MTR Nordic 2017-05-31 Gustav Sjöberg Business development manager, MTR Tech [email protected] Ett bolag inom MTR Corporation 2017-06-01 Sid 1 What is MTR? • One of the world’s leading global railway operators with approximately 11 million completed journeys every day. • MTR operates, develops and builds metro, commuter and high-speed trains – as well as associated infrastructure, stations, homes and shops. • MTR has a presence on 3 continents and is responsible for 11 systems. • Founded in Hong Kong in 1975. • Has been publicly listed on the Hong Kong Stock Exchange since 2000. The State of Hong Kong is still the majority shareholder. • The Nordic region has been highlighted as one of the Group’s growth areas. Ett bolag inom MTR Corporation 2017-06-01 Sid 2 MTR is responsible for 11 systems on 3 continents, ranging from metro to intercity services Beijing metro lines 4, 14, Daxing & 16 (under construction) • 1.8 million passengers/day • 147,1 km tracks, 124 stations Hangzhou Metro Stockholm metro • 0.54 million passengers/day • 1.2 million passengers/day • 54 km tracks, 34 stations • 108 km tracks, 100 stations Hong Kong Stockholm commuter rail • 5,6 million passengers/day • 87 million passengers/year • 230,9 km tracks, 93 stations • 241 km tracks, 53 stations Shenzhen Melbourne commuter train • 0,54 million passengers/day • 0.4 million passengers/day • High-speed trains Stockholm- • 20,5 km tracks, 15 stations 390 km tracks, 218 stations Göteborg, started March 2015 • Sydney Metro Northwest 455 km tracks, 5 stops • South West Trains commuter train London Crossrail • Operates London Waterloo and South • A new, 15-year PPP contract West England to build and operate a 36 km • New metro under construction • 220 million trips/year, 976 km tracks, commuter train line with 13 stations. 186 stations, 1700 departures/day Sid MTR Nordic Assignment: . Management, follow-up, coordination . Culture/values, brand, policies, processes . Synergies . Specialist expertise . Business development Employees: approximately 90 MTR Tunnelbanan MTR Express MTR Tech MTR Pendeltågen Next deal Assignment: Assignment: Assignment: Assignment: . A world-class . The number one . World-class . A world-class metro train operator in maintenance commuter rail Procured the world In open market system operation, competition, main ? contract 2009- Competitive revenue from Procured operation, 2023 business procured operation contract 2016-2030 Employees: 2,700 Employees: 120 Employees: 380 Employees: 1,200 Ett bolag inom MTR Corporation 2017-06-01 Sid 4 MTR´s vision We aim to be a leading multinational company that connects and grow communities with caring service Ett bolag inom MTR Corporation 2017-06-01 Sid 5 The MTR approach Customer satisfaction Customer experience Punctuality Time table Commercial Facility Customer Rolling stock Cleaning Driving train Infrastructure services Management Safety service maintenance stations safely maintenance stations stations stations cleaning Efficiency Sid 7 Key milestones in the liberalisation of the Swedish passenger rail market 1990: First private operator in tendered 2010: Full liberalisation traffic of Swedish open access market 2001: SJ restructured 2015: MTR Express 1988: Vertical separation of into a pure passenger commencing traffic (first incumbent SJ (rail infrastructure traffic operator (newly major challenger to SJ) placed in Banverket, now formed entities in charge Trafikverket) of e.g., stations and freight traffic) Sid The Swedish passenger railway market Approx. 14 bn SEK annual revenues Subsidized, tendered traffic • Liberalised market since the early 1990s • Typically 8-10 year long contracts where traffic is tendered either by a regional public tender authority or Trafikverket (for 7 unprofitable long-distance traffic) • Mostly local and regional traffic, e.g., commuter trains in Stockholm and Gothenburg Commercial traffic (open access) • Liberalised market since 2010 • Any operator with a traffic licence can apply for train paths to 7 Trafikverket • Operators have full commercial freedom (i.e., fare-setting, train design, service concept) • SJ still with 95+% market share • Main lines are Stockholm-Gothenburg, Stockholm-Malmö and Stockholm-Sundsvall Sid 10 MTR Tunnelbanan Continuous improvements for an increased number of satisfied passengers Ett bolag inom MTR Corporation 2017-06-01 Sid 13 The contract for the Stockholm Metro We manage operation of the metro on behalf of the Stockholm Public Transport, SL. Our agreement runs for 14 years and covers everything that makes the three lines of the Stockholm Metro run. • Traffic operation • Metro services • Traffic information • Ticket sales • Customer service • Cleaning of metro trains and stations • Maintenance of vehicles and other equipment Ett bolag inom MTR Corporation 2017-06-01 Sid 14 Continued improvements in the metro • The highest punctuality level in the metro’s history with an average of 97.7% in 2015 • Satisfied Employee Index: 92 (max. 100) • Fewer trains but more departures with more efficient procedures • General customer satisfaction at highest level in the metro’s history, 84% 2016 • Cleaning in the metro: 100% in all INSTA 800 surveys in recent years Ett bolag inom MTR Corporation 2017-06-01 Sid 15 MTR Tech World-class rolling stock maintenance Ett bolag inom MTR Corporation 2017-06-01 Sid 19 MTR Tech - World class maintenance Main contract is rolling stock maintenance in MTR’s Stockholm Metro contracvt 400 employees and 5 vehicle depots around Stockholm. Maintenance and cleaning on the 500 metro carriages that operate on the Stockholm Metro. 106 trains daily are delivered to serve the Stockholm Metro. MTR Tech also carries out work for other clients in the rail industry (components and vehicle works). Ett bolag inom MTR Corporation 2017-06-01 Sid 20 Open access competition in Sweden • Introduction to the market and MTR Express • Effects from increased competition • Reflections on the Swedish rail industry 22 MTR Express commenced traffic on Stockholm- Gothenburg in March 2015 • First major challenger to incumbent SJ (previously 150- year long monopoly) • 100 weeklydepartures, vs approx. 220 for SJ X2000 • 120 employees • Total investment of approx. 700 MSEK in 6 new trains from Swiss manufacturer Stadler • Maximum speed 200 km/h, same as SJ X2000 23 Significant potential in increasing the rail market’s share on Stockholm-Gothenburg Est. no. of travellers per direction and weekday (region to region) Rail Air 99% lower carbon dioxide footprint if everyone travelled by Bus rail Car 0 5000 10000 24 All new major open access players in Europe targeting same route characteristics Key characteristics for most attractive open access routes • Short enough journey time to compete Vienna-Salzburg with air, long enough distance to be more competitive than car • Mix of high-paying business travellers and leisure travellers filling up Prague-Ostrava capacity • Major catchment areas in both ends of route • Acceptable infrastructure Rome-Milan Open access competition in Sweden • Introduction to the market and MTR Express • Effects from increased competition • Reflections on the Swedish rail industry 26 Ticket prices significantly down thanks to MTR Express’s entry Indexed average price level, lowest available fare, Stockholm-Gothenburg, first year after MTR Express’ entry SJ pre MTR Express 100 -15% SJ the year after MTR Express entry ~85 -25% MTR Express ~65 Source: SJ.se; Infare, Resrobot.se 27 MTR Express most punctual operator on Stockholm-Gothenburg Punctuality (both directions), Q1 2017 +15 min +5 min 92% 88% 87% 83% 82% 73% 71% 69% 61% 48% Snabbtåg Source: Trafikverket LUPP-data; Flightstats.com 28 Drivers for higher punctuality than competitor • Performance-oriented culture ‒ All staff feel engaged to contribute ‒ High transparency incl. quarterly punctuality reports published • Procedures to minimize effects from infrastructure-driven delays ‒ Staff given large mandate, which avoids bottlenecks and long lead-times ‒ Quick turnarounds with quick cleaning and loading of catering thanks to strong cooperation with partners • New, high-quality trains ‒ Significantly fewer rolling stock failures ‒ Train with outstanding acceleration – useful to quickly recover from stops 29 Open access competition in Sweden • Introduction to the market and MTR Express • Effects from increased competition • Reflections on the Swedish rail industry Reflections on the Swedish rail market • The market has undergone major changes during the past few decades (deregulation, separation of infrastructure/stations/operators) ‒ generally with good results ‒ further work needed to clarify responsibilities • There are a lot of opportunities to improve the quality of the rail system through ”soft” factors, e.g., establishing a more performance-oriented culture • Competiton is good as it improves productivity and drives innovation – but it needs to be on equal and fair terms To capture all benefits, playing field must be neutral for all open access operators • The dominance of SJ.se means high booking fees for the consumers (3-4 times Ticket sales higher booking fee for a ticket compared to the airline industry) • All operators’ offering should be available in main sales channel(s) • A state-owned company, Jernhusen, has in practice a monopoly on all attractive Depot availability depots and stations, which does not foster innovation or cost-efficiency • Jernhusen has contracts with SJ and its maintenance providers, which in practice locks out other operators from key depot locations Market data • Access to market data is crucial when a new operator enters a market • Currently no source with market data for all operators.