An alternative regulatory approach for long-distance passenger rail services: An explorative analysis with a focus on Germany

Regulatory efforts to introduce effective intramodal competition to the rail sector, in particular to the long-distance intercity market segment, have so far been only marginally successful in Germany. This stands in stark contrast to some other EU member states such as Italy, Sweden, Austria, the Czech Republic, Slovakia, Spain and, most recently, France. In 2019, the year before the outbreak of the ongoing Coronavirus pandemic and 25 years after Germany’s fundamental 1994 ‘Bahnstrukturreform’ (structural reform of the railway system), which eliminated the legal network monopoly of former Deutsche Bundesbahn for passenger transport services, the combined market share of all competitors for long-distance passenger services was still marginal at 4 per cent (Bundesnetzagentur, 2021a, 26). By contrast, its competitors’ market shares stood at 28 per cent for short-distance (regional) services – where a competition for the market regime had been established – and at 54 per cent in the rail cargo segment – which is governed by an open access regime. In this paper, based on a comparative institution analysis, we explore an alternative regulatory regime to substantially increase effective intramodal competition in Germany’s intercity rail passenger market: open access to the incumbent’s seat inventory. Our main finding is that, compared to the existing yet ineffective open (track) access regime, our proposed alternative considerably reduces entry barriers for newcomers and simplifies regulatory oversight given the specific features of Germany’s railway market.