Brussels, 30 January 2023: The Swedish Transport Authority Trafikverket should take responsibility for the recently announced offensive against the privately owned operator Snälltåget by the Swedish state-owned rail incumbent SJ. Namely, SJ has announced that it will compete with Snälltåget´s commercially driven night train between Stockholm and Berlin by extending its taxpayer-funded Stockholm – Hamburg night train service to Berlin. This represents an illegal cross-subsidy.

This move by SJ represents unfair competition to Snälltåget, as SJ receives Public Service Obligation (PSO) subsidies from Trafikverket for (alleged) unprofitability of the Swedish and Danish part of the route. On 100 days per year, the SJ night train will receive government subsidy for some of exactly the same route that the commercially driven Snälltåget night train also operates. This allows SJ to sustain losses and take higher risks on the so-called commercial part of the route on the territory of Germany, for example by offering lower fares to passengers. For a recent example of how SJ is undercutting Snälltåget’s fares between Sweden and Germany, please see the screenshot below.

Therefore, Trafikverket is violating the European regulatory framework on PSO subsidies for train services. It also concluded a PSO contract for an international train service taking place on the territory of Denmark and Germany, despite Trafikverket not being the competent authority to unilaterally grant PSOs for train services on other Member States´ territories, and the German market regulation not allowing for long-distance PSOs at all. However, Trafikverket was obliged to conclude such a PSO by the previous Swedish government with the Green Party, a politically motivated decision.

Furthermore, did Trafikverket not take into account that its new night train PSO for SJ would distort the level-playing field with unfair competition on the German part of the route and did not properly prevent overcompensation with taxpayer money. The failure of Trafikverket to comply with the European PSO Regulation means that the subsidy to SJ should be considered as illegal state aid.

ALLRAIL, the alliance of independent passenger rail companies in Europe, is calling on Trafikverket and the new Swedish government to take responsibility for the damage that this illegal cross-subsidy will have on the level-playing field in the international night train market because of Trafikverket´s politically motivated PSO that was decided by the previous government.

The whole case proves that so-called “Hybrid PSOs” with international train services being subsidised for just a part of the route are not the right way forward. It is impossible to artificially split an international train service into a subsidised (“PSO”) part in one country and a commercial (“open access”) part in another country, as the profit on the PSO part will allow compensation of losses on the commercial part.

European transport authorities should learn lessons from this Trafikverket case and favour non-discriminatory stimulus of all train operators – instead of a PSO for only one operator. Authorities should consider that once they grant a PSO for a train service, it becomes impossible to operate a comparable train service under normal commercial market circumstances. PSOs lead to market distortion and to an unnecessary dependency upon subsidy.

A smarter and more effective approach for stimulating night trains is to reduce the cost level for operators, by reducing or waiving infrastructure charges, helping with the procurement of rolling stock or other measures such as reduced VAT and fair pricing of other modalities.

This will ultimately lead to a rail market in which all operators can experience a level-playing field and can offer improved train services to meet and grow the demand from travellers. After all, even SJ itself admitted just a few weeks ago that there is “huge interest in journeys between Sweden and Germany.“

”If SJ is admitting this, then why does it need subsidy for its night trains? This is a complete contradiction. Trafikverket and other EU transport authorities must finally acknowledge the importance of fair competition and refrain from jeopardizing successful commercial driven train services with subsidised competition.”

Arthur Kamminga, legal expert at ALLRAIL

Screenshot showing the subsidised SJ night train that recently undercut the commercially operated Snälltåget night train on the route between Stockholm and Hamburg