Federal<br/>Passenger Company Annual Report

Inter-sector competition

JSC FPC currently is the natural monopoly for domestic passenger rail services. However, there is also competition in this rail segment.

JSC Russian Railways high-speed train Sapsan, as well as trains and rail cars from private rail carriers (CJSC GrandServisExpress, CJSC TKS and Tverskoy Express LLC, amongst others) also operate on Russia’s domestic services railway network (domestic transport services) in addition to JSC FPC trains.

Independent private carriers and operators occupy an insignificant share of the market — 2.2% and their presence is mainly strongest on popular routes (Moscow — St. Petersburg, Moscow — Nizhny Novgorod etc.).

Due to the launch of the new Lastochka express trains on the following routes: St. Petersburg — Velikiy Novgorod, St. Petersburg — Bologoye, Moscow — St. Petersburg and Moscow — Nizhny Novgorod, JSC Russian Railway’s market share increased to 3.81% during the reporting year. As of August 1st 2013, Lastochka trains on the Moscow — Nizhny Novgorod route have been leased to JSC FPC.

The presence of international operators on the RF domestic market is limited. Foreign trains do not constitute significant competition for JSC FPC trains on domestic rail routes. Foreign operators’ presence in internal Russian market is limited. Foreign trains are not viewed as significant competitors for JSC FPC on Russian routes.

Market structure of long-distance passenger rail services in 2013 (domestic transport services), by number of passengers travelling, %