Deutsche Bahn already faces unwanted competition from French peer SNCF, which has said it intends to compete on major European routes and inter-city service in Germany.

Most long-haul bus services are currently banned within Germany to protect the rail service from competition, but this could end by 2011 pending approval of details in the coalition contract between Angela Merkel’s conservative Christian Democrats and her junior coalition partners the Free Democrats.

“There are already companies in the starting gate,” head of the International Coach Tourism Federation Dieter Gauf told the paper. “When the law goes down they’ll go for it.”

Coach service between large and medium German cities could be offered at prices some 30 to 40 percent lower than Deutsche Bahn prices, head of the BDO association of German omnibus companies Martin Kaßler said. The demand for the service on the few lines already allowed to operate within the country is high he said, citing some 400,000 passengers per year between Berlin and Hamburg.

Since 1931 all long-haul bus services, except those that travel to and from Berlin, have been restricted in Germany. Only bus companies that apply for a special Deutsche Bahn-approved permit can get around the ban.