Will privatisation improve SNCF services in France?

29 April 2020
By Selma Daddi

France’s national rail operator the SNCF became a private company with public capital in January.

The firm agreed to open the rail market to other companies, while the government pays €35billion of its debt.

SNCF staff hired from January do not benefit from the cheminot status, which offers many advantages, such as life-long employment, a specific pension system and strong social security.

From December, national lines – LGVs and TGVs – will face competition. From 2023, competition will be mandatory in every region. 

Paca and Grand Est have already launched a call for tenders to have more lines circulating in their regions. 

Unions argue that the disorganisation of the network is due to the dismantling of SNCF, while users’ associations hope the extra competition will benefit travellers.

Is privatisation a way to improve the rail network? Here people involved in transport give opposing arguments.

YES 
Bruno Gazeau,
Fédération Nationale des Associations d’Usagers des Transports (FNAUT) president

The SNCF has been transformed into several public limited companies but the capital is set to remain public.

Competition has been gradually introduced over the last few years, particularly on international lines and freight, so it is not a big change.

What is new is the opening to competition for national and regional lines. Competition makes it possible to lower prices and improve the
quality of service for users.

In the case of regional routes, the situation is not the same because they are put out to tender in the same way as urban transport, and the content of the tender is proposed by the organising authority, which covers the deficit.

There is, therefore, competition on the call for tenders but no direct competition on the routes, as the company chosen by the regional authority will be the one running on the tracks.

It is market competition. The task and fares will still be defined by the local authority. Prices should not increase. It is more like a public
service delegation, where a private company will provide the service requested by the local authority.

This system of public service delegation is a bit like the franchising system in England. In France, it works in transport and it works very well.

Competition means that the quality of the service and the definition of the service on offer can be put back into competition. This is positive for the user, who benefits from these changes and the advantages of competitiveness. But competition does not change fares, particularly when they are set by local authorities.

There will be no fare increase, contrary to what the unions tend to say.

Rail maintenance is independent of the number of companies operating on the network. However, the more lines that run, the more there will be a demand for better maintenance.

The law also allows the network to be maintained by all the companies that run it, so it should be better.

To me, the SNCF is not privatised as long as the capital is public. However, the opening to competition is well-regulated and it remains advantageous for all the users.

Privatisation takes place at different levels. First, there is the dismantling of the network, which actually began in 1997. The dismantling affects the organisation of work and the railway system. 

The second element is the competition, which does not necessarily require privatisation. Then there is the privatisation. Until December 31, 2019, SNCF was a state-owned public institution.

Privatisation means that we are entering a capitalist regime, ie. the capital of the SNCF would be held by private operators, but this is not yet the case.

However, the SNCF has been multiplying subsidiaries for a very long time. As soon as a sector of activity is deemed profitable, it is isolated in a subsidiary and can be sold to other operators. 

Freight, for example, has many subsidiaries. The SNCF organises its own competition through these subsidiaries and the turnover is generated in these subsidiaries and not in the parent company. So the SNCF still remains in deficit. The management of rail flows is much more complicated than road or air transport.

In the railway system, there are constraints:you are on the same track, you cannot overtake a train, sometimes the tracks are single tracks, and a train can go in one direction or the other. 

Traffic management is a rigid system. And to give it flexibility, you have to give all the levers to the same hand.

To illustrate the situation: before, the regional director had control over everything and was the only decision-maker if a train was blocked or late to pass another. He could use freight trains to evacuate a TER, for example.

But ,with the separation, you have to negotiate between the different activities and it becomes difficult.

Moreover, there is a general demand to put the competition ahead of the SNCF.

We also cannot lend our equipment to each other any more. With the agents being specialised, we have a new system that can be efficient only if everything goes well. But you have to know how to manage hazards and priorities to make the railway system work.

The railway system becomes full of contradictory objectives. Fragmentation and splintering into different companies leads to making the railway system less efficient and more expensive.

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