International Conference on Traffic and Transport Engineering - Belgrade, November 29-30, 2012 399 DYNAMICS OF RAILWAY MARKET OPENING – CHOICE OF A POLICY Branislav Bošković 1 , Mirjana Bugarinović 2 , Olivera Medar 3 1 Directorate for Railways, Nemanjina 6, Belgrade, Serbia 2, 3 University of Belgrade, Faculty of Transport and Traffic Engineering, Vojvode Stepe 305, Belgrade, Serbia Abstract: Opening of the railway market has no alternative for all European countries. Before the very opening of the market, it is necessary to take a number of independent and difficult decisions, namely, to find solutions with unpredictable results as far as dynamics and final models of realization of these solutions are concerned. The duration of the period preceding the beginning of activities on the opening of the market depends on interest and possibility to create a climate for opening of the market. The opening of the market can also be realized in phases until a completely free market can be established. In different phases, access to the market can be restricted (for example, only for national and regional railway undertakings). In order to achieve effectiveness and avoid unnecessary costs, all the activities shall be synchronized. This requires a clear state policy regarding the dynamics of the market opening process. It is possible to define several different policies, taking into account the existing characteristics of the railway sector in a certain country. The paper presents different possible policies of the railway market opening in Serbia and use of the ANP approach for the choice of the most appropriate policy. Keywords: Policy, Railway market opening, Analytic Network Process, Serbia. 1. Introduction The member states of the precursors to the European Union (EU) opted for an open and free transport market in the whole area, for all transport modes and in all segments of the market, by the Treaty of Rome in 1957. Railway reforms, which have been lasting for more than two decades, enable gradual opening of the railway market which has always been monopolistically organized. Although the opening of the railway market in the EU is generally being realized as a gradual process, in certain countries there are several alternatives regarding the dynamics of its realization. The process of the market opening can be realized more or less slowly or rapidly. Perception of dynamics of this process depends on the moment of decision making and realization. Thus, perception of dynamics of the market opening was not the same in the 90s as today. Before the very opening of the market, it is necessary to make a number of independent and difficult decisions as a precondition of its liberalization. Many of the activities in this process take a lot of time and require more resources. Therefore, all the solutions, as well as decisions themselves, have a high proportion of uncertainty regarding their results, dynamics and final models. The most important decisions concern restructuring of the incumbent railway company, development of railway market institutions, subsidies and investment policy, railway infrastructure access charges, public service obligation, etc. Realization of each activity requires a certain time. Some of the activities are interdependent and, thus, they shall be coordinated. Therefore, target date and dynamics of the opening of the railway market shall be defined at the very beginning. Desired and realistic time limit for the opening of the market is essential for fixing time limits for all the necessary activities in this process. Besides the dilemma regarding ”faster” or ”slower” opening of the market, there is also a doubt whether it would be useful to introduce different phases with restricted access to the market. For example, according to the draft “Agreement on Establishment of a Transport Community in the Western Balkans” (Treaty, EU 2010), railway market of the Western Balkans countries (Croatia, Serbia, Bosnia and Herzegovina, Montenegro, Macedonia and Albania) shall be opened through three phases until a completely free market can be established: the first concerns opening of the internal market (only for railway undertakings of the concerned country), then, opening of the market at the regional level (only for railway undertakings from the region) and, finally, complete opening of the market according to the EU legislation. Time limits for the different phases have not been fixed. Each country shall define its own time limits. Complete liberalization of the market of a candidate country shall be realized, at the latest, on the day of the accession to the EU. What dynamics of market opening shall be adopted for a country in certain circumstances? Circumstances mean all important factors, such as economy requirements regarding quality of services and market, accounts and characteristics of railway infrastructure and railway undertaking, present and expected dynamics of restructuring process of the incumbent railway company, development of railway market institutions, subsidy and investment policy, dynamics of the EU integration process, projects of the other countries in the region for the future, etc. On the other hand, in most railway markets there is still a "non ideal competition" and railways are still considered as a social transport mode. Such point of view slows down restructuring process and opening of the market. This affects the level of charges, subsidies, type of competition, structure of the market, specificities of demand, compliance with the EU strategy for development of transport, etc. 1 Corresponding author: branislav.boskovic@raildir.gov.rs