First rail tendering in Finland

HSL (Helsinki Region Transport Authority) will start the opening
of Finnish passenger rail market by tendering the contract for local
trains starting 2018.

Although the incumbent VR (Finnish State Railways) still has a
monopoly position in Finland, the conditions for a successful first
tendering exist. Finland has separated the rail network manager
and the railway operator already in 1995, and the rolling stock
company JKOY was founded in 2004 to provide the new trains
for tendered services. HSL is the competent authority within the
Helsinki capital region, and it has the opportunity to open
tendering after the current direct award contract with VR ends.
HSL is a regional authority responsible for a multi-modal integrated
public transport system. The local trains carry 55 million passengers
over 6 million train kilometers annually. The trains provide about
20 % of the transport services on offer, combining with buses,
metro, trams and ferry service to form a high-quality system. The
Helsinki region will continue the strategic development of all
rail-based modes.

In 2015 a new loop link will connect the Helsinki international
airport with the local rail network. Future projects include a
western extension of the urban double track line and the
ambitious tunnel loop under the Helsinki City center called “The
Raindrop”. The project would relieve the rail congestion at the
approach to the Helsinki main terminus and improve passenger
access to the core city and interchanges to other modes with
three new stations. Due to the scale and complexity, The Raindrop
is tentatively scheduled to open 2024.

The continuing improvement of the transport system requires
efficient, reliable and flexible local train operations. HSL wants to
establish a partnership with a rail operator focused on the specific
needs and conditions of the urban rail services, capable of maintaining
high quality and growth of ridership. The operator will get
to use a modern EMU fleet, as at least 54 FLIRT trains will be
delivered by Stadler before the start of the new contract. First
trains of that series have been used since 2010 and received
positive feedback from passengers and operating staff. HSL is
leasing the new trains from the rolling stock company and
assigning them to the contracted operator, who should also take
responsibility for train maintenance.

The preparations for tendering are ongoing, including at this
stage dialogue with potential operators, other tendering authorities
in Europe and various experts in the field. The Finnish
government authorities at the network manager LiVi, railway
safety agency Trafi and the independent rail market regulator
are committed to promoting fair and transparent conditions for
market access, which is a requirement for HSL to achieve a
successful tendering result.

The final decision to start the procurement process will be made
at the start of 2015, followed by a two-stage tendering procedure
and decision on the winner to be made before the end of
2016. The transitional period for the new contract should then
be long enough to allow the operations to begin either in
January or in June 2018. The challenging winter conditions in
Finland would make starting in the summertime a safer option.
The new contract will be gross cost based with significant quality
incentives. As the level of service offer, timetable structure and
rolling stock will be pre-determined by the authority, the operator
can focus on the delivery of reliable and punctual services
with well-maintained clean trains to achieve a high customer
satisfaction and growing ridership. In a highly integrated multimodal
transport system, where the ticketing and fares are
completely controlled by HSL, the operator could not assume
the full responsibility needed for a net cost or concession-type
contract.

The contract period would likely be 10 years, including flexible
options to manage the network changes, and depend on the
fulfillment of quality targets promised by the winning bidder.
The train contract could also include a bundle of integrated
feeder bus lines, if this is found to be an attractive option for the
potential operators.

The future of rail competition in Finland is still undecided, and
the results of the first tendering will be crucial for the policymakers.
Open access to the Finnish rail network for passenger services is
effectively blocked until 2024 with an exclusive rights contract
granted to VR by the Ministry of Transport, but it does not cover
subsidized PSO services organized by competent authorities.
While the HSL local trains contract is by far the biggest rail
service contract in Finland, there are possibilities for future
tendering in regional train services for the wider commuting area
around Helsinki and potential new regional services around
Tampere. There are also planned light rail projects in Helsinki,
Tampere and Turku, where different models of tendered
contracts will be considered.

HSL will keep looking for useful new contacts, tendering expertise
and dialogue with potential bidders until the end of 2014.
Anyone interested in the rail tendering in Finland is welcome to
visit us or contact the writer directly.

For more information: Kimmo Sinisalo,
Contract manager services Helsinki Regional Transport
Authority HSL.