Questions and Answers about
Regional Railway Service in Lombardia and Regional Rolling Stock

Written in March 2010

Per i lettori italiani: gli argomenti di questo articolo sono ampiamente trattati in altre parti del sito. In particolare tutta la parte sull'acquisto dei treni disponibile nel corrispondente articolo.


Contents:

The same topics are also available in Italian: see the article Come si comperano i treni.

This text was originally written as a source of information for David Haydock's article "Regional Competition in Italy" published on Today's Railways Europe, issue 167, November 2009. Now it is presented as a standalone article for readers of this site.


First of all, let's spend some words on the legal framework of Italian railways

Let's see how it works with FS (Ferrovie dello Stato). Since year 2000, FS has two main subsidiaries: Trenitalia and RFI (Rete Ferroviaria Italiana). FS is totally controlled by the Italian State (Ministry of the Economy), so also Trenitalia and RFI are totally controlled by the State.

Trenitalia is the railway undertaking (IF, Impresa ferroviaria), i.e. the operator that manages the service (owns the trains and runs them, pays for the train drivers, etc.).

Trenitalia manages three markets:


Incomes for regional traffic come from both tickets and subsidies: approximately 40% and 60% respectively. A minimum of 35% from tickets is required by the Italian law (the 35% is computed not including the cost of infrastructure, i.e. the access charge paid to RFI).

Subsidies are paid by Regions, through a Contract (Contratto di Servizio). Most of subsidy, even if paid by Regions, comes from the State budget (risorse vincolate, constrained funds, i.e. funds transferred from the State to the Regions for a precise task). Average subsidy in years 2001-2007 was equal to 7-8 Euro/km. After the increase of state subsidy since 2009, now average subsidy is around 11 Euro/km (both values including access charge that Trenitalia pays to RFI).

Incomes for long distance traffic:


RFI is the network manager (GI, Gestore Infrastruttura), i.e. it manages the network (construction and maintenance), takes care of rails and stations (including information to passengers), designs timetables and controls train circulation.

RFI receives incomes from railway undertakings, in the form of an access charge (canone di accesso, or pedaggio). Access charge is paid by whatever railway undertaking is travelling on RFI network. Access charge is computed on a per-km and/or per-minute basis, plus a fixed fare for each train. Average charge for regional traffic, if transformed in a simple Euro/km value, is about 3 Euro/km.

Nevertheless, most of RFI incomes come from subsidy from the State, through a Contract (Contratto di Programma). In particular, access charge mainly pays running costs, while subsidy pays construction and maintenance.


Other regional railways in Italy: the case of Ferrovie Nord Milano

Now let's see the case of FNM, or Ferrovie Nord Milano, the most important regional railway company in Italy, which manages 320 kilometers of network and some 9 million trainkilometers per year.

We must remember that FNM is a holding, just like FS. 57% of FNM is the property of Regione Lombardia (the Regional Government), the remaining is owned by minor companies (e.g. banks and private citizens).

Up to 2004, FNM had only one subsidiary: FNME (Ferrovie Nord Milano Esercizio), which managed both service and network. At the end of year 2004, FNM, in agreement with Regione, decided to apply the same separation between service and network that was already existing with Trenitalia and RFI:


It should be noted that since 1997 (opening of the first section of Passante Ferroviario in Milan) trains from FNME (later FNMT, at present LeNORD) travel on RFI network. This is perfectly consistent with the legal framework, and LeNORD pays an access charge to RFI.

At present, no Trenitalia service travels on Ferrovienord network.

LeNORD receives incomes exactly like Trenitalia (some 40% from tickets and 60% from regional subsidy).

Ferrovienord receives incomes only from Regione, because an access charge does not apply on Ferrovienord network (at present, an access charge is not a critical issue, as we said that no other operator, different from LeNORD, travels on Ferrovienord network).


Only two other regional railways have separated network from service: SAD / STA (Strutture Trasporto Alto Adige) in South Tyrol and TFT (Trasporto Ferroviario Toscano) / RFT (Rete Ferroviaria Toscana), former LFI, in Tuscany. All other regional railways have a single company and, as far as I know, they do not ask for an access charge.

It should be noted that all these railways are not private operators: all regional railways belong to their Regions (or to the State, in few cases in Southern Italy, the so called Gestione Commissariale Governativa).


What about tendering for regional passenger services in Italy?

Italian Regions are not starting to tender for regional services. The age of tenders in Italy died before starting at all.

An explanation of the present situation can be found in English in the article Regional Railway Service in Lombardy: an Overview, and in Italian along many other pages of this site, mainly in the article Liberalizzazione dei servizi ferroviari: a che punto non siamo.

We can summarise the following steps:


It is clear that the three laws mentioned above simply cancelled the concrete possibility of having a tender for at least the next 12 years (i.e. up to 2021). Why should a Region start a tender, if it can give service to Trenitalia without tendering, and thus receiving an extra subsidy from the State?

The same rules apply to Regional Railways, but all of them are (at least partially) property of Regions. Why should a Region start a tender for its own railway, provided that it cannot make a fair tender for all other services managed by Trenitalia?

At present (March 2010), only one Region, Piemonte, has started a tender for all Trenitalia services, subdivided into 5 batches. Actually in summer 2009, Piemonte was the only Region who has not accepted the new contract proposed by Trenitalia, which costs some 40% more and offers no real advantages to Regions and users (new contracts have been signed by all other Regions, mainly because it was the only way to obtain the extra subsidy provided by Law 2/2009 mentioned before).


How does Regione Lombardia buy rolling stock for its railway services?

Let's see the situation before Region decided to buy new trains. As we said before, Trenitalia's rolling stock belongs to Trenitalia itself. "Ancient" FNM rolling stock (built within 1980's) was in the property of the State, as it was built with public money. After 2001, the State transferred its property to Regione. So now all this rolling stock belongs to Regione.

TAF EMUs (built around 1998-2000) belong to FNM. They were bought by an increase in capital of FNM, and LeNORD pays a rent for using them (of course money for this rent comes from the Contract, i.e. from Regione).

In 2001, when Regione decided to buy additional rolling stock, the solution of giving its property to FNM was discarded, as it was considered more useful to maintain the property to the Region itself. A contract for investments (Contratto di programma per gli investimenti) was signed between Regione and FNME (later Ferrovienord), to make tenders and buy:

The Contract clearly stated that trains were the property of Regione. Money for these trains mainly came from the State (mostly within funds for Malpensa Airport), with a minor amount of funds from regional budget.


The EMUs tender was won by AnsaldoBreda, Firema and Keller for a "second generation" TAF, that was called TSR (Treno Servizi Regionali). The TSR won over Alstom Coradia mainly for the lower price.

The tender for airport EMUs was won by Ansaldo (alone) with a new-design 8-car articulated EMU.

Both tenders were assigned at the end of 2002 and contract were signed in middle 2003.

The only offer for the locomotives (Bombardier E.464) was considered inadequate and the tender was cancelled.

In autumn 2004, 15 additional TSR were ordered for Line S5 (at the beginning of 2005 Region assigned the tender for the service on this line). These 15 TSR were paid with funds from Region and State.


In summer 2006, although no TSR was already working, it was considered important to increase the number of TSR to be built, in order to completely replace old engines still operating on LeNORD. It was in this occasion that a new legal framework for buying trains was developed.

Regione decided not to buy and own new trains by itself, but to use its network manager, Ferrovienord, and assign it the additional task of buying trains. In this way, Ferrovienord became some sort of Rosco (Rolling Stock Company).

Just like a Rosco, Ferrovienord:

Unlike a Rosco, Ferrovienord:

Finally Ferrovienord gives the trains to the railway undertaking selected by Regione. Ferrovienord and the railway undertaking sign a free-of-charge commodate contract (comodato d'uso gratuito).

Ferrovienord receives 1% of the price of each train in order to cover its costs of making the tender.

It should be clear that in this way a strong independence is guaranteed between railway operators and the property of rolling stock.

In other words, this was the "right solution" to create fair competition, if tenders had to be made: Regione has the possibility to assign rolling stock to the winner of a tender. Unfortunately, as we have seen, this is no more the case of Italian railways.

I have no news of a similar framework in any other Italian Region.


In more detail, an Agreement (Convenzione) was signed in January 2007 between Regione and Ferrovienord, containing the complete list of the rolling stock that Regione asked Ferrovienord to buy. This list includes also the first orders of TSR, thus replacing the previous Contratto di Programma, which was therefore cancelled.

An important feature of this framework is that funds are not linked to trains. There is a list of trains to be bought and a list of funds available. The list of trains sums up 688 million euros and, of course, funds are available for 688 million euros, but Regione from time to time, can use whatever fund to pay for whatever train. This appears to be very important in order to manage public resources in the most effective way.

In 2007 the original contract with AnsaldoBreda for airport trains was cancelled, because in three years AnsaldoBreda wasn't able to build them. A new tender was made, won by Alstom with Meridian (a second generation Minuetto). The Agreement contained these trains too.

In 2008 the Agreement was "generalised": it was no more specific for the original list of trains, but additional trains (and funds) could be added when required, just using the same rules (by the way, this was one of the most "simple & successful" ideas I had in my job...). In this way Ferrovienord made the two tenders won by Stadler for Iseo and Molteno lines.

The following tables summarise the trains that Regione is buying. Please note that the cost is not the exact price of the Contract, but the maximum admitted cost decided by Regione, including 1% for Ferrovienord. TABLES TO BE COMPLETED IN THE NEXT DAYS


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