German railway reform implemented in 1994 meant abolishing monopoly of Deutsche Bahn and introducing of competition. Other companies were allowed to enter local passenger rail transport (SPNV). Their share gradually increased and achieved about 40 % in 2020. The reform doubled the number of passengers between 1994 and 2019. However, many new participants, especially with foreign owners suffer big losses from their operations, some of them even went bankrupt or can operate only due to massive support from their owners. Another problem is that railway companies face shortage of qualified personal staff. The article describes the essence of the reform and analyzes the performance of the main railway companies operating in SPNV, investigates whether they achieved their market share gains in this period due to strong competition via price and if personnel costs had a significant impact on their results.