The balancing act in rail capacity planning and allocation

The institutional setting

Passengers and freight customers are key drivers of demand, with their choices depending on factors such as price, travel time, frequency and service quality. Railway Undertakings (RUs) provide services in both the passenger and/or freight sectors, with incumbents enjoying established networks, whereas new entrants face considerable regulatory and financial obstacles and encounter substantial hindrances when competing against incumbents despite government support for them. Infrastructure Managers (IMs) oversee railway networks, plan and allocate train paths and manage the traffic, while maintaining the operational efficiency of their network and fulfilling broader macroeconomic goals; their independence is crucial for fair competition, although in many instances, they continue to maintain close organisational relationships with the established national operators for historical reasons. Governments play a central role in regulating railway markets by setting policies, providing financial support, and enforcing competition measures, although the extent of state intervention influencing the degree of market liberalisation varies across the continent. Regulatory bodies ensure fair competition by overseeing access to infrastructure, pricing policies, and resolving disputes. Effective regulatory frameworks are essential to ensure a fair and competitive market, as they help balance the pursuit of market efficiency with the protection of broader public interests, such as accessibility, consumer rights, and long-term sustainability. Without such frameworks, close ties to established operators may hinder innovation and limit opportunities for new entrants.

The European railway sector is mostly dominated by state-owned incumbents, and despite efforts to introduce competition, significant barriers persist due to regulatory and structural constraints. Competition in the railway sector takes different forms, either through open access, where multiple operators provide services on the same infrastructure, or through franchised competition, sometimes referred to as a public service obligation (PSO), where Public Authorities contracts are awarded to a single operator for a specified period. While open access is common in freight and on specific profitable passenger routes, the franchise and/or concession model is still the standard across Europe for services that are not commercially viable and therefore require public sector support.

The European Union has implemented policies to encourage a more competitive railway market by requiring the separation of infrastructure management from operations, the use of open access rights and by regulating PSOs through competitive tendering processes. However, the degrees of implementation and interpretation of these rules vary among member states, leading to notable differences in the level of market liberalisation.

A crucial element in railway market dynamics is the concept of train paths, the main product offered to the market for sale by the IMs. A train path is defined by where and when it runs, requiring precise coordination by the IMs, who impose charges on RUs for using these paths, with the pricing models varying across markets. Train paths are considered scarce economic resources on heavily used networks, and their allocation plays a fundamental role in the overall process. Railway capacity is constrained by physical infrastructure, signalling systems, and structural elements of the timetable, leading to competition for access in high-demand corridors. Unlike other transport industries, the inherent structural rigidity of the rail system can reduce the flexibility available for adjusting short-term service offers based on market demand. The allocation of paths may be limited to short-term provisions that offer flexibility but create uncertainty for new entrants, or at the other extreme through long-term framework agreements that provide stability but may hinder competition by limiting opportunities for market entry.

RUs generate value by enhancing service quality, improving operational efficiency (with optimised rolling-stock and staff utilisation) and expanding market reach, their ability to attract customers is largely dependent on timetable quality, pricing, reliability, and the overall service experience. IMs play a crucial role in optimising network development, capacity utilisation and maintenance tasks. Governments and Authorities support these through subsidies, regulatory frameworks, and funding, which ensure the long-term viability and sustainability of the railway sector at both national and European levels, aligning railway developments with broader economic and environmental objectives.

While increased competition could enhance service quality and lower prices, the limited number of market participants constrains liberalisation efforts. Economists often argue that competition is necessary but acknowledge the structural challenges involved in achieving it. At this point, the role of regulators is to ensure the transparency of the market for capacity, prevent monopolistic behaviour, and to foster fair competition which is essential in maintaining a balance between commercial efficiency and public interest.

The new EU Regulation and the TTR framework

A part of the new European regulations and the Timetable Redesign for Smart Capacity Management (TTR) framework specifically address these aspects and the balancing-act between public and private sector economics. They seek to meeting it by introducing new capacity deliverables such as the capacity strategy, capacity model and capacity supply in the medium-to short-term capacity planning, known together as the “Advance Planning” process. This approach should offer greater flexibility to applicants, allowing them to request capacity at points in time when the actual demand is known, reducing wasted capacity and enhancing the responsiveness of the IMs.

The rationale behind the new European framework lies in responding to market and customer needs. This focus on a reactive “customer response” approach driven by private sector needs may appear to collide with a state-led proactive “planning” approach. However, the two approaches are complementary during the tactical medium-term capacity planning process.

They aim to ensure that planned capacity footprints (the capacity models) are aligned with customer requirements. This structured approach should enhance capacity stability over time while maintaining flexibility. While the reactive approach attempts to accommodate all requested train paths according to the demand, it ensures that immediate market needs are addressed and fosters a demand-centric capacity allocation, the proactive approach involves strategic capacity planning to align the infrastructure needs with expected long-term demand and associated services. This proactive service-oriented logic should support the development of a competitive market. By structuring the provision of capacity in a strategic manner, it enhances efficiency and stimulates competition between market players. A well-managed capacity framework prevents market failures, ensures stable path availability, and creates opportunities for new entrants. Rather than distorting competition, it sets clear rules that promote fair play, prevent monopolistic dominance, and ultimately benefit consumers through better quality, pricing, and choices.

Within the logic of this concept, the European rail community is currently debating whether capacity models - incl. Temporary Capacity Restrictions (TCR’s) - should include timetables, be systematic, and to which extent these models should be legally binding. Despite the ongoing discussions, some IMs have already integrated systematic timetabling into their capacity planning process. While doing so represents a paradigm shift in terms of resources (manpower, systems, …) for the IMs who are not yet prepared, it is necessary to highlight the cornerstones of such capacity models (as deliverables).

Systematic timetables and flexibility

Systematic timetables, such as clock-face timetables, are operated in many places across Europe. Characterised by symmetrical services running with consistently structured intervals, they offer numerous advantages and challenges for the stakeholders in the rail ecosystem.

For the passengers, clock-face timetables provide predictability, readability and reliability, making it easier for travellers to plan their journeys. They improve connectivity between services in hubs and create a more user-friendly travel experience throughout the journey. For the RUs, these timetables simplify operational planning and facilitate clearer communication between stakeholders. For the IMs, regular service intervals optimise capacity utilisation and allows to target its development, improve coordination of maintenance activities, minimise bottlenecks and facilitate the management of operations.

Although strict adherence to fixed intervals makes it challenging to accommodate last-minute capacity requests, particularly for freight operators or irregular services, structuring a timetable in a regular, coordinated manner helps optimise capacity and avoid inefficiencies. The capacity gained through this approach can then be allocated to ad-hoc services which are requested at short-notice. For example, organising a station-hub with arrivals spaced at fixed intervals creates room for additional services at the times when the trains are not concentrated together. For freight transport, a “conveyor-belt-like” system with systematic freight paths (fewer during peak hours and more frequent or faster during off-peak hours) facilitates both planning and the real-time operations, such as accommodating delayed trains.

Taking Switzerland as an example, such clock-face commercial timetables are the last stage in an institutional and iterative process in which the functional requirements of the infrastructure at each stage are derived from a service-based network strategy where the timetable is not the goal, but rather a means to an end as part of rolling-planning over decades. Following this principle, infrastructure, equipment and rolling stock requirements are then obtained from a consistent capacity usage concept (a systematic timetable) evolving over time. Not generating these requirements from the need would be detrimental to the overall capacity of the system and a potential waste of public funding for both the infrastructure financing and optimisation of the operations. Such early planning mechanisms, ensure that infrastructure managers have better forecasts of the long-term capacity needs and allows better coordination with stakeholders, reducing last-minute conflicts and ensuring a stable basis for the financing of the rail network and operations.

Having said that, flexibility remains a critical component in capacity planning. The dynamic nature of rail transport demand necessitates adaptable processes that can respond to irregular needs, such as seasonal, weekly or even daily trends in both passenger and perhaps more importantly in the freight business which often requires dynamic timetabling due to extremely variable shipment demands. In view of this, advanced and systematic capacity planning helps to meet market needs, independently of the future operator who will order and/or be allocated the paths. This enables the reconciliation of the objectives of capacity optimisation and the neutral and objective allocation of paths, which ultimately results in the industrialisation of the process.

The appropriate level of precision for the stakeholder management

Effective coordination among IMs, RUs, Authorities, and Regulatory bodies is crucial to ensuring a fair and balanced railway system that serves all the stakeholders of the railway system. However, for obvious reasons, in competitive frameworks RUs cannot easily be fully involved in this coordination and are thus encouraged to participate by submitting their Capacity Needs Announcements (CNAs), which provide information on their anticipated capacity requirements to help shape the capacity models developments.

Early coordination and ongoing consultations ensure balanced stakeholder engagement, but they are costly and require significant human resources as well as strong governance frameworks. While these coordination processes are necessary, it is also important to be able to rely on smart and efficient IT-systems to improve timetabling workflows and ensure transparency, continuity and consistency in the planning process.

Stakeholder management requires objective information for the decision-making process. At this stage, socio-economic assessments provide a structured approach to make the difficult trade-offs at the strategic level (i.e. making long-term public investments). While the challenges of quantifying benefits remain, considering that the methodology must be transparent and widely accepted by all stakeholders, such cost-benefit assessments (CBAs) on capital investment projects should not be confused with those potentially used to arbitrate decisions in the capacity allocation process. Such CBA methods are currently being discussed within the rail community in the framework of the new EU regulation. While such methods could be meaningful in some very specific planning cases, they probably overlook the fundamental capacity interactions between train paths when taking a network-wide view. Instead, it would be more appropriate to compare contrasting capacity plans based on overall capacity distribution, rather than evaluating train paths individually.

Based on this concept, the capacity plans (i.e. essentially timetables) must be simple and manageable. The planning process should be agile for both the strategic and tactical levels in terms of its clarity and abstraction of the actual railway system. In view of this, neither the use of aggregated and detailed data, nor macro- and microscopic models are mutually exclusive. Rather, they should be used in a complementary approach with problems always addressed using the appropriate precision, i.e. one that is sufficiently abstract for the purpose of fast and efficient comprehensive planning across large networks, while at the same time providing sufficient accuracy for operational feasibility assessments.

However, the choice of the level of precision is always going to have to be able to handle the continuous variability of the assumptions used and requests made at different times during the process, and the system must cope with changes throughout the capacity planning process as the level of known detail increases. Indeed, from high-level policy changes by the Authorities (such as those due to a change of government) through to short-term speed restrictions imposed on a section due to maintenance reasons, the models and systems chosen to work with at these points should allow the users to modify what is relevant quickly, efficiently but with sufficient precision.

Conclusions

Balancing the economic needs of the public and private sectors in railway capacity planning and allocation is essential to meet the requirements of the stakeholders of the system. The TTR initiative and new EU regulations aim to enhance medium-term capacity planning through structured deliverables such as capacity models, aligning medium-term and short-term needs, which means leaving a “manufacturing” mindset behind and embarking on a real “industrialisation” of the capacity production process. To achieve this, systematic timetables offer numerous advantages in the planning and operations processes, but the diverging and often contradictory requirements from freight RUs seeking short-term flexibility, passenger RUs seeking long-term stability and fluctuating demand for TCRs must be balanced. Effective coordination among stakeholders, supported by smart IT systems and the appropriate precision in timetabling and performance assessments, will ensure such transparent and efficient capacity planning.