Regulation, licensing and safety issues on the

Hungarian rail markets

ANTAL, Dániel p r e s i d e n t

L i l l e, 5th February 2008.

Case I: capacity misallocation and safety

The HRO examined whether capacity allocation requests were made and allocated capacities were used properly in connection with a fatal rear-end train collision on the Trans-European network on 6th February 2007. The accident involved MÁV Zrt’s infrastructure management and passenger divisions as well as its freight transport subsidiary, MÁV Cargo.

Case I: capacity misallocation and safety

The Hungarian Rail Office established that no valid train paths had been allocated for the trains involved for the network segment concerned. If the trains were not allowed to use the line without a valid path they could not have collided.

•The train path requests and allocation regarding the February 5-6 2007. were not in compliance with relevant legislation. The trains involved in the collision should not have received a train path. The passenger train received a path in the annual scheduling, the freight train received an ad hoc path.

•The capacity allocation body accepted path request from non-authorized sources. It was possible that not trained personnel, who do not need the real requirements and needs of a train to use the capacity, requested unrealistic schedules.

• MÁV Zrt’s infrastructure management division did not take into account allocated capacities when one of the trains were not on time, and let it use a train path that was used by another train, which was not on time either. Real-time traffic management had no knowledge of the allocated capacity.

The full text of Decision 49/2006 is available in Hungarian with an English language brief summary (for English instructions click on the UK flag) http://vasutihivatal.gov.hu/vasutipiac/piacfelugyeleti_dontesek

Case I: capacity misallocation and safety

Is any co-operation needed between the investigation body, the safety authority, the licensing authority and the regulator?

• According to Directive 2001/12/EC “the regulatory body shall decide at the earliest opportunity on appropriate measures to correct undesirable developments in these markets”. Should these measures be used against bad or illegal capacity allocation decisions? Should the regulator or the licensing authority take into account the considerations of the investigation body under Directive 2004/49?

• What is the relationship between the professional competence requirements (licence requirement) and the safety management system requirements (safety certificate requirement)? Is the lack of the a sound safety management system a proof of the lack of professional competence in a rail undertaking? Is this in turn a source of undesirable developments in the market?

• Is it possible that the same behaviour is sanctioned by the regulator, the safety authority and the licensing authority?

Case II: licensing and safety

The Hungarian incumbent MÁV Zrt, which is both the infrastructure manager and owns 100 % of MÁV-START, a passenger only rail undertaking, have changed the structure of MÁV-START without the approval of the licensing authority.

• On the first working day of the changes an unexpected condition – an expected heavy rainfall – lead to in incompetence of MÁV-START and MÁV to modify the schedule of passenger trains and train paths for 1st - 2nd January. The further complicate the situation, the expected snowfall did not happen.

• The infrastructure manager did not cancel the train paths, but requested the rail undertaking to have it cancelled. It was not clear neither in the infrastructure manager or in the undertaking who should decide on traffic restrictions, and who may cancel train paths.

• On 1 January 10% of the trains did not run at all, and 30 % were late in Hungary. By 2 January there were hardly any trains on time, and more than 10% did not run at all. It was not clear who should inform the passengers on the stations, and during the morning peak on 2nd January no information was available on the stations at all.

• On 2 January most the market stopped functioning. Many employees did not know who their actual employer was. The management board of MÁV-START was dismissed.

Case II: licensing and safety

What is the connection between the requirements of professional competence (licensing) the requirements of the safety management system?

• An applicant railway undertaking has or will have a management organization which possesses the knowledge and/or experience necessary to exercise safe and reliable operational control and supervision of the type of operations specified in the licence,

• Its personnel responsible for safety, in particular drivers, are fully qualified for their field of activity and […] its personnel, rolling stock and organization can ensure a high level of safety for the services to be provided.

• Infrastructure managers and railway undertakings shall establish their safety management systems to ensure that the rail-way system can achieve at least the CSTs, is in conformity with the national safety rules […] and with safety requirements laid down in the TSIs, and that the rel-evant parts of CSMs are applied.

What roles should the licensing authority, the regulatory body, the safety authority and the investigation body play in such a disruption?

Conclusion: the Hungarian regulation

• The Hungarian market regulation treats licensing as a part of the market regulation. The lack of a licence is a legal barrier to enter the regulated market. The loss of the licence is a legal means to force the exit of a not suitable player from the market.

• Gross professional incompetence may be a source of market disruptions in the market.

• The management competence of an undertaking, the existence and functioning of a safety management system and the possibility to cause market disruptions (especially in a dominant positions) are interconnected. How should the regulatory, the licensing authority and the safety authority co-operate to take measures against such failures?

The lack of public trust in the security of an open access rail market may undermine the process of liberalization. In Case I one person was killed and eight person was injured. The damage in the public infrastructure was substantial. In Case II no-one was injured but approximately 100 000 commuters could not arrive to their working place on the first working day, or were very late.

Hungarian Rail Office Múzeum utca 11.1088 Budapest PO Box 132, 1461 Budapest www.rail.gov.hu phone: +36 1 511 3131 fax: +36 1 511 4669

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