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Oleg Belozyorov: We'll do everything on our own and not ask for alms

Russian Railways president in TASS special project Top Officials
Andrey Vandenko 
Andrey Vandenko

Andrey Vandenko was born on November 8, 1959 in Lugansk, Ukrainian SSR. In 1982, he graduated from the Taras Shevchenko National University of Kiev with a degree in journalism. Since 1989, he has been living and working in Moscow. For over 20 years, he has built his career as a journalist specializing in interviews. His work is published predominantly in Russia’s leading mass media outlets, and he is the recipient of numerous professional awards.

Part 1
On steam engines and planes, charter trains, bottlenecks and changes for the better


The president of Russian Railways in an interview has told TASS about prospects for using the Hyperloop technology in Russia, the changes in the company he runs, his favourite Zodiak sign and much more


- Travelling by air or by train – is it a dilemma for you?

I believe it’s better to spend time on doing my job than on travelling

- In principle, it isn’t. What really matters is getting to the destination you need as soon as possible. What means of transportation you choose is of secondary importance. The ultimate goal always comes first. It is to be achieved in the most effective and optimal way. If I must fly, I fly, if I must walk, I walk. No problem!

I believe it’s better to spend time on doing my job than on travelling.

- And still, you saw a steam engine before you saw a plane, didn’t you?

- Quite right. I was born in Ventspils, a seaport, where cargoes were delivered by rail. The airport was at the other end of the city, three kilometers away, which was quite a distance by local standards. The look and smell of the rail track were far more familiar. Besides, my mother was a doctor at the local railway’s outpatient clinic.

I started using planes regularly to travel from Leningrad, when in 1992 I graduated from the Voznesensky Institute of Economics and Finance. In Latvia we moved about by train. To the republican capital Riga, too, although bus services were far more frequent. After all, 120 kilometers is a rather long ride. A train carriage is far more convenient. I recall one particular family outing. We travelled by train for three days to see Latvia’s places of interest. We were on the move during the night and in daytime we went sight-seeing about the castles. This small country is very rich in historical sites and architectural monuments.
Incidentally, the Russian railways company RZD has a special department for relations with travel agencies. If necessary, you can order a charter train and request any route.

- Is this service in good demand?

- Yes, tour companies eagerly use this option. The traffic schedule is the key problem. Changing train schedules is a costly affair. But if the requested route is a well-established tourist itinerary, the costs are in no way different from those of an ordinary passenger train. In cash terms it’s basically the same.

- You took over the RZD on August 20, 2015. Did you set yourself a task of inspecting all of Russia’s railways within a certain deadline? Say, one year?

- I established no special time frames, although I surely made plans for visiting each of the sixteen railways. Over one year I inspected all of them but one, in Kaliningrad, where I only managed to introduce the new chief, Viktor Golomolzin, to his subordinates. I will certainly go there again to see the state of affairs and to meet with the staff. When I’m on business trips, I prefer not so much to chair office meetings as to see the infrastructure and meet the people. Seeing and hearing for oneself is the best way of getting information.

The assets being contested are different. Human resources are possibly the most precious of all and they are in the greatest demand

There, where a good team of co-workers has taken shape, the business mechanism works with the maximum efficiency. Even in defiance of objective problems. The basic performance parameters –  rather the ability or inability to meet the targets - readily expose problems with human resources. The scale of tasks accomplished depends on how successful, motivated and committed to the common cause the employees are. The modern world is a scene of struggle for capital and resources. This is a universal truth. The assets being contested are different. Human resources are possibly the most precious of all and they are in the greatest demand. People are free to choose where they feel better and more comfortable. Our task is to create competitive conditions.

- What can you offer?

Railway jobs are for real men, although there are quite a few women employees

- To begin with, we, railway people have really thrilling jobs. It is important for any person to have a chance to display one’s potential. Railway jobs are for real men, although there are quite a few women employees within the RZD system. We pay decent wages, 30% above the average in this or that region. People have a good opportunity to establish themselves and solid reasons to remain committed to their jobs. A package of hefty fringe benefits is another argument in favor. We painstakingly observe all of our commitments under the collective bargaining agreement. Hospitals, childcare centers, mortgage discounts… That’s the way it is and that’s the way it will be. True, at a certain point some started arguing that health care is a non-core asset and should be dropped. I strongly disagree. It should be remembered that at some remote communities in Siberia and the Far East the local railway-supported health service establishment is the only one available. There’s just no other alternative.

- What are the Russian railways’ bottlenecks?

- The Trans-Baikal Railway is in the most complicated position. Historically, there’ve always existed a bundle of intricate problems. Still more headaches emerged in recent years. In a word, the railway’s condition was anything but normal. We are in the process of sorting things out. It’s still very far from the ideal, but the situation has been changing for the better. On the one hand, the railway failed to enjoy proper attention, but on the other no one could have predicted that such a mighty flow of cargoes would start flowing to the Far East. The traffic has surged up. The yearly growth is as big as ten percent.

- China?

- Not only. The whole of Asia. The West concludes far fewer contracts with us today that it used to, the sanctions have changed the market situation. More cargoes are going to the south and to the east. The Baikal-Amur railway is unable to handle the whole amount. Also, a great deal depends on the location of ports where the freight trains arrive. The Trans-Siberian was laid 110 years ago. This is an old line and it needs considerable upgrade and renewal. Changing the rails and the sleepers is only part of the task. The whole system is to be brought in line with the requirements of the day if the Trans-Siberian’s throughput is to be increased in earnest.

- When can changes for the better be expected?

- Back in 2013 the Russian president and government made a decision to support a project for developing the eastern railway network that incorporates the Baikal-Amur line and the Trans-Siberian. We hope to be finished in 2019.

- Wasn’t 2018 set as the original deadline?

- We changed it on purpose. The RZD does not produce much on its own. By and large we transport somebody else’s products. Our main cargoes are coal and ore. These items are provided by our counterparts. As the commissioning of mines and production facilities is delayed, we have to revise dates, too. If we create infrastructures ahead of time, before it is in real demand, we will have to pay taxes on it. Moreover, this would be tantamount to ineffective use of budget money, and we cannot afford this in the current complex situation and in any other, too.

- When you took office a little more than a year ago, you said that you would not dismiss the previous team. But many of your deputies who held the posts of vice-presidents are gone.

- To begin with, not a greater share of them, but a smaller one. Dismissing the previous team has nothing to do with my style of work.

- As far as I know, more than half of the old-timers have been replaced.

- Really? Honestly, I’ve never bothered about making such calculations. Never thought they might be of any use… Besides, not all of them have left the company. Say, Vadim Morozov was the RZD’s first vice-president for ten years. Now he is my senior adviser. I have tremendous respect for this man. He is an excellent specialist, a real professional. True, he has his own ideas of certain managerial solutions, different from my own. We’ve devised a way of how to use Morozov’s knowledge and experience best…

- Also, the chiefs of three railways have lost their posts.

- Not quite so. For instance, Vladimir Goloskokov, the chief of the Northern Caucasus Railway has moved from Rostov-on-Don to St. Petersburg to take over the October Railway. Oleg Valinsky has been relocated from St. Petersburg to Moscow to the position of RZD vice-president and chief of the engine fleet. And Goloskokov’s former deputy, Vladimir Pyastolov, has been promoted to lead the Northern Caucasus Railway. In a word, dismissal is the wrong word. It’s rotation. New chiefs have been appointed to command the Kaliningrad and Far Eastern railways. Their predecessors have retired. And the former Chief of the Volga Railway was dismissed after an internal investigation.

- Do you give a second chance to those who’ve made a mistake?

- Mistakes vary. Some are unforgivable. Of course. I would agree with the old truth: “Failure teaches success.” If someone really wishes to correct a mistake, he is to be helped.

I try to maintain calm and professional relations with every single person

Don’t you see, we’ve got together to do our job right. I try to maintain calm and professional relations with every single person. Nothing personal. Natural processes are afoot. Certain rotation proceeds. Some colleagues have retired for age reasons, others have been moved to new positions inside the company and given new assignments. It turned out that some top managers were not good enough for their jobs. They failed to match the new requirements and had to be dismissed. But I don’t see anything tragic about that.

- Is the search for a scapegoat an effective way of addressing issues?

- I don’t believe that this should be a manager’s key task. Identifying and punishing those responsible may be a thrilling process, but far from always an effective one. Take the Trans-Baikal Railway. This is precisely what happened there again and again for a long time. Executives of this or that level were fired each time there occurred an accident, a schedule disruption or some other emergency. Under the established system and in accordance with our own internal corporate rules we cannot but punish someone, once a mistake has been made. In the end there emerged a situation in which everybody refused to be appointed to such suicidal positions. I tried to change the approach. It is far more important not to punish, but to do one’s best to enable employees of different talent and ability to address arising issues and come up with properly configured solutions. These days head office staff make fact-finding trips more often to settle matters on site.

True, my subordinates have to do things my way, but I make it pretty clear to one and all what I expect of them. Among other things costs are to be slashed and old habits dropped.
Life has changed.

- What is it you are talking about?

- To put it in a nutshell, it’s about being more modest. This quality is really important. Take care of other people. Retain your grass-roots connections. Move forward hand in hand with your colleagues, and not on your own. Stop catering to one’s own whims. Excesses never bring about anything good. I have nothing against comfortable conditions at work, but the balance should be observed and certain borderlines never stepped over.

As a result we’ve saved a great deal.

- How much?

Up to two billion rubles, something like that.

- What costs have been slashed?

- The overheads. Cars, trips, flights, hotels, the entourage, advisers, aides… And so on and so forth. A little bit here, a little bit there. That’s how it was all put together. I decided we can easily do without certain things.

Part 2
About buttons sewn pretty damn tight, time for adaptation, Moscow’s Circular Railway and dancing bridges


- You’ve cut your own staff by ten percent, haven’t you? Was it a cut to the quick?

- It was. In the railway industry there are no “dead souls,” no vacant staff positions. As I’ve told you, all jobs are well-paid ones and never remain unfilled for too long. This year all of our employees are to get a six-percent pay rise. But our labor productivity is growing, too. At first, we agreed to achieve 3.5% growth by the end of the year. The rate is already higher and there is still much time and room for improvement.

In the railway industry there are no “dead souls,” no vacant staff positions

You know, our reasoning was extremely pragmatic. We eliminated unnecessary functions and at the same time achieved higher effectiveness. All business processes were scrutinized with the aim to see if some functions are redundant or not. The RZD is a mammoth structure and all of its components are to be adjusted in a way that maximizes the company’s performance on the whole. In some cases it turned out that an individual element of the system, although it worked extremely well, at the same time caused colossal harm to the other processes. Here’s an example. Greater speed and faster delivery results in a situation where there will be no chance of unloading the cargo at the seaport, thus creating trouble for all. The rail track will be occupied. The traffic controllers and other related divisions will have more duties to attend. How should we go about that business? Loading and transportation is what we get money for. But one division is responsible for cargo handling, another, for transportation and a third, for unloading. Each is eager to excel at work, to display one’s maximum abilities. But for the entire company smooth operation of the whole system is far more important. Some people had to be told: you are great guys, you loaded the cargo really fast, and others hurried to deliver it, but now the train stays idle. There is no chance to dispatch it to the expected destination or use alternative routes. One parameter has been improved only to entail a long string of problems – excessive spending on train crews, idleness, schedule disruptions…

- You surely remember Mikhail Zhvanetsky’s hilarious Awfully Tailored Suit Sketch? A customer hopelessly trying to find out who of the one hundred tailors, each responsible for just one tiny operation, was to blame for the utterly unwearable garment? And the real punchline from one of the sloppy workers: “Anything wrong about the buttons, pal?”

- The customer’s reply is one of the most favorite phrases of mine. “By no means, each single one is sewn pretty damn tight.” But, you know, we’ve managed to achieve something after all to make the suit fit the customer better. We are still in the process, but some results are already in sight.

- Did RZD people give you a warm reception?

I am not a technical specialist and I am not trying to pretend to be one

- Don’t forget, I spent many years working at the Federal Road Agency and RZD officials’ paths and my own often crossed. We built bridges across railways and had to resolve a great deal of other problems. Then I moved to the Transport Ministry, where I was responsible for the budget and a number of important fields of activity, including the railways. Then I was a member of the RZD Board of Directors for eighteen months, and in that capacity I got familiar with a great deal of information about the company. I am not a technical specialist and I am not trying to pretend to be one. Moreover, I emphasized and capitalized on this quality of mine when I wished to achieve a certain result. I told all those around I was not a professional railway specialist and it was their mission to show me the way to do the job right. When I heard objections to the effect a certain problem was insoluble, I replied that such excuses might be permissible for an outsider, but not for those who had grown and matured as specialists within the railway industry… At this point all discussions usually died down and everybody left for one’s work place. It took my colleagues a short while to understand this gimmick of mine. A month later they started telling me that I was a railway specialist no worse than anybody else. In other words, let’s look for solution together.

- But you surely needed some time for self-adaptation.

- It goes without saying. The organization is very complex and one may spend the whole life studying it. I haven’t tried to reorganize the system globally. Minor projects helped us realize the way it all works. Say, last year, we increased the frequency of Sapsan speed train services between Moscow and St. Petersburg and opened an express train service from Moscow to Kryukovo.

- But why do you put these projects on the same list? St. Petersburg is far away, while Kryukovo is just a suburb of Moscow.

- In both cases the result was positive. But it could’ve been the other way round, had we started running the trains in accordance with our original plans. We would’ve seen nothing but no end of disputes and scandals due to poor coordination with ordinary train services. True, people have to undergo retraining while staying in motion all the time. And it cannot be otherwise. Train traffic is a non-stop process. It cannot be paused for a minute.

At the moment we are putting the finishing touches to another complex project. Possibly, it one of the most complex ones in recent years. It’s about starting passenger traffic on the Moscow Circular Railway. It can hardly be compared to anything. There was a heap of problems, from security to issues of urban construction, management, technologies and traffic schedule… Building the Baikal-Amur Railway was easier in a sense. The Moscow Circular Railway emerged a hundred years ago. In those days it was built along the city limits. The passenger traffic project was first launched in 2011. A comprehensive development program was being drafted then. At the Ministry of Transport I was responsible for the Moscow transport hub. I recall it was a great surprise for me to learn that the circular railway would be the most effective means of transportation inside the city, and not the metro or bus services, let alone private cars. Provided there were convenient interchanges and well-placed car parks.

But the task proved extremely complex. The best specialists had to be invited. Moscow’s previous mayor, Yuri Luzhkov, focused on laying outbound highways, while his successor, Sergey Sobyanin, demonstrates a more comprehensive approach to Moscow’s transport problems.

- Was there light at the end of the tunnel called Moscow Circular Railway passenger project already when you took over the RZD?

- One year was still to go before the commissioning date, but no certainty existed at the moment it could be met. The certainty we will succeed emerged on June 23, 2016.

- What happened on that day?

- A very important phase of work was completed. Including electricity supply lines. Let me say once again: an awful lot of problems had to be resolved – gas and heating pipelines had to be re-laid and nearby territories cleared…

- So a steam engine can be fired up easily, provided the wish is strong enough?

the bridge to Russky Island in Vladivostok Yuri Smityuk/TASS
the bridge to Russky Island in Vladivostok
© Yuri Smityuk/TASS

- If you know how to go about the business and how much coal to shovel into the furnace. My previous career at the road agency provided invaluable experience. Its management system was far more intricate. The RZD is a one-man command system, while all decisions regarding motor roads, which can be seen everywhere, are made collectively and the agency’s chief is responsible for everything, including the state of affairs in the regions. In distributing budget subsidies one should be aware what is happening locally. As you may understand, a mechanism of control in a country like ours is very hard to establish. Roads in Russia take too much time to build. We managed to complete twenty projects, some of them several decades old. We had a program for finalizing the construction of the so-called “classless” bridges in Yaroslavl, Kemerovo, Novosibirsk, Ulyanovsk, Tomsk and Volgograd. Also, there were new facilities, such as the bridge to Russky Island in Vladivostok. It was designed and began to be built when I was in charge. When I moved to the Ministry of Transport, I was no longer responsible for it, though.

- The bridge in Volgograd you’ve just mentioned is the one that was dubbed “dancing bridge,” right?

- But eventually it remained in place and it is still there. Nothing awful happened. Even the paint remained intact! I was there the next day after the “dance.” There’ve been various explanations why this happened…

To forestall such incidents we’ve simulated and made allowances for all likely effects, including strong wind, high waves on the river and even neglect of safety rules at some places. The bridge is designed to carry a certain load and it can perform up to two million oscillations.

- And what bridges are called “classless”?

- Those more than 500 meters long or having one span more than 150 meters long.

Part 3
About KPI, subsidies, the quest for new happiness, Passenger Year and named passenger trains


- Your employment contract mentions the Key Performance Indicator (KPI). Whose idea was it to complement it with a special clause regarding effectiveness?

I am the top manager and I’m entirely responsible for the RZD’s performance

- That parameter was in the contract before, but previously the RZD president’s performance was measured in accordance with four general parameters, while there was 26 of them in the company in general. Different sets of indicators for different divisions. I felt obliged to pool them all and to include them in my contract. Before, it might seem that traffic safety or some other aspect of activity was not my direct competence. This is not so. I am the top manager and I’m entirely responsible for the RZD’s performance. It was essential for me to show to all of my subordinates that I am responsible for the end result like everybody else. That we are one team.

- Who rates your performance?

- The Board of Directors. All of my bonuses and other remunerations, too, require its approval. I have quarterly targets to meet, and I present a report on their basis at the end of the year. In 2015 our plans forecast a 26-billion-ruble loss, but we ended up with a 300-million-ruble profit. This year we are expected to make a 900-million-ruble profit, but we wish to achieve more. We keep working to improve ourselves. The company’s potential is enormous.

- In 2015 the RZD for the first time managed to do without operating subsidies. Why had it failed before?

- There are various ways of achieving a balanced budget. Getting government subsidies is one. Possibly, it is the easiest solution of all. Raising tariffs is another. But in either case internal effectiveness will be invariably present in the equation as one of the values. When I joined the RZD, the issue on the agenda was getting 70 billion rubles in subsidies in 2015. Then the demand shrank to 40 billion, 30 billion, 20 billion…

- That you saved so much money so easily apparently means that the company was extremely inefficient in the past, correct?

- What makes you think that saving money was easy? We drafted a plan and we systematically implemented it. This year we hope to cut operating costs at least by 60 billion rubles. The program is close to completion. Where do we go for resources? This is what a manager’s job is about. We reviewed the traffic issues, the engine fleet, the mechanism of forming business programs, we looked into the effectiveness of property management, purchases of materials, the operation of affiliates, interaction with cargo senders, staff lists, personnel size, salaries paid to head office employees… Many different components. In wintertime a railway engine may spend several hours outdoors, running at idle, or wait for the moment of departure inside a warm depot. Do you see the difference? Fuel consumption and the wear and tear rate are different. And so on and so forth…

Now we tend to count each dime. This helps the company save billions. The first move should be to try to identify internal resources instead of hurrying to ask the government for help. That’s what makes the world go round: don’t ask for alms but do something yourself, find extra sources.

Another example. We use more than fifteen hundred computer programs. Many of them are redundant. Software unification alone cut costs significantly.

- How significantly?

- By several hundred million rubles… That’s the way of cutting corners. This work is underway in the company at different levels – from the very top all the way down. We don’t hesitate to rid ourselves of the assets we do not use. We are conducting wholesale inventorying once again.

- Again?

- The way I see it, far from everything has been counted, and the counting done so far was wrong. It should be done the modern way. Not roughly, but accurately, with all assets inventoried at their real value. If it turns out that we don’t need something, let’s sell it or write off. What’s the reason for keeping it on our balance sheet and paying redundant property taxes? It’s an old-time custom: we’ve had it all along and may it remain so further on. No, we will put an end to this attitude. Everything redundant will be disposed of.

Of course, we cannot go entirely independent from budget funding. Say, contributions to the charter capital of major projects or passenger traffic subsidies. Commuter trains, long-distance trains, discounts for certain groups of passengers – veterans, schoolchildren… The government decides what routes it needs, who and what should be transported and what fares are to be charged. We are a joint stock company and we must not operate at a loss. Moreover, have no right to this. The RZD is a carrier, a contractor, and not a customer.

- You declared 2016 as Passenger Year. This sounds nice but I’m naïve enough to think that for the RZD each year should be so.

- I agree, but there’s one little thing: to make this a reality the people whose duty is to take care of the passengers must be asked now and then to remember their priorities. The better we formulate the task, the greater output we’ll get. We’ve decided that 2016 should see noticeable progress in all passenger-related services. For instance, better services at the railway stations, better boarding platforms and solutions of a number of technologically complex issues that require considerable spending. Free Wi-Fi at the stations or electric sockets to plug in electronic gadgets to charge the batteries might seem unimportant to some, but already now they are a vital need. All this cannot be accomplished overnight. Some works will take time. The company has made a decision, and I’ve already briefed President Vladimir Putin on that, that Passenger Year will gradually evolve into an open-ended policy pursuing a clear aim: making train passengers the focus of our attention. In other words, from a list of measures due to be accomplished  this year we will make transition to a long-term program. For the time being, till 2020. But we will keep this key task of ours in mind much later.

- What are you priority guidelines?

- We’ve come up with a list of 150 items or so. The ones our clients have prompted to us. We’ve summarized and classified all messages the company has received this day. There are some very obvious things. Many complain about the air temperature inside the carriages. In summer time the ventilation system fails. We’ve been doing our best, but the heap of problems leaves no chance of settling with it right away. Many of the carriages still in use were built under old standards, when air conditioning was not a standard option. We are upgrading the fleet of both compartment and economy class carriages, but this is a lengthy process.

Of course, we experience certain financial constraints, but other things do not require large investments. Any contact with the steward should be pleasant for the passengers. We’ve introduced a special instruction course for the stewards, who are briefed on what they should pay attention to above all, what complaints are most frequent, and what they should do in response. In a word, they are taught the skill of proper communication with the passengers.

- Is the steward’s job in great demand?

- There is no shortage. The industry is conservative and practically staffed. The turnover rate is very low, several percentage points at the most. But retraining is a must. Before, the steward had to take care of the passengers and the carriage. Naturally, attending so many duties was a tricky task. Now the steward is entirely focused on the passengers, while getting the carriages ready for the journey and settling all related problems on the way is the responsibility of a special service.

- You’ve mentioned wi-fi at the stations. Can the same problem be resolved on the trains, too?

- Theoretically, yes, but in reality the design of the carriage has to be amended. For instance, on the Sapsan trains the existing technical capabilities of communication operators are still not good enough to maintain a signal of proper quality due to high speeds. But we are working on this. We are developing a special program for smartphones, which will provide access to various services – from ordering meals in the dining carriage and a taxicab at the final destination to information about the localities the route lies through. Before, the Russian airlines Aeroflot used to name its planes after our outstanding compatriots. Now we will have named trains. This is a joint campaign, started in cooperation with the Ministry of Culture timed for Cinema Year, observed in Russia in 2016. The trains 103/104 Moscow-Adler and 23/24 Moscow-Kazan bear the names of actors Vyacheslav Tikhonov, Lyubov Orlova, and Tatyana Samoilova and film director Leonid Gaidai, train 5/6 Moscow-St. Petersburg is named after film directors Eldar Ryazanov and Grigory Chukhrai, and train 35/36 St. Petersburg- Adler, after actor and film director Mikhail Ulyanov… Films featuring Russian legendary actors are shown on the trains on the way.

In a word, we are working really hard to provide the maximum level of comfort on our trains. Our passengers should face no restrictions, feel free to use the Internet, receive and send e-mails, watch the news and keep in touch with relatives and colleagues.

- It is common knowledge that the RZD makes money mostly on cargo traffic, while passengers yield no big profits.

- Yes, that's right. But fortunately, as we’ve already agreed, money is not the sole measure for all things in life. Passengers are not outcasts. Clearly, any railway station is only a temporary shelter, but I would like to recall that at the end of the nineteenth century renowned musicians and composers of that time performed recitals at the station in the town of Pushkin, the royal countryside retreat near St. Petersburg. It might be a good idea to restore the tradition of such concerts. We’ve already taken some steps along these lines. Last summer the RZD orchestra played at Moscow’s railway stations. Participants in the international music festival of military bands Spasskaya Tower performed there just recently, too, and with tremendous success. Cooperation with the leading music companies are on our agenda.

Of course, ticket prices are a matter of everybody’s concern. This year the prices of long haul train tickets have been up but the growth was still half of the inflation rate. On the eve of the holiday season we established a 50% discount for children aged ten to seventeen. Before the discount was available only during the academic year, from September to May. Now it effective all year round.

Trains’ speed is another problem. On some busy routes people use to travel to health resorts, say, from Moscow and St. Petersburg to Adler, we reduced the time on the road by 30 minutes, or even by one hour.

- And still the number of passengers in the first half of the year was down in contrast to that in the same period of 2015.

- Nothing of the sort happened on long distance trains. There we observed considerable growth. But commuter traffic slumped. To an extent this depends on the budget capabilities of regional authorities who set ticket prices. We are ready to carry as many passengers as necessary, but apparently the subsidies calculation mechanism leaves no chance for increasing the passenger flow. At the same time the statistics look more optimistic than we had anticipated. We do not rule out that in the second half of the year we will see some growth. The beginning of passenger traffic on Moscow’s Circular Railway will contribute to this.

Part 4
On high-speed trains, concessions, Hyperloop, iterations and overdue repairs


- Anything new about the Moscow-Kazan high-speed line? I hear people say in 2012 a 770-kilometer train ride will take three and a half hours instead of the current fourteen hours.

- The process is continuing. Russia, with its vast expanses, is obliged to have fast railways. The speed of travelling is essential to a different quality of life. In one hour you may travel 80 kilometers or 500. The difference is tremendous.

- That’s clear. And yet a few words more about the high-speed lines, please.

- In 2016 we hope to be through with design work. After that we will be able to specify the costs, select a financial model, estimate likely pressures on the environment and other factors. In all likelihood we may get things started in 2017.

- Are the Chinese still interested in the project?

- They are. Moreover, some European counterparts – the Germans, the Italians and the French - look eager to participate.

- As investors?

- In a variety of ways. Some would prefer to provide financing, while others offer technologies and know-how. We are a big country. We will keep developing and building further on. The partners are in a hurry to catch this train.

- What are the high speed line’s benchmark costs?

- At this point we estimate them at one trillion rubles. This is a classical concession project: Russian investors finance only a certain part of it. The rest will be provided by a pool of foreign investors. For instance, the Chinese offer about 450 billion rubles, and the Germans slightly less. In any case there will be a rather complex arrangement. We are still in the process of selecting the loan’s currency. A lot will depend on interest rates. Everything must be evaluated thoroughly …

- Have you made up your mind regarding the value of TransContainer, your transport and logistics subsidiary?

- The question of selling the RZD’s stake in the company is still open. Everything will depend on the vision of the company’s future, and each has one’s own socio-economic forecasts.

- What’s your attitude to Elon Musk’s Hyperloop idea?

- It’s cautious for now. We will wait till December, when the next tests are due. Then we’ll review the results. We are affiliated with the working group. We’ve made some proposals and amendments and we asked certain questions to which we would like to get clear answers.

- What makes you feel somewhat confused?

- There isn’t enough clarity yet about the routes for this type of transport. It is important to find out how much it will cost. In principle, oil can be extracted from wood. Technologies for that do exist. Next there is the question of production costs. Gasoline made of wood will have the price of gold. The same applies to Hyperloop. How fast will the train be in reality? Will it be really faster than the plane, as Elon Musk has promised? How safe will such travels be? Also, the idea of moving human beings in a fashion like this is highly debatable.

- Is the theme of foreign assets of any relevance to RZD?

- Naturally. I believe that we haven’t yet used all of our competences in this respect. Traditionally, our company’s business operations have been here, inside Russia. These days slowly but surely we’ve been spreading outside the perimeter border. We are mastering the skill of interacting with other markets. Serbia, Iran… In India we are considering the possibility of opening passenger services and organizing traffic. We’ve been through no end of iterations, but our partners still have an opportunity to change their mind. We haven’t yet started practical work anywhere, but we’ve drafted binding documents. We possess certain knowledge and competences nobody else has. Those concerning transport security are an example. Sometimes experience was gained in very tragic circumstances.

- Railway accidents? Is that you mean?

- First and foremost, external interventions in the operation of transport facilities – from acts of sabotage to terrorism.

Cybersecurity is a very important aspect. High speeds require impeccable performance of computer programs, and these remain vulnerable to hackers and other wrongdoers. The RZD is well protected from such attacks, and this gives us a considerable competitive edge.

- Don’t you have the feeling that we are behind Western Europe and China, as well, where high-speed railway industry makes a far more rapid headway?

- You know, I hold regular meetings to discuss scientific and engineering aspects and other events concerning research and development and I can say with certainty that in some fields we are far ahead of our foreign counterparts. We are in close contact with the Russian Academy of Sciences, the ROSNANO company and other organizations conducting research into cutting-edge technologies and their applied uses.

I must admit that during a trip to inspect some minor line in a remote province, where traffic is low, one can see that life there follows a slightly different course and proceeds at a different pace… But I have no reasons to say that we have lagged behind, that we remain stalled in the realities of last century. If we manage to cope with our plans, the RZD will certainly make a fast and long stride forward in terms of quality. True, we are always short of funding, but we will try hard to devise a solution.

Competing with China, trying to catch up with it is a daunting task

It goes without saying that competing with China, trying to catch up with it is a daunting task. I’ve long formulated an answer. Some say China will build tens of thousands of motor roads and railways. This is a lot, but we should take a look not at the absolute values, but at the real needs. Whether the demand is met or not. The size of the country’s territory and the condition of its economy should be born in mind. Ok, imagine we’ve laid a new rail track, but who and what will the trains carry? How big is our own population and that of our southeastern neighbor? Take the ratio of the railway’s total length to the number of residents. The proportion will be in our favor. We build no less. Besides, excessive bias towards one single industry is unnecessary. In other words, should all resources be spent on the railways, there will be no people and money to launch space rockets. There should be a sense of proportion everywhere.

Don’t you think that I’m trying to make the reality look better than it actually is. Objectively speaking, our infrastructures are in a substandard condition. More than 25,000 kilometers of rail track are past the repair and maintenance deadlines. Historically, infrastructures remained underfinanced. But if you look into detail, you will see quite remarkable facts. Russia’s railways are 85,000 kilometers long, while only 35,000 kilometers of them are really busy. That’s what we have focused on now to do repairs and maintenance.

True, this is not enough, and we keep doing all we can to improve the situation and to eliminate the overdue repair statistics by 2020.

- Will you please explain that in greater detail? What risks is the “substandard condition” fraught with?

- Lower speed of traffic. In the railway business reliability and safety come first. These basics are unshakable. Should there occur any deviation from standards, we lower the risks at once. In this particular case it affects speed. On newly-repaired lines train run faster. Naturally, economic performance indicators are higher. There is a direct link. Cargoes can be carried at a speed of 80 kilometers per hour or at 15 kilometers. The results will readily manifest themselves. There’ll follow utter failure.

But you know, the situation on our railways cannot be regarded separately from the general condition of the Russian economy. I can say with certainty that today’s state of affairs is far better than it was a year ago. We’ve developed a vision where we should move. We’ve adapted ourselves to the crisis, although very many non-economic factors have to be made allowances for. For instance, the overall political instability in Europe or, say, the effects of Brexit. But relations are being rearranged somehow. New partners show up. The range of opportunities keeps expanding with time. Life follows its course. I’m an optimist and I am sure that the Russian economy will achieve a surplus by the end of the year. I would not dare venture into what is the Economic Ministry’s realm of activity or make any lengthy forecasts, but I would take the risk of predicting that 2017 will see further growth, something like 1-2%. The RZD’s performance will be still better.

Part 5
On horoscopes, early birds and late birds, fair play, and an uncaught monster pike


- When you were appointed RZD chief a year ago you were described as a depoliticized anti-crisis top manager, commissioned to govern a company in an alarming financial condition. Is that really so?

- True, in 2015 the situation in the company was complicated. It hasn’t become easier today, but the performance is noticeably better. I believe that there are no reasons for alarm. The situation has stabilized. As for everything else, the onlooker sees most of the game, the saying goes. I’m not afraid of challenges and I never lose concentration. I always try to look calm, while staying alert and performance-oriented.

- What’s your attitude to horoscopes?

- I like them. I do believe that Libra is the best Zodiac sign of all.

- Do you read the forecasts?

- Sadly, I’m pressed for time.

- Then I’ll read this one out for you: a patient perfectionist. Is this true?

- It is. Absolutely. I move towards the goal steadily and persistently. If I know I’ve failed to get things done right some place, I’ll stay uneasy till I return there and have all fixed up. And I make all those around to act likewise.

- And what if somebody fails? Do you feel free to lose your temper?

Debates are permissible and highly welcome as long as no decision has been made

- I don’t. But… I do lose temper once in a while. Then I feel sorry I lost self-control. If I overdid it or made a mistake, I go and apologize. In public. I believe that the ability to present an apology is very important. For someone in the commanding position, too. I’m never afraid of looking funny if I don’t know something. I never try to lecture others who are more competent in this or that respect. The manager’s task is to properly use each of his subordinates. Create an environment where all specialists can speak their mind. Debates are permissible and highly welcome as long as no decision has been made. But orders are to be obeyed. Achieving that, though, is possible without getting nasty and rude.

In our lifetime we never do many things that we should’ve done. We say not enough words of love to the people we hold dear, we may not appreciate the good things other people do for our sake, we may leave good deeds unnoticed, and we may forget to thank others.

And very often we paint a dark picture of the world around us, darker than this world really is…

- Are you an early bird or a late bird?

It’s hard for me to tell. I’ve always thought I’m a late bird. I seldom go to sleep before midnight and in the morning I get up no later than half past six. To the sound of the alarm clock. It takes me quite an effort to wake up. So it’s up to you to decide what I am…

I get to the office between eight and nine. At the latest. And I leave for home after nine. I find this schedule quite comfortable. I’m a workaholic. I’ve always been one.

- What do you do to relax?

- I’ve just thought of saying ‘I never strain myself’ to make you smile, but that would’ve been untrue. Running the RZD is not the easiest job in the world, but I like it. I even don’t feel I’m at work. It’s the meaning of life. And I have no days off in the usual sense of the word.

As for some classical hobby, I don’t think I have any particular obsession.

- How about fishing?

- I confess. I do like fishing a lot. Too bad the opportunities to take my time with a fishing rod in hand offer themselves far rarer than I would like them to. When I have a day to spare, I go to a lake or a river. I prefer the simple fishing tackle - the float, etc. or the bottom gear. Not spin fishing. Everything should be calm and quiet. I spent my August vacation on the Velikaya River, in the Pskov Region.

- Were the fish biting well?

- Quite well. But I must tell you that I failed to catch the largest pike I’ve ever seen a long while ago. My father and I went fishing to Lake Busnieku, near Ventspils, where we had our dacha summer country cottage. One pike that we almost caught was not a pike but a huge beast. I don’t know its real size, but just one sight of it was enough for me. It was THAT wide and THAT long. A real monster! We were in the boat. Then I stood up. The pike’s back was lit by the sun for moment, when it lazily swam past us. An unforgettable impression it was. I then thought the fish must’ve remained curious who caught whom. It may have thought I was its catch. The next moment it proudly disappeared into the deep water …

- You are a gifted story-teller. Are  you also a sports fan?

- Football, you mean? I won’t say I go to the stadium often, but almost each time I went there our team won. Possibly, I bring good luck. Seriously speaking, I’m not at all indifferent towards our team, FC Lokomotiv Moscow. The club is our pride. At the moment it is struggling through a not very easy time but who would say life is easy today? With the advent of the new management I hope that the situation will be back to stability.

Incidentally, we have not only a professional football club, but teams playing other sports games – ice hockey, volley-ball, basketball and even beach football. Our beach football team won the world title just recently.

The main question is what is the best way of financing sport to ensure the spending does not place too heavy a burden on the company or violates the fair play rules.

- In your younger years you were a good short distance runner. You even set your school’s record that has remained unsurpassed since. Do you think that the choice of this sport had some effects on your character?

Interviewed by Andrei Vandenko

Born November 8, 1959 in Luhansk, Ukraine. In 1982, Andrei Vandenko graduated from the Kiev National University of Taras Shevchenko specializing in journalism. Since 1989, he lives and works in Moscow. Vandenko has more than 20 years of experience in the interview genre. He was published in the major part of top Russian media outlets and is a winner of professional awards.

Andrey Vandenko