Transport

Rail

As competition in the rail industry has increased in many countries, NERA has played a leading role in helping rail industry organizations address a wide range of rail industry issues, including industry structure and reform, competition policy, regulation, pricing, cost and revenue modeling, demand forecasting, and appraisal methodologies. We have a deep understanding of the rail industry, and have made significant contributions to key developments such as industry restructuring, franchising and contracting, and the principles and practice of track access charging.

NERA's extensive experience covers the following areas:

• Access charging. NERA is a leading adviser on access charging and has carried out a number of important studies, including a major European Commission study on the principles of charging. We provide clear, robust analysis on issues such as promoting the efficient use of the network, the impact on demand, how charges affect competition between operators, and the likely impact in practice of proposed new incentives.
• Industry structures. NERA provides authoritative advice on the advantages and disadvantages of different industry structures, including vertical and horizontal separation. We have advised extensively on the impacts of restructuring and the introduction of competition on cost and revenue efficiency.
• Franchising and contracting. NERA is ideally placed to support governments, regulators, and regulated firms in relation to contracting and franchise design. We provide advice on franchising issues such as the overall structure of franchises, revenue risk-sharing, performance incentives and compensation, and franchise length.
• Price cap review. We are renowned for our expertise in supporting regulated firms, regulators, and other stakeholders through price cap reviews. Our exceptional knowledge and experience allows us to provide clear, robust advice on issues including measuring the regulatory asset base, the cost of capital, efficiency benchmarking, and financial sustainability.
• Competition. NERA advises extensively on competition issues. We advise train operators during merger investigations, assist regulators on the identification of excessive fares or abuse of market power, and provide advice during market investigations. We also advise on competition within rail markets, for example on proposed mechanisms for managing “on rail” competition between train operators.
• Due diligence studies. NERA provides commercial and regulatory due diligence advice to investors in the rail industry. We advise on potential market or competitive developments, and their implications for the firm(s) being sold. Where parts of the industry are subject to economic regulation, we explain how the current regulatory framework operates, highlighting the risks arising and protections provided, and consider potential future developments.
• Public policy and appraisal. NERA advises on many aspects of project and policy appraisal in the rail industry. We have contributed heavily to the development of central government appraisal and evaluation guidelines. Our experts have conducted a large number of major appraisals for both public and private sector clients, including important impact assessments and cost-benefit analyses.
• Modeling and forecasting. NERA is renowned for its expertise in the application of econometric and quantitative techniques to real-world problems. We have carried out detailed econometric forecasting work on rail passenger demand, and have undertaken important work in analyzing rail freight demand.