Foreword by the CEO
For NS, 2021 was another difficult year, both from an operational and a financial perspective. This applies in particular to our employees. We have nevertheless proved to be united and to be enormously resilient as an organisation. Despite the many setbacks, we managed once again to keep our trains running in 2021. We owe this to the unfailing commitment of all our colleagues. Together, we have kept the Netherlands accessible, in a sustainable manner. I am extremely proud of that.
With effect from April, after months of lockdown we were finally able to scale up our train services. People were keen to go out again and travel, and soon rediscovered the benefits of the train. Satisfaction with NS stations continued the upward trend. All the greater was the disillusion when a new curfew and partial lockdown were announced in late 2021. Those measures made it clear that the pandemic was far from over. In the period ahead, NS will continue to be confronted with lower passenger numbers and difficult financial conditions.
Despite the issues awaiting NS in the near future, the long-term outlook is promising. The country is facing major challenges in the fields of housing and the climate. For example, one million new homes will need to be built. This also calls for an infrastructure for sustainable mobility. In the past year we travelled to Glasgow in the Climate Train. One thing that struck me during the climate summit there was that more energy went into discussing problems than in discussing solutions. There was more talk about polluters than about front runners. Everybody is talking about carbon emissions, while NS has run climate neutral train services for years, thanks in part to wind energy. And everybody is talking about waste, while NS is already 99% circular thanks to our VIRM overhaul project. The train has always been a solution. Of course we will need to gain further momentum, by providing even better and more frequent connections between cities and regions. In 2021 we showed that we are able to do so. For example, since the new timetable came into effect we have run Intercity trains on the Rotterdam-Schiphol-Arnhem route every 10 minutes, providing extra flexibility for passengers. Another example is the F1 Grand Prix in Zandvoort: in close collaboration with ProRail, in a single weekend we transported nearly 90,000 visitors in ultra-high-frequency trains (every 5 minutes) between Amsterdam and Zandvoort. This required the deployment of 300 additional staff. A world-class achievement and a significant logistic challenge.
A large proportion of our staff worked in the front line during the COVID-19 crisis. They were always ready to serve, despite the uncertainty about how long this crisis was going to last. The protests in Eindhoven were quite frightening, also for our colleagues. Due to the low passenger numbers, the presence of tramps, loitering youths etc. was more conspicuous than usual. This affected the safety perception among passengers and staff alike. We also noticed that not all passengers comply with the COVID-19 measures, such as wearing a face mask. We will continue to call them to account over this, even though it occasionally results in aggression on the part of the passenger. Our office staff have had to work from home for much of the year, which demanded a great deal of flexibility on their part. It was a challenge for us all to keep our spirits up. The Executive Board made over a hundred summer visits to talk with staff about NS and their work. After all, we need each other to be successful. We are aware that changes and procedures sometimes take a great deal of time. But we really want to be careful. For example, the procedure for Individual Compensation for Victims of WWII Transports by NS was finalised in 2021.
Our aim is to persuade 1.4 million passengers to board our trains every working day. This figure is higher than ever before. Not all of these will be the same passengers we transported two or three years ago. People have rearranged their lives since then. This is resulting in new mobility needs and changes in the distribution of passengers over the day and the week. New spatial developments in our cities, including the creation of low-traffic city centres, are reinforcing these trends. We are preparing for this by ensuring a wide range of services, a high-quality timetable, top-class stations and facilities, and convenient personalised journeys from door to door.
Internationally, on routes of up to 700 kilometres, rail has great potential to develop into a sustainable travel alternative. Thalys services have been in operation between Paris and the Netherlands for 25 years. Following completion of HSL South, Thalys became a competitive alternative to air travel. Before the COVID-19 crisis, around three quarters of passengers to and from Paris opted for the train. The House of Representatives is currently discussing a research report on regulation of the market for international connections. In 2022, the government will decide on how international passenger transport is to be regulated. NS is keen to keep contributing to sustainable international railway transport in Europe.
NightJet Vienna/Innsbruck and NightJet Zürich started services in 2021, highlighting the opportunities out there for the train. For this to be a success, however, we will have to make it easier to book international tickets and improve the rail infrastructure. During the 2021 European Year of Rail, a special train called the ‘Connecting Europe Express’ travelled across Europe. In concert with the other European transport companies we used this tour to promote a strong, innovative and safe international transport network. We will continue this effort. NS has joined forces with other mobility partners in the Mobility Alliance, calling for an audacious and ambitious investment programme. The new Dutch government's coalition agreement presented in late 2021 contains some promising sections in this regard.
Safety remains our top priority. Last year the investigation report was published on the tragic accident near Hooghalen, in which one of our colleagues died. In response, together with ProRail we immediately implemented additional measures to further increase safety at and around uncontrolled level crossings. Ultimately, all level crossings of this type will have to be closed to make sure the rail system is truly safe.
An agile organisation
In order to keep the Netherlands accessible in a sustainable manner, NS needs to meet passengers’ wishes and respond quickly to changes and opportunities in its environment. This means we will have to become more agile and flexible, and organise the company and our work in keeping with today's requirements. This calls for an even richer diversity of people and views in terms of age, experience, background, gender, sexual orientation and character. We also need to become more effective as a company, by reducing the number of support staff departments and management layers. Up to and including 2024, 2000 jobs will go at NS – all via a process of natural wastage and accompanied by an employment guarantee. We will also modernise our IT systems and accelerate the digitalisation process. We have made considerable progress on these points over the past year. There is an urgent need for new people in specific job categories. However, we are facing acute shortages on the labour market, especially in the supply of engineers and IT specialists, as well as in staff on the trains and retail staff. It is essential, therefore, that we remain attractive to new talent while at the same time ensuring high-quality training, guidance and career options for our existing staff. We are making considerable investments in training facilities to ensure long-term employability for our people. Within NS, too, many colleagues have moved to a different job and now work as train drivers or guards, for instance.
Agility also calls for a change in behaviour: a willingness to change and the courage to speak our minds and call others to account. About what is going well and what is not, and also, crucially, about respect and integrity. Inappropriate behaviour, of whatever type, is unacceptable and will not be tolerated within NS. Not in our trains, not in our stations, not in our workshops, not in our offices. We want everybody to feel safe with NS.
The operations of our subsidiary Abellio must serve the interests of passengers in the Netherlands, by contributing to higher-quality international and regional cross-border connections and to a positive financial result. Our subsidiary in the United Kingdom, Abellio UK, has survived the COVID-19 crisis reasonably well, thanks in part to the measures taken by the UK government and the efforts of our subsidiary. We were able to close our 2021 UK operations with a profit, even without the one-off adjustment resulting from significantly lower termination fees than the Department for Transport had initially imposed. The COVID-19 crisis did however accelerate a new market regulation system for UK railway transport. While the UK market will remain accessible to private parties, coordination will be strengthened to achieve a more straightforward organisation of the UK rail system, in the interests of passengers. What exactly this is going to look like should become clear in the years ahead. While Abellio UK will continue to play an active role, NS is reconsidering its involvement in the United Kingdom in view of the interests of Dutch passengers. Needless to add, this will be done with the utmost care so as to protect our interests in the United Kingdom.
The restructuring operation in Germany was necessary on account of our loss-making activities there, which can be attributed mostly to unforeseen circumstances. In Germany, Abellio will continue to operate a limited number of franchises, in Lower Saxony and in the central part of the country. Operations in North Rhine-Westphalia and Baden-Württemberg were terminated and transferred at the beginning of this year. This signifies the end of our activities in this German border region which is so important to the Netherlands. However, we certainly have not given up our ambition to operate across the border and will continue existing services to Paris, London, Brussels, Frankfurt and Berlin.
As in the preceding year, COVID-19 and the loss of passengers due to successive lockdowns and government measures had a significant impact on our income in 2021. Without the availability payment (beschikbaarheidsvergoeding) and Temporary Emergency Bridging Measure for Sustained Employment (NOW), we incurred a severe loss of revenue in the Netherlands in 2021 amounting to over €1.3 billion relative to 2019 (pre-COVID-19). We are implementing a cost-savings programme to regain our financial health, keep train fares affordable and continue investments in our anticipated long-term growth. This programme should permanently reduce our costs by a quarter of a billion euros from 2024. So we are well under way, but a great deal of work still needs to be done and we want to do that carefully. Considering the further development of the COVID-19 crisis, the government's recent measures and their effect on passenger numbers, a financial scheme will continue to be required after the end of the current arrangement to maintain the Dutch timetable. At the same time, we want to maintain the high level of performance for our passengers and guarantee the continued safety of rail travel. This calls for a significant effort from all individual colleagues, and from NS as a whole, to mitigate the consequences for our staff by relying on natural wastage, offering retraining programmes and guiding our people to a new job. The years ahead will require a strong commitment from us all to help finalise the current reorganisation process while continuing to provide high levels of customer service.
Ongoing contributions to Dutch society
We will have to learn to live with COVID-19 and organise the country accordingly. For us, it is very important to know what this will look like. After all, if commuters are going to work from home one day a week more than they did in 2019, we may lose 10% of our revenue from transport services in the Netherlands. The man rail network franchise is vital for society as a whole and cannot be scaled down. With a view to the expected growth in passenger numbers by 2030 and our ambitions for cross-border mobility, investments in this network will have to be organised fast to enable us and our partners to prepare for and help build the future.
Also on behalf of my fellow members of the Executive Board, I would like to thank all NS colleagues, employee participation bodies and partners for their outstanding efforts and commitment. Finally, we would like to express our gratitude to the Supervisory Board and our shareholder for their dedication in 2021 and for the trust that they have placed in us.
Marjan Rintel, Chair and CEO