FROM bus services to rail, Arriva has a wide range of operations across Germany. Its turnover in 2007 was €318 million, compared with €178 million in 2006. This year, it expects to increase this to more than €450 million. With 30 million train-km and 50 million bus-km, it operates more than 200 trains, 50 freight locomotives, and 900 buses. With more than 550km of track, it is the biggest private infrastructure provider in Germany. Arriva started in 2004 with the acquisition of the Prignitzer Railway (PEG) in eastern Germany, and today provides train services with successful brands such as Vogtlandbahn and Alex. It made some very important purchases in eastern and northern Germany, which CEO Mr Klaus Jacobs believes makes it an especially strong company in this region.
”In recent years,” says Jacobs, “the German public transport sector - the biggest in Europe - has developed enormously in terms of opportunities for independent operators, as well as in terms of competitors. Of course, German Rail (DB) is the dominant player, and will consolidate its position after its partial privatisation.
“Nevertheless, the number of players has increased and the market has become more complex and more challenging. In particular, the next 18 months will see more tenders to operate private rail services across Germany, while the size of the tenders is increasing far beyond today’s standards. The growing competition stimulates creativity to improve service quality and efficiency.”
Jacobs views DB’s privatisation with optimism, believing it could become a template for further sell-offs of state-owned operations: “I think privatisation is very positive and could become a model for municipal transport companies. Arriva is a key player in the German transport market, and we believe that there will be many opportunities for further expansion.”
And existing concessions are performing well too, he says. “One of the reasons for our success is that our operations perform according to their local needs. Arriva did and does always strengthen regional roots because they help to recognise our consumers’ needs. Simultaneously, Arriva provides as the holding company all its experience and expertise where needed.”
Much of this success is down to Arriva’s fundamental belief in the importance of its staff. “We focus very much on people - on training, and on having clear systems and processes.”
And continuing this policy is vital, believes Jacobs: “We have to remain at the state-of-the-art, and to be a leader in people as well as technology. Attracting new people is vital as new fields of expertise are developing, such as tenders, so we have to build up and develop our expertise. We are competing against other industries for people for whom rail may not have been on their radar before.”
Maintaining performance is becoming ever-more vital, with increasingly stringent contracts for concessions, something Jacobs believes has encouraged operators across Germany to raise their game.
“The German market is very large and complex. Due to the political framework and the federal structure of the country, there are a lot of different stakeholders that have to be considered. Likewise, the requirement of stakeholders and customers may vary in different regions. Above all, the level of service quality is very high in Germany. To succeed in this market, a service provider has to be able to implement excellent performance every day. We achieve this, and are continually striving to improve,” says Jacobs, who believes competition can only be good for passengers.
“Savings compared with the existing situation were as high as 90% on certain tenders - even if the incumbent did win at a much lower price. This shows that the incumbent operators do take competition seriously now.
“But competition also boosts the creativity of bidders: new concepts with respect to rolling stock, maintenance and onboard service are being developed and implemented, and where there are net contracts or at least incentives for increased passenger revenue, bidders do develop new ideas to enhance the number of passengers using public transport.
“However, it is important that the clients ensure that they provide a level playing field.”
While some operators may find the introduction of the European Rail Traffic Management System (ERTMS) as an expense which will have little impact on their day-to-day operations, Jacobs says that Arriva, with its cross-border passenger and freight operations, is working actively to support it. “We are a pan-European player,” he says, “and we are actively supporting it, through the Community of European Railways and Infrastructure Managers (CER), and at more local levels, such as our involvement in the British ERTMS steering group.
Perhaps understandably given his position, Jacobs is highly positive about the future for Arriva’s position in Germany: “We see many chances for future developments in the German market: the number and size of railway tenders in Germany is dramatically increasing. The growth of the freight business in Germany is continuing. Arriva is already among the biggest private transport service providers and it is our aim to strengthen this position and expand our activities.”
For a company that has been in the German market for a relatively short time, Arriva has made a big impact - and the increasing trend for concessioning and more local management means that further expansion is likely to be on the cards.
By courtesy of Andrew Rowden, published in International Railway Journal in October 2008.
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