30 years of tendering regional rail services in Germany – A data-based analysis of long-term effects and the impact of network characteristics on competition

Competitive tendering has been a key pillar of the European railway reforms since the 1990s. As outlined in EC 1370/2007, these reforms aim to reduce subsidies and enhance competition in public transport. Germany adopted this policy early through its regionalisation reform in 1996. In view of the looming 30-year anniversary of competitive tendering of regional rail services in Germany, this paper reviews and assesses the long-term effects of intramodal competition. By analysing market development over this period in conjunction with the topology of the tendered service networks, we aim to derive best practices for public transport authorities to foster competition. Empirical evidence is provided based on a newly established comprehensive dataset covering tendering procedures in the German regional rail market between 1998 and 2028. The results confirm that the introduction of competitive tendering initially led to a reduction of subsidies, in line with increasing competition. Cost increases exceeding general inflation are observed since 2020 in combination with changes in the structure of market players as signs of a consolidation phase. While the aggregate market share of competitors has stabilised at around 45%, a cluster analysis of service network topologies reveals differences in the degree of competition. Competition is strongest in networks of medium complexity with a market share of 63.5%, whereas most complex networks remain dominated by the incumbent. A panel regression indicates a significant relationship between the share of selected clusters and subsidy development pointing against simple single-line networks that are most widespread, raising questions regarding operational flexibility and long-term efficiency.