There have been some recent discussions about restructuring Amtrak in a way that mirrors a European model of railroad management. It is therefore helpful to explain the characteristics of railroad structures and the evolution of European railway management. While Europe and the United States deregulated their rail sectors in the same era, they have since taken fairly different paths and the models of railroad management of today are very different. 

While complex, railroad management can be categorized into infrastructure management and rail or train operations. In the early 20th century, much of the rail network in Europe was nationalized, which meant the central government controlled infrastructure and operations, with no room for competition from other operators. At the same time, railroads in the United States remained under private control, subject to heavy government regulations. The private railroads controlled their own networks and functioned as natural monopolies, minimizing competition on their own lines.   

Towards the latter half of the 20th century, state-controlled railways in Europe and private railroads in the United States came under pressure from increasing competition from automobiles, commercial aviation, and decreasing rail efficiency. As a result, railroads and governments sought ways to remain relevant and afloat. 

Deregulation became the name of the game for railroads in Europe and the United States in the 1980s. Sweden was the first country in Europe to enact deregulation in its rail industry in the 1980s and following Swedish deregulation efforts, the European Commission began to formally introduce measures to promote competition in the European rail market. The United States transferred passenger rail responsibility to a government corporation, Amtrak, in 1971 and deregulated its freight rail sector with the Staggers Act of 1980. 

The Characteristics of Railroad Structures 

Railroads can be characterized according to the extent of vertical and horizontal integration and separation of infrastructure and operations, shown in Table 1.  

Table 1. Characterization of Railroad Structure 

European railways in the early 20th century were both horizontally and vertically integrated, meaning there was one entity that controlled both infrastructure and operations in the entire country. But Europe moved towards vertical separation at the end of the century. In contrast, the US freight rail sector is vertically integrated and horizontally separated: multiple private freight railroads operate separately across the rail network (horizontal separation), and each private freight railroad controls the infrastructure and conducts its own operations on that infrastructure (vertical integration). 

The US passenger rail sector is somewhat complex. The Northeast Corridor (NEC) is vertically integrated, with Amtrak operating rail services and owning the infrastructure. However, multiple commuter rail agencies operate passenger services along the NEC, which adds an element of horizontal separation, although they do not own the infrastructure. Outside of the NEC, Amtrak and commuter rail agencies operate on infrastructure owned by freight rail companies, contributing to the horizontal separation in the freight rail sector. 

Rail Restructuring in Europe 

1991: Laying the Foundation 

European restructuring of its railways began in 1991 when the European Commission enacted Directive 91/440, which required member states to vertically separate their rail management structure by separating infrastructure management and operations. An infrastructure manager would be the entity responsible for rail infrastructure: track, signaling, maintenance, capacity allocation, and sometimes stations (Capacity Allocation refers to the process of the infrastructure manager assigning time/space on the network to operators). Operations would include rail or train operators, which are companies that run passenger or freight services.  

An underlying principle in the Directive was to enable competition between railway operators. Separating railway infrastructure from operations was believed to create the potential for multiple operators to participate and provide service, creating an environment of competition, and strengthening railway performance in the face of growing competition from other modes of transportation.  

Post 1991 Railway Packages 

Since 1991, the European Union has adopted four rail “packages” aimed at opening the European rail market to competition based on the idea of vertical separation. The first two packages opened domestic and international freight rail markets to competition through open-access rules. Open access refers to rules that allow multiple operators to run services over the same infrastructure. Allowing open-access freight services enables rail operators to compete within a member state’s rail system and for operators in one member state to access infrastructure in other member states’ systems, strengthening cross-border freight movement. 

The third and fourth packages opened domestic and international passenger rail markets to competition through open-access and public service contracts. A public service contract is an agreement between the government and a rail operator under which the government compensates a rail operator for providing services on essential and unprofitable routes, mainly in regional or commuter settings. Unlike public service contracts, open access rail services do not involve government subsidies, and the system is open to any public or private operator (although operators may compete for public service contracts). 

Core to the rail reforms over the years is the idea of vertical separation boosting competition and increasing efficiency. Establishing open access and public service contracts across the freight and passenger rail markets reflects the EU’s push to open the rail network to multiple operators. This has been largely successful. New entrants accounted for 39% of the freight rail market in 2018, rising to 49% in 2022. In the commercial passenger rail market, new entrants accounted for 12.6% of the market in 2022, up from 6% in 2018. On the public service side, new entrants made up 21% in 2022, up from 13% in 2018.  

Proponents of the rail reforms argue that competition from multiple operators on the network improves rail performance. Competition in the rail market can be an incentive for operators to provide efficient and high-quality services to attract riders and spur innovation.   

But the research on vertically separated models is mixed. Vertical separation introduces extra coordination costs. In Sweden, trackwork scheduling has become an issue when contractors modify maintenance schedules, undermining the train operators’ ability to run services efficiently and contributing to delays. New mechanisms are needed to resolve conflicts over train paths, manage rail-wheel standards, and assign responsibility for delays.  

Successful vertical separation is also reliant on adequate regulation and infrastructure access. Regulators must ensure that infrastructure managers and train operators avoid anti-competitive behavior. An infrastructure manager providing preferential treatment to a train operator holding a large share of the market creates an unfair environment for smaller operators who are legally allowed to access the network. 

Two European Models for Vertical Separation 

Even within the EU, countries have landed on a few different models to comply with the vertical separation directive. Two broad approaches are a complete institutional separation model and the holding model. In the complete institutional separation model, infrastructure management and train operations are conducted by separate companies that are institutionally and functionally independent. The infrastructure manager typically provides network access to operators and allocates capacity across the network. In contrast, in the holding model, the infrastructure manager and train operators are legally separate entities but remain under an umbrella holding company. While subsidiaries operate under the same umbrella company, the model satisfies the EU separation requirements from a corporate and accounting perspective. 

Complete Separation in Sweden 

Sweden led the continent in the move towards vertical separation, initiating separation prior to the EU Directives. The Swedish rail market includes the Swedish Transport Administration, which owns, constructs, operates, and maintains all state-owned roads and railways; a state-owned passenger rail operator, which must compete through open-access or tenders with private operators; a state-owned company that manages railway stations and related properties; two private maintenance companies; and a state-owned freight operator. Sweden also has Public Transport Authorities in each of its counties that are responsible for subsidizing regional and local services.  

In 2010, domestic passenger rail services were fully liberalized, creating an open access environment along the country’s long-distance lines, well before the EU pushed for open access in domestic rail markets. Sweden is often seen as a success story in complete vertical separation. Some research attributes its success to a balance between the public and private sectors. Public service contracts for regional rail services co-exist in a system with commercial open-access services on main lines connecting major Swedish cities.  

While the Swedish passenger rail market is fully open, the modal share of passenger rail has grown slightly from 8.1% in 2008 to 9% in 2023, suggesting that even with open access on the rail network, rail still holds only a small modal share in passenger travel. Additionally, only the main long-distance lines are open access. The government still subsidizes regional and local routes through public service contracts.   

Some research has indicated that on-time performance in Sweden has increased since 1988, suggesting a relationship between vertical separation and on-time performance. Multiple operators competing for the same tracks will push operators to be as efficient as possible, but the research does not show a causal link between the increased competition from vertical separation and on-time performance.  

The Holding Model in Germany 

Germany is often looked at as the premier example of the holding model in vertical separation. The main holding company is Deutsche-Bahn AG (DB AG), which is owned by the state. There are several key entities within DB AG that manages or operate separate aspects of the rail system: 

• DB InfraGo: manages the national rail infrastructure, including stations 
• DB Fernverkehr: operates long-distance passenger services 
• DB Regio: operates regional and local passenger services 
• DB Cargo: oversees freight services 
• DB Schenker: oversees international freight and logistics 
• DB Systel GmbH: IT partner 
• DB Energie: manages energy 
• DB Engineering and Consulting: oversees construction and planning 

In this structure, all of the actors controlling infrastructure and train operations are legally separate but remain subsidiaries of the same holding company, DB AG. The advantage of the holding model is that while the infrastructure and operations are legally separate, being under the same umbrella eases coordination for scheduling trains and creates alignment on system priorities. In contrast, independent companies in the institutional separation model are not always aligned on priorities, leading to confusion and delays.  

While the holding model satisfies the vertical separation requirement, it has not achieved significant expansion of competitors. DB dominates the rail market in Germany, holding 96% of long-distance services and 72% of regional and local services. There are other competitors in the rail market like FlixTrain, but they only account for 4% of the long-distance services.  

 In 2026, DB CEO Evelyn Palla announced plans for a major restructuring of the company. The plans include streamlining decision-making by reducing the number of members in the Group Executive Board and DB InfraGo board, as well as streamlining the business structure of DB Regio and DB Fernverkehr. However, this organizational restructure will keep the holding model in place.  

Restructuring US Passenger Rail 

There are no official public plans to restructure the US national passenger rail carrier, Amtrak. However, the Federal Railroad Administration (FRA) leadership expressed interest in structural change at Amtrak at a February event held by the American Association of State Highway and Transportation Officials (AASHTO). This has spurred conversations in the US rail space about a potential restructuring, and a statement from the Rail Passenger’s Association (RPA) provides a detailed summary of what a restructured Amtrak could look like.  

According to the RPA’s statement, Amtrak would act as the holding company with three separate subsidiaries under the company. 

• Infrastructure Management Entity: Controls all Amtrak-owned infrastructure including maintenance, dispatching, and capital delivery work. Most of the Amtrak-owned infrastructure is on the Northeast Corridor (NEC).  
• Rolling Stock Management Entity: Manages all Amtrak-owned rolling stock, maintenance facilities, and would include state-owned equipment (e.g., passenger cars owned by the North Carolina Railroad or Caltrans equipment) in an RSME equipment pool. 
• Operational Entity: Operates the Northeast Corridor, State-supported, and Long-distance services. 

Such a restructuring would be a lengthy process; formal restructuring of Amtrak would require Congressional action beyond an FRA proposal. In a world where this plan is successful, Amtrak would be a vertically separated company, mirroring the holding model used in Germany, with fewer subsidiaries. There would also likely need to be a government entity responsible for mediating among the holding company’s subsidiaries, similar to the European structure of a government regulatory body providing rail market oversight.  

One consideration for restructuring is the role of private railroads. Norfolk Southern and CSX currently have operating agreements to run trains along the Amtrak-owned NEC, and these agreements could look similar under an Amtrak holding model. 

But the role of private railroads reveals a key difference between vertical separation in the US and Europe, where vertical separation was promoted to open the market to multiple operators and increase competition. In European countries, there is typically one infrastructure manager in the vertically separate structure. However, the larger US rail network is vertically integrated. Vertically separating Amtrak could create a scenario with multiple infrastructure managers across a system that is both vertically separated and integrated. The new infrastructure management entity would need to coordinate with the freight railroads in instances when trains operate between railroads. (Technically, this could also be solved by creating a single public infrastructure manager to own all rail infrastructure and set uniform rules about who uses the infrastructure across the whole network. This is far more ambitious than any plan to restructure Amtrak, although not unprecedented: the US nationalized its railroads during World War One. But perhaps one ambitious plan to change US rail is enough for now.)