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Train travel in Europe is changing. With a growing awareness of the environmental impact of travel, the ‘no-fly’ movement is gaining momentum and travelers realize that rail is the greenest mode of transport. At the same time, we see an increasing number of high-speed, cross-border rail networks with rising levels of comfort and a variety of long-distance rail options. This leads to higher demand, and rail evolving to position itself as a preferred mode of transport for journeys up to 300 km.
It’s against this backdrop, today we launch a discussion paper to explore the impact the Fourth Railway Package could have on the industry and how it could transform the way we travel across Europe.
Over the last two decades, the European Council, a collective body, comprised of the heads of state or government of the EU member states, that defines the European Union's overall political direction and priorities, has adopted the ‘rail infrastructure package’ - a set of measures promoting the opening-up of networks and services for passengers and freight across member states. In 2001, the first package laid the foundations to reform, standardize and integrate the European railway transport network. The second (2004) and the third (2007) focused on passengers’ cross-border travel, safety standards and rates. All the packages represented steps towards a common EU goal: the creation of a Single European Rail Area (SERA); and the adoption of uniform standards, rights and regulations across all EU member states.
The European rail network needs to further unify standards and allow young entrants to seize new opportunities in order to become a fully functioning single European rail space. In our new discussion paper ‘Opening Europe: Rail Liberalization and the Passenger Experience’, we consider how the Fourth Railway Package, adopted by the EU Commission in 2016, will incorporate both the market and technical aspects to achieve more harmonized regulations. The market pillar will open up each member state to competition from new rail operators and allow European operators to run passenger services anywhere in the EU. The technical pillar will focus on safety, regulation and interoperability. It will expand the role of the European Rail Agency, giving the EU a stronger footing in the market. This final set of measures aims to turn SERA into reality.
Our paper cites that greater competition will encourage rail operators to become more responsive to customer needs and improve cost-effectiveness. We expect to see an increasingly wide variety of offerings and better quality of services for travelers in Europe. More choice could also mean an emphasis on multimodal transport – it could encourage operators to distribute offers that include other forms of transport, such as long-distance coaches or ride-sharing services. It could also mean improvements in ticket distribution and real-time competitive pricing.
Since the European market is still fragmented, the immediate effects for passengers will vary from one country to another. Mature markets, like Germany, that already have competitive practices in place will not feel any improvements straightaway. Spain, for example, will face competition from at least two new entrants as of end 2020. The incumbent rail operator Renfe is already preparing for the competition, launching a new low cost offering on the main route between Madrid and Barcelona as of April 2020. These are just a few examples of how we’re seeing new business models with new offerings for customers which has not been seen for the past 20 years.
Other countries, such as Italy, have been quick to move towards liberalization. NTV, for example, was the first railway of its kind to be developed as a direct response to liberalization. The operator began competing with Italy’s internal operator Trenitalia. As a response to NTV’s entry, Trenitalia acknowledged the need to better understand its passengers and consequently invested heavily in market research and revenue management systems to provide an improved product and better pricing.
The success of the Fourth Railway Package will largely depend on whether operators can be persuaded to see the benefits of collaboration to meet shared goals. This can be interpreted in a number of ways, such as, shared data that can result in better understanding of routes that might create higher value; better understanding of shared passenger data that can help operators deliver more personalized services; and multimodal transport to ensure travelers get last-mile service.
Today, technology and the ‘on-demand’ economy is raising passenger expectations for a high-quality, efficient service creating an experience they enjoy. They’re looking for tailored services and greater choice and flexibility. The Fourth Railway Package arrives at a critical moment for European rail travel.
At Amadeus, we’re committed to working with all rail operators to seize new opportunities and we’ll continue to push for rail passengers to be at the center of any decision-making. This commitment to our rail operator customers, as well as the technology we deliver, is a reflection of the Live Travel Space we’ve created. We are meeting travel players in an open, dynamic and connected way with innovative solutions that enable them to serve today’s travelers at every step of their journeys.
For more info, read our new discussion paper that tackles Rail Liberalization in Europe.