The move to liberalising the Spanish railway sector has made gradual progress in recent years as a result of the railway packages approved by the European Union (EU) and their transposition into Spanish legislation.

As a result, the sector has slowly been opened up to competition, beginning with railway freight transport and international passenger services; finally, as a result of the fourth railway package passed in 2016, 14 December 2020 has been set as the date for the liberalisation of passenger rail transport. From then on, the exclusive rights held by incumbent railway operator (Renfe-Operadora) will be removed and a limited number of railway undertakings will be able to enter the market and operate services on a free competition basis.

 A proposal is currently being tabled to modify the 2019 Network Prospectus (Declaración sobre la Red), a that document is key to the upcoming liberalisation of passenger rail transport services in Spain. On 25 June 2019, Spain's markets and competition regulator, the Comisión Nacional de los Mercados y de la Competencia (CNMC) approved an Agreement in which it issued a Report on the proposals made by Adif and Adif Alta Velocidad (Adif-AV) regarding the modification of the 2019 Network Prospectus, raising a number of considerations that the infrastructure manager should take into account with a view to the definitive approval of the Network Prospectus.

The process of liberalising the railway sector

The first railway package was approved in 2001. It was composed of four Directives and kicked off the process of opening up railway freight to competition and established provisions to regulate the award of railway licences to undertakings and operators wishing to enter the market.

The second railway package was approved in 2004, which established the European Railway Agency and set out the safety and interoperability rules necessary to open up the international railway market to competition.

In 2007, the third railway package was approved, which liberalised international passenger transport, regulated public passenger transport services by rail and by road, and established passengers' rights and obligations.

On 30 January 2013, the European Commission approved a Communication titled "The fourth railway package – completing the single European railway area to foster European competitiveness and growth". As a result of that document, in 2016 the EU approved as a set of Directives and Regulations that make up the legal substance of the fourth railway package, which will substantially modify Spain's current railway legislation, particularly aimed at the liberalisation of passenger rail transport from 14 December 2020.

One further highlight of the raft of new provisions is that from 25 December 2023 onwards, it will no longer be possible to directly allocate contracts involving public service obligations (especially short-haul services), this notwithstanding a number of exceptions and the possibility of pushing that date back to 2033.

Access to the high-speed railway network: allocating capacity

The key to opening up high-speed passenger railway services to competition revolves around the infrastructure manager (ie, Administrador de Infraestructuras (Adif) and Adif-Alta Velocidad (Adif-AV)) allocating capacity to the infrastructure.

The process involves the infrastructure managers allocating time slots, which are defined in the Network Prospectus, to candidates that have submitted offers. As a result, a specific train will be able to run between two points for a specific period of time.

The initial deadline established in the Network Prospectus to submit applications to operate passenger railway services was 31 July 2019. However, given the enormous interest among candidates currently negotiating alliances and consortiums to compete in the high-speed passenger transport market, that deadline has been pushed back to 31 October 2019.The infrastructure manager (Adif-AV) has designed a capacity offer on the basis of three corridors: 1) Madrid-Barcelona; 2) Madrid-Levante (Valencia and Alicante); and 3) Madrid-Southern Spain (Seville and Malaga). In turn, each corridor has been divided into three packages (A, B and C) on the basis of the number of daily services established for each one.

The framework capacity packages proposed by Adif-AV match three different profiles of railway operator: 1) Package A reflects a capacity similar to the services currently being offered by Renfe and is aimed at the continuity of the railway offering when the market is finally opened up to competition; 2) Package B is national in scope and enables railway undertakings to compete on the basis of a number of different variables, specifically frequency, with the aim of attracting customers in the business segment and; 3) Package C, aimed a smaller-scale operators.

Railway undertakings may apply for framework capacity according to their business plan, without being bound by the structure and capacity proposed in the Network Prospectus; however, if their applications exceed available capacity, Adif-AV will be able to apply the priority criteria established by the Network Prospectus.

If the offered capacity is exceeded, the Network Prospectus establishes that framework capacity for those packages will be allocated to the operator that undertakes to use each package's slots most intensively over a period of 10 years. The infrastructure manager is also able not to award framework capacity when the applications submitted by railway undertakings do not reach 65% of the capacity offered in the Network Prospectus.

On 25 June 2019, the CNMC issued its Report on the modification of the 2019 Network Prospectus in respect of ADIF and ADIF-AV, which gave its backing to the Network Prospectus submitted by the infrastructure manager, albeit proposing that the framework agreement for Package A be limited to 5 years (renewable) with the aim of ensuring a progressive liberalisation of the market.

Once framework agreements have been allocated to operators that have submitted applications for capacity, Adif-AV must notify the CNMC of the agreements for the latter's approval (article 38.6 of the Spanish Railway Sector Law (Ley del Sector Ferroviario, or LSF) and article 13.3 of Order FOM/897/2005, of 7 April).

Finally, in its report of 25 June 2019, the CNMC points out to the infrastructure manager two key factors in the process for liberalising passenger rail services:

  • Firstly: access by new railway operators to maintenance facilities and rolling stock might prove to be a significant barrier to entry for new operators. As such, on the one hand, railway undertakings must be able to request access to maintenance facilities and receive a response from the operator of the facility. On the other, the Sixteenth Additional Provision of the LSF, amended by Royal Decree-Law 23/2018, imposes an obligation on Renfe-Mantenimiento y Fabricación and Renfe-Alquiler to render services to third parties on a transparent, objective and non-discriminatory basis, which will be essential to enable railway undertakings to make their applications for capacity.
  • Secondly, the CNMC warns that the system of railway charges, "and the amount and evolution thereof are aspects that have not yet been suitably covered by regulations, which generates a significant risk for railway undertakings". Railway charges represent approximately 40% of a railway operator's costs, and the CNMC has therefore called for those charges to be predictable and reasonable so as not to become an excessive burden for new railway undertakings during the liberalisation process.