📑Backers of the current Swiss rail system claim that the vertical integration of infrastructure manager and operator is highly efficient, with a large amount of taxpayer money spent on infrastructure.

🤔But this infrastructure spending is not the result of vertical integration. On the contrary, there is the risk that it cross-finances the operator to undercut competitors, as we can see from recent media reports in Germany & France. 

☝️In reality, vertical integration only funds a large lobby that indulges in self-PR. Indeed, the evidence shows a different story.

Here are the facts in Switzerland –

▶ The market share (modal split) of passenger rail has decreased since 2010, long before COVID-19;

▶ Since 2020, the directly awarded taxpayer subsidy for public transport (81% of it goes to rail) has risen sharply each year, +30% compared to 2019(!) – much higher than in EU markets with competitive tendering;

▶ Seat occupancy onboard the state-owned incumbent passenger rail operator SBB CFF FFS (‘SBB’) is just 27.2% – one of the lowest in Europe – meaning almost three out of four seats are left empty;

▶ Finally, a report last year said Switzerland has the most expensive public transport in the world.

❗There is a considerable financing gap in the Swiss federal financial plan, growing to 2.6 billion francs by 2027 (if no countermeasures are taken).

▶ Can the government just keep throwing money at SBB?

ALLRAIL’s Nick Brooks says: “there is little evidence that vertical integration optimises efficiency or that Swiss passenger rail is the best model.”

✔ Instead, each player should focus on its core competency: independent infrastructure managers should focus on construction and maintenance, whilst rail operators should focus on winning more passengers.

▶ And competitive tenders are essential to achieve this goal!