International Railway Journal - May 2008 - (Page 24)

Italy we started negotiations with the government in 2006 regarding our balance sheet, equity, and return on investment. Almost 50% of our income comes from the public sector, but it is not our obligation to provide transport for everyone. If the government wants to guarantee total mobility, it is up to it to give a contract to someone to do this.” A major management shake-up took place in September 2006 with the appointment of a new chairman and CEO of FS, and new CEOs of the two main subsidiaries, Trenitalia and Italian Rail Network (RFI), which is responsible for the infrastructure; FS being one of the few remaining integrated railways in Europe. Moretti became the new CEO of FS, the first career railwayman to take the helm for many years. Moretti was previously CEO of RFI and was succeeded by Mr Michele Mario Elia who had been technical director. Soprano, formerly FS’ central strategy manager, was appointed CEO of Trenitalia. The immediate priorities were to cut costs and increase fares and rates. One of the key actions to reduce costs was to devolve power down through the railway to give staff lower down greater control of what they do. FS also exerted much stricter control over suppliers to keep costs down. FS won approval to increase highspeed and InterCity train fares by 15% from January 1 2007. This was followed by another 15% increase, but just for high-speed services, a year later. High-speed traffic on the core Turin Milan - Rome - Naples and Rome Venice lines is growing at 2% a year, and will receive a major boost over the next two years as the remaining sections of high-speed line open. However, Trenitalia will be first operator in the world to face direct Trenitalia plans a major expansion of commuter services. competition when NTV takes to the tracks in 2010 with its fleet of AGV trains. “Competition is good for us because it helps us to cut our costs, etc,” says Soprano. “But the rules need to be the same for us and the private operators.” Traffic on other premium longdistance services is stable, but it is falling on lower-quality day and night trains. “Three to four years ago, 35% of long-distance traffic was in night trains, but it is now 25% because of competition from low-cost airlines,” says Soprano. As far as regional and local passenger services are concerned, the national government funds the regions to pay for the public transport services they need. The problem is that the regions give Trenitalia less money than agreed. “Subsidies are at the same level as in 1998,” says Soprano. Fares are ridiculously low: the average income per passenger-km is between ƒ0.35 and ƒ0.38. Italy started to offer concessions for the provision of regional services, but this failed, as Soprano explains: “We have had three tenders in Italy so far, but the level of subsidy and fares are so low that nobody wants to bid.” As a result, Trenitalia has adoped a radical new policy to address the problem. It has drawn up a menu of services it will provide, each with a price tag, so that regions can choose the level of service they can afford. “We launched this initiative at the end of last year, and we are now in bloody negotiations,” says Soprano. “The regions are not happy, but now they know the cost for each service.” To help the situation, the former Italian cabinet allocated an extra ƒ80 million on April 1 to allow some regional services that had been under threat to continue operating. Despite the financial problems, Trenitalia sees a great future for local rail transport, especially in the big cities where traffic is growing at 2-3% a year, but rail and public transport have relatively low market shares. In Milan, for example, rail had a 21.7% market share in 2004 and public transport 32.4% compared with 66% in Madrid and 67% in Paris. Trenitalia wants to boost rail’s market share by 2011 to 50% in Milan and Rome, and 43% in Naples. “If we put new trains in service, they fill up,” says Soprano. “We plan to increase the offer by 34% in the next four years. We intend to invest ƒ4.9 billion between 2007 and 2011 both to buy new trains and refurbish existing ones: this is the so-called 1000 new train railway workshop equipment plants nts r age ired fo areas requcovered not- stand 1136 hall 2 24 sand filling plants - lifting plants - bogie drop plants working platforms - special cars IRJ May 2008 Photos: Quintus Vosman

Table of Contents Feed for the Digital Edition of International Railway Journal - May 2008

International Railway Journal - May 2008 Contents This Month News Transit News Market News Technology News News Analysis Italian Railways on the Road to Recovery High-Speed: On the Home Straight Korea Develops High-Speed Ambitions Setting New Standards for New Rolling Stock India Solves Traction Motor Conundrum Weathering the Storm with Climatic Testing Technology Drives US Train Inspections Rendezvous Full Contact List Advertisers Index The Last Word

International Railway Journal - May 2008

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