Passenger transport

Major events

CHANGES IN THE BUSINESS UNITS STRUCTURE

After the acquisition of Arriva, we made an adjustment to the management structure in Passenger Transport. The new DB Arriva business unit has been set up in the Board division Passenger Transport. Since January 1, 2011, this business unit has been responsible for all regional transport activities outside Germany. For this purpose, all tasks with an international content, excluding cross-border services, are allocated to the DB A rriva business unit.

Since January 1, 2011, only regional transport activities in Germany have been operated by the DB Bahn Regional business unit. The previous business unit DB Bahn Urban has been merged with the DB Bahn Regional business unit.

SHORTER INSPECTION INTERVALS FOR ICE 1 AND ICE 2 TRAINS

We again experienced further restrictions in the availability of the ICE fleet in the period under review. This is due to the fact that DB Fernverkehr AG, with the letter dated February 16, 2011, complied with the request of the EBA to also reduce the ultrasound inspection intervals for the multiple units ICE 1 and 2 by way of a voluntary agreement [see "AR online"].

Following liaison with official authorities and industry, a project has been initiated with the aim of developing a viable model for providing technical and scientific backing for determining ultrasound inspection intervals for wheel set axles.

REPLACEMENT OF THE AXLES OF ICE 3 AND ICE T

In October 2009, we reached a mutually acceptable agreement with Siemens and Bombardier with regard to the replacement of the ICE 3 driven wheel sets. At the end of February 2010, an agreement was also reached with Alstom on account of a joint solution for replacing all wheel sets of the ICE T. The industry has now virtually completed the processes of developing and testing the new driven wheel sets of the ICE 3. However, the approval procedure with the EBA is still ongoing. The process of developing and testing the new driven wheel sets and trailing wheel sets of the ICE T by industry still has to be performed. Again, the wheel sets will subsequently still have to be approved by the EBA.

After the approval has been obtained, the implementation process with the corresponding schedule for replacement will be carried out jointly between ourselves and the industry. In total, the replacement process affects around 1,200 driven wheel sets of the ICE 3 and around 2,100 driven wheel sets and trailing wheel sets of the ICE T. The process of equipping all ICE 3 and ICE T trains with the new axles is expected to be completed in 2014 (ICE 3) and 2015 (ICE T).

NEW HIGH-SPEED TRAINS WILL EXPAND THE ICE 3 FLEET BEGINNING IN 2012

We have placed an order with Siemens for 16 new ICE 3 of the 407 series for cross-border passenger services. The first trains are expected to be deployed in the spring of 2012.

This latest generation of high-speed trains will strengthen and enhance the existing ICE 3 fleet. The new trains are expected to be deployed in Germany, France and Belgium; however, their use can also be extended to the whole of Western Europe. For this purpose, we are assessing new deployment concepts for connections to the Netherlands and London through the Channel Tunnel.

ICX – NEWS ERA IN LONG-DISTANCE SERVICE BEGINNING IN 2016

At the beginning of May 2011, we initiated the changeover of generations in our long-distance fleet when we signed a framework agreement for up to 300 ICx multiple units. The ICx sets new standards with regard to flexibility for adapting to future market developments, interior variability and energy efficiency.

The contract with Siemens is the largest single investment in the history of DB Group. The first call-off order will comprise 130 trains which are to be gradually deployed starting in December 2016. At least a further 65 multiple units are expected to be called off in order to completely replace the IC /EC and ICE 1/2 fleets.

ADJUSTMENT OF THE TRANSPORT AGREEMENT WITH THE VRR

At the end of 2009, we agreed an adjustment to the existing transport agreement [see "AR online"] with the Rhine-Ruhr transport association (Verkehrsverbund Rhein-Ruhr; VRR ) from the year 2004.

In a subsequent review procedure initiated against the VRR , the Federal Court of Justice stated that this contractual amendment was void due to considerations of procurement law. It is alleged that, without a formal procedure, Cartel Procurement Law does not allow the envisaged extension of the services of S-Bahn Rhein-Ruhr by a further five years until December 2023. The Federal Court of Justice stated that German Cartel Procurement Law specifies an obligation to put contracts out to tender for agreeing public local passenger transport services beyond the law of the European Union.

On May 18, 2011, we reached an agreement with the VRR with regard to a new adjustment to the transport agreement which, as far as possible, in particular maintains the improvements for the passengers which were included in the contract adjustment which was declared to be void (including increased train capacities, optimized routes). The extension of five years for S-Bahn (metro) services, which was criticized by the Federal Court of Justice, is no longer applicable. Part of the S-Bahn (metro) services will be extended by one year until December 2019 in line with procurement law as a result of an existing option of the VRR in the agreement from the year 2004.

In several letters to the EU Commission, the Interessenverband Mofair e.V., whose members include Abellio which belongs to the Dutch NS, has alleged that transport agreements between the VRR and companies of DB Group contained unlawful aid. The Federal Republic of Germany has answered a request for information from the European Commission which refers to these complaints. In the opinion of DB Group, no unlawful aid is involved.

FURTHER COMPENSATION PAYMENTS FOR RESTRICTIONS IN THE SERVICE OF S-BAHN BERLIN

As a result of the severe winter conditions at the beginning of 2011, a restricted winter timetable was applicable for S-Bahn Berlin between the end of January and the end of February 2011; these restrictions also included speed limits. The scheduled services with 425 quarter-trains, which had been applicable since June 2010, were initially resumed in March 2011. The number of quarter-trains deployed for passenger operations was then increased to 440 by the end of June 2011. The operating position was thus overall slightly improved compared with the first half of 2010. It is still the aim to offer scheduled services with 500 quarter-trains with the introduction of the new 2011 /2012 timetable.

As a result of the continuing restrictions in operations at S-Bahn Berlin, we are offering additional compensation to our customers in the local public transport network in Berlin in 2011.

In addition to the previous compensation provided in the form of free travel and repayments of around € 105 million, further payments will be made to passengers in 2011.

LIBERALIZATION OF LONG-DISTANCE SCHEDULED BUS SERVICES

In February 2011, the Federal Government published the draft of the amendment to the Passenger Transportation Act and liberalization of long-distance scheduled bus services. The legislation procedure will probably be completed at the beginning of 2012. In accordance with the regulations of this draft, local rail passenger transport services and public rail passenger transport services are to be protected against long-distance bus services.

Following an extensive review, we initially decided not to expand our existing long-distance bus services aggressively in view of the expected volatility of the market. However, we will observe further developments and adopt a flexible approach for our business activities.

TENDERING OF RAIL AND BUS SERVICES

Rail services in Germany (DB Regional Rail)

The ordering organizations completed 13 tender procedures in Germany in the period under review (first half of 2010: six) and awarded contracts for a total of 31 million train kilometers (train km) (first half of 2010: 14 million train km).

As was the case in the first half of 2010, we participated in all invitations to tender. We were successful in winning six contracts (first half of 2010: two invitations to tender) or 69 % of the train kilometers for which a contract was awarded (first half of 2010: 43 %). Of the total train kilometers put out to tender, 78 % have previously been provided by companies of DB Group.

On the basis of the contracted volume (train kilometers over the entire term of the contracts), the success ratio was 77 % (first half of 2010: 66 %).

Bus services in Germany (DB Regional Bus)

In the period under review, contracts were awarded in Germany for bus services in 17 tendering processes with a total volume of around 12 million bus kilometers (bus km) (first half of 2010: 14 million bus km). Of the total number of bus kilometers for which contracts have been awarded, 38 % have so far been provided by companies of DB Group.

In the period under review, we participated in nine invitations to tender with a volume of 9 million bus km. In the invitations to tender in which we participated, we achieved a success rate of 45 % (first half of 2010: 39 %).

Bus and rail services in other European countries (DB Arriva)

DB Arriva has also participated in tender processes throughout Europe in the period under review.

In bus transport, DB Arriva achieved success in eight major tendering processes with a total volume of around 7 million bus km in Great Britain, four major tendering processes in Denmark with a total volume of approximately 23 million bus km and three major tendering processes in the Netherlands with a total volume of approximately 5 million bus km. Most of the bus services which were secured had previously been operated by DB Arriva.

In the field of rail services, DB Arriva was also successful in a major tendering processes for a contract between Arnhem and Winterswijk in the Netherlands. The contract is due to run for a period of 13 years, with an annual volume of around 4 million train km.

Last modified: 02.08.2011