From Liberalisation to Appropriation: The Trajectory of Italian Railways

Saturday, 4 July 2015: 10:15 AM-11:45 AM
TW1.3.03 (Tower One)
Angelo Salento, University of Salento, Lecce, Italy
Giuseppe Pesare, University of Salento, Lecce, Italy
In the present time, the process of marketisation of society (Polanyi 1944) is not simply the transition towards a regulatory regime based on competition. It is, instead, a neo-liberal process, marked by the transformation of income and profit into rent, the diffusion of value extraction (rather than value production), the spread of financial accumulation. Rather than marketisation, it could be named a process of capitalisation of society and institutions.

Relying on budgetary data, ministerial reports, and interviews with railways officials, in this paper we show that the history of Italian railways in the neo-liberal twenty-five years (1990-2015) is a very clear example of the process of appropriation of public goods and corrosion of social citizenship.

As well as in other countries, in Italy railways may be considered a common good, as well as an essential sector of the foundational economy. Nationalised in early twentieth century, railways have played an essential role in the construction of an Italian identity. Encouraging mobility and migration, train transportation has contributed to unify and transform the Italian society, to change lifestyle and the organization of the territory.

In the last three decades, however, in Italy as in the rest of Europe, the idea has spread that the relationship between State and society should be mediated by the market, meaning both an organizational domain, and a set of principles and rules of action. Justified by the need to avoid inefficiencies, the privatisation of railways began with the enactment of Directive 91/440/EEC (implemented in Italy in 1999), which established the principle of railway liberalisation. Since then, the Italian State Railways (Ferrovie dello Stato), by far the main Italian rail company, previously embedded in the State apparatus, has become a joint stock company with total State participation. In 2000 Ferrovie dello Stato has been transformed into a holding company (FSI – Ferrovie dello Stato Italiane) that controls two entirely new companies (in addition to a number of extra companies): Trenitalia (the provider of transports) and Rete Ferroviaria Italiana (owner of the infrastructure). The separation between the operator of the network and the one that provides the transport service – required by Directive no. 440 – is therefore essentially fictitious. In the twenty-first century, three further bundles of EU directives have completed the liberalisation.

The process of railway liberalisation has been commented positively in the Italian debate: even the rail sector – it’s argued – could become more efficient by promoting competition. In fact, however, the privatisation has not increased competition. The rail sector is dominated by a giant player, entirely held by the State (with all the conflicts of interest that this entails), which controls both transportation service and the infrastructure. It should be added that the rail transport market has high barriers to entry (Cambini, 2009; Sebastiani, 2013) and, more generally, the specific characteristics tipically preventing the spread of competition (Beria, Ponti, 2009; Fantigrossi, 2010). In this chronical lack of competition, serious inefficiencies have been repeatedly reported – such as delays, poor cleaning of trains, inadequate maintenance – as well as a crony management of contracts (Gatti, 2009).

We will show that privatisation was not simply a process of growth of efficiency: it was a process of appropriation of an economic sector, driven by a policy of maximizing profitability.

Between 2006 and 2013 financial results of the Group changed drastically: EBITDA rose from -650 to 2,030 MEUR; net income from -2,115 to 460 MEUR. Workers and users bear the cost of this increased profitability. The employees of the entire Group decreased from 120,000 in 1998 to 98,000 in 2006, to 70,000 in 2013. Many activities have been outsourced: cleaning and maintenance of trains, research and development, ICT.

The remuneration of the rail transport service has been completely revised. For regional transportation, now each of the Italian Regions must “buy” the service from Trenitalia (as if there was a market for rail transport services). As for the long-haul transport, the less profitable services (reduced by 38% between 2006 and 2013) are funded by the State (and the State also funds the maintenance and innovation of the network); the most profitable (increased by 20% over the same period) are paid by travellers at “market” price.

The train service has been overall reduced. The number of passengers/km fell by 19% between 2006 and 2013, and regional travelling has become increasingly difficult (Legambiente 2014); nevertheless, revenues from passenger traffic between 2006 and 2012 increased by 14% (Ministero delle Infrastrutture e dei Trasporti, 2014), a result mainly due to the increase of tariffs and to the pricing policies for “free market” services. Even clearer was the reduction of freight (an effectively competitive sector), in which the number of trains/km has been reduced by over 50% between 2006 and 2012.

During the same period, the overall number of Trenitalia’s rolling stock shrank by about 38%. Many areas of the Italian territory, especially the inland areas, have been completely deprived of rail transport.

Today, freedom of movement of citizens, sanctioned by the Italian Constitution, may be exercised only at their own expenses. Correspondingly, Trenitalia has been turned into an extraordinarily profitable company, ready to be sold by the Treasury to private investors – as announced by the CEO Michele Elia – within the first half of 2016. Thus, a common good will be eventually transformed into private capital; and Italian citizens will keep the costs of an increasingly poor service.

In conclusion, we will illustrate some initiatives of self-defense of society, focusing in particular on the movements of commuters and cyclist-users, claiming decent services at affordable rates; and on the experiments of recovery of disused railways. We will argue that, in the railway sector, unlike other sectors of the foundational economy, a social license can hardly be defined at local or regional level. In an industry dominated by a monopoly operator, the right to mobility must be defended on a national scale.