Rail Restructuring in Germany —8 Years Later Heike Link

Home , BahnCard, DB Cargo, DB Netz, DB Regio, Deutsche Bundesbahn, EuroCity

Feature Railway Reforms in Europe

Germany’s national rail companies passenger transport to federal states A third optional phase would—if Deutsche Bundesbahn (DB in western from 1996 onwords realized—imply dissolution of the holding Germany) and Deutsche Reichsbahn (DR company. After intense political debate, in eastern Germany) saw fundamental Details of these first measures have been it was decided that further separation restructuring in 1994, creating Deutsche described previously (JRTR 2, pp. 19–22) (dissolution of the holding company) Bahn AG (DB AG). It has already been 8 so this article only discusses further would not occur. This situation where years since the restructuring and it is time measures and amendments in the last 8 both the infrastructure owner and to evaluate the outcomes. Apart from years. operators operate as parts of one holding analyzing the general performance of DB Right from the start, separation of company is what economist call vertical AG, this article discusses separation of infrastructure and operations caused integration. It offers the ability to operations and infrastructure as well as remarkable political discussion in discriminate against other third-party experiences of open network access and Germany, especially because different EU operators intending to offer on-track on-track competition. Member States have adopted different competition by running train services on practical solutions since 1994. While EU DB Netz tracks. Directive 91/440/EEC obliges all Member Some explanatory remarks about network The Reform Measures States to separate tracks and operations access and charging rules are necessary. at least at accounting level, the original Although introduction of on-track The German railway reform was intended intent of the Germany government was competition was not an explicit aim of the to be a 10-year process as outlined below: institutional separation. In the first stage rail reform, in mid-1994, DB Netz opened • Foundation of DB AG as a private- (1994–98), DB AG was split into four up the network to third parties for payment sector company in 1994 subdivisions: DB Netz (track network), of access charges. Compared to the other • Institutional separation of DB Reise & Touristik (long-distance Member States, Germany and the UK infrastructure and transport passenger transport), DB Regio (regional have taken the lead in full implementation • Opening of rail network to third passenger transport) and DB Cargo (freight of EU Directive 91/440/EEC. However, parties with payment of track charges transport). In the second stage (from apart from some general rules about • Assumption of federal responsibility 1999), these subdivisions became public network access and charges, DB Netz is for investment in rail infrastructure companies operating as part of a holding completely free to decide the level and • Financial refloating measures by company German Railways Group (DB). structure of the charges. This led to federal government Meanwhile, the two passenger companies discrimination against non-DB track users • Transfer of responsibility for suburban were merged into a single Business Sector. who took their complaints to the Federal Antitrust Commission with the result that the access charge system has been revised three times in 8 years. The institutional separation of infrastructure and operations as well as problems of on-track competition are discussed in detail later in this article. The regionalization (meaning that federal states request and finance (subsidize) all regional passenger services) from 1996 is also related to problems of on-track competition because the federal states can put these services out to tender. Finally, some remarks on investment financing are necessary. The federal government finances construction and replacement of tracks. DB Netz pays the The long-term Netz 21 strategy follows the idea of separating tracks for slow trains such as freight trains from those annual depreciation for these tracks to the for higher-speed trains such as long-distance ICE, Intercity and EuroCity passenger trains. (S. Cramer, ice-page.de.) federal government and raises the

42 Japan Railway & Transport Review 34 • March 2003 Copyright © 2003 EJRCF. All rights reserved. necessary funds via access charges from 36,600 km in 2000. More lines are now increased by 9%, indicating more long- the operators. However, if the federal in the official line closure negotiation haul transport. track investment is not in DB’s commercial process and continued reduction of the The financial indicators confirm DB’s interest, the depreciation payments can network length in the future seems likely. performance problems in 1994–2001. be either reduced or abolished, or DB can Notwithstanding these closures, the length Turnover fluctuated around €15 billion receive investment grants (€4.5 billion in of electrified lines has increased. with increases in 1994–97, decreases in 1998; €1 = $1.03). This financing scheme Staff numbers have been drastically cut 1997–99 and increases in 1999–2001. changed from 1997 and DB now receives by more than 30% from 376,000 Pre-tax results have been decreasing since all investments for new infrastructure and employees in 1994 to 242,000 in 2000. 1996 and DB went into the red in 2001— renovations as grants that do not have to On the other hand, DB has made efforts the first time since the 1994 reform. be repaid to the federal government. to modernize the network and services by Losses of €500 million and €200 million However, this new arrangement implies making investments of about €42 billion are expected in 2002 and 2003, that the saved depreciation repayments (2000 prices) from 1994 to 2000. respectively, with a return to profit from must be invested—it is debatable whether Performance differences have developed 2004. However, this optimistic forecast this will actually happen. in passenger and freight transport. From is based on unrealistic assumptions about 1994 to 2000, regional passenger the recovery of the German business transport increased by 33% but long- cycle. DB also faces the problem that Reform Outcomes distance transport increased by just 4% depreciation increased by 80% from (number of passengers and passenger-km). 1994. This huge increase occurred Table 1 shows some DB indicators from There were temporary drops in passenger because the assets of DB and DR were 1994 to 2000. Some cost savings, such numbers in 1994–95 and 1997–2000 greatly undervalued by the 1994 reforms, as closing unprofitable lines and reducing (with passenger-km decreasing in 1995– so the early low depreciation payments staff were achieved; the track length was 98). Freight tonnage fell by 9% between have increased with subsequent new decreased from 41,300 km in 1994 to 1994 and 2000 but freight tonne-km investments.

Table 1 DB Business Indicators 1994–2000

1994 1995 1996 1997 1998 1999 2000

Track length (km) 41,300 41,700 40,800 38,400 38,100 37,500 36,600

No. of electrified lines 17 17.4 17.8 18 18.2 18.9 19.1

Passenger-km (million)

Long-distance passenger transport 34,845 36,277 35,620 35,155 34,562 34,897 36,226

Regional passenger transport 28,073 34057 35,408 36,475 37,291 37,949 38,162

Freight tonnes (million) 309.1 302.4 289.4 295.5 288.7 279.3 282.2

Tonne-km (million) 69,488 67,609 67,882 72,612 73,273 71,097 75,752

Employees (thousand) 376 350 312 293 274 258 242

Investment (€ million) 5,986 6,458 5,707 5,400 4,732 8,003 6,071

Depreciation (€ million) 586 708 827 887 1,003 1,048

Revenues (€ million)* 18,720 19,110 20,250 19,630 22,980 23,730 23,060

Turnover (€ million) 14,771 15,226 15,429 15,554 15,325 14,725 15,465

Pre-tax profits (€ million) 251 282 368 183 201 91 37

*Including subsidies for reduced tickets for disabled persons, students, etc., and subsidies for maintaining level crossings and for combined transport. From 1998 including revenues from DB Netz access charges Sources: Transportation in figures, DB AG

The performance problems are also sections. Here they are mentioned only in the holding, causing serious discussion reflected in decreased consumer to help understand the company’s overall within the company and intense political satisfaction (Fig. 1a). In 1994, the DB strategy. debate. Mr Dieter Vogel, former Global Satisfaction Index stood at 2.87 (on Chairman of the Supervisory Board, a 5-point scale where 1 = Completely General strategy argued strongly against Mr Mehdorn’s satisfied and 5 = Dissatisfied). By 2001 it The overall strategy is to focus on the preference for a vertically integrated group had fallen to 3.19, the worst value since strengths of rail transport, such as highly and hinted that the high demand for 1994. This suggests that the decrease in utilised high-speed lines (ICE), regional subsidies by DB Netz would reduce the passenger numbers is largely due to lack passenger transport services with high chances of selling DB share. In addition, of customer-focused business. Figure 1b traffic volume and regional subsidies Mr Kurt Bodewig, a former Federal shows the details of the dissatisfaction. where revenues cover costs, and long- Transport Minister, favoured clear distance freight services. This implicitly institutional separation of DB Netz from Summary of DB suggests closure of loss-making lines. On DB in order to prevent any possible Company Strategy one hand, DB has introduced a cost- discrimination against non-DB track users. cutting programme, as well as an It was finally decided that DB Netz would Evaluating these outcomes of the German infrastructure investment programme on remain in the holding company but will railway reform requires understanding the the other hand. Mr Hartmut Mehdorn, introduce and publish its own accounting company’s strategy. This section Chairman and Managing Director of DB, system as obligated by EU Directive 91/ summarizes this strategy based on DB’s strongly prefers keeping DB Netz in the 440/EEC. An independent agency will official statements and actions taken over holding company to ensure centralized monitor network access for non-DB users the last 8 years. It is a personal opinion control of all activities. In other words, to ensure freedom from discrimination. and not a description of any official he is vigorously opposed to further Mr Mehdorn also revised the structure of strategy. separation of infrastructure and train the holding company by merging DB Three issues—separation of DB Netz from services. From his announcements, the Regio and DB Reise & Touristik into one the other DB companies; track access, first shares will be sold around 2005. Business Sector to provide more integrated access charges and on-track competition; passenger transport. This merger may and investments, especially the Cologne– Integration of network and have positive effects on the supply of Frankfurt project and Berlin north-south operations passenger transport services but may axis—are discussed in more detail in later DB’s current strategy is to keep DB Netz cause a loss of accounting transparency,

Figure 1 DB Customer Satisfaction

(1a) Customer Global Satisfaction (1b) Customer Satisfaction

2.4 Reliability of booked seats Personal safety in trains 2.5 Travel times 2.6 Technical condition of trains Kindness of conductors/service staff 2.7 Comfort and equipment of trains Clarity of timetables 2.8 Train frequency 2.9 Cleanliness of trains Variety of catering 3 Availability of connecting trains 3.1 Space for luggage Punctuality/reliability of trains 3.2 Informations about delays 3.3 Value for money Clarity of fare-system 3.4 1994 1995 1996 1997 1998 1999 2000 2001 confident satisfied disappointed Source: Servicebarometer AG Deutschland, Kundenmonitor Deutschland 2001

44 Japan Railway & Transport Review 34 • March 2003 Copyright © 2003 EJRCF. All rights reserved. which is important because regional without tendering if the contracts are originally introduced to connect regions passenger services are subsidized while longer than 3 years and if the train services up to 160 km apart. In 1995, DB operated long-distance passenger services are are partly tendered during the contract 424 Interregio trains on 24 lines carrying provided at DB’s own business risk. duration. 62 million passengers, a figure that exceeded the numbers on ICE and Tackling increasing competition Cost-cutting programme ordinary Intercity/Eurocity lines. in rail market DB has introduced a number of cost- However, DB has been closing these Germany has opened its rail network to cutting measures such a downsizing staff services step-by-step since 2001 and the third parties paying track access charges (Table 1), closing loss-making tracks (11% process is expected to be completed this so DB faces competition from third-party decrease in network length) and closing year. The closure affects 42 million train- services on its network. Regional 8 rolling stock maintenance workshops km or about 25% of all long-distance passenger services, which are subsidized (5900 employees). Unprofitable services, train-km. The DB rationale for closure is by the federal states, are increasingly put especially long-distance passenger trains, that these trains are mainly used by out to competitive tender to get the best are either closed or reduced in frequency. regional commuters and should be service quality and cost. Freight DB also drives hard bargains with builders requested and financed by the federal companies and two long-distance non-DB when ordering new stock. states and it hopes that about 25 million operators are also running trains on DB train-km will be taken over by the states. tracks. However, DB has pursued an Infrastructure development The necessary financial resources would aggressive strategy against competing While the infrastructure strategy is closure come from other closed regional services operators because a lack of regulations of tracks with low traffic, annual that have low passenger levels. Some enables DB Netz to levy access charges investments in infrastructure average €6 Interregio services may be upgraded to that act against non-DB companies. Since billion (at 2000 prices). From 2001 to Intercity lines. DB Netz is closely linked with the DB 2007, DB has and will receive additional These closures and DB’s justification operators, it gives information advantages funds from the federal government caused intense public and political and even privileges with regard to paths, generated by auctioning Universal Mobile debate. Although regional commuters do time slots and access charges when DB Telecommunications System (UMTS) use these trains, it has never been proven Regio bids for tendered regional train licences. The focus of the investment whether the share of regional commuters services. Moreover, when DB sells old programme is new projects such as the really justifies DB’s request. Obviously, locomotives and railcars, a special clause Cologne–Frankfurt high-speed line, the DB is trying to shift unsubsidized long- in the bill of sale prevents the stock being Berlin rail node and the so-called German distance services towards becoming used in competition against DB; breakers unification transport projects. However, subsidized regional services. The are even forbidden to sell scrapped stock this focus has led to neglect in performing disadvantages for customers are clear— to DB’s competitors. Amazingly, DB necessary replacement of existing tracks, the replacement of these services means refuses to include Connex long-distance especially in western Germany. The long- more stops, longer journey times and less services in published timetables and it term Netz 21 strategy follows the idea of comfort because they are not designed for uses every political means to provide separating tracks for slow trains such as journeys of 3 hours or more. Train federal-state-subsidized services without freight trains from those for higher-speed frequency will be reduced and no going through the normal public trains such as long-distance ICE, Intercity substitute will be offered for most services. tendering. Typical pressures are and EuroCity passenger trains. This Another intensely disputed measure is the threatening to dismiss employees with harmonization of speeds and increased introduction of a new fare system in consequences for regional unemployment track capacity is expected to lower December 2002. Unlike the former levels, not ordering new trains from running costs (JRTR 11, pp. 30–39). tapered fares, the new system defines builders in regions that might put services prices per relation similar to airfares, out to tender—with consequences on Passenger transport strategy which are further differentiated by service regional unemployment, and providing DB focuses its activities on highly utilized quality (higher prices for high-speed lines). train services only at the lowest level. DB high-speed lines while under-utilized and Discounts are available for early booking lobbying of the federal government loss-making services are closed. The (up to 40% discount for booking 7 days resulted in a new regulation allowing the closed services have mostly been in advance), for users with the BahnCard federal states to sign train-service contracts Interregio trains (IR trains) that were (25% discount with reduction in

BahnCard price from €140 to €60 per early bookings on regional trains. transport and Alpine transit will enable it year) and for accompanying persons (50% Moreover, early booking discounts are to provide integrated freight transport discount). Children under 14 only available for a defined number of services on one hand and to close the gap accompanied by parents or grandparents seats per train. Unlike airlines, who have between the rail terminal and the pay nothing. At first glance, this system to consider their competitors’ number of customer. However, it has to be seems reasonable and advantageous for early booking tickets when defining their remembered that the success of this travellers and DB is using large advertising own amount of low-price seats, DB has strategy depends greatly on progress in EU campaigns to convince them so. no competition pressure and can exploit harmonization of cross-border transport. However, the German Association of its monopolistic power by keeping the Consumers analyzed various ticket prices number of discount tickets low on high- Current Network Access for different groups and demonstrated that demand trains. and Charges the new fare system causes drastic price increases for most people. Freight transport strategy Germany has achieved Europe’s most Since DB aims to increase ticket revenues Rail freight has continued to decline since comprehensive opening up of its rail by 20% using this new system, it is likely the 1994 restructuring and DB’s strategy network but has failed to establish a that travellers will be paying more rather is to focus on long-distance freight as workable regulatory framework for on- than revenues will increase through higher evidenced by the increase in average haul track competition. DB and all other rail patronage. length. The ratio between tonne-km and companies offering public transport Indeed, prices increase for travellers tonnes hauled has increased from 225 (in services in Germany have opened up their unable to book tickets in advance: using 1994) to 268 (in 2000). A large number routes for payment of usage charges to: regional trains up to 142 km (the old tariff of regional freight services were closed • Public railway companies possessing system will continue to apply here while including their respective yards and own rail networks at the same time the discount for handling services. On the other hand, DB • Non-public railway companies who BahnCard users falls from 50% to 25%); is intending to offer a complete package grant access to their infrastructure to using ICE and IC/EC trains for distances of logistic services; it bought EuroStinnes other public railway companies under up to 180 km (price increase by 10%); Group holdings including the logistics similar terms wanting to rebook (they have to pay a company Schenker for €2.5 billion in • Railway companies from EU countries charge of up to €45). 2002. This purchase and several other for cross-border intermodal traffic Furthermore, there are no discounts for joint ventures in cross-border freight • Railway companies from non-EU countries guaranteeing mutual access to rail network on the basis of international agreements

This exceeds the requirements of EU Directive 91/440/EEC and DB even grants other companies such as haulage contractors, travel companies and government bodies access to its routes. DB Netz is responsible for operation and management of the tracks and for negotiations with companies applying for network access. Since both DB’s operators and competitors can use DB Netz tracks, DB Netz should be highly regulated to prevent it discriminating in favour of DB operators. The German government has failed to do this and the rules leave DB Netz with too DB had to face competitive pressure in long-distance passenger transport when Connex opened two long-distance passenger services on DB tracks in eastern Germany. (M. Buchholz) much freedom as follows:

46 Japan Railway & Transport Review 34 • March 2003 Copyright © 2003 EJRCF. All rights reserved. • DB Netz may freely define the level revision in 1995 reduced discounts the operators. The digressive effect comes and structure of track charges. structure of which clearly favoured the DB from the two-part scheme with a fixed • DB Netz does not need to apply for operators; the second revision in 1998 charge and a variable charge. As more approval of track charges. Charges are changed the system from a single tariff to train-km are ordered the charge per km not regulated by an independent a two-part tariff consisting of a fixed becomes lower because the fixed charge authority. charge and a variable part per train-km; is distributed over a more train-km. A • There are only general rules about the third revision in 2001 returned to a second problem is track allocation where access charges. For example, DB Netz single tariff. The 2001 revision was half of non-DB operators have faced may consider the route type, service required by the Antitrust Commission, problems of competing track access. operating days/times, rolling stock which had identified anti-competitive According to the survey, in most of these type, track wear-and-tear and line features in the two-part tariff. cases, DB Netz suggested alternative track utilization level. Due to DB’s restrictive information policy access (either timetable or route), which • DB Netz is not compelled to publish there is not much official information on was usually accepted. However, in 25% charges but provides them to the degree of track use by non-DB of the cases (mostly in regional passenger customers on request. operators. According to a survey, there transport), DB Netz refused track access. • DB Netz may grant discounts for some were 43 non-DB operators on the DB So far, there is no known case of the volume of train-km when justified by network in 2000. Of these, 21 were bidding process foreseen in the network respective cost reductions (by official running passenger services (mainly access rules being used. A third problem auditor’s certificate). regional), 18 were running freight services, concerns the information provided by DB • In case of competing demand, DB and 4 were running both types of services. to competitors. When the two-part tariff Netz is allowed (but not obliged) to Since 2000, DB has had to face was in use from 1998 to 2000, DB Netz grant track access to the highest competitive pressure in long-distance did not publish the track access charges. bidder. passenger transport when Connex opened Half of the track users had no information • If competitors feel discriminated two long-distance passenger services on on the most price-relevant factors such as against they may appeal to the DB tracks in eastern Germany. Most non- the route category and the utilization class Antitrust Commission or the Federal DB operators using DB tracks have their of the track they wanted to use. Also Railway Board (EBA). own rail network (66% of passenger information on possible discounts for operators and more than 75% of freight rolling stock causing less track wear and The Antitrust Commission and the EBA operators). In the freight sector, most of tear, for low-noise stock and for timetable only have passive regulatory powers— the companies are rather small with less flexibility was not given to non-DB users. they can only react on the basis of than 25 employees. In the passenger Since the new tariff system was introduced received claims but cannot actively sector, the company sizes seem more in 2001, DB Netz has changed its regulate the market. While the Antitrust balanced—38% have less than 25 information policy and publishes the Commission oversees all claims about employees; 38% have between 26 and access charges. competition, the EBA deals mainly with 100 employees; and 25% have more than DB’s competitors know that most of these issues of technical compatibility, safety, 100 employees. Most possess problems occur because DB Netz staff qualification requirements, etc. locomotives but only 25% have their own operates under the umbrella of the DB However, DB’s competitors can appeal to wagons. holding company. Apart from favouring both institutions about track charges. The The survey revealed a variety of clear institutional separation of DB Netz, Antitrust Commission can introduce discriminatory problems as well as most non-DB users of DB tracks consider formal procedures to prohibit the price problems arising from the market situation the separate responsibilities for tracks (DB system, while EBA can decide on the level in general. First, charges had clearly Netz) and stations (DB Station & Service) of prices. This, however applies only to discriminatory features for non-DB as inefficient. They would prefer to the respective claimed case. operators either because of the large transfer the shunting yards, which are Track access charges have an 8-year quantity discounts granted to DB currently owned by their direct competitor history in Germany. The first price system operators in the first charging schemes DB Cargo, to DB Netz. The non-DB was introduced in 1994, followed by a (1994–98), or because of the digressive companies perceive one of the most price list for use of stations in 1995 and effects of the two-part tariff (1998–2000), serious problems to be the lack of sector- three quick price revisions. The first which generated huge discounts for DB specific regulation of DB Netz. In most

Figure 2 DB Competitors’ Evaluation of Institutional Framework and Reform Suggestions

Evaluation Wishes (Median) competitors in regional passenger

35 Obligation on transport are often reluctant to appeal to (4.0) (5.0) (5.0) approval of access 30 charges the Antitrust Commission because they are

25 DB subcontractors in freight transport and Introduction of new regulatory body do not want to loose this business. 20 Furthermore, it is unclear how the 15 Track company within DB, but No. of answers independence of DB Netz from the regulated 10 decisions of the DB holding group can be

5 Track company separated from DB guaranteed and supervised. and regulated 0 Two companies Vertical No regulatory 0 5 10 15 20 25 for tracks and integration of body stations DB Number of answers (multiple) very good good indifferent poor very poor Passenger transport Freight transport DB Investment Policy

Source: Deutsches Institut für Wirtschaftsforschung As already mentioned, DB invested about €42 billion from 1994 to 2000—€30 cases of discrimination, they have is part of the EBA will monitor network billion of which was invested in the track contacted the EBA and Antitrust access and charges. network. According to a study for the Commission but they are dissatisfied with • To clarify responsibilities between the Transport Ministry, about 60% was spent only passive regulation. The majority new agency and the Antitrust on renovations. However, the same study prefers a new independent, sector-specific Commission, the Antitrust shows that this amount was insufficient regulatory body, similar to the Commission will continue to be the to cover the replacement needs, especially telecommunications regulator (Fig. 2). body responsible for overseeing the in western Germany. One focus of new DB’s competitors also favour approval of rules of network access and charges. investments is the German unification tariffs by an independent regulator. The new track access agency will be investment projects that aim to improve Apart from these problems caused by DB’s in charge of technical issues such as the east–west links. About €7 billion was discriminatory behaviour, non-DB analyzing track availability. spent on these projects from 1992 to operators face rolling stock problems and • The executive board of DB Netz will 1999. There are two other main difficulties in recruiting qualified staff. be independent of the DB Chairman projects—the new high-speed Cologne– Locomotive pools are just starting their and Managing Director. Frankfurt link (opened in 2002) and the business but the problem is aggravated by • DB Netz will use its own separate Berlin north–south axis. DB’s restrictive clause in bills of sale for accounting system. The 177-km Cologne–Frankfurt link costs old rolling stock mentioned earlier. • Penalties of up to €500,000 can be about €6 billion. The travel time at speeds levied on DB for discriminatory of 300 km/h is 1 hour and 16 minutes—a Separation of DB Netz behaviour. reduction of about 1 hour. Tickets on ICE € and DB Operators trains on this line cost 12 more than on It is not clear whether these new rules will other ICE trains. I have already discussed the problems enable non-DB companies to use DB’s The Berlin north–south axis is still under arising from the vertical integration of DB. tracks without discrimination. Problems construction and consists of a link Although Germany originally envisaged might arise between the Antitrust including the new Berlin Lehrter Bahnhof, a clear institutional separation between Commission and the EBA Track Agency. reconstruction and modernization of the the track owner (DB Netz) and the DB On one hand, DB’s competitors mistrust inner-Berlin ring system, several crossings operators, the process has stalled. To the EBA because many EBA staff are north and south of Berlin, a link to the guarantee non-discrimination, the Federal former DB staff. From this perspective, it new Berlin-Schönefeld airport and Transport Minister has drafted a new law seems a good idea for the Antitrust reconstruction of several stations such as on network access and access regulation Commission to monitor the network the S-Bahn East crossing (Ostkreuz), as follows: access and charges. On the other hand, Spandau, Papestraße, Jungfernheide, etc. • From 2004, a new independent track the Antitrust Commission only has passive The north–south axis will have a length access agency with 25 employees that regulatory powers. Moreover, DB’s of 9.5 km with four tracks allowing a

48 Japan Railway & Transport Review 34 • March 2003 Copyright © 2003 EJRCF. All rights reserved. maximum speed of 120 km/h. A 3.4-km four-tube tunnel will be built southwards from Lehrter Bahnhof; the new Potsdamer Platz station will be in this tunnel section. The Lehrter Bahnhof has an interesting architecture with a glass roof of 42,000 m2 and four levels. Level 1 will serve the east–west links with regional and long- distance trains as well as S-Bahn trains; level 0 will connect the station to other public transport modes; level 1 will be a dedicated pedestrian zone; and the main hall and level 2 will serve the north-south link with regional and long-distance trains, the U-Bahn and S-Bahn. The Impression of Berlin’s New Lehrter Bahnhof (Archimation) originally estimated construction costs of €2 billion have already been revised up and fare increases in long-distance U. Kunert, H. Link, Prognose des and it is now assumed they will reach transport hidden under the guise of fare Ersatzinvestitionsbedarfs für die Bundesverkehrswege €3.1 billion. Around 24,000 people are rationalization will not produce passenger bis zum Jahre 2020. Beiträge zur Strukturforschung expected to use the station each day. increases. One problem is rail travellers’ (Future replacement demand for federal transport perceived sense of reduced service quality infrastructure. Series Beiträge zur Strukturforschung), (abolishing dining cars, large reduction in Duncker & Humblot, Berlin, 2001. Conclusions ticket offices) but service quality does H. Link, On-track competition in the German rail differ between high-speed and other network. Proceedings of 28th European Transport Despite sound reform measures and trains. Conference, PTRC, Cambridge, 2000. optimistic DB forecasts, it is clear that the Against this background, it is unlikely that P. Schäfer, Das Finanzierungsmodell zum Neu- und German rail restructuring is in a difficult DB will be able to sell its first shares in Ausbau der Schienenwege der DB AG (The financing situation. The general transport market 2005. I scheme for new construction and extension of DB’s conditions are still unfavourable for rail tracks), Eisenbahntechnische Rundschau 45, Heft 9, transport. Although a full-cost road- Further Reading 1998. pricing scheme will be introduced from A. Aberle, A. Brenner, A. Hedderich, Trassenmärkte M. Schnell, Analyse des Wettbewerbs um SPNV- 2003 for heavy goods vehicles on German und Netzzugang. Giessener Studien zur Leistungen in Deutschland (An analysis of competition motorways and despite the fuel price Transportwirtschaft und Kommunikation (Track in regional passenger transport), Der Nahverkehr, 9, increase due to the 1998 ecology tax markets and track access, Giessen Studies in transport 2000. reforms, road transport has still cost and communications), Band 8, Hamburg, 1995. advantages. These advantages together H. J. Ewers, G. Ilgman, Trassenpreissystem der with the higher flexibility and better Deutschen Bahn AG. Gutachten im Auftrage der DEG customer orientation are the reason for und der Hessischen Landesbahn (The track access rail’s continued loss of market share. The charging scheme of DB. Study on behalf of DEG and focus on long-distance freight and on Hessische Landesbahn.), Berlin, Hamburg, 2000. integrated logistic chains is certainly a step in the right direction for DB. Much will Heike Link depend on the progress of EU harmonization in cross-border rail Dr Link is a senior researcher at the German Institute for Economic Research in Berlin and a member transport. It is debatable whether the new of the Board of Directors of the Association for European Transport. She has published extensively on German railways and visited Japan in 1993 on a fellowship to study Japanese railway restructuring. strategy in passenger transport will convince travellers and lead to increased patronage. The closure of Interregio lines will obviously lead to passenger losses