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Gathering steam

Bus operator plans railway expansion in bid to compete with České dráhy

By Victor Velek
Staff Writer, The Prague Post
October 10th, 2007 issue

COURTESY PHOTO
Radim Jančura's economically priced buses revolutionized inter-city travel, and he hopes to do the same with his train project.
State-owned České dráhy (ČD), the country’s only long-distance passenger train operator, might soon face an unusual competitor.
Radim Jančura, the owner of Student Agency Express, has been dreaming of railway expansion since his bus company conquered domestic long-distance travel with its fleet of yellow buses.
“In three years or so, our trains will transport passengers between Prague and Ostrava,” Jančura says, confidently.
Jančura says he is setting aside a project to build hotels in the country’s regional capitals to focus on these trains: He plans to buy five new trains for an estimated 2 billion Kč ($103 million).
“The railway project is financially demanding, and we need to save money,” Jančura says. “I’ve decided to concentrate solely on it.”
Although Student Agency is expected to have revenues exceeding 3 billion Kč by the end of the year, its profit is relatively low — last year, it amounted to about 15 million Kč. The company plans to take out a bank loan to finance the new train expansion, Jančura says.
Jančura believes passenger trains are a feasible business even without public money, and even though the public railway system receives state subsidies.
“There is a thirst for comfortable and cheap railway transport,” Jančura says. “České dráhy is not capable of quenching it.”
Jančura plans to apply a business strategy similar to the one he has been using since his bus fleet began transporting people between Czech cities almost four years ago: more comfort and lower prices.
Student Agency trains will directly compete with Pendolino, the top ČD train, in comfort and in price, Jančura says.
Jančura admits his train project might look like a crazy venture to some and his competition doesn’t take the project seriously.
But a spokesman for state-run České dráhy says it welcomes Jančura’s plan because it could make the railway sector more competitive.
“Every new player means motivation for existing carriers,” says ČD spokesman Ondřej Kubala.
Beginning and running a new train route is not easy, however, Kubala says, pointing to the September 2007 failure of passenger and cargo train carrier Railtrans, which gave up trying to operate the same route Jančura has his eye on.
Railtrans had problems getting access to this same rail line, says Railtrans executive head Petr Šimral. “Statements by politicians in favor of … rail liberalization are just empty phrases,” Šimral says.
ČD says such claims are untrue.
“České dráhy doesn’t have any leverage to influence decisions of independent offices licensing train vehicles and granting access to rails,” Kubala says.
Rail fights
Only a handful of private carriers operate on the country’s rail network, which is one of the world’s most dense. This means ČD enjoys a virtual monopoly on domestic passenger rail transport.
No private passenger train carrier currently operates on any long-distance route and the practice of automatically allocating state support for running long-distance routes to ČD creates this environment, according to private train carriers.
Every year, about 3 billion Kč flows to ČD to cover losses connected with operating inter-region passenger trains, says Karel Hanzelka, a transport ministry spokesman.
However, the situation is likely to change soon.
At the end of 2005, the Transport Ministry announced two pilot tenders for operating subsidized inter-region routes. ČD won both tenders. Since then, no further tenders have been launched — a measure that would liberalize competition for state subsidies.
Czech bus and short-distance train carrier Veolia Transport, part of the France-based Veolia Group, is one of the most vocal critics of the way things currently are run.
“Although the Transport Ministry promised that further tenders would be announced this year, no announcement has been made, and none is apparently being prepared,” says Jiří Schmidt, Veolia Transport project manager in charge of railways.
On August 15 — after waiting in vain for tenders — Veolia Transport offered to operate three inter-region routes in north Bohemia, which are currently operated by ČD. Veolia Transport made an offer to give customers more comfortable surroundings and use less state aid, according to Schmidt. “We’ve received no official answer,” he notes.
But since no new tender offers are planned, the transport ministry must decline the Veolia offer, Hanzelka says.
The government is not against the liberalization of railway transport, Hanzelka says.
“The main reason [for dropping route tenders] is that we are working on a bill addressing public transport and on the further transformation of České dráhy,” Hanzelka says.
The new bill will set up new rules for subsidizing public transport and is expected to come into force as of January 2009.
Next year — before the bill becomes a law — some route subsidies might be tendered, Hanzelka says.
Setbacks notwithstanding, Veolia Transport is to continue to focus on state-aided routes, rather than embarking on more risky ventures of operating routes without the support of public money, like Student Agency or Railtrans.
“Only if the Transportation Ministry remains reluctant to liberalize the access to railways, we might consider operating train routes on a commercial basis,” Schmidt says.

Victor Velek can be reached at vvelek@praguepost.com


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