Germany: Deutsche Bahn Chief Richard Lutz fired!

[BavarianTrain]

Germans Federal Minister of Transport Patrick Schnieder announced the dismissal of DB Chairman of the Board Richard Lutz at a hastily convened press conference.
Link to a Tagesschau Article

Deutsche Bahn CEO Richard Lutz has to step down. His contract actually runs until 2027. The 61-year-old will continue to lead the company until a successor is found, said Federal Transport Minister Patrick Schnieder (CDU). "The search for a new Deutsche Bahn CEO has begun at this moment."The situation at the railway is dramatic – in terms of customer satisfaction, punctuality and profitability, said Schnieder.Lutz had been considered a dead end for months – the economic and operational crisis that Deutsche Bahn has been experiencing for years is too severe. It's time for a restructuring, both structurally and in terms of personnel, said Schnieder. The Federal Transport Minister had criticized Deutsche Bahn's current punctuality rate just at the beginning of the month.

Richard Lutz will remain in office until a successor is found.The main reason is a strategic reorganization in favor of punctuality, cleanliness, and safety, as well as the streamlining of Deutsche Bahn.
The details of this will be announced on September 22 of this year.

What i think:

It's not surprising. Mr. Lutz's dismissal was only a matter of time.
He has been with the company since the era of Hartmut Mehdorn. Mehdorn pursued a radical austerity course, which is why the DB is where it is now.
Since 2017, Lutz has been the CEO. I hope that the strategy of the transport minister is correct and will contribute to a more reliable railway.

 

[Gerald Fiennes]

DB's problems are very considerable. Lutz gave the impression at least that he realised what they were and was taking action, within the spending limits that DB is subject to, in order to speed up change. As ever, it is always for discussion how much changing the guy at the top on its own helps.

Mehdorn tried to turn DB into a global transport player, paid for in part by cutting back on train and track maintenance. It will take at least 10 years, in my view, to get DB back to the kind of service it used to provide 15 years ago.

Remember also that, just as in GB, the many main lines are now much fuller than they were: not just with 'ICE/EC/IC' trains but also 'RegioExpress' and similar services that partially compete with the long distance network. The timetable could do with substantial recasting to spread the trains out and thereby prevent delays building up rapidly. The Essen-Duesseldorf-Cologne section is particularly difficult, in my experience, with the fast lines now too heavily utilised, let alone the operational nightmare that Cologne Hbf is!

 

[bahnause]

The problems facing DB can be summarised in the following four points, which have existed since 2009:

• Peter Ramsauer (CSU)
• Alexander Dobrindt (CSU)
• Andreas Scheuer (CSU)
• Volker Wissing (FDP)

All four conservative politicians were, according to their titles, transport ministers, but in reality they were ministers for motorists, albeit remarkably incompetent ones.

As the owner, the federal government has failed to present a comprehensible long-term strategy, sustainable financing or reliable planning in all these years. The most important credo was: Wi-Fi on all trains. Everything else was secondary. As long as these overarching problems are not addressed, even Chuck Norris could take over the helm at DB without bringing about any sustainable improvement.

 

[CdBrux]

I cannot comment on the history of how DB got where it is now, or if Herr Lutz was the correct person to fix it. All my recent experiences of travelling on it (I live in Munich) are bad, it's reliability is off the scale bad, a shame as if reliable it is still a decent way to travel around.

The Deutschland ticket cannot help, it must be depriving the railways of a lot of revenue. It needs at least a €20 / month increase if not quite a bit more. It's pure politicking.

 

[Amalie]

I’m not too familiar with the management aspect of the DB, but wasn’t the largest problem simply outdated and much needed new infrastructure? I do hope the new CEO will do much better, but I somehow doubt that any meaningful improvements can be gained in the short term with a new CEO alone. I would love to be proven wrong however.

 

[The exile]

The Deutschland ticket cannot help, it must be depriving the railways of a lot of revenue. It needs at least a €20 / month increase if not quite a bit more. It's pure politicking.

At least in the short term, the only money the railways will be being directly deprived of are the IC / ICE fares that people aren’t paying because they’re travelling using the D-Ticket instead. It’s the Laender that will be haemorrhaging money / which of course eventually means less money for train kilometres, investment etc.

 

[ClivePage]

We took a trip involving several DB trains a couple of months ago. Of the 6 which were IC or ICE, the most punctual was 15 minutes late, while four of them were about an hour late. Two services had part or all of their route cancelled because of late running, so we had to make rapid changes to our trip. We had to stand on a packed-out train in Belgium for nearly an hour after arriving on Eurostar to make a connection in Germany. Several of our seat reservations didn't work because they had substituted different train sets or renumbered the coaches. We have claimed compensation via their equivalent of delay repay and small refunds are trickling in but you only get a small refund and only after an hours delay. Overall it was an awful experience. Some of the regional trains weren't too bad - but on my experience I'd avoid anyting called inter-city and certainly don't expect any connections to work. I didn't think anything could be worse than British railways, but DB clearly is at present.

 

[LNW-GW Joint]

Can we look forward to them selling off DB Cargo and other foreign interests?

Is this a case of prioritising new/upgraded main lines (NBR/ABR) at the expense of local routes?
DB has spent vast sums of money in the last 3 decades (not least on infrastructure in the former DDR), and has built impressive works in Berlin and elsewhere.
They are also far in advance of us with electrification and modern signalling.
Then there's Stuttgart 21...

 

[CdBrux]

At least in the short term, the only money the railways will be being directly deprived of are the IC / ICE fares that people aren’t paying because they’re travelling using the D-Ticket instead. It’s the Laender that will be haemorrhaging money / which of course eventually means less money for train kilometres, investment etc.

and if they take several D-ticket journeys they won't be paying anywhere near as much for the regional and local services either

 

[doc7austin]

Just firing Lutz and part of the board is not enough. The entire structure of the Deutsche Bahn conglomerate must be changed.
That conglomerate has a big head (lots of management and administration overhead). Keeping this overhead is immensely costly.
And it is esp. the SPD that has been blocking big structural changes for years, because it would lead to massive layoffs.

When I talk about structure change -> Infrastructure/stations (DB InfraGO) must be completely decoupled from train operating companies.
At the moment there are just too many cross-subsidees flowing through the DB conglomerate.

 

[The exile]

and if they take several D-ticket journeys they won't be paying anywhere near as much for the regional and local services either

Yes - but the price the Laender pay db to run the train remains the same - AFAIK the ticket revenue goes to them, not the railway.

 

[yorksrob]

When I talk about structure change -> Infrastructure/stations (DB InfraGO) must be completely decoupled from train operating companies.
At the moment there are just too many cross-subsidees flowing through the DB conglomerate.

That sounds very much like copying our privatisation fiasco. DB should avoid that at all costs. Cross-subsidy is a vital part of running a railway - the main line cross-subsidises the secondary route which brings in and distributes its passengers.

 

[Bletchleyite]

That sounds very much like copying our privatisation fiasco. DB should avoid that at all costs. Cross-subsidy is a vital part of running a railway - the main line cross-subsidises the secondary route which brings in and distributes its passengers.

And integration of track and train brings a more efficient operation and a better service. The fix is not, as you say, repeating the UK fiasco in Germany; the fix is getting competent management into DB and giving it the funding that is needed to do the necessary infrastructure work. And if overseas operations are losing money, for them to get rid.

 

[doc7austin]

And integration of track and train brings a more efficient operation and a better service.

I do not agree here.
The construct (infrastructure and TOCs in one conglomerate) is hindering competition. There is always the incentive that infrastructure arm favours its own TOCs.
There are three examples:
- The infrastructure arm inflates track usage fees. The own TOCs must pay these fees, but the money stays within the conglomerate. In reality third-party TOCs are put at an disadvantage.
- The profit, which has been generated through these fees, can then be used to cross-subsidize its own TOCs (e.g. cargo TOCs, or regional TOCs that outbid the third-party TOCs to run regional trains).
- The infrastructure may elect to prioritize projects, where their own TOCs profit from (e.g. new tracks, new switches), and neglect infrastructure, where third-party TOC operate on.

and giving it the funding that is needed to do the necessary infrastructure work.

Who controls that this extra funding is not funnelled to DB's own TOCs ?

Infrastructure/stations (DB InfraGO) must be completely decoupled from train operating companies.

Decoupling does not equal to privatization.
The German government does not need to sell DB Fernverkehr. It can still keep it.

 

[Bletchleyite]

I do not agree here.
The construct (infrastructure and TOCs in one conglomerate) is hindering competition. There is always the incentive that infrastructure arm favours its own TOCs.
There are three examples:
- The infrastructure arm inflates track usage fees. The own TOCs must pay these fees, but the money stays within the conglomerate. In reality third-party TOCs are put at an disadvantage.
- The profit, which has been generated through these fees, can then be used to cross-subsidize its own TOCs (e.g. cargo TOCs, or regional TOCs that outbid the third-party TOCs to run regional trains).
- The infrastructure may elect to prioritize projects, where their own TOCs profit from (e.g. new tracks, new switches), and neglect infrastructure, where third-party TOC operate on.

Concentrate on the competition provided by car, coach and air.

 

[doc7austin]

Private cargo TOCs have revitalized the cargo train market in Germany.
There are more cargo trains running through Germany than in the last 3 decades. This is a success.
That success would not have been possible if all cargo train operations belonged to one monopoly TOC, which affords a huge bloated administration.

 

[35B]

Just firing Lutz and part of the board is not enough. The entire structure of the Deutsche Bahn conglomerate must be changed.
That conglomerate has a big head (lots of management and administration overhead). Keeping this overhead is immensely costly.
And it is esp. the SPD that has been blocking big structural changes for years, because it would lead to massive layoffs.

When I talk about structure change -> Infrastructure/stations (DB InfraGO) must be completely decoupled from train operating companies.
At the moment there are just too many cross-subsidees flowing through the DB conglomerate.

If you remove those structures, what fills the gap that they leave? And how does that deliver a restoration of quality?

As for integration, even if I agreed on cross-subsidies (I don't know so can't comment), the split of track and train creates inefficiencies as they lose sight of their position in the system - as can be seen in the UK.

 

[The exile]

There are more cargo trains running through Germany than in the last 3 decades. This is a success.

Only if the tonnage is greater.

 

[doc7austin]

In my eyes the government must make a choice between 1) and 2):
1) go for an integrated conglomerate, where everything (money, locos, cars) in this conglomerate can be shared:
- that would cause conflict with EU rules and squeeze out the competition;

2) full decoupling of infrastructure and TOCs:
- the existing TOCs (DB Fernverkehr, DB Cargo, DB Regio ...) could still exist and are owned by the government.

As for integration, even if I agreed on cross-subsidies (I don't know so can't comment), the split of track and train creates inefficiencies as they lose sight of their position in the system - as can be seen in the UK.

But how would that work in practise ? More than half of the regional train network in Germany is run by third-party TOCs. Many contracts run well into the mid-2030s.

If you remove those structures, what fills the gap that they leave? And how does that deliver a restoration of quality?

The federal ministry of transport must issue a political directive to a new fully-decoupled government-owned infrastructure company + the ministry must provide the funding to achieve the set political goals.

 

[35B]

The federal ministry of transport must issue a political directive to a new fully-decoupled government-owned infrastructure company + the ministry must provide the funding to achieve the set political goals.

Can I refer you to the example of Stephen Byers, and what happened with the collapse of Railtrack.

 

[doc7austin]

Did the UK government own Railtrack ?

 

[35B]

Did the UK government own Railtrack ?

No. But the collapse was precipitated when they had to make the choice of meeting a policy commitment, or paying for it.