photo: trainphotographyde / Flickr/Czech Railways train; illustrative photo
Czech Railways is about to undergo the most significant transformation in its history, with a series of unprecedented reforms set to shake up the market. A massive EUR 3.9 billion tender is just the beginning—competition is about to redefine the future of train travel in the Czech Republic.
End of Monopolies, Beginning of Liberalization
Due to the adoption of new EU legislation, member states are undergoing reforms in domestic rail passenger transport. December 2023 marked the final date for direct public procurement, and now, market competition is required. While the Czech Republic shares this challenge with other European nations, it benefits from a favorable starting position. The country has experience with both types of liberalization—commercial Open Access and competitive bidding processes.
Before these liberalization reforms, the standard method for public rail procurement was direct assignment. The state or regions would directly offer a contract to one operator for a specific area. In the Czech Republic, this was typically České dráhy (Czech Railways), while Slovakia's counterpart was ZSSK. This method favored national rail companies, fostering monopolies. However, these direct assignments ended in 2023, with new EU regulations requiring open bidding for rail services. The bidding process allows any railway company that meets the criteria to compete for contracts.
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EU Rail Reform: Towards an Efficient and Unified Market
Liberalization in rail transport has been a key EU agenda since the 1990s, with the aim of revitalizing railways that had declined after World War II. This decline was attributed to inefficiencies within state-run monopolies and the shift in demand for road and air transport.
The EU aims to create a single European rail area, which will be an integrated, efficient, and competitive network across member states. A cornerstone of this initiative is opening up rail markets to competition, according to the European Union Council. The goal is to enhance economic competition, promote rail over other modes of transport, and improve service quality. Freight transport and international passenger rail services have already been liberalized since 2004 and 2007, with the domestic passenger market being the final area to be addressed.
European Legislation: The Fourth Package Opens the Market
The opening of domestic rail markets began with the adoption of the Fourth Railway Package in 2016 by the European Parliament and the Council of the European Union. As a result, EU member states must now reform their domestic rail passenger transport systems, according to the European Commission. Since the end of 2020, Open Access has been allowed, where multiple companies operate services on commercial terms without state subsidies. A notable example in the Czech Republic is the Prague-Ostrava route, where three commercial operators—České dráhy, RegioJet, and Leo Express—compete for market share.
The second form of liberalization, competitive tenders, came into effect in December 2023. In this model, operators compete by offering the lowest compensation for providing services. The winning bidder becomes the sole operator on a particular route. Although this model maintains a monopoly on each route, it ensures the most efficient operator is selected.
Member states had the option to directly award public contracts until the end of 2023, but European legislation now prohibits this after that date. Countries that did not take advantage of this opportunity must now open their domestic markets to competition. A good example of a competitive tender is the R9 Prague-Havlíčkův Brod-Jihlava/Brno route, which was awarded last year to ensure better service for Jihlava, as reported by České noviny. The winning operator, RegioJet, will begin service on this route in 2026. Previously, a mixed model was in place, with the commercial RegioJet directly competing with the state-subsidized České dráhy.
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Record Tenders in the Works for Czech Regions
Planned tenders in the Czech Republic will mostly last for 15 years, although some will be shorter. The longest planned tender will be a 30-year contract between Prague and the Central Bohemian region, with operations set to begin in 2029. This long-term contract is necessary due to billions in investments in new rolling stock, including high-capacity electric units for up to 400 passengers, as the Prague Integrated Transport portal reports.
In the coming years, tenders will take place in at least four regions, including Prague, Central Bohemia, Liberec, and Ústí nad Labem. Other regions, like South Moravia, Plzeň, and Moravia-Silesia, have already secured contracts until the 2030s. Some regions that used direct assignments before 2023 will prepare tenders once current contracts expire.
What Will Liberalization Bring?
Liberalization will bring significant benefits for both passengers and the state. Market competition will result in improved service quality, more diverse connections, and potential reductions in ticket prices. Furthermore, competitive tenders can reduce tax burdens on public budgets, as the most efficient operators are selected. Liberalization also brings modernization of rolling stock, ensuring more comfortable, higher-capacity, and eco-friendly services.
This change could mark a major step forward in the modernization of the Czech and European rail systems. In the coming years, it will be clear how the opening of the market will bring new innovations and improvements, benefiting both passengers and public budgets.