Czech Railways (ČD) is weighing up the possibility of creating a low-cost subsidiary that could compete on foreign track and domestic routes where it is challenged by local competition.
Targets for the low-cost competition, helped by pushing aged carriages back into service, include neighboring Germany, Poland and Austria, the Czech daily Mladá fronta Dnes reported on Friday. It said that the state-owned rail passenger company estimated that it could cut costs by a third compared to its normal operations. Estimated ticket charges for passengers have not been released.
The idea has discussed by the rail company’s supervisory board but has still to be given the final green light, the paper said. The idea of a low-cost subsidiary is opposed by rail workers’ unions, who fear that wages and conditions will be set at lower levels than for the main company.
Ironically, Czech Railways has been phasing out much of its most aged carriages on main routes or submitting them to a modern makeover. The most ancient rolling stock, which looks at least half a century old, is still preserved on little used rural and branch lines.
Increasing competition
The state railway company has been facing stepped up competition on some of its busiest routes. Czech businessman Radim Jančura launched his distinctive yellow RegioJet trains on the route between Prague and the Czech Republic’s third biggest city, Ostrava, just over six months ago. The new company says it is now carrying up to 2,200 passengers daily on its 14 daily services, some of which continue on to Haviřov and the Slovak city of Žilina with an occupancy rate of up to 86 percent. Czech media say the battle has so far not been decided either way.
RegioJet says it will cut its fares, currently higher than the Czech Railways, and boost capacity in a bid to win more business. At the same time, it has launched a complaint with the Czech competition watchdog (ÚOHS) complaining about dumped fares being offered by its rival.
Czech Railways also faces competition to provide services on local routes subsidized by regional authorities with some rivals, such as Viamont, already grabbing some of the contracts to provide these services.
EU rail market opening measures mean that any national operator can pick up and transport passengers to stations outside their own country on an international route from the start of 2010. Further market opening measures are being sought.
