companies. Policy has continued to lean towards the private sector and lead to an extension of Arriva Tog’s operations.

(I am not as up to date with Danish matters as I was a few years ago.)

One disadvantage is that DSB through services from Copenhagen have been chopped back in Jutland - Thisted and Frederikshavn are no longer served by DSB and Struer is only served via Holstebro. On the plus side the frequencies on the branch lines are much improved.

 

[The exile]

Private railways (privatbaner) have existed in Denmark for many years, even though they have for long been majority or entirely owned by local authorities and the state: calling them private, which some of them had been originally, was to differentiate them from the wholly state owned DSB. Many of the private owned lines closed in the fifties and sixties, while in more recent years the remainder have amalgamated into a small number of groups that are part of the local transport authority. So the idea of branch and local services operated by these companies is nothing new to the Danes.

Very similar applies to (West) Germany - with several "non-federal" lines hanging on by the skin of their teeth on an "as required" freight only basis, while others, such as the AKN north of Hamburg flourished. In the early days of regionalisation, DBAG was often undercut by other operators - I'll leave others to comment on the reasons - but has subsequently founded its own "independent" operating companies.

 

[Bletchleyite]

Very similar applies to (West) Germany - with several "non-federal" lines hanging on by the skin of their teeth on an "as required" freight only basis, while others, such as the AKN north of Hamburg flourished.

AKN (Altona-Kaltenkirchen-Neumuenster) is a curious little operation - it's kind of styled as a diesel extension of the Hamburg U-Bahn, with stations with similar furniture, displays, high platforms etc (almost "U-Bahn Lite") and the trains at least used to be odd 2-car diesel/DC bi-modes* which looked like the offspring of a bogied Pacer and a classic U-Bahn unit (not sure if they're still in use, though). I've never seen another railway quite like it**, not even in Germany. I wonder if they just found an odd one-off winning formula with that?

* Most people probably don't realise they are bi-modes, but they used to, years ago, operate through services to Hamburg Hbf S-Bahn platforms at peak times only, so I've been on one in electric mode
** Actually, there's sort of a curious resemblence to the more rural parts of Metrolink (though it's not electrified) of "heavyweight" high platform, proper-metro-style stations yet a foot crossing at the end.

 

[Gloster]

AKN (Altona-Kaltenkirchen-Neumuenster) is a curious little operation - it's kind of styled as a diesel extension of the Hamburg U-Bahn, with stations with similar furniture, displays, high platforms etc (almost "U-Bahn Lite") and the trains at least used to be odd 2-car diesel/DC bi-modes* which looked like the offspring of a bogied Pacer and a classic U-Bahn unit (not sure if they're still in use, though). I've never seen another railway quite like it**, not even in Germany. I wonder if they just found an odd one-off winning formula with that?

* Most people probably don't realise they are bi-modes, but they used to, years ago, operate through services to Hamburg Hbf S-Bahn platforms at peak times only, so I've been on one in electric mode
** Actually, there's sort of a curious resemblence to the more rural parts of Metrolink (though it's not electrified) of "heavyweight" high platform, proper-metro-style stations yet a foot crossing at the end.

There were two types: sixteen VT2 of 1976 and 1977, which have all been withdrawn and eighteen from 1993 that are still in use: eight of the latter are fitted with a third-rail pickup. At the moment it looks as though they are not going through to Hauptbahnhof as it appears there is a bus replacement between Eidelstedt and Burgwedel for electrification work.

 

[eldomtom2]

The model of regional government tendering rail and (non-city) bus on the same basis seems to me the best way to achieve good services and accessibility for the whole population, within funding constraints. (Non-)transparent infrastructure cost allocation may push most things to bus in practice, of course.

One risk that does come to mind is a lack of jointed-up thinking between different governments, with negative consequences for "cross-border" services.

AKN (Altona-Kaltenkirchen-Neumuenster) is a curious little operation - it's kind of styled as a diesel extension of the Hamburg U-Bahn, with stations with similar furniture, displays, high platforms etc (almost "U-Bahn Lite") and the trains at least used to be odd 2-car diesel/DC bi-modes* which looked like the offspring of a bogied Pacer and a classic U-Bahn unit (not sure if they're still in use, though). I've never seen another railway quite like it**, not even in Germany. I wonder if they just found an odd one-off winning formula with that?

* Most people probably don't realise they are bi-modes, but they used to, years ago, operate through services to Hamburg Hbf S-Bahn platforms at peak times only, so I've been on one in electric mode
** Actually, there's sort of a curious resemblence to the more rural parts of Metrolink (though it's not electrified) of "heavyweight" high platform, proper-metro-style stations yet a foot crossing at the end.

The concept of "diesel extension to a subway" reminds me of eBART in the US...

 

[The exile]

AKN (Altona-Kaltenkirchen-Neumuenster) is a curious little operation - it's kind of styled as a diesel extension of the Hamburg U-Bahn, with stations with similar furniture, displays, high platforms etc (almost "U-Bahn Lite") and the trains at least used to be odd 2-car diesel/DC bi-modes* which looked like the offspring of a bogied Pacer and a classic U-Bahn unit (not sure if they're still in use, though). I've never seen another railway quite like it**, not even in Germany. I wonder if they just found an odd one-off winning formula with that?

* Most people probably don't realise they are bi-modes, but they used to, years ago, operate through services to Hamburg Hbf S-Bahn platforms at peak times only, so I've been on one in electric mode
** Actually, there's sort of a curious resemblence to the more rural parts of Metrolink (though it's not electrified) of "heavyweight" high platform, proper-metro-style stations yet a foot crossing at the end.

Couple of similar operations near Frankfurt (Main) - at least one of which used similar units, IIRC.
The Hamburg one shows the effects of regionalisation. For years the U-Bahn didn’t penetrate beyond the citystate boundary, with the AKN mopping up the job in Hamburg!s Schleswig-Holstein hinterland.

 

[Bletchleyite]

One risk that does come to mind is a lack of jointed-up thinking between different governments, with negative consequences for "cross-border" services.

To some extent, but looking at the Liverpool parallel the "buffer stops" to AKN at Norderstedt are remarkably like those at Ormskirk in principle, if a bit better laid out (AKN is in the middle between two U-Bahn terminal platforms with doors open on both sides). That is, that the urban area really does run out at Norderstedt and very much turn into somewhere much, much more rural. Though AKN is rather more frequent than Preston to Ormskirk despite the situation in terms of "ruralness" being extremely similar - 3tph off peak, 6tph peak. (There are a heck of a lot of parallels between Liverpool and Hamburg - Kiwittsmoor, where my student residence was, might as well from a railway structural perspective have been Aughton Park ).

The concept of "diesel extension to a subway" reminds me of eBART in the US...

Hadn't heard of that before but it looks almost identical in concept.

 

[U-Bahnfreund]

It is, EU requires purchases (of services in this case) by a government to be tendered. There are four exceptions Amsterdam, Rotterdam, The Hague and Utrecht are allowed to tender under private contract to their local operators according to an addendum to the Transportation Act from 2012.

No, EU regulation 1370/2007, which is applicable here, has always allowed a direct award without a tender.

Until December 2023, railway services could be awarded to just any company, mostly done for the former state railways (article 5 subsection 6). Even though that's now prohibited (see article 8 subsection 2), there are still many options for directly awarding railway or bus/tram services:
An in-house operator, such as a municipal bus and tram company, or a regional railway owned by the regional government are examples (see article 5 subsection 2).

In Germany for example, the AVG tram-train services around Karlsruhe and Heilbronn run under an article 5(2) direct award, because AVG is owned by the city of Karlsruhe, and it was a joint direct award with the other relevant authorities.

The EU regulation in its current form: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02007R1370-20171224

 

[DanielB]

No, EU regulation 1370/2007, which is applicable here, has always allowed a direct award without a tender.

Ah, another example where Dutch law is more stringent than European regulations.

Could only find a Dutch version of the transportation act, so have translated the relevant sections below:

Transportation Act 2000 - Article 61.1: Franchises for public transport are only awarded after being tendered, except when article 63a or 64.1 is applicable.

Transportation Act 2000 - Article 63a: In deviation from article 61.1 franchises for public transport other than by train in a designated area consisting of the cities Amsterdam, The Hague, Rotterdam or Utrecht may be directly awarded to a transportation company under control of the local body.

Transportation Act 2000 - Article 64.1: Authorised to award franchises for public transport by train is the minister of infrastructure and water management, without using the procedures described in paragraph 1 till 3.

Furthermore its described that tendering for rail franchises can be delegated to regional authorities. (The NS network is currently the only rail franchise tendered under the exceptions from 64.1)
An important point is as well that operators to which a franchise was tendered according to article 63a are banned from competing outside their own region. (Which is why a cooperation of NS and HTM in the joint venture RegioLinq had their bid for the Dordrecht - Geldermalsen railway and surrounding buses rejected in 2006)

 

[Invincible]

Normally you expect the state to run lines that make a loss and the private companies to run the profitable routes, instead in the countries mentioned you get private operators on minor routes.

Arriva's European rail operations include vast amounts of regional routes, in Poland and the Netherlands (which is like one glorified suburban network really) and surely can't all turn a profit.

Deutsch Bann has now sold Arriva to I Squared, perhaps some unprofitable branch lines may be cut back?

Arriva sold to I Squared — Financier Worldwide

www.financierworldwide.com

.

 

[Bletchleyite]

Deutsch Bann has now sold Arriva to I Squared, perhaps some unprofitable branch lines may be cut back?

Arriva sold to I Squared — Financier Worldwide

www.financierworldwide.com

.

That's the decision of the tendering authority. Arriva can't just break the terms of their contract by withdrawing services they're paid to operate.

 

[JonasB]

As mentioned, those are not run as open access for profit routes. In Sweden it started in the 1990s. The private railways were all nationalised in the 40s and 50s (except TGOJ, but that's another story) and became part of SJ that had a monopoly on running trains. In the 1990s the monopoly ended and private companies could compete, and that led to a boom in local trains all over the country as it became cheaper for regional traffic authorities to run trains.

Every region in Sweden has a regional traffic authority that is responsible for public transportation and work pretty similar to TfL. And they tender the actual running of the trains so you might see a sign on train that says "operated by Arriva" or similar.

One disadvantage is that DSB through services from Copenhagen have been chopped back in Jutland - Thisted and Frederikshavn are no longer served by DSB and Struer is only served via Holstebro. On the plus side the frequencies on the branch lines are much improved.

Not sure that was the big reason to DSB to abandon Fredrikshavn. The line to Frederikshavn was converted to ERTMS in 2018 and since DSB had no trains with ETCS at the moment so they had no choice. Now several IC3s have been equipped with ETCS though…