We might not inevitably need Volán (Hungary’s long-distance state bus company) or MÁV; the liberalization of long-distance transportation is also conceivable – explained János Lázár, the Minister of Construction and Transport, at the end of November.
According to EU Regulation 1370/2007 public service contracts for the operation of railway lines in individual member states can be extended without tenders for the last time until this year’s December 23, for a maximum of ten more years. Afterwards, open calls for tenders must be held, allowing private service providers to bid as well.
It is possible, therefore, that the hegemony of state providers in Hungary’s railway traffic could come to an end. In the majority of the country, this monopoly is represented by MÁV-Start, with GYSEV operating the railways in the roughly-defined triangle of Sopron–Győr–Szentgotthárd – and more recently, in the region surrounding the town of Zalaegerszeg as well.
With the introduction of open tenders, the state would remain the client, financier, and organiser of railway services; meaning there would be no changes in ticket prices, the number of departures, and their timing. However, there could be several advantages to opening up the market.
The unanimous opinion of transportation experts consulted by 24.hu is that the government does not plan to break with its previous practices. It is quite peculiar, however, that just over a week before the deadline, there has been no information about the extension.
We have contacted the Ministry of Construction and Transport to find out whether they plan to extend the public service contracts for MÁV-Start and GYSEV; and whether they are considering a potential market liberalization regarding the country’s railways. However, no response has been provided yet by the ministry in charge of the issue.
Financial issues
The operation of railway lines costs the state a considerable amount of money each year, especially since the increase in energy prices. According to Lajos Dorner, president of the Urban and Suburban Transport Association (VEKE), a lack of clarity in financing may be behind the delay in contract extension.
There is no money left; MÁV’s entire maintenance budget for next year is spent, and there is absolutely no chance of financing the purchase of new vehicles. But even if they were to announce a tender for new railway vehicles tomorrow, they wouldn’t arrive before 2027 at the earliest, either,
Dorner explained to 24.hu. To VEKE’s knowledge, the 10-year plan presented by János Lázár on November 20, involving 6,500 billion HUF to be spent on the railways, does not include significant developments; instead it focuses on maintaining track conditions and eliminating the majority of current speed restrictions. This could involve determining the service level, schedule, and capacity the state wishes to order on specific lines. Then, the Minister of Finance must find the sources for all this by the end of December. According to Dorner, a decision is not to be expected before this happens.
The contents of the package are not known, but the refusal to engage in professional consultations is not a good sign, according to Dorner:
MÁV-Start simply doesn’t have enough vehicles, and it’s no coincidence they started closing railway lines. They are testing public reaction, checking whether there are strong local lobbies for their preservation, and in the case of insufficient resistance, the closure of additional railway lines is not ruled out, either.
The system is already working in the Czech Republic
Several of the surrounding nations have implemented the strategy of opening the market. Of course, there are bad examples as well; for instance, it didn’t work out that well in Romania, indicating state orders must have a strong organisation behind them to manage the liberalisation process, said Bence Király, board member of public transport activist association Közlekedő Tömeg Egyesület, in an interview with 24.hu.
In Western Europe, private service providers have recently taken over the operation of numerous railway lines in several countries. One example is France, where the state-owned railway company (SNCF) is traditionally very strong. But for example in the Czech Republic and Slovakia, countries similar to Hungary regarding their endowments, the operation of several lines has been handed over to the private sector.
The yellow carriages of Czech private railway company RegioJet might already be familiar from the Budapest–Győr–Vienna–Prague railway line. However, these trains are not operating as public services ordered by the state, but rather, they are competing with state-owned railway companies on a commercial basis.
In the Czech Republic, the operation of several regions’ railway lines within a public service framework was also tendered out. RegioJet won the largest such tender to date in the Ústí nad Labem region on November 23; while back in April, they obtained the operation rights of the long-distance trains on the Prague–Brno route. The company had previously won another tender in the Ústí nad Labem region, and they will also operate the Prague S49 and S61 suburban trains from the end of next year.
New vehicles
The entry of private service providers could solve the issue of replacing out-dated vehicles, which proves too much of a challenge for the financially constrained MÁV-Start. As part of tender requirements, winners can be mandated to introduce new railway vehicles on the awarded lines. For example, RegioJet won the operation of the listed railway lines in the Czech Republic by deploying new, modern trains purchased from the Polish company PESA.
As seen in many foreign examples, private operators often cover the costs of acquiring new vehicles by making it a part of the service itself, reimbursed by the state based on travelled kilometres. The advantage of this model is that it relieves the state of bearing the significant purchase costs.
It is the daily maintenance of operations on branch lines and non-electrified mainlines that poses a primary challenge for MÁV-Start. In the summer, the railway provider suspended operations on ten branch lines, which were not eventually reopened with the December 10 timetable change. Also, from December 10 onwards, the operation of the Zalaegerszeg–Rédics and Zalaegerszeg–Őriszentpéter railway lines was transferred from MÁV-Start to GYSEV. According to Lajos Dorner, the aim of this measure was to enable MÁV-Start to spare a few Bzmot branch line engines. (Czech or Czechoslovakian-made Bzmot engines are Hungary’s iconic main vehicles on branch line railways.)
With the lack of EU funding, it is currently unclear how the state would obtain the necessary financing for the nationwide replacement of aging Bzmot engines acquired in the late 1970s and early 1980s. However, except for the Stadler Flirt and Kiss suburban motor trains operating around the capital’s agglomerations, almost all of MÁV-Start’s railway vehicles are worn-out and obsolete, with the majority of express, intercity, and regional carriages, as well as the diesel and electric powered engines requiring replacement.
Cheaper Than State Providers
Foreign examples show that private service providers often offer cheaper bids for operating lines compared to state railways. In the tender won in the Ústí nad Labem region in November, RegioJet undertook the service for 3.3 billion Czech crowns (approximately 52 billion forints) less than what the state railway (ČD) offered over the 15-year contract period.
Similarly, for the operation of long-distance trains on the Prague–Brno route over 15 years, the private railway offered a bid 1 billion Czech crowns (approximately 16 billion forints) lower than ČD: 4.9 billion instead of 5.9 billion crowns. This price also includes the purchase of new PESA motor trains.
Right on the other side of Hungary’s Slovakian border, we can see instances of private providers in the case of the Bratislava–Komárno (Pozsony-Révkomárom) railway line. Another Czech private railway company, Leo Express, took over the line’s operation under a public service contract right after the December 10 timetable change. This is not the beginning, however; in 2012, the operation of the Bratislava–Komárno line was tendered out for the first time, and it was subsequently won by RegioJet. RegioJet operated the line until December 2020 when it was once again taken over by the Slovak State Railways (ZSSK), who operated the railway line together with the Austrian Federal Railways (ÖBB) until this year’s December.
Presumably, significant growth could also be achieved on certain railway lines in Hungary if the aging rail vehicles were replaced with modern ones.
