Rail Infrastructure Pricing: Principles and Practice

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Since the early 1990s, railway operations in Australia and in many overseas countries have been radically reformed. One reform has been widespread outsourcing of railway activities such as infrastructure maintenance, to encourage efficient provision through competitive tendering for services. In some cases, entire rail operations have been contracted out or privatised. The major reform, however, has been to introduce regulations to require access to rail infrastructure by outside ("third-party") train operators. This mandated access also supports rail interoperability objectives facilitating train service coordination by streamlining the logistics chain across infrastructure networks.

Prior to these regulations, there were no access charges because the track use was an internal transaction within the railway company the company maintaining the infrastructure had exclusive use of the tracks for its own trains. In essence, the railway's revenue was generated only from tariffs for transporting goods and passengers. However, with mandatory access, rail infrastructure owners offer an additional service non-track owners' access to the infrastructure.

What are fair, equitable and efficient charges for that access? We know that the level and structure of these charges matter, for they account for, perhaps, one-third of the train operator's total operating costs. This report focuses on the rail infrastructure pricing structures that have developed with mandated access around the world, and the lessons that can be drawn from the subsequent experiences.

Our analysis involves consideration of the benefits and costs of mandatory access; the principles of efficient access charges; Australia's systems of access and pricing; international pricing and access systems and the lessons from the experiences with them. While principles of access charges apply equally to freight and passenger trains, mandated access is generally directed only at freight operations. For that reason, in this report we consider only freight operations.

  • Rail Infrastructure Pricing: Principles and Practice