Artur Martyniuk, CEO Polregio: The development of regional railways is the development of the entire economy

Artur Martyniuk, CEO Polregio: The development of regional railways is the development of the entire economy

Last year in May, you assumed the position of the President of the Management Board of POLREGIO. What goals did you set yourself for this position?

POLREGIO, the largest passenger carrier in Poland, currently with a 27% market share, is a company with great potential for further development. At the same time, it is a big challenge due to the scale of operations. My short-term goal in 2020 was for the carrier to regain profitability and to sign long-term contracts with provincial governments on favorable terms. These assumptions were more than realized. As a result of intensive work and thanks to the support of our owner, the Industrial Development Agency, we have negotiated long-term contracts with virtually all local governments. . We have signed contracts for 10 years in as many as 8 regions. Thus, we have secured our financial situation in the long term – we have nearly PLN 9 billion in contracts with local governments and contracted transport by our trains of at least 385 million kilometers by 2030. We also left the definition of a company in a difficult economic situation. Moreover, the European Commission issued a positive decision regarding the state aid granted to the company in previous years for restructuring, considering it to be justified. Not only that, despite the very difficult operating conditions and two lockdowns in 2020, we generated PLN 23 million in profit for the previous year, while reducing debt by over PLN 30 million and reducing costs by PLN 11 million. These results are due to effective management and great mobilization of all employees. During my tenure, we also recruited new managers to better cope with current and future challenges. And we do not lack these. Another long-term goal is the replacement and modernization of rolling stock and the integration of the offer within offers combining various means of transport, e.g. rail with electric buses.

POLREGIO is one of the largest passenger carriers in the country, serving nearly 30% of the market. Are you currently implementing or planning investments aimed at increasing the number of passengers using your services?

The basis of our investments closely related to the retention of existing passengers and the acquisition of new passengers will be our long-term plan for the purchase and modernization of rolling stock, on which we are currently finishing work. We also submitted applications under the National Reconstruction Plan for over PLN 6.4 billion. We want from these funds, among others purchase 180 new EMUs (Electric Multiple Units) and modernize another 50 units.

As part of the strategy for the coming years, we also plan to further expand the rolling stock maintenance points. This will allow us to significantly expand services for other carriers and, as a result, increase the company’s revenues. We focus on expansion in our development strategy. We are a natural integrator of railways because we are present in all voivodships in Poland, we know this market very well and we cooperate with local governments in the organization of passenger rail transport.

We create added value for passengers by integrating our offer with other carriers and transport organizers. For example, our passengers receive a subscription to Park & Ride car parks, as well as shared tickets in agglomerations where various means of public transport are combined. In the Świętokrzyskie Voivodeship, we are working on a project integrating electric buses, which will be used to transport the inhabitants of localities away from the nearest railway station to the station. This is a pilot project for now, but the concept can also be applied in other regions in Poland. Transport integration is necessary to effectively combat the phenomenon of transport exclusion, which affects Poland, according to estimates from 14 to even 15 million people. This is where we should focus our efforts on the railways.

The National Railway Program, also known as the Marshall Railway Plan, which includes, inter alia, modernization of 9 thousand kilometers of railway lines is a great opportunity for passenger transport, for further development and reaching new travelers. At what stage are your works on expanding the network of rail connections and are you planning to purchase additional trains?

We are closely monitoring investment plans for railway infrastructure, including the ambitious Kolej Plus program in terms of future timetable changes. In total, up to 1,300 km of lines are to be rebuilt and rebuilt, and another 1,000 km are to be revitalized. Local governments that submitted these projects will have to start and finance the transport of at least 4 pairs of trains for 5 years on these sections. We can already see that the demand for new connections is huge. In this year’s timetable from Białystok and Siemiatycze, our passengers on the new tracks can reach the area of the Białowieża Forest. The station in Hajnówka and four stops in Orzeszków, Witów, Policzna and Dobrowoda are very popular among tourists and residents.

That is why we are preparing for a long-term program of investments in rolling stock, so that new or modernized passenger trains can run on new and renovated tracks, equipped with air conditioning, Wi-Fi or USB ports for charging smartphones. This is what passengers expect today, and the mission of POLREGIO is to ensure such a standard of travel throughout Poland.

Despite the extensive infrastructure, there are regions in Poland that struggle with the problem of transport exclusion. How can the Kolej Plus program help with this? Are these connections likely to be profitable or will you have to pay extra for them?

The regional railway is to implement the social mission of providing passenger transport from smaller towns at a reasonable price. The railways must do this with the support of local government. We recently conducted a survey among our passengers in the Kuyavian-Pomeranian Voivodeship and it turned out that over 70 percent. of them there is no alternative when it comes to communication. What about the other passengers? For employees commuting to plants in Bydgoszcz, for example from Inowrocław, the cost of a monthly ticket is approximately PLN 178, and for Large Family Card holders, the monthly cost of commuting to work is less than PLN 100. Meanwhile, the alternative monthly cost of traveling by car is over a thousand zlotys. Please note that every year several hundred thousand heavily worn-out cars from Germany are brought to Poland. What is the alternative to the regional train? It’s usually an old, dilapidated car with a diesel engine. Therefore, the development of passenger rail at the regional level is in the interest of all of us, because it is the regions that contribute most to the creation of GDP. It is also an investment that will also pay off in the ecological aspect in the form of clean air.

Will the current railway investments increase the comfort of passengers’ travel and to what extent can they contribute to shortening the travel time?

Improving travel time or modernized stations are certainly a lure for passengers, but rather for those who have been using rail services for years. It is a confirmation of their choice and appreciation in such a way that the money they spend on the ticket is properly invested. However, the rolling stock is of key importance and it is on this that the effort should now be focused. We can see this by observing the reaction of our passengers waiting for the latest trains. Modern railroads should not be limited only to residents of the largest cities and islands of modernity. On regional rail, passengers also expect it to be comfortable, fast and – unlike long-distance trains – cheap.

The 6th National Reconstruction Plan has recently aroused a lot of controversy and extreme opinions in the railway sector. In your opinion, is KPO an opportunity or a threat to Polish railways?

A chance, not only for the railways, but also for the entire economy. The role of the KPO is to rebuild its potential after the pandemic. In this situation, we should invest where there are the greatest needs, i.e. in the regional railway. We are the largest passenger carrier in Poland, carrying almost 100 million passengers annually. Even during lockdowns, our services were used by those who could not afford to work remotely. As a result, it is in the regions where the greatest needs exist in terms of increasing the standard of traveling in commuting to work or school. That is why it is so important that KPO funds compensate for the difference in the development of railways between Poland A and B, i.e. large cities and smaller towns. Investments in rolling stock for long-distance carriers have already taken place in the last EU perspective and these needs are largely met. Now it’s time for regional carriers. I cannot imagine a situation where, after spending funds from KPO, a metropolitan resident will have great access to railway connections with modern rolling stock, and a person from a small city will be deprived of it, or only well-worn, several dozen-year-old trains will run on its route. Unfortunately, this is sometimes the case today, so we are doing a lot to change it. Hence, among others we are starting the most comprehensive rolling stock investment plan in the history of the company and we want to implement it, among others with the help of KPO funds. There is a huge chance for modern regional transport ahead of us and our passengers.

Rail produces three times less CO2 emissions than road transport and eight times less than air transport. Can railroads turn out to be a panacea for the current environmental challenges, especially now, when there is so much talk about sustainable development? Will the fashion for rail come back thanks to increasing social awareness?

Let’s imagine what will happen when the price of 95 petrol or diesel fuel fluctuates in the range of PLN 8 after adding, for example, a fee for CO2 emissions. If we want to at least partially mitigate this shock, which will be associated with the reduction of CO2 emissions from road transport, we should already invest heavily in passenger railways. Recently, the European Commission published the “Fit for 55” directive, potentially of great importance for transport, which indicates that the distribution system of liquid fuels for road transport is to be covered by CO2 emissions trading. Needless to say, what this may mean for the car’s operating costs. Anyone who has regularly paid their home electricity bills over the past 5 years knows how much more electricity has increased after the energy sector was included in the CO2 emissions trading scheme. On the other hand, it is an opportunity for passenger rail, which, as one of the leaders in ecological solutions, can maintain very competitive fares in relation to individual transport. The fuel itself is only part of the cost of owning a car. There is also insurance, service and depreciation. In public transport, these outlays are borne by the carrier and do not translate into 1: 1 ticket price, so the cost of the regional railway is practically unbeatable for the passenger. In addition, there is an ecological factor, Poles are more and more aware of the changes affecting the climate and value the environment, so I am convinced that the fashion for railways will return soon.

Artur Martyniuk

President of the Management Board of Polregio Sp. z o.o. is a graduate of MBA studies at IESE Business School in Barcelona. He was also educated at Harvard Business School and London Business School. He also graduated from the Lublin University of Technology at the Faculty of Electrical Engineering and Computer Science with a master’s degree in engineering. He started his professional career in the consulting company KPMG, where for many years he managed projects for medium and large Polish enterprises and international concerns. He also worked in the Swiss branch of Goldman Sachs and the Madrid headquarters of Bank Santander. In 2013-2020 he was the director of financial advisory at Deloitte, managing a project team for many sectors of the economy in the country and in the region of Central and Eastern Europe.

Last Updated on August 3, 2021 by Karolina Ampulska

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