Transports: potential for growth, need for regulation

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The transport industry in Italy has become increasingly exposed to competition as a result of privatizations and liberalizations carried out over the last quarter of century, from airliners to airports up to high speed railways. True competition between privately and government owned operators requires rules. After almost twenty years of announcements and debates Italy eventually decided to be equipped with an independent industry regulator – the Autorità di regolazione dei Trasporti that will start its activity in December 2013 with an initial workforce of 40-50 people. The new body is chaired by Andrea Camanzi, a manager with a long career in regulatory and government affairs spent in international companies, such as Telecom Italia.

The new Authority will be headquartered in Turin for both economic and symbolic reasons: the Northwestern city is hometown of automaker Fiat, but the region boast the presence of important rail production facilities of France’s Alstom, while Piedmont is the core of two main railroad projects being developed: the high speed connection between Turin and Lyon and the new railway which will connect the port city of Genoa to Central and Northern Europe, aka Terzo Valico in Italy.

Railways operators welcomed the new body, Ferrovie dello Stato boss Moretti called it «a guarantee for all the market players” while private high speed group NTV predicted it will ensure the improvements expected as the result of the competition. The new Authority will oversee all the industries of the transportation business at national, local and urban level. It will set criteria for tariff and paytoll setting while also define the framework for licensing the transportation services at local level.

The Italian transportation system of industries and infrastructure has to deal with several critical issues deeply rooted which the Authority should face and solve in order to protect customers and revamp the businesses more transport-dependable, such as tourism. There is the airports issue, whose number in Italy is twice that of France but most of them poorly trafficked. And there is the highway issue, a natural monopoly which Italy licensed to a private operator which year over year enjoys the permission for a tariff increase, independently from the traffic or the investments.

And there is the railways system. Despite the huge capital spending made into high speed trains, Italy has now less passengers per kilometer than it had in 1997. The high speed is doing well, but the remaining of the network infrastructure is lagging behind. Having an Authority would have been helpful in the past as high, non-regulated tariffs on the regular speed trains discouraged passengers.

Last but not certainly least there is the local public transportation, which in Italy is among the most backward across Europe: each town or city sets its own tariff in the total lack of competition as almost all services are run by companies owned by local governments or subsidized by governments. Which means high costs, poor revenues and excessive reliance on public subsidies. But the economics of this particular industry are huge: 1.8 billion kilometres run each year with 5.3 billion passenger and more than 100,000 employees who operate 45,000 vehicles with a total turnover of some 7 billion euros. It equates the sales of Ferrovie dello Stato which move indeed just one tenth of passengers. Out of 1,238 local transport companies 87% are in private hands, while the remaining 13% is government owned, but the latter component covers 68% of the national market in term of kilometers run. As in fact the entire industry is dependable upon public money, the Italian system is somewhat 20% less efficient compared to north Europe best practices.

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