[SE] Vy (NSB) abandons night trains in Sweden from Dec-24

[jamesontheroad]

Vy Tåg (approximately pronounced Vee torg if you are an English-speaker), the Swedish subsidiary of the state-owned Norwegian VY Group has announced they will not seek an extension of the 4-year procurement of the Stockholm-Narvik and Stockholm-Luleå night trains when it runs out in December 2024. The framework provided for a 2-year extension but they chose to walk away.

Järnvägar reports, in Swedish, here: https://jarnvagar.nu/vy-overger-nattagen/

My translation of the key bits...

"The costs for the traffic have become higher than we expected, partly because the vehicles were in worse condition than we thought, and in addition, the ticket revenue has become significantly lower," says Dag Lokrantz-Bernitz.

The lower ticket revenue is primarily due to fewer travellers during the 2020-2022 pandemic, but also due to cancelled traffic west of Björkliden in recent months following the two derailments with ore trains.

But the underlying problem for Vy Tåg was that they won the tender with a very low tender. Vy Tåg only receives SEK 10-11.2 million annually from Trafikverket to run the night trains between Stockholm and Upper Norrland. The total compensation for the four years will be SEK 42.1 million. However, Vy Tåg must pay SEK 35 million per year to be allowed to use the Swedish Transport Administration's locomotives and wagons in the traffic in question. This means that traffic must generate a surplus of SEK 25 million per year for Vy Tåg to break even.

SJ, which ran the night trains until December 2020, received SEK 116 million per year but paid twice as much for the use of locomotives and carriages. SJ could consequently lose SEK 45 million per year for running the night trains and still report a zero profit.

...

Dan Lundholm, who is the contract administrator at the Swedish Transport Administration, confirms that the Swedish Transport Administration will carry out a direct allocation of the night train traffic for the two years December 2024-December 2026.

"It is too short a time to carry out a proper procurement of the traffic from December this year," he says. "In parallel with the preparations for the procurement of the night train traffic from December 2026, we are carrying out a direct allocation of the traffic in the next two years."

For my part, I'm not so sympathetic to Vy Tåg's argument. They bid incredibly low to operate a very complex pair of night train routes and didn't expect SJ to compete by launching commercial traffic on the Umeå-Gothenburg/Stockholm corridor.

Once again, the state has to step in and sort out a problem created by a private company. A direct procurement for 2 years will be announced in July. Only SJ, Snälltåget and possibly VR's new Swedish operation might be eligible. In all likelihood, SJ will get the 2 year direct procurement and then we start all over again with a new procurement in the next few years.

 

[doc7austin]

The lower ticket revenue is primarily due to fewer travellers during the 2020-2022 pandemic, but also due to cancelled traffic west of Björkliden in recent months following the two derailments with ore trains.

Yes, the primary problem for passengers is that this train (esp. the Narvik) run is often blocked for bookings.

 

[JonasB]

I'm also not that sympathetic to Vy, their bid was really low and I'm not at all surprised that it's hard for them to not make a loss on running the trains.

 

[RT4038]

V

Once again, the state has to step in and sort out a problem created by a private company.

Isn't Vy Tag the Norwegian State Railway? So one State stepping in to sort out a problem created by another State?

 

[Watershed]

Isn't Vy Tag the Norwegian State Railway? So one State stepping in to sort out a problem created by another State?

Yes but it's the foreign arm of what was NSB. A bit like how DB used to own Arriva, or how NS used to own Abellio.

 

[jamesontheroad]

Isn't Vy Tag the Norwegian State Railway? So one State stepping in to sort out a problem created by another State?

Vy Tåg AB in Sweden had to get a bailout from the parent company in Norway when things started to go south with the Swedish night train contract, so yes that was a Norwegian state-owned company subsidising a Swedish one. Now Trafikverket (the Swedish Transport Agency) will have to pay a premium to find an operator (likely SJ) to step in quickly from Dec-24 for two years.

The free market is the solution to everything, but only if the taxpayer can step in when it isn't.

Yes but it's the foreign arm of what was NSB. A bit like how DB used to own Arriva, or how NS used to own Abellio.

"Vy Tåg AB" (AB = Aktiebolag, i.e. limited company) was founded as Tågkompaniet ("The train company") in 1999. It was one of the new breed of independent railway companies that cropped up in Sweden after liberalisation of the railway.

NSB bought 34% of the company in 2005, another 51% in 2006 (to 86%) and then acquired the remaining shares in 2007. In 2019 NSB and Netbuss rebranded to Vy. I think Tågkompaniet rebranded a little later. I was still getting served coffee or buns with Tågkompaniet branded paperware on board Norrtåg as late as last year, so they clearly haven't been that fussed about it.

 

[deltic]

For my part, I'm not so sympathetic to Vy Tåg's argument. They bid incredibly low to operate a very complex pair of night train routes and didn't expect SJ to compete by launching commercial traffic on the Umeå-Gothenburg/Stockholm corridor.

Once again, the state has to step in and sort out a problem created by a private company. A direct procurement for 2 years will be announced in July. Only SJ, Snälltåget and possibly VR's new Swedish operation might be eligible. In all likelihood, SJ will get the 2 year direct procurement and then we start all over again with a new procurement in the next few years.

If I understand this correctly, the State ie the Swedish taxpayer saved 90% of the subsidy payments it was previously paying to have this service provided. Sounds like a good deal for the State. The fact that the State appears not to have allowed enough time to retender the service if the operator decided not to take up an optional tender extension is a problem of its own making and not the operator's.

 

[YorkshireBear]

If I understand this correctly, the State ie the Swedish taxpayer saved 90% of the subsidy payments it was previously paying to have this service provided. Sounds like a good deal for the State. The fact that the State appears not to have allowed enough time to retender the service if the operator decided not to take up an optional tender extension is a problem of its own making and not the operator's.

I agree, one party leaving a contract at a contractually agreed point, is not the fault of the company leaving. I suspect it will be no skin off their nose to get SJ to run it and that's what they'd have done anyway.