Opening up PSO rail services in France to competition: opportunities and challenges for SNCF Voyageurs

This opinion piece explains the ongoing liberalization of France’s regional rail services, where approximately 60% of train-kilometers are now subject to competitive tendering. While SNCF Voyageurs has secured a majority of awarded contracts thus far, the decentralized approach and influx of new operators are driving significant changes, requiring SNCF to adapt and innovate to maintain its competitive edge.

Opening up public service obligation (PSO) services in France to competition represents a significant evolving transformation, marked by both opportunities and challenges. This process of liberalisation, which was initiated in 2019, has gradually reshaped the landscape of regional rail services. As of today, approximately 60% of train-kilometres are being tendered, showing the growing reality of competitive dynamics in this sector. To date, five rail service contracts have been awarded, with SNCF Voyageurs securing three of them accounting for 80% of the train-kilometres awarded, emphasising SNCF Voyageurs’ continued success despite rising competition.

Among these factors were the allotment of public services, the efficiency and practicality of contract sizes, the optimal organisation of timetables, the strategic distribution of resources and other considerations drawn from European experiences in similar contexts. By benchmarking against established practices in other countries, the document aimed to provide a roadmap to ensure smooth and effective competition.

One of the most notable aspects of this transition is the principle of progressiveness. Unlike a uniform nationwide strategy, each French region retains the autonomy to manage its own tendering process for regional rail services. This decentralised approach has led to significant variations in contract sizes and organisational strategies. On average, contracts range between 4 million and 6 million train-kilometres. However, exceptions abound, with smaller contracts tailored to specific dedicated lines – such as Marseille-Nice and Nancy-Contrexeville – and larger contracts that exceed 10 million train-kilometres.

For SNCF Voyageurs, the historical operator in the French rail market, this liberalisation represents nothing short of a revolution. The company faces the dual challenge of adapting to the simultaneous initiation of multiple tendering procedures – 10 of which are currently underway – while implementing significant internal changes to respond to escalating competitive pressure. Unlike many of its competitors, SNCF Voyageurs has chosen a bold strategy of responding to every tender, a decision that underscores its determination to maintain a leading position in this evolving market.

The legislative framework underpinning this liberalisation is rooted in the New Rail Pact, which transposed the 4th European Railway Package into French law. This framework lays out the modalities for opening up competition while ensuring fair and equitable conditions for all participants. Key provisions include the transfer of assets – such as rolling stock and workshops – and employees to new operators. Specifically:

• Employees directly involved in the operation and continuity of the public service are transferred to the new operator awarded the public service contract.
• Assets, primarily consisting of rolling stock and workshops, are transferred upstream to the organising authority, which then makes them available to the selected operator.
• This regulatory clarity has attracted interest from a wide range of operators, both domestic and international, which are eager to enter the PSO rail market. Their enthusiasm reflects the growing recognition of the opportunities presented by this new competitive landscape.

Public transport authorities (PTAs) play a pivotal role in this process by seeking to open the market while achieving key objectives such as increasing service offerings at lower costs, enhancing service quality and improving overall robustness. They rely on prescriptive specifications to objectively compare offers and select the most advantageous solutions for their regions. In response, SNCF Voyageurs has embarked on a comprehensive transformation journey aimed at boosting its competitiveness. This includes aligning its offerings with PTA specifications, streamlining its cost structure for greater efficiency and fostering the development of the skills and expertise of its workforce. The company is also restructuring its organisation to anticipate the fragmentation of the value chain – encompassing operations, maintenance, rolling stock and distribution – and to propose tailored solutions for each segment.

Another critical element for SNCF Voyageurs is the need to capitalise on early tender experiences to industrialise its approach. This will help reduce the cost and complexity of future tendering procedures. The company’s credibility and legitimacy hinge not only on its ability to win tenders but also on the performance of its current services, which remain under scrutiny by PTAs. As the monopoly agreements that previously governed operations will expire between 2028 and 2033 (depending on the region), the coexistence of monopoly operators and tender-awarded operators will create a dynamic and competitive ecosystem in the same territories.

For SNCF Voyageurs, opening up to competition is more than just a challenge; it is a unique opportunity to innovate, reinvent itself and demonstrate its expertise. The company aspires to transcend its traditional image as a legacy operator and becoming a trusted and preferred operator chosen by regions for its proven capabilities and commitment to operational excellence.

This opinion piece by Scheherazade Zekri, Director, Strategy, Bids & New Mobility, SNCF Voyageurs TER, originally appeared in the European Transport Regulation Observer, “Tendering railway public service obligation contracts: a balance sheet” (January 2025).