The amount of new rolling stock being put into action on British railways has been far below what is needed to keep pace with capacity, according to a new report.
Figures on the rolling stock leasing market presented by the UK's Competition Commission at the Vision for the Future of Rail conference on 19 November showed that while there has been a 58% growth in traffic since 1994, the amount of new trains operating in Britain has only increased by 4%.
Member of the Competition Commission John Smith said at the London conference that growing capacity on British rail was a very important challenge.
"Since privatisation there has been a huge amount of growth in rail, however the lack of new trains being put into action has hampered the need to increase capacity," he said.
"Developments in franchising policy have produced an unfavourable environment for train companies to order new stock and on top of this limited rolling stock options have created poor competition between manufacturers and pushed up prices."
According to the findings of the Competition the franchise leasing policy has led to a supply-led market, where lack of competition means train manufacturers are able to set their own prices, making it cheaper to keep old stock and limit expansion.
In addition, train purchases are often timed to franchise re-letting, which creates a small purchasing window.
"Another issue is that the market is still very young," Smith said.
“"At the moment, the need for high level government support means that value for money for the tax payer is very important and often this is not the case with buying brand new trains."
The Commission found that competition between rolling stock manufacturers is very low and while there are 80 leases in operation, the amount of alternate fleet bids was just five.
According to the report findings this was due to technical and operational factors that reduce the amount of trains available to operate on British railways. Further reasons were that the costs and risks involved in switching to alternative leases were just too high.
"Operating companies are limited in their options, in 60% of cases only one fleet is ever considered," said Smith.
The government body is busy publishing a provisional decision of possible remedies to this situation which is expected to be released in its final stage in February 2009.
By Daniel Garrun.
