BRUSSELS: The European Commission's (EC) latest report on the European rail market says more open competition and increased public tendering will lead to better services in several Member States.

Currently Europe's railways cost €36 billion in public subsidies a year - almost as much as they earn from fares.

Vice-President Siim Kallas, European commissioner responsible for transport, said while rail has significant potential as a green and sustainable mode of transport it was necessary to "take bold measures to put EU railways on track for the 21st century".

The EC is proposing a so-called "4th Railway Package" to not only streamline vehicle authorisation procedures, increase investment in infrastructure and boost research and innovation in rail, but also open domestic intercity markets to competition and generalise tendering for public service contracts.

The latest report says rail freight is now generating almost half of its traffic from cross-border services. However it still lags behind the growth of other transport modes and the EC says the ports of Rotterdam and Antwerp "could do better" in terms of freight traffic.

With State-owned public rail monopolies increasingly replaced by international private-sector groups, the EC notes new entrants are already employing 120,000 people and have a 21 percent share of the passenger and a 28 percent of the freight rail market.

The report notes that European rail prices are lower where there is open competition and says prices on the Rome-Milan route, where two rail operators compete, are 25 - 40 percent cheaper than between Madrid and Barcelona where there is no competition.

In its latest rail proposals, the Commission says it will oblige Member States to put contracts out to public tender in order to deliver better quality rail services and better value for money and impose open competition on high speed and inter-city lines.