Changes in operating environment
VR Group is wholly owned by the Finnish State. The Government Ownership Steering Department of the Prime Minister's Office wields the ownership power in the Group. The ownership policy is in accordance with the Government Programme.
Rail traffic is comprehensively regulated. In early 2013, the European Commission presented its proposal for the fourth railway package, which includes the following: obligatory competitive tendering for outsourced passenger services, opening of domestic passenger services to competition, changes in the division of labour between the European Railway Agency and the agencies responsible for rail safety in the Member States, and the separation of train operations and infrastructure ownership in all Member States. The proposals were discussed in the European Parliament and the Council in 2013 and the process will continue in 2014.
VR Group is operating in a competitive environment
In the infrastructure engineering business, every contract is either won or lost through competitive tendering. In logistics, the VR Group has a large number of competitors in road haulage. In rail transport, too, the first competitors have started operations. VR is preparing for competition in passenger services. The transfer of railway sector training from the VR Group to an independent operator is part of this development process. Even though VR still has the exclusive right to operate rail passenger services, trains are in continuous competition with other modes of transport, particularly private motoring.
The exclusive right of VR to operate rail passenger services is based on an agreement concluded with the Ministry of Transport and Communications in 2009. The agreement was made for ten years and it contains an option for a further five years. In July, the Government decided to execute the option and extended VR's exclusive right until the end of 2024.
In the same connection, the obligation of VR to provide services along a number of unprofitable routes was extended. Under the agreement, executing the option is only possible if VR commits itself to major rolling stock investments. Services purchased by Helsinki Region Transport (HSL) account for about half of all commuter traffic. The agreement between VR and HSL will remain in force until the end of 2017. HSL has announced that the next agreement will be on the basis of competitive tendering, so the tendered services would start at the beginning of 2018. The details of the tendering arrangements have not yet been finalised.
The outlook for VR Transpoint is closely connected with the growth prospects of Finnish industries and thus also the demand for rail services. Economic growth outside Finland (especially in Russia) is also an important factor.
The rail network and its state determine the operating environment for rail services
Finland's rail network is the responsibility of its owner, the Finnish Transport Agency, which receives its funding from the state budget. During the past two years, there has been an increase in the appropriations for track construction and maintenance, which is more than welcome from VR's perspective. Higher volumes of track and improvements in speeds and punctuality are only possible if the rail network is in good shape.
The Finnish Transport Agency is also the biggest customer of VR Track. The appropriations of the Finnish Transport Agency determine the volume of track construction and maintenance and the volume of the engineering markets.