The liberalization of rail transport in Germany, Austria and Switzerland is an interesting example of the development of rail transport in Europe. These countries have taken different paths to privatizing and liberalizing the railway sector throughout history.

The three states have had a similar development, but the approach to private and state transport and infrastructure was very different. In Germany, people fought against private competitors for many years and in Austria, private railway companies initially went bankrupt or had to be nationalized.

Nevertheless, there was a long tradition in the Alpine republic that alternative providers were also allowed to use the mostly state-owned infrastructure for a fee. Until the founding of the Western Railway, which initially operated between Vienna and Salzburg, this was only rarely used. This was also fueled by the fact that, due to various EU regulations, private companies now have a legal right to use the infrastructure for an appropriate fee. Of course, there are often conflicts between state railways and private providers about what is appropriate and what is not.

The history of railways in Germany

The beginnings of railway traffic in Germany go back to the early days of the 19th century. During this time, numerous private railway companies emerged that promoted the development of a rail network. Examples of such companies are the Bavarian Ludwig Railway and the Cologne-Minden Railway Company. But over time, the German government began to nationalize the railway infrastructure. This process began in the 19th century and was finally completed in the 20th century with the founding of the Deutsche Reichsbahn and later the Deutsche Bundesbahn.

However, there are exceptions to this development. An outstanding example is the Hohenzollerische Landesbahn (HzL), which has been privately owned since its founding in 1869 and operates rail transport in Baden-Württemberg.

The situation in Germany today

In Germany, rail transport was initially largely nationalized. Only in recent years have there been efforts to promote competition and open the railways to private companies. However, access to infrastructure is limited and private railway companies have had to contend with restrictions.

In contrast to Austria, private railway companies were not allowed to use the infrastructure of the Federal Railway or Reichsbahn for a very long time. This has now fundamentally changed, as DB Netz AG has to grant access for a fee.

Well-known examples of private providers in long-distance transport include Westbahn and Flixtrain. A number of railway companies are now active in local transport, as these are transports ordered by the federal states that have to be put out to tender and awarded to the best bidder. Just a few days ago it was announced that the Austrian Federal Railways would be taking over Go-Ahead's German traffic. ÖBB also operates as a provider of night trains within Germany.

The history of railways in Austria

In contrast to Germany, Austria had a more liberal policy regarding rail transport from the beginning. Even in the early days, private railway companies were able to use the tracks of the state railways. This was made possible through so-called Péage contracts.

In the Alpine Republic, too, the early days were characterized by many private companies, which in most cases built their own infrastructure. This sometimes reached absurd proportions, which was evident in the large number of terminal train stations in Vienna. Almost all providers built their own large train stations in the capital in the 19th century and it didn't matter that the competition already had a station in the immediate vicinity.

From today's perspective, it seems particularly absurd that the southern and eastern train stations (originally both had different names) were right next to each other, but had no rail connection whatsoever. The situation of the “double terminus station” was not remedied after the Second World War, but was at best concealed. In addition, there was a third terminus station, Aspangbahnhof, not particularly far away. The three stations mentioned no longer exist. Continuous train connections were made possible with the main station.

There was a similarly absurd situation regarding the Nord- und Nordwestbahnof. Both were built by private companies and were just a few steps away from each other on foot. There was also a separate goods area in each case, which was quite large. The competitive situation meant that passenger traffic at Nordwestbahnhof had to be abandoned early on, but was reactivated for around ten years after the Second World War. The Nordwestbahnhof was then purely a freight station for many decades until it was finally closed. The original Nordbahnhof building was badly damaged after the Second World War and was demolished, similar to the other terminal stations from the Wilhelminian era. At that time, the passenger service was relocated to the current location of the Praterstern station. The freight remained where it is and continued to compete with the nearby Nordwestbahnhof, but the Nordbahn area was abandoned much earlier and is now largely built up.

Other relics from the era of private railway companies are the Franz Josefs Station and the West Station. The original buildings no longer exist for a very long time. This was not renovated due to war damage, but rather, in keeping with the spirit of the time, it was demolished and new buildings were built. The Nordwestbahnhof is a special case: even before the Second World War, the hall was more of an event hall than a train station and after passenger operations were relocated to Vienna-North for a second time, it was no longer needed and the pompous building was torn down. It should be noted that no investments were made and the building was correspondingly outdated and run down at the time of demolition.

The authorities tried to put a stop to the “wild growth” of train stations and railway lines back in the times of the Danube Monarchy. It was almost commonplace for companies to go bankrupt in the middle of construction projects due to a lack of money or for operations to simply not cover their costs. This then resulted in nationalizations, although these were initially limited to routes that were of strategic importance from the perspective of the Austro-Hungarian monarchy. Later, pretty much everything that was still in private hands was taken over, but some operators were able to defend themselves over a long period of time and at least keep the infrastructure.

A very well-known example of this is the Southern Railway Company, which was most recently active as the Danube-Save-Adria Railway Company. This was severely affected by the loss of many routes after the First World War, which were now located abroad. The diplomatic division of assets dragged on for decades. To this day there are still a few former Südbahn subsidiaries that are still registered in the company register. Railway operations have been stopped for a long time and the infrastructure in Austria has been owned by ÖBB for a long time.

The EWA (Vienna-Aspang Railway Company) at least held out longer as the owner of the infrastructure. The background is that the tourist Schneebergbahn lost significant income. It was not until 1937 that the ÖBB initially only took over operations and the Nazi regime then dissolved the EWA or incorporated it into the Reichsbahn against the will of the shareholders.

It is also worth mentioning that at the time the line was being built in Lower Austria, the EWA was literally forced to conclude a péage contract with the Südbahngesellschaft between Sollenau and Wiener Neustadt. They actually wanted to lay their own tracks and build their own train station in Wiener Neustadt. However, regional politics resisted this because they wanted to avoid “wild growth” like in Vienna. So the EWA came to an arrangement with the Südbahn company. Even though today everything is ÖBB, this situation continues to this day.

What is a Péage contract anyway?

A péage contract is an agreement between a private railway company and the state infrastructure manager that allows the private company to use the tracks and facilities of the state rail network. This agreement usually regulates the fees that the private company must pay for using the infrastructure.

Such agreements can be concluded between a public infrastructure manager and a private railway company wishing to use the line, or vice versa. The state railways of the Danube Monarchy and the later BBÖ, from which the ÖBB emerged, initially only took over operations wherever possible. The tracks and stations, and in particular their cost-intensive maintenance, initially remained in private hands and the state-owned company paid usage fees. However, this situation did not last long and has no longer been common since 1942 at the latest. However, there are still exceptions to this day in the area of ​​state railways, which are legally private railways. Historically, private railways have also concluded péage contracts with each other.

Historically speaking, this wasn't originally done completely voluntarily, but it was a kind of forced concession to politics. This wanted to curb the proliferation of train stations and tracks, because where there were already two or even three routes in roughly the same direction, they didn't want another one to be built and the result would be that everyone would go bankrupt a few years or months later because no one earned enough money. The Péage contracts put a stop to the meaningless construction of new infrastructure, but the decline of the railway in private hands was foreseeable.

The first Péage contract in Austria

The first Péage contract in Austria was concluded in 1841 between the Kaiser Ferdinands-Nordbahn and the Imperial Private Railway Company. This paved the way for the use of railway lines by private companies and contributed to the development of the Austrian railway network.

The situation in Austria today

In Austria there are still numerous private railway companies that have concluded Péage contracts with the state infrastructure operator, ÖBB-Infrastructure AG. These agreements enable private operators to use the rail network for freight and passenger transport and contribute to diversity and competition in the Austrian rail transport sector.

It should be noted that there are also numerous routes in Austria that are not or no longer owned by ÖBB. Some routes never belonged to ÖBB, but always to private providers or state railways. They also have to grant competitors access to their network for a fee.

Some routes that were abandoned by the ÖBB for economic reasons have either been taken over by state railways, private companies or companies founded specifically for this purpose. In the Wachau, NÖVOG offers tourist services on former ÖBB routes.

Selling the infrastructure does not always mean that everything improves under new ownership. Examples of this: The Südburgenländische Regionalbahn, a subsidiary of Autoreisen Schuch, took over large parts of the Pinkatalbahn in 1989. It was not possible to operate this economically successfully in the long term. After the railway operation was stopped, it was sold to the state of Burgenland, which wants to build cycle paths. The Southern Burgenland Regional Railway voluntarily dissolved itself at the end of 2022.

The situation in Switzerland

Switzerland has a unique approach to rail liberalization. Here the rail infrastructure and operations are largely in state hands. However, private railway companies can use rail networks by paying fees to the state infrastructure operator, Swiss Federal Railways (SBB).

In Switzerland, fees for using the rail network are calculated according to a complex tariff system. The costs vary depending on the length of the route, time of use and weight of the trains. For example, private providers pay fees to the SBB per kilometer and per station use.

The liberalization of rail transport in Germany, Austria and Switzerland shows how differently countries in Europe approach this important transport sector. Germany has only begun to open the market in recent years, while Austria has relied on cooperation with private railway companies from the start. Switzerland, on the other hand, retains control over the rail infrastructure but still allows private participation. This diversity reflects the different ways in which European countries organize rail transport and meet the needs of their citizens and economic sectors.