Conference on railroad industry structure, competition and investment

1. Conference on railroad industry structure, competition and investment APTA ANNUAL CONFERENCEOCTOBER 1ST 2003COMPETITIVE CONTRACTINGbyAntoine HURELChairman & PresidentCONNEX North America Toulouse, 7 & 8 /11/2003 Contribution of Connex François PETER

2. Connex Some key facts and figures • Connex is the first private european operator of passenger public transport. • Connex has presence in 22 countries around the world. • Connex serves 1.4 billion passengers / year and employs 55 000 people. • Its turnover 2002 amounted 3.4 billion euros, of which 60% are performed in rail operations.

3. Connex : Rail operations (a) Starting in 2004

4. The model for our rail operations : Delegated Management • Delegated Management of Public Service is a variety of Public-Private Partnership between a Public Authority, in charge of transport policy and an Operator, responsible for the provision of the service. • Delegated Management consists, for a Public Authority, to entrust an Operator, by means of a contract, with the management of a line or a network. The contract is awarded by a tendering process and has a limited duration.

5. Delegated Management : Investments • Infrastructure : Our view is that the property of the infrastructure should be in public hands, either the Public Authority or a third party. We believe it useful that the current maintenance be performed by the Operator, but the renewals and big repairs should be performed by the public owner or subcontracted by it. • Rolling stock : can be provided by the Public Authority, if it wishes, or by the Operator ; in that case, the duration of the contract has to be adapted to the lifetime of the rolling stock. • Other equipments (e.g. ticketing) : cf. rolling stock.

6. Delegated Management : Financing Apart some special cases or activities (e.g. long distance, touristic), rail operations are usually financed by a mix of : • Fares paid by the passengers. • Subsidies allocated by the Public Authority. The amount of that public money, and the way it is allocated, is one of the key issues of delegated management.

7. Delegated Management :Risk sharing The two main risks are the industrial risk (on costs of the service) and the commercial risk (on revenues coming from passengers). • Our view is that, in any case, the operator should take the industrial risk. • On the commercial risk, the commitment of the operator is strongly dependent on the exhaustiveness and quality of the information on the existing operation (when applicable).

8. Delegated Management :Personnel issues • Our view is that, before the tender process starts, the conditions of a transfer of the personnel must be clearly precised. Usually, the new operator has to take the existing staff over. • The same applies at the end of the contract. • During the contract, the operator must have full responsibility on the personnel.

9. APTA ANNUAL CONFERENCEOCTOBER 1ST 2003COMPETITIVE CONTRACTINGbyAntoine HURELChairman & PresidentCONNEX North America Thank you for your attention