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. Continue reading “Arriva Celta”

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On the Wings of Hope

AVE at Sants Station

This essay ponders the interplay of risk, debt and optimism, with specific reference to the expansion of Spain’s high speed railway network. It summarises the renaissance of AVE expansion, reconciling different approaches to risk in the construction of transport infrastructure. The interaction of external finance within the Spanish societal structure is hypothesised as reliance on external debt with no internal counter-balances – a virtual economy characterised as Gross Domestic Optimism. The postscript asks what it means to invest in state, with reference to two evolving models – people and perception. Continue reading “On the Wings of Hope”

Public Competition in Post-Independència Catalunya

Camp del Ferro

This essay examines how the art of public competition functions when one of its most important competitors is absent. The suspension of policy-making within the Generalitat de Catalunya, following the region’s failed bid for independence, provided an almost unique opportunity to observe the strategic processes and limitations of the art of public competition. The optimistic finances of metro line 9/10 set the context, followed by analysis of the reactions of the city and metropolitan area of Barcelona to the Generalitat’s hiatus. That analysis exposes vast differences in the funding models of higher and lower tiers of Spanish government, which can be traced to the availability of externally-financed debt. Continue reading “Public Competition in Post-Independència Catalunya”

The Expectations of Competition

Estació de França

This essay establishes the policy context for the liberalisation of public transport in Spain, with specific reference to the recent history of Barcelona’s railways. The text introduces three difficult policy areas for Spanish public transport competition – local system integration, the balance between nation and communities, and the understated role of presence. It questions both the applicability of super-regulatory structures to a state where power is not absolute, and the use of economic analysis to rationalise transport infrastructure that primarily serves a strategic function, instead suggesting a role for the state’s own form of internal competition, here called the art of public competition. Continue reading “The Expectations of Competition”

Scottish Tram Financing

Transforming Travel... or not. Edinburgh Tram's optimistic route plan.
Transforming Travel… or not. Edinburgh Tram’s optimistic route plan.

Some Edinburgh City councillors already privately refer to the city’s tram project as the problem that “cannot be named”. Much as actors refer to Shakespeare’s tragedy as “the Scottish play”, superstitions of bad luck now bedevil the production. A dramatic shift from the optimism that initially characterised the development of the Edinburgh tram, towards pessimism.

That which cannot be named is no longer just the failure of a flagship local transport policy. The issue has engulfed the City of Edinburgh Council, and now risks destroying local politics completely: Not only the existing administration, but public trust in local government decision-making.

Political heavy-weights, who normally shy away from the minutiae of local governance, are now offering parental guidance in public: Alistair Darling (local Member of Parliament, and former United Kingdom Chancellor and Secretary of State for Transport) described the option to borrow £231 million ($370 million) to complete the city centre section of the tram line as “absolute madness” – the local population would be saddled with vast debts. Days later, Graham Birse (chief executive of the influential Edinburgh Chamber of Commerce) called the decision to not complete the city centre section, “bonkers” – far fewer passengers would use a tram that did not serve the city centre adequately. Even Alex Salmond (Scotland’s First Minister) has become directly embroiled, struggling to contain calls for an immediate public inquiry to identify who is responsible.

Burn the witches! This Scottish tragedy is rapidly descending into farce. That would be unfortunate, because this particular local difficulty goes to the heart of the Scottish nationalist agenda: A desire for greater devolution of public funds to local level. More localised independent entities have fewer financial resources, so are less able to manage expensive, risky projects. Consequently policy ambitions also need to be scaled back. Such scale isn’t necessarily a problem – small can be beautiful. The problem lies in pretending to be big, when not.

This article introduces the concept of risk in tram (and similarly large public transportation and infrastructure) projects, chronicles the decisions that lead a relatively small local authority to need to find hundreds of millions of pounds to support a single project, and explores the implications for future policy-making, especially in the context of a more devolved Scotland. Continue reading “Scottish Tram Financing”