Rebel's take on financing night trains

April 28, 2021 | Willem-Jan Zwanenburg

2020 saw the revival of plans for a large European network of night trains – a network that existed before, but which has mostly been replaced by high-speed day trains. The current rail network, however, connects far fewer cities than its predecessor did, say, 40 years ago. The rise of budget airlines has also played an important role in weakening rail’s competitive position as a mode of transportation, and the small number of night trains that remain only serve a handful of European destinations.

Financing new rolling stock

Let’s take a look at some potential obstacles to relaunching a comprehensive night train network. The biggest stumbling block isn’t capacity: there are more than enough available train routes at night. Post-Covid, the morning rush hour is also expected to be quieter, as it looks like working from home is set to become the new normal. Then there’s the admission of rolling stock, which has become much easier than before: European homologation can be arranged for carriages and locomotives as available “off the shelf” from several manufacturers, and these can be admitted anywhere in Europe. Staff isn’t an issue either, as multilingual crews can be deployed on a pan-European basis these days. The only real problem that remains is how to finance new rolling stock.

There is a need for night train services that offer considerably more comfort than they do now: quieter trains, free Wi-Fi, various sleeping options ranging from comfortable chairs to private cabins with double beds, catering, and an entertainment offering comparable to that of airlines – or better yet: good-old linear television.

The first reflex in European decision-making, however, seems to be to keep doing things the way they’ve been done before. That’s why the proposal currently on the table is to have the national operators of Germany and France, DB and SNCF, set up a new, joint company. This operator would then run the trains using the existing knowledge of DB and SNCF as legacy railway companies, while a separate, private venture would have to arrange homologation and purchase the rolling stock, which would be staffed with crew borrowed from the two national operators. Private operators would be able to buy into the project.

Rebel’s first proposal: set up an EU rolling stock company

Potential night train passengers would benefit if all rail operators received the same opportunities, without an unfair advantage being given to national operators. But what would that look like in practice?

The EU could set up its own rolling stock company (or hire a commercial party to do so) that would make a large fleet of night trains available to any party with a sound plan, regardless of its historic status.

This approach would likely draw the interest of manufacturers such as Stadler and Siemens too. The size of the new fleet would guarantee economies of scale while the rolling stock could be paid for out of ticket revenue. Fledgling operators interested in starting a night train service could rent this rolling stock at the same price as legacy competitors. If a country or a group of countries were to desire a specific connection that would initially be less profitable, this could be put out to tender as a concession. Every competitor vying for the contract would have to pay the same price for the rolling stock, removing the major initial investment in rolling stock and all the uncertainty surrounding its admission from the equation, thus leveling the playing field.

Rebel’s second proposal: cross-finance affordable train travel by making short-distance flights more expensive

There are several options for financing. A fleet of carriages big enough to make the dream of a comprehensive night train network come true would cost around 1 billion euros, which could be guaranteed by the EU – a reasonable proposal if Brussels is in fact serious about the shift to rail. The locomotives could be leased from existing leasing companies, and there would have to be a fixed price for use of the carriages. But if we truly want to change our travel behavior, cross-financing from airlines could also be part of the deal:

if all intra-EU and national air travelers would pay 1 euro extra for tickets to destinations with a flight distance of less than 800 km, this would generate an additional 186 million euros a year.

The average air traveler would probably not even notice this small additional fee, but together all those euros could go a long way towards financing the European railway network of the future – without adding to national tax burdens.

What are your thoughts?

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This publication is part of the series Rebels in Rail