Open letter: ALLRAIL’s response to the allegations of the Polish rail regulator UTK containing false information about the level of competitiveness in the Polish passenger rail market

ALLRAIL’s recent press release pointed out the real reasons behind the latest increase in PKP Intercity ticket prices – the dire lack of market opening – resulting in the Polish rail regulator responding with its opinion on the liberalisation of rail transport in the country. We would like to thank the President of the regulator UTK for expressing its view on rail competition in Poland. As a European non-profit association, we bring together independent passenger rail companies from across Europe. The views stated by the President of UTK are an excellent illustration of the façade of the Office’s activities.

In order to supports its accusations about ALLRAIL’s alleged “false information and half-truths” in our press release last week, UTK is deliberately manipulating data and statistics, thereby creating an illusion of opening up the Polish railway market.

UTK points to the multitude of positive decisions issued by its President regarding open access (Reference: “Between 2016 and 2023, the President of the Office of Railway Transport (the formal name for UTK) issued around 150 decisions on open access, of which more than 85% were positive”). Unfortunately, this optimistic narrative takes into account only the number of applications and totally ignores the number of requested connections as well as their relationship and especially the nature of the service. Particularly, if we take into account the latter factors, we get a true picture of market liberalisation which is clearly divergent from UTK’s fraudulent narrative.

Firstly, as evidence of alleged passenger rail market opening in Poland, UTK counts the issuing of decisions to local or commercial carriers for seasonal or part-time services. We are referring here to access for regional and seasonal operators operating single services at weekends and on holidays or during summer or winter holidays. Such services can hardly be seen as a sign of market opening. They merely fill some of the gaps that are currently not covered by services performed out by the state-owned incumbent. Similarly, decisions for applications in which the operators themselves must promise that there is no domestic traffic (i.e. no cabotage) whatsoever in order to be allowed to operate on the tracks at all cannot be considered as opening up the market and creating conditions for competition. But UTK still counts such cases fully.

The following applications, which aimed at introducing real change in terms of opening up the Polish railway market on key long distance domestic routes, were either rejected by UTK, or the procedure was so protracted that, as a result, the applicant withdrew its application:

  1. Decison for Arriva RP in 2016 – 9 pairs of trains between Warsaw East – Kraków Główny – Warszawa East – rejected
  2. Decision for Koleje Mazowieckie in 2016 – 4 pairs of trains on the route Warsaw East – Łódź Fabryczna – Warsaw East – rejected
  3. Decision for Arriva RP in 2016 – 5 pairs of trains between Wrocław Leśnica (Wrocław Nadodrze) – Rzeszów Główny and return – rejected
  4. Decision for Arriva RP in 2017 – trains between Warsaw East – Poznań Główny – Warsaw East – rejected
  5. Decision for Arriva RP in 2017 – trains between Wrocław Główny – Szczecin Niebuszewo – Wrocław Główny – rejected
  6. Decision for Arriva RP in 2017 – trains between Warsaw East – Kraków Główny – Warsaw East – rejected
  7. Decision for Arriva RP in 2017 – trains on the route Warsaw East/Warsaw Gdańsk – Łódź Fabryczna – Warsaw East/Warsaw Gdańsk – rejected
  8. Decision for LeoExpress in 2022 (regarding its application from 2019) – 6 pairs of trains between Warsaw East – Kraków Główny – Warsaw East – after more than 2 ½ years of waiting for a decision, the operator cancelled its plans
  9. Decision for RegioJet in 2022 – 9 pairs of trains between Wrocław Główny – Warsaw East – Wrocław Główny – rejected
  10. Decision for RegioJet in 2022 – 9 pairs of trains for the connection Kraków Główny – Gdynia Główna – Kraków Główny – – rejected

According to UTK, all of the above mentioned commercially driven services threatened the economic balance of the directly awarded public service contracts (PSOs) for the state-owned long distance incumbent PKP Intercity which was running subsidised trains on these routes. The big irony, however, is that the commercially driven trains of the very same PKP Intercity mysteriously did not and still do not threaten the economic equilibrium of its PSO subsidised long distance trains.

Should this fact not have been puzzling to UTK?! Should alarm bells not have been ringing to UTK?! Namely: that the Economic Equilibrium Test is being abused by PKP Intercity as a weapon to fend off new entrants operators, and that – in reality – there was no threat to the economic equilibrium of the PSO trains at all?

This becomes all the more obvious when we look at the resulting state of play:

  1. On the Warsaw-Kraków route: 15 pairs of PKP Intercity’s commercially driven trains do not threaten its PSO subsidised trains (whereas 9 pairs of Arriva trains, 6 pairs of Leo Express trains, or 9 pairs of RegioJet trains pose a threat to the economic equilibrium);
  2. On the Warsaw-Gdynia route: 9 pairs of PKP Intercity’s commercially driven trains do not threaten PKP’s subsidised trains (whereas 9 pairs of RegioJet trains pose a threat to the economic equilibrium);
  3. On the Warsaw-Poznań route: 6 pairs of PKP Intercity’s commercially driven trains do not threaten PKP’s subsidised trains (whereas Arriva’s trains threaten the economic equilibrium).

As we mentioned earlier, in its deliberately misleading narrative the Polish rail regulator UTK relies on carefully selected statistics to prove how much it supports the opening of the Polish railway market to competition. Here again, the regulator cites a multitude of positive decisions, ignoring the fact that most of them were issued to the state-owned incumbent operator PKP Intercity for connections that could only be contested in practice by…….. PKP Intercity.

Furthermore, if we take a closer look, we get to learn about how market liberalisation is consistently treated with contempt by the Polish regulator:

  1. Warsaw-Kraków – open access for 2 pairs of trains. The procedure lasted for 834 days (!) which is far longer than should have been the case according to regulation
  2. Prague-Gdynia – limited access with only 1 out of 4 trains approved (the 3 other trains allegedly posing a threat to the economic equilibrium),
  3. Prague-Kraków – open access only for 1 pair of trains,
  4. Warsaw-Poznań-national border (with final destination to Ostend via Berlin, Amsterdam and Brussels) 1 pair of trains with domestic traffic (i.e. cabotage) being FORBIDDEN,
  5. Kraków-Katowice-national border (with final destination to Split/Rijeka via Ostrava, Vienna, Graz and Zagreb)– 1 pair of seasonal trains with domestic traffic (i.e. cabotage) being FORBIDDEN,
  6. Warsaw-Katowice-national border (with final destination to Landeck-Zams via Ostrava, Vienna and Innsbruck) – 1 pair of seasonal trains with domestic traffic (i.e. cabotage) being FORBIDDEN,
  7. Przemyśl-Medyka/Mościska (Ukraine) – 1 pair of trains being a mere 14 km extension of the operator’s current train service (But counted fully by UTK)

It is also worth mentioning how UTK inexplicably claims that its actions are compliant with European law (We read: “Open access regulations derive from EU law. The President of UTK does not apply any derogations in this respect”).

Yet – in reality – UTK takes at least four to six months in order to process very simply procedures that should take less than two months. In addition, complex procedures related to the economic equilibrium test, despite the explicit deadlines set by European regulations, are dragged out to the extent that the operators themselves give up on the application, because market conditions have changed in the meantime

This is what happened in the case of the Leo Express procedure for the Kraków-Warsaw. From the submission to the issuing of the decision on discontinuation, the proceedings lasted almost 1,000 days. By contrast, does state incumbent PKP Intercity need to wait this long? Of course not.

Procedures in Poland are dragged out, not to mention UTK’s practices such as failing to publish notifications on time or not issuing decisions by the deadlines which are clearly indicated by the European regulations in question.

UTK also adds: “All administrative decisions of the President of UTK concerning open access are subject […] to judicial review – parties dissatisfied with the decisions of the authority may use appeals”. In the case indicated by the regulator, Arriva RP won the dispute with UTK in the administrative court. However, it was UTK itself that appealed the court decision to the next instance. Ultimately, it took 5 years from the submission of the open access application to complete the appeal procedure. After such a period, even a positive decision in the appeal process will not lead to the launch of new services, as such intentions are long thwarted. Is this fact alone not evidence of the shortcomings of the current system of market opening and UTK in Poland?

As one of the official representative bodies for the railway sector of the European Union, ALLRAIL contribute to the activities of the railway sector in the work programme of the European Union Railway Agency (ERA), of which UTK is a member. In this regard, we would be very happy to visit with UTK and address our acute concerns about its lack of independence and professionalism. We are happy to share our experience from other EU Member States with regards to competition in the railway sector.

Kind regards,

Katarzyna Dekeyser
Policy Coordinator, responsible for Poland

Nick Brooks
Secretary General