Saving Ferroviarias

ADIF at Luarca station

This essay reviews the broad policy context of Spain’s passenger railways, highlighting the residual tension between pre-democratic and Modern eras, the financial impetus to make the high speed network more viable, and the evolving policy paradigm of rationalisation. “Saving Ferroviarias” is the first essay in the sequence “Café Para Todos“, an exploration of the contemporary relationship between the railways and the people of Spain. “Disassembling Trenes“, the second essay in the sequence, deconstructs Spain’s current passenger railways to expose the deceptions of AVE and nation therein. “Deconstructing Estaciones” provides a demographic analysis of Spain’s railway stations, that explores the unserved areas and probes the differences between regions. The fourth, “Understanding Obligación“, builds a model of the human connectivity offered by Spain’s railways, revealing the patterns between Spaniards and the democractic tension therein, with income analysis that explores the import of “Obligación de Servicio Público”. “Reanimating Regional” outlines the regional biases of Spanish railway connectivity, reassesses the role of Castilla in the national railway, and ponders the balance between actuality and perception inherent in Adolfo Suárez’s doctrine of “café para todos”.

The Human Semaphore

Five roads, two sidings. Three passenger platforms, one freight warehouse. Station building, two floors. Toilets, two sexes, immaculate. Ticket office, staffed and open. Next passenger train, five or maybe six hours hence. For now the daily freight approaches, light but double-headed. The station master dons cap and stands to attention upon platform one. Arm outstretched, flag clenched vertical. The human semaphore signal, the only sign of life. But all is not well in toytown. For taped to the unnecessarily large timetable case is a demand: “Por un tren digno para todas, más inversión pública y menos concesiones” – for a train worthy of all, more public investment and fewer private concessions.

This diorama, reminiscent of European railways of the early 20th century, is not primarily remarkable because it persists on the north coast of Spain a century later. Rather that the railway line on which it persists, that from Ferrol to Gijón, was not even opened until 1972 – its construction having spanned an entire era of “cohesión territorial” from Primo de Rivera in 1923 until the death of Franco in 1975. For Rafael Benjumea y Burín, the Count of Guadalhorce who served under both, “cohesión territorial” tended to emphasise land, a residual feudalism that characterised much policy of the period: Many of the routes Guadalhorce proposed connected Spanish provinces that had not been directly connected by the private railway concessionaires of the later 19th century, typically because those routes connected few people, hence would have generated little traffic and thus insufficient commercial return on investment. In retrospect, Guadalhorce’s railway-building plans were, almost by definition, economically irrational. But judged within Guadalhorce’s era, the policy failed not because of an entirely predictable dearth of traffic, but because of the inability of the fragile and isolationist Spanish state to fund such an expensive mode of transport in the absence of private capital: That the purely public state was not strong enough to deliver the “cohesión territorial” the state needed in order to maintain state is a basic and still largely unacknowledged arithmetic flaw in Spanish rail-based state-building, which in the current era has led the nation state to depend (financially) on a global world that by definition undermines it, a vicious circle expanded by the essay On the Wings of Hope.

Few of Guadalhorce’s proposed railways were completed, and even fewer were retained in the subsequent era of “democracy”. Modern Spain shifted the emphasis of “cohesión territorial” toward people. However that demos was structured too hierarchically, as if the external projection of Spain as a singular sovereign nation meant that Spain could be managed internally as an absolute power: A model which simply cannot reflect the interactions of the people of Spain, which are between people, especially between small but intensively known groups of people. This tension, first explored in the essay Absolute Devolution, routinely renders gaps in transactional responsibility, leaving the state held responsible for providing that which the populous cannot themselves fully comprehend. National in conception but often rather local in delivery, it is consequently widely understood that state-owned Spanish railway operator Renfe only offers services in certain places, yet there is scant understanding of why. While “democracy” may have shifted public expectations toward serving people – railways that offer passenger utility – the formal structure of that democracy still tends toward the projection of authority from what used to be called God – an idea of physical “presence” introduced in The Expectations of Competition. The combination is a state railway that should, by Modern Spanish democratic expectation, relate people together, but is too often moribund by a political structure that can only affect relations through physical infrastructure, and especially struggles to relate past infrastructure to contemporary use. A struggle that has now festered for a century, almost oblivious to fundamental demographic and economic change in the meantime, mocking any sense of societal equality appended to the modern rhetoric of “cohesión territorial”.

As explored in the next section, the long-run financial unsustainability of modern Spain’s high speed railway network now poses a threat to the whole national railway, a threat that logically perpetuates the evolution of Alta Velocidad (AV) into a more regional service, in search of more revenue-earning traffic – a gradual slide that started the moment Ciudad Real was accidentally added to the first Línea de Alta Velocidad (LAV), as described in Is Alta Velocidad Fast? But at least LAV was conceived to link large centres of population in an era when people mattered – even if the residual manifestation of authority, and more specifically the structural needs of Castilla (explored in the next essay, “Disassembling Trenes“), still appear to focus those links upon Spain’s largest city and capital, Madrid. In contrast Ferrocarriles de Vía Estrecha (FEVE), the traditional state operator of the metre-gauge railway network introduced at the start of this essay, remains resolutely stuck in the previous era: If the only aim is to link Galicia to the Asturias, it matters not that the population of Luarca are offered no same-day return railway journey to Oviedo, their regional capital. Or that the people of A Mariña (Lugo’s coastal belt) cannot use the train to travel to work or to hospital. Indigno indeed.

FEVE‘s suburban core is scarcely better, its combination of speed and frequency woefully inadequate to compete with modern autopistas (motorways) – or, in Asturias, even to compete with the traditional rival, Renfe. Oh, Renfe (Viajeros SME SA) may have taken ownership of FEVE’s passenger operations at the start of 2013, but the two organisations continue to maintain not only separate trains, but separate labour agreements, separate passenger information systems, and even separate ticket offices in certain shared stations. Such integration surely serves only to dilute FEVE’s abysmal financial performance: For example, across the whole of the Asturias, FEVE only carries about five thousand people each day across roughly 270 daily train journeys, averaging under 20 passengers per train. Just 14% of FEVE’s Asturian operating costs are covered from passenger revenue. That performance is on a par with Iberian-gauge Renfe routes slated for closure – such as the original line to Segovia which has been largely surpassed by an AV alternative – but is a travesty of market development given FEVE’s core Asturian operating territory around Oviedo: A fragmented, but still relatively high density of population, where the focus of much local travel is a city whose transport policies are intent on dissuading car use. Yet even Íñigo de la Serna – a native of the north coast, who must have been well aware of FEVE’s malaise – could only propose an 8-year survival package of track and trains: A strategy of maintaining a status quo that was defined in a very different era.

Although the town’s bus station is now in denial – their timetables not even afforded a proper display, in sharp contrast to local municipal bus services – Luarca is the L in ALSA, “Automóviles Luarca Sociedad Anónima”: A commercial business that has grown to become Spain’s largest bus operator, and is now part of a global public transport group. Much of ALSA‘s pre-1960s success can be attributed to the Galicia-Asturias corridor, an axis which then had no railway, and thus no incumbent rail operator with the legal right to deny ALSA their long-distance bus concessions. ALSA’s dominance was undiminished by the eventual arrival of the railway – ALSA’s current service through Luarca is faster, vastly better scheduled, and generally stops closer to the people it serves. And one look at Oviedo’s massive ALSA-dominated bus station suggests this pattern is not unique to Luarca: ALSA’s territorial victory marked by the building of a bus station on a site originally occupied by FEVE, a veritable stake driven through the heart of the vanquished. Yet there is scant evidence that FEVE ever tried to offer a competitive local transport counter-balance. The implication, that the railway was never intended to convey local people: Its plethora of local stations offering localities the mere “presence” of the state. A presence that, for Luarca, completely dominates the skyline with a behemoth of a concrete viaduct that looms over the town – an attempt to dominate nature in a town where nature dominates.

In the north-west of Spain nature is unstable: A pattern most obvious in its changeable Atlantic-driven climate, which is quite unlike the meteorological stability experienced by the rest of Spain. The far west of Britain understands a similar environment through the predictive analytic, but that is not a philosophical model integral to Spain. Instead the people of north-west Spain would seem to de-emphasise time as a continuum, since logically such time offers no stable basis for comparison and therefore no reliable platform for understanding. Perhaps taken to its extreme conclusion, the only time is now, which can only be understood in its moment. The pattern perplexes Castilians, but helps explain why the north-west produces such good managers of chaos. However the north-west is still strongly influenced by the Spanish “family” model of knowing – the intensely known group, not a knowledge that deconstructs the wider whole. But shorn of the implicit stability of environment assumed elsewhere in Spain, the people of the north-west are perhaps more inclined to focus on their immediate environment, narrowing the geographic scope of locality: The Asturias must feel like the biggest small place in the world. Consequently the instability of nature does not just make the theological Spanish state work extra hard to impose itself: It changes how locality is perceived – the geographic proximity at which the familiar becomes unfamiliar – which contributes to the substantial differences between the regions of Spain. Differences which national transport entities are somehow expected to manage fairly. For the national infrastructure provider, the “presence” offered by railway networks can surely never be enough to match the intensity with which locality may be felt. For the national public transport operator, the reduced distance from “home” at which the collective group dynamic fades and the individual survival instinct takes over, makes competition with the private car challenging. Yet here, as often, persistence in the face of the unachievable propagates the counter-balancing tension that sustains Spain.

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Is Alta Velocidad Fast?

Awaiting Fast AVE

This essay analyses and explores the regional passenger fare structure of Renfe, Spain’s national railway operator. The question, “Is Alta Velocidad Fast?”, derives from Renfe’s tradition of pricing slower trains cheaper. The question asks whether, in the era of yield management (balancing current patronage to current capacity by modifying price), the traditional fare structure should be applied to high speed, AV, operations? The journey provides an insight into the structure of modern transport geography, the haphazard strategic development and exploitation of Alta Velocidad, the management of national inequalities through fares, the conflation of public and commercial roles within single shared operations, and, from a perspective other than infrastructure, the contemporary challenges to Spain’s railways.

The introductory section describes the current trend toward Temporal Ticketing, with a reflection on how this alters transport geography and state: While the growing reliance on algorithms challenges established operator dominance, it is not necessarily incompatible with societal behaviour, especially for less familiar journeys. A brief history of Avant follows, the Regional Alta Velocidad funded as a public service obligation (OSP), with extensive analysis of fares on Avant corridors, including an assessment of the selective use of yield management on parallel commercial AV services. Avant is placed in context by a similarly detailed analysis of fares on slower regional services, those on which passengers are Paying to Go Faster. The strong relationship between fare and speed is confirmed, but with a balanced structure of revenue-to-cost that equalises quite different styles of operation.

Fare’s Fair exposes the differences in fares and speeds between Spain’s regional Autonomous Communities, demonstrating how fares have apparently been used to manage the inequalities between regions. Unfortunately the same structure has not been adequately deployed to counter AV‘s inequalities, ultimately because AV pricing has been defined by commercial aviation markets: By matching, not taxing, aviation, the cascade effects (of inflated expectation) to lesser classes of transport can only be addressed through subsidy – the flawed policy that is exposed by AV Cercanías, a theoretical high speed suburban railway – Avant being the closest non-theoretical product to AV Cercanías. Inter-City probes how Renfe has evolved the management of marginal longer-distance trains, especially over non-AV routes, where the same train may share regional public service and inter-regional commercial roles. The conflation of pricing models is highlighted, and evidence is presented that suggests the state is subsidising the train, and not specifically the seats upon it – a pattern that might concern the European courts, were it to continue after 2020.

The concluding section takes a contemporary journey From Extremadura to Catalunya Nord – the origin exemplifying the political impact of AV‘s inequalities, the destination actively challenging the idea of region as strictly administrative. Along the way, how transport geography relates to the source of its finance, how the preoccupation of the Spanish political state with infrastructure inhibits behavioural policy interventions, and ultimately, how Renfe transpires to be a better manager of state than state. The Postscript provides an intense reflection on an otherwise somewhat long and technical analysis of what may seem quite a trivial topic, but actually explains much about the state of contemporary Spain.

Temporal Ticketing

The curious case of railway ticketing is one that invariably embeds and perpetuates cultural biases to the perennial question, what is value? For example, the pre-privatisation British Rail ingrained its primitive yield management strategy, that return fares were “cheaper after 09:30”, so deeply into the state psyche that decades later concessionary fares policy was still formulated to protect “the morning peak”, even though the late afternoon had long since become the busier period for many regional public transport networks in Britain. Britain’s railways are still stuggling with the issue, although Britain seems unlikely to shift away from a model that emphasises the temporal capacity of the transport system to handle the intending passenger, and prices journeys accordingly. In parts of Europe, not least Spain, the temporal capacity of the transport system is traditionally not a consideration in pricing. Indeed, every “salida”, the busy days for longer-distance travel at the start and end of holiday periods, the mere possibility that the capacity of Spain’s transport system might have been temporally exceeded, can be rendered a national preoccupation – the media routinely broadcasting reassuring images of half-empty roads and passengers boarding trains like normal. The underlying presumption is that the system accommodates the passenger, even if that means some time periods are far busier than others, and some operational assets lay idle during quieter periods. For example, Barcelona’s metro currently has no fare variation by time of day, even though its patronage is far from constant across the day. The idea of introducing such a variation has been considered only recently, as a means of managing peak overcrowding, and that was only triggered by the post-Independència financial realisation that increasing demand could no longer be met with extra capacity. For state-provided systems, the implicit presumption is that the state will provide. The reasoning is indubitable: State, in its broadest sense, is perpetual, as stable a constant as can be reasoned – not a facet that alters at 8 o’clock just because other people also want to travel then.

Where transport systems are liberalised, most obviously in European aviation, yield management has become the accepted norm. The price of a flight might double or halve from day to day, as airline operators try to fill every seat in every plane – managing their supply, which is largely fixed in the short run, by altering price. Likewise, few will be surprised to discover a flight from Madrid to Berlin (2300km) that today just happens to be cheaper than a flight from Madrid to Barcelona (600km) – in stark contrast to the state-centric model, where fares typically retain a strong correlation to distance. Just two examples of how liberalised transport systems are shifting geography from the spatial to the temporal, and, perhaps more alarmingly, de-humanising geography: Not only by emphasising the economy of the carriage over that of the passenger, but also by encouraging travel specifically when others are not, in opposition to many natural group dynamics. It is in the midst of this tumult that we find the contemporary “Alta Velocidad”, Spain’s high speed passenger railway – a state-implemented network operating in an increasingly liberalised market.

The question posed by this essay, “Is Alta Velocidad Fast?”, is not just the question it may first seem, that which begets the retort, compared to what? Traditional Iberian railway fare structures differentiate between trains based on their speed, where those that complete their journey faster cost more to travel upon. Thus, to quote Franklin, time is money – but here the value of time is constant over time, not varying within time (from hour-to-hour or day-to-day) as is more common in Anglo-Americanised markets. AVE, and similar long distance inter-regional public transport services, are forced by their increasingly competitive liberalised environments to adopt fare structures which undermine the base understanding of state: The national in Spain thereby becomes the liberalised global. Yet within Spain’s regions the traditional fare structure still predominates, and thus perhaps regions better retain their state. Spanish railway liberalisation implicitly acknowledges this by opening up most inter-regional services to competition in 2020, while likely retaining state control (via Public Service Obligation) of services within regions. An analysis that might confer the dominance of regional politics over national, but more specifically, that regions are more knowable among their own populations than the nation of “Spain”, and thus regions evoke greater protection of their state. The strategic counter-balance, that the national will, by dint of improved asset utilisation and reduced reliance on new assets to deal with insufficient capacity, become relatively more efficient economically. However as this essay explores, while local juxtaposes to national, regional is not necessarily aligned to local.

Such protection of the more local state is not arbitrary. The more locally and the more frequently a transport service is used, the more that use is considered normal by the user, the more the consistency of its state is appreciated. The hassle, what economists call shoe leather cost, of navigating a complex ever-changing fare structure may be acceptable for exceptional journeys, but surely not for a daily commute or a trip to the shops. The differing acceptance, based on geographic familiarity, of transaction costs – the cost of making a trade – evokes modern behavioural concepts such as bounded rationality: That decision-making is a pragmatic reflection on users’ perceived reality, that the terms of this “geography” are not as universal as the word might imply. The physical, spatial geography that makes the whole that science calls nature, may be reasoned universal. However societies in both Britain and Spain have strong “virtual” components – the British predictive analytic routinely juggles time across a wide spectrum of past-future, while the Catalans (and, dare I suggest, other Spaniards) emphasise social knowledge through “knowable groups”. In both societies the physical geography continues to play an important role, but analysis of only that role omits these virtual themes, which can be important when trying to understand modern societal behaviour. So instead of presuming a flawed universal notion of geography, derive geography from the perspective of those within their respective societies: An alternative model where transport geography is expressed in terms of users’ familiarity, rather than a specific absolute notion such as time or distance. For example, a regular or local journey is typically more familiar to the person making that journey, than an occasional or long-distance journey. The familiarity of each person is first and foremost a function of “knowing” – of, in the broadest sense, state. This relationship between knowing and geography is especially obvious in video game world design, a theme developed from my Adventures in the Invisible Tent: The scale of such a world, a hybrid of time and distance, is optimised for knowing that world. Game worlds are far more compact than planet earth because even complex games contain far less to know.

Optimisation for knowing differs from optimisation for analytic efficiency – and herein lay much of the tension between contemporary society and computational optimisation: Since (and arguably before) Euler tried to cross the 7 bridges of Königsberg, transport has been posing computationally challenging problems, from network route planning to supply chain logistics. But it is perhaps only in the last two decades that the average traveller has become directly exposed to such computational optimisations. In the mid-1990s the apocryphal tale was told of an Operational Researcher who commuted each day to his workplace in London Transport’s headquarters near St James’s Park, central London. Upon arrival in the capital at Paddington railway station he was faced with two potentially viable Underground (metro) routes – direct on the Circle line, or via Bakerloo and Victoria lines. For the casual user, the direct Circle line would be the obvious choice, both requiring no change of trains and, based on the stylised London Underground network map, of similar distance. However those distances are actually a lot less similar than the stylised map betrays, and the Circle line had a far lower effective frequency than the alternative route via Bakerloo and Victoria lines. The calculation of optimal route, at the precise moment our expert commuter arrived at Paddington, originally would have relied on train service predictions, but could now be improved with live-time data delivered to a mobile phone application. The optimisation rarely saved more than a few minutes. In the 1990s these were games played by mathematically-minded transportation planners. Now they are becoming the norm among regular travellers, those whose behaviour is optimised by their “smart” mobile phones. The domination of this technology over its human users is clearest among those that happily walk or drive round in a circle, simply because the underlying dataset is missing a network node or link – and thus cannot calculate the direct path that should be obvious to the user, had they not placed absolute trust in their (sadly fallible) device. In the final analysis, these users have become so optimised that they have ceased to know.

This trend is not new: In the spirit of Kuhn, the Enlightenment West has progressively expanded the complexity of its worldview by simplifying every-thing within that world. And given such apparent acceptance of technology over human, yield management of the most familiar of journeys should now seem entirely reasonable: Blind user trust in journey-planning algorithms readily extends to ticketing. In practice the algorithms taking users’ fare decisions would compete with the operator algorithms setting prices, a computer-vs-computer model already successful (except when dealing with the unexpected) in financial market trading. The economic efficiency implied would liberate humans to obsess about something else – and ultimately the minutiae currently associated with transport ticketing would be replaced by trust that the system tends to offer “best value”, with any user interaction reduced to broad concepts such as brand. Transport operators traditionally consider themselves to be the sales channel of their product, and even in the most entrepreneurial arenas (Ryanair vs Skyscanner in 2007) operators are naturally hostile to any optimisation they don’t control. Aside from exerting ownership over data (a battle largely lost), the operators’ only logical defense is to simplify their ticketing structure – logically opposing the yield management that is inextricably driven by market competition. Thus operators in open transport markets will ultimately be reduced to supplying a service sold by technology platform providers (such as Google) or travel metasearchers (such as KAYAK) – a keenly fought technology market that has not yet peaked or consolidated. And once again, in the midst of this tumult that we find the contemporary AVE, its state-owned operator, Renfe, accustomed to a national prominence that it will not yield easily – even if, as discussed in Arriva Celta, Renfe’s role as the provider of national “presence”, beyond mere journey utility, is easily taken by state track owner ADIF, leaving Renfe vulnerable.

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Arriva Celta

Talgo Shunt

Arriva Spain Rail’s announcement of a new cross-border railway service from A Coruña (La Coruña) in Galicia to Porto (Oporto) in northern Portugal took some in the railway industry by surprise. The first proper phase of the liberalisation of Spain’s national passenger railways was widely expected to be focused on the high speed AVE network, a somewhat commercial near-aviation market, theoretically serviceable with trains acquired outside Spain. Even interest in cross-border services had hitherto focused on the high speed route from Madrid via Barcelona to the south of France, which judging by its latest search for 15 new cross-border drivers, state operator Renfe intends to respond to competitively. After all, the Spanish government had declared every regional railway service to be “Obligación de Servicio Público” (Public Service Obligation, OSP), to be financially supported as a Renfe monopoly, likely well into the 2030s. Add the difficulty of acquiring and operating uniquely Iberian gauged and signalled rolling stock in an environment where almost all the relevant assets are held by state operators, and one might dismiss the whole A Coruña-Porto scheme as an ill-conceived dream of a multinational that had not yet understood the local railway environment. Except the Arriva Group have been operating buses in Galicia since 1999 and Portugal since 2000, and so should know the territory as well as anyone. Perhaps more importantly, while Arriva’s British rivals sought liberalised markets for their initial forays “overseas” in the 1990s, Arriva learnt to work with whatever competitive environment it found on mainland Europe. That combination of local experience and competitive adaptability makes Arriva’s approach to Spanish railways unique. That Arriva’s first instinct is A Coruña-Porto, and not head-to-head competition on flagship intercity routes such as Madrid-Barcelona, reveals much about Spanish railway liberalisation. As explored in the following paragraphs, Arriva’s competitive strategy is contextualised by the need to:

  1. Address an underlying commercial market, not the “railway” market Renfe is structured around.
  2. Expose Renfe as no longer a “national” entity, thereafter making its role contestable.
  3. Exploit the structural weakness between national Renfe and regional government.

Arriva’s current parent group, Deutsche Bahn (DB), has already been burnt by the (non) liberalisation of Spanish railfreight: DB was fined 10.5 million euros by the Spanish competition authority, CNMC, for anti-competitive agreements to control the supply of traction – at rail-freight liberalisation in 2005, only Renfe Mercancías (its freight division) and DB subsidiary Transfesa (which had, exceptionally, operated privately since 1943 on RENFE‘s network) had freight locomotives that could operate across Spain. The case was emblematic of Renfe Mercancías’ anti-liberalisation strategy of asset control – from a non-auction of life-expired rolling stock that was all but useless for new operators, to a driver training paralysis that resulted in Renfe hiring competitors’ drivers (Renfe’s employment offer more favourable because of its public status). Renfe Mercancías’ approach was exceedingly traditional – defending the body of workers using the assets of the company – with scant regard for what those workers and assets were functionally there to do – move goods: Between its regular state-subsidised operating loses and its minimal impact on the national economy, Renfe Mercancías arguably lost track of its own importance and risks irrelevance. Yet even now the railway has few commercial logistics-orientated operators, and practical asset liberalisation is still dependent on the regulator forcing Renfe’s hand – hardly the panacea of free market liberalism envisaged by European Union policy. Even if this were the beginning of the end for Renfe Mercancías, it might also be the beginning of the end for freight on Spain’s railways: The underlying model (from the Spanish, not European Union, perspective) assumes the mercantile elite test the resolve of the national railway – the railway as a strategic entity of the nation – and only once that resolve has been broken does the national railway structure begin to yield actual liberalisation. However as simple transport utility, Spain’s internal freight was already somewhat liberalised on the roads, which convey the vast majority of Spain’s domestic goods traffic. Consequently it may have been easier to test the resolve of the national railway by capturing its freight market from the road, than compete on the railway itself: Renfe is easily blind-sided by functional competition that focuses on the market for moving goods, since Renfe’s organisational focus is “trains”, especially the staffing of trains.

While the problems of freight liberalisation have ensured intending commercial passenger railway operators are better prepared, for example establishing their own driver training schools and acquiring their own rolling stock, the underlying structure of Spain’s passenger railway liberalisation remains rather similar to that of freight. The baseline assumption, if only by historical pattern, is the emergence of a dominant commercial duopoly, plus Renfe: Perhaps a market similar to Spanish terrestrial television, where two dominant but counter-balancing commercial broadcasters co-exist with a state broadcaster. However, the dominant state actor is surely ADIF, the state owned provider of railway infrastructure: Commercial liberalised operators will rationally focus only on passenger “utility” (delivering a functional transport service), so, as discussed in The Expectations of Competition, the only unfilled role is that of “presence” (the physical manifestation of authority). While the original unified RENFE provided both utility and presence, on the modern railway presence can effectively be achieved by ADIF alone building and maintaining railway infrastructure: Exactly who operates the trains would not matter strategically, only that they were operated by someone. That cripples Renfe (specifically Renfe Operadora, its passenger division) as the strategic national entity it was, and explains Renfe’s desire to merge back with ADIF and thus remain part of a true national entity. Assuming Spain does not follow Poland and merge its national operator and infrastructure company back together, it will be incumbent on commercial operators to break Renfe’s monopoly position on track, so that Renfe can no longer be considered a national entity, thereafter allowing other operators to take Renfe’s role in subsequent non-commercial (typically regional and local) liberalisations. Mere dilution of Renfe’s patronage by indirect competition, such as by alternative modes, will not break Renfe as a national entity. Even competition only on high speed routes risks fostering a liberalised environment that cannot subsequently transfer to older (primarily) Iberian gauge networks, thus cannot compete effectively in whatever contractual regime eventually emerges for state-supported regional and local services, and hence maintains Renfe as a monopoly operator of much of the Spanish railway network.

If Renfe’s status as a national entity has been admonished by the time its OSPs are due for review (a maximum of 10 years after they are awarded), it will surely be politically impossible for Spain’s national government to continue to determine regional railway services: If there is a genuine choice of operator, the relevant Autonomous Community governments can scarcely be denied that choice for their own internal services. This is presumably the main aim of Arriva in Spain: To open up the large, but historically often uncontested, contractual market for public transport. A rather different aim to those market entrants focused on a handful of commercial near-aviation markets, such as Madrid-Barcelona. The hostility of regional government in Spain to Renfe is well documented in Catalunya, but from Aragon to Madrid to Extremadura, none has much love for Spain’s national railway operator. Regional government theoretically counters centralist Spain, representing a powerful ally against Renfe, even if the Catalan example suggests that such power is no guarantee of success. In some regions, Renfe could become vulnerable at much the same time as the local bus concessions that were last extended without contest in the 2000s: In Galicia, law 5/2009 extended most until the end of 2019. The metropolitan concession in A Coruña is already under intense pressure from the CNMC to be modified for compliance with European state aid rules. While all this raises the possibility of multi-modal contracts, especially attractive to an operator with the breadth of Arriva, the more immediate outcome should be greater clarity on the costs of delivering different services: As demonstrated in Catalunya, even apparently “fair” funding mechanisms can disguise substantial cost differences. In a similar vein, the Spanish government’s blanket OSP allocation is eminently challengeable as a policy: Aside from mocking its intended methodology by waving efficiency and utilisation targets for every service that didn’t meet them, INECO’s “rubber stamp” analysis ignores other transport modes, offering no reasoned assessment of Renfe’s contribution to policy objectives such as local mobility: Why support a train between Ferrol and A Coruña with an average of just 16 passengers a trip, when the route is more-or-less mirrored by a faster and more frequent bus?

As explored in The Art of Public Competition sequence of essays, Ferrol-A Coruña does not pose the rational economic question it may seem. The implicit long-run expectation is that the railway service will be improved to compete effectively as a balanced duopoly – although with up to a billion euros of investment required, those improvements may be a long time coming to Ferrol. Liberalisation implies the transformation of the societal model of competition, such as where discrete local duopolies maintain balance, to a more economic model of competition, where factors like cost and demand determine balance across a whole. A Spanish legislature devoid of absolute power can only expose the new model to an environment defined by the old – Spanish policymaking is necessarily structured in a way that lets its society test new legislation, successful EU “directives” included. The challenge for liberalised market entrants is thus to transform the old environment into a new model. Being more operationally efficient or market orientated than the status quo should be straightforward for veterans of open public transport markets. But if the terms of that competition don’t gain state (in the widest sense, of knowing) acceptance, then the theoretically liberalised market might be overwhelmed by attempts, however irrational, to the maintain prior “competitive” balances. As the operator of the Ferrol-A Coruña bus, Arriva presumably have some understanding of the challenge posed by Spanish railway liberalisation, and some strategy for addressing it. The three contexts outlined above – market redefinition, operator contestability, culminating in a regional endgame – give some clues as to why Arriva’s first foray into Spanish passenger railways is on familiar territory for Arriva as a bus operator (both in Galicia and northern Portugal). But is Arriva’s A Coruña-Porto passenger railway service a feasible commercial proposition, or is its purpose more… strategic?

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