CEO of Italy's largest train operator says tourist flows have 'dramatically' increased

Hello to thecnbc.com audience. I’m CNBC contributor Michelle Caruso Cabrera here in Milan, Italy. We’re at the SDA Boconi campus of management, the School of Management, where there’s a very large conference happening today trying to address the competitive issues of Europe. Joining me right now is the CEO of Ferovia. This is the train company, the transportation company of Italy state owned. The CEO is Luigi Ferraris. It’s a pleasure to have you here. It’s my pleasure and good morning to you. How is how is business going at this moment when budgets are so constrained? You’re a state owned company that needs to invest billions to maintain roads, trains, transportation. Well, we are in a quite exciting period as well as a quite complex period because on one end we see an incredible increasing of traffic in our train, in particular because of the tourist, tourist flow which is dramatically increasing after the pandemic. But in the meantime, we have experienced a reduction in the traffic in the business segment. Therefore, we have our chain fully booked, but because of tourism, not because of of business do tourists pay less than business people, pay less than the business people and they are more volatile if you want. So less predictable even if we started the first quarter this year with quite excellent results. But of course we need to be sure that in the long run this level remain the same and the flow is very, very high. So this is positive and when it comes to our trusting train, to our buses, we are definitely in a good shape. Of course, when it comes to infrastructure, we have another type of challenges because we are managing about 17,000 kilometres of railways infrastructure in Italy and we are talking about very old infrastructure with The only exception on the high speed railways network. When it comes to the to the rest, we need a lot of investment and now the investment are definitely coming from the public for the from the public budget. But we need to work in order to create a condition to connect private investment with the long term infrastructure projects. So that was my next question. Can you go to the private capital markets are are you set up to do that in a way that will attract investment from the private sector. We are working on that. There are ways to attract private investor in particular when it comes to the long term projects. For instance, if we look to other sector in Europe and in Italy, we have a type of regulation which are in a position to attract long term investor in particular bond investor thanks to a change in the rules and thanks to the possibility to to in basically amortize or spread out and the the, the life, the useful life of the project together with the issuance of bonds so that you can easily find that you’re stayed owned. Is there ever a talk of privatization of of the state owned rail system and the state owned transportation system? I ask because one of the questions that’s coming up here at the conference is the question of scale for Europe competing against the United States competing against China. If there were a a pan European transportation company, would it be more competitive and can that only be done if the company can change hands through you know private deal not necessarily what I what I believe. First of all we need the set of rules which allows to act as a European player. You mentioned the market. We do not have yet a high speed railways market in in Europe. We are building to create this market. For instance, when it comes to us, we are already present in Spain, in France with high speed train. We are of course in Italy and and I think in in the medium term the European Community will invest in infrastructure to create an integrated market. When it comes to the high speeds. Of course if you have to to to to face this type of challenge, you need to be a little bit more flexible and more competitive in the market. So it might be good to change the rules as I said before to attract long term investor when it comes to the bond holders and why not in the long run to place on the market and minority stake to a more transparency and more competitiveness. You have a lot of experience in privatizations in the past, yes. So you think it’s doable. It is of course you need first of all to set the right regulatory framework. Then once we have that in place, which is not yet the case, then you can talk about the possibility of placing on the market and a minority stake or whatever. One of the big questions is the impact of AI on every industry I imagine must be in a, in a business that is so technologically dependent advancing, you must be thinking about a lot about how to deploy it. I mean AII think is going to be transformational in all the sector. There is a concern on one end and of course an opportunity on the on the other end. The concern is related how speed is going to happen, this change and this transformation because we need to take care about the humour resources that we have. The more you are as quick in implementing these changes, the more you have to face problem in changing the mindset of your employees. On the other end, of course the implication are amazing. I’ll give you an example. If we talk about the railways network and if you have the proper data centre with the proper data information and you can apply this new algorithm for instance in the predictive maintenance, you can be quick, precise and forecast in the best, in the best way all the maintenance that you have to do in your infrastructure. So it’s going to be dramatic. I mean it’s going to to to change all the process that we are facing.