The challenge facing Europe's railways is to halt and reverse the
long-term trend of declining markets and lost traffic (predominantly to
road), poor performance, under-investment and low productivity. This
challenge was made explicit in the 1996 White Paper on railway
revitalisation, which stressed the critical importance of improved
commercial performance and greater private sector initiative and
involvement in rail operations.
The aim of the project was to propose measures to increase the
competitiveness of railways in long-distance and international traffic. In
particular the project aimed to identify existing and new marketing
strategies for rail and to develop practical action plans for
The project has developed a methodology to analyse the current situation of a railway system and to select an optimal path towards greater commercial relevance in the transport market place and towards enhanced profitability.
The PRORATA methodology involves the identification of product, marketing and organisational concepts. The starting point of the methodology is benchmarking. PRORATA has presented a sample set of comparative performance measures that give an indication of the areas of operational and financial concern in the performance of railways.
A relationship between profitability and efficiency on the one hand and the institutional framework, represented by a railway adaptability index, on the other has been identified. The evidence indicates that reform and restructuring increases adaptability and leads to enhanced efficiency. Adaptability has been defined in terms of power (which operational elements does a railway control itself?) and accountability (what proportion of activities are subject to commercial forces?). This assumes that an organisation cannot adapt if it does not have the power to do so and if it is not accountable for its performance.
Two main categories of concepts to make rail a more competitive mode have been identified:
- generic concepts, which can be introduced irrespective of organisational structure or institutional framework (e.g. total quality management), and
- strategic concepts, which are associated with changes in organisational structure or institutional framework.
The practical applicability of the PRORATA methodology has been demonstrated in case studies. These have shown the selection and successful application of concepts that the PRORATA methodology would have recommended. They also demonstrate the significant efficiency savings, which also would have followed.
The demonstrated relationship between efficiency and adaptability implies that it is possible to make efficiency gains by increasing the power and accountability of railway organisations.
The proposed methodology draws on best practice from across the rail sector and is therefore recommended. Moreover, as the case studies have shown, a more rigorous application of the methodology could bring about additional efficiency gains.
The methodology involves process re-engineering and includes change management and implementation advice. The appropriateness and likelihood of success of the different concepts suggested would be dependent on the current levels of efficiency and adaptability and the political, social and economic context in which the railway operates. Priority should be given to developing an overall strategy in which each of the concepts then fits.
The following recommendations have been made to:
- improve the comparability of corporate data on EU railways and update benchmarking;
- add econometric analysis of market and revenue benefits from restructuring;
- apply the method to freight and urban railways;
- expand the adaptability analysis to other sectors (e.g. power and telecommunications).