The Finnish government has announced its plan to open passenger rail services to competition and to split VR, a state-owned railway company, into four separate entities.
The Finnish government has announced its plan to open passenger rail services to competition and to split VR, a state-owned railway company, into four separate entities.


The Finnish government has decided to open rail passenger services to competition in stages to be completed by 2026.

Railway companies will not be granted open access to the passenger rail market, however, but will have to submit tenders for concession agreements designed in a way that guarantees the availability of passenger rail services in all parts of Finland.

Anne Berner (Centre), the Minister of Transport and Communications, reminded in a press conference yesterday that the government has previously determined that it is possible to prevent skimming in passenger rail services by combining profitable and unprofitable market-based services and tendering them out as packages.

“The solution we’ll unveil today was prepared on this basis,” she said.

“The reform aims to encourage rail operators to become more responsive to customer needs, improve the quality of services and increase the share of rail services in passenger transport. The opening to competition will promote fare competition and reduce transport costs with easier access to rolling stock,” she added in a press release from the Ministry of Transport and Communications.

The de-regulation process will begin with local passenger rail services in Southern Finland in the early 2020s. The process will take place concurrently with the tendering of commuter rail services by the Helsinki Region Transport (HSL), according to the press release.

Both HSL and the Ministry of Transport and Communications currently have agreements in place with VR. The former has granted the state-owned rail company an exclusive right to provide passenger services on the regional rail network until 2021 and the latter an exclusive right to provide passenger rail services elsewhere in the country until 2024.

Berner highlighted that the de-regulation of passenger rail services will not necessitate any legislative revisions but only the re-negotiation of the agreement between VR and the Ministry of Transport and Communications.

“We don’t currently have any obstacles to competition; the only genuine obstacles arise from the existing agreement,” she told.

The reform will also provide counties and large cities the opportunity to organise regional and local rail services and, thereby, to improve the possibilities of job seekers to accept job offers further away from home.

“It’s our objective to ensure we’re able to promote labour mobility in employment areas. We’re already aware that labour mobility is one of the bottlenecks to our growth,” commented Berner.

Berner also revealed that in order to create an equal competitive landscape and guarantee open and non-discriminatory access to the passenger rail market, three separate, state-owned entities will be removed from VR: one for managing the rolling stock, one for maintaining the rail network and one for managing the terminals.

“This isn’t about privatisation. All of this will remain in the state’s ownership. The state will continue to own all of the assets that produce services to both citizens and businesses,” she said.

The details of the split-up will be determined in collaboration with the VR Group.

VR: We have experience of market-based operations

The VR Group on Wednesday responded to the announcement by pointing out that it has experience of market-based operations.

“VR will continue to succeed in the competitive rail market, as several studies suggest we are one of the most efficient railway companies in all of Europe. We will continue seeking a strong position in the rail transport market of Finland,” Rolf Jansson, the chief executive of the state-owned rail operator, asserted in a press release.

“We have modernised our services and enhanced our competitiveness, creating solid growth in passenger and freight volumes and improving customer satisfaction in all our businesses.”

Freight rail services were de-regulated in Finland in 2007. The de-regulation, however, has yet to bring about genuine competition and the state-owned railway company has effectively retained its monopoly.

Jansson also reminded that passenger rail services were initially scheduled for de-regulation by the end of 2024. “VR has prepared for the expiry of its exclusive right for some time.”

The reform will signal a major change for some of the 8,000 professionals employed by the VR Group, added Jansson. “The position of the staff must be taken into consideration throughout the reform,” he stressed.

Aleksi Teivainen – HT
Photo: Vesa Moilanen – Lehtikuva

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