The single market has been a key principle of the European Union since its founding more than five decades ago, yet it has taken exhaustive legislation over the years to turn this notion into reality. One particularly hard nut to crack has been the rail sector, where national monopolies have long held sway. However, European Union Transport Ministers meeting in Luxembourg on June 16 took a key step in changing this holdout to the single market as they voted new rules to boost competition and transparency in the rail market.

The rules set out to address three problem areas:
• fair access to railway infrastructure and rail related services: the proposed directive aims to open up markets for rail maintenance, terminal, and passenger information and ticketing – as well as establishing new rules on conflicts of interest and discriminatory practices. It aims to end discriminatory practices on access to tracks and rail-related services like disproportionate discounts to the largest operator and denied access to central stations for international passenger trains competing with those of the incumbent;

• regulatory supervision: national rail regulators will have an extension of their remit, and full independence from any other public authority. This is significant since regulators' offices in most other member states are understaffed, have limited investigating powers and cannot enforce their decisions with financial penalties. And in several member states, the regulator belongs to the transport ministry, which also owns or controls the incumbent railway undertaking – a clear case of conflict of interest;

• the framework for public and private investment: governments and infrastructure managers will be required to work to long-term strategies which link funding to performance. There are also measures to increase private investment in interoperability and green technologies.

According to the EU Transport Commissioner Siim Kallas, if approved by the European Parliament, the new rules will provide passengers and rail companies with greater choice and better services. "These new rules aim to shut loopholes in the current laws that allow discrimination against newcomers and block operators from providing new and innovative services,” he said. “They will ensure that opportunities to compete exist not just in theory but in practice." He added that the proposals were a response to complaints made by companies over the last 10 years.

Indeed, despite many reforms, there are still major gaps. The 2001 Railway Package aimed to liberalize the sector: the rail freight market has been completely open since 2007, and international passenger services since January 2010. To some extent, there has been an impact: the railways' share of inland transport has remained stable in the last 10 years, following a long period of decline (its share among inland modes has remained around 17.1% in tonne/km for rail freight and between 8.6 and 8.4% in passenger/km for rail passenger transport since 2002). And on some rail corridors, rail’s modal share can in fact reach up to 35% (such freight transport on the Rotterdam-Genoa rail line) or even 80% (such as for passenger transport on the Lyon-Paris rail line), suggesting the potential of rail transport if well organized and well managed.

However, the Commission has admitted that the liberalization has only had a moderate success. Despite the 10-year push for European rail liberalization, competition varies widely. Monopolies dominate in countries such as France, but other states such as Britain have given privately owned train companies the right to compete.

There are two important reasons for rail’s relative lack of progress, according to Christian Kirchner, a professor at the Humboldt University in Berlin who specializes in railway legislation. The first is that closed national markets are too small to enable long distance transport where rail would enjoy competitive advantages over road; and the second is inefficient, heavily subsidized national monopolies, he said.

Kallas himself notes that no other mode of transportation has state interests that are so strong: even airlines - still often known as “flag carriers” can be bought and sold across borders within the EU, he says. His vision ties in with the Commission's Transport White Paper published earlier this year, which set a target that most medium-distance journeys should be taken by train by 2050.

On a smaller scale, in May, Kallas announced details of a plan to make it easier for tourists to travel across Europe with the creation of a unified journey planner: he invited both businesses and the general public to submit ideas for standardized European ticket and timetabling systems to allow people book and travel on all modes of transport across all countries in the EU with a single ticket bought online.

And this is not the end of the process. Kallas said that the agreement sent a strong political signal and paved the way for a much more far-reaching rail regulatory package that the Commission intends to bring forward in the next 18 months. Which means that even a decade of reforms has yet to fully open up rail, Kallas is determined to finish the job over the next few years.