Business model
DB Regional’s core service is to bring millions of passengers in regional transport to their desired destination every day in a punctual, safe, comfortable and environmentally friendly no. 3 manner and in doing so, meet the requirements of the respective transport contract.
Our offerings cover both regional rail passenger transport with regional express, regional railway and S-Bahn (metro) lines as well as regional and urban bus transport services. We therefore offer passengers comprehensive mobility services in major cities and metropolitan areas, but also and especially in rural areas. Our regional organizational structure guarantees local transport services oriented towards the requirements of our local customers.
As a rule, DB Regional provides its regional rail passenger transport services within the framework of the Regionalization Act (Regionalisierungsgesetz) as a public service task and on behalf of the competent public transport authorities. The public transport authorities are either the Federal states or a state-owned company, or municipal special-purpose associations. The public transport authorities conclude long-term transport contracts and line permits with transport companies, mainly within the framework of competitively awarded tenders. These contracts determine the volume produced and contain detailed specifications on quality and fare pricing. With integrated transport concepts, high-quality mobility services and targeted capital expenditures on the vehicle fleet and digitalization, we aim to defend our leading market position and strengthen our role as a quality and innovation leader in the field of regional rail passenger transport.
Volume sold and volume produced are important key performance figures. Transport contracts typically refer to the volume produced. Concession fees, in addition to revenues from ticket sales, are the most important source of income. However, contracts where fare proceeds remain directly with the contracting organization, while the transport company is fully compensated by the public transport authority for the entire range of services (gross contracts), are also of increasing importance.
Predefined terms in transport contracts and route concessions, combined with the extensive production system, result in a cost structure with high fixed costs. The major drivers are personnel, maintenance, energy and infrastructure expenses. Only a small portion of expenses vary with train capacity utilization.
In the rail sector, integrated bids covering vehicle procurement, financing, fleet management, operation and maintenance were generally required by the public transport authorities in the past. Nowadays, fragmented tender models are becoming more common. In such models, partial services or even only the basic operation of vehicles are put out to tender. Other partial services remain the responsibility of the public transport authorities in these models (financing, for example) or the responsibility of the vehicle suppliers (maintenance, for example). On the basis of our performance capability at all stages of the value-added chain, DB Regional is in a position to tailor partial services as required and to operate successfully on the market as a subcontractor for competitors.
In the bus sector, integrated bids are still required from the contracting authority, and there is no indication of a change over the next few years.