České dráhy rules the tracks

České dráhy (ČD) is the national rail operator in more ways than one. The rail company is state-owned, and, thanks to recent contracts signed on Dec. 2 worth 80 billion Kč ($4.7 billion), it will be the primary operator for all of the country's regions for the next 10 years.

While private companies like Radim Jančura's Student Agency claim ČD has created a monopoly, ČD representatives say the company was simply able to offer the most comprehensive bid.

Beyond the usual subsidies rail companies receive from the government to keep transportation affordable, ČD has gotten other financial incentives from the state that have allowed it to continue its reign on the rails.

In June, the government gave the company 3.2 billion Kč toward its regional operations. The company said, without the special subsidy, it would have had to cut operations. In August, the government announced it would give regions a total of 2.65 billion Kč annually from the state budget for the next 10 years. After the promise, all the regions agreed to sign 10-year contracts with ČD. The only region to announce tender for companies to bid on providing rail transport, Plzeň, immediately canceled its tender.

"The decision to cancel the tender was spurred by the agreement between the region and the government, which ensured stable funding for public transport over the next 10 years, and the fact that ČD submitted a comprehensive bid for all the lines in the Plzeň region," said Petra Jarošová, a spokeswoman for the Plzeň regional government.

ČD is often reported by the press to be unprofitable, and, by simple ticket sales, that's true. However, the company receives heavy subsidies from the state, a common practice in many countries that want to provide affordable rail service. With subsidies, ČD will draw a 2 percent profit from the total amount in the contract, according to Petr Šťáhlavský, a ČD spokesman. Legally, the company is allowed up to 5 percent for profits, he added.

ČD would not comment on Student Agency owner Jančura's plan to file a complaint with the European Commission, but the company does take issue with Jančura's negative ad campaign.

"[The campaign] has nothing to do with the real business environment. It uses false claims, compares nonexistent trains with our older models instead of showing our hundreds of cars that offer comfort," Šťáhlavský said.

ČD General Manager Petr Žaluda told the daily Lidové noviny Dec. 3 he believes Jančura never intended to have a rail line but wanted to put himself in a position where he could challenge ČD in court.

"Our view is linked with the ever-changing expressions of representatives of [Student Agency and RegioJet]," Šťáhlavský said. "We have publicly available data on Student Agency. To ensure transport means investing at least 2 billion Kč over two years for the trains, building supporting infrastructure, building up staff and so on. According to our analysis, the company is unable to fulfill that bid."

Claire Compton can be reached at
ccompton@praguepost.com