The landscape in Europe is complex but with travellers demanding greener travel, the shift online and the rise of competition, there is everything to play for. Pamela Whitby reports

Liberalisation of the European rail market has not exactly happened at high speed!  At the Amadeus Rail Innovation Forum last week (Oct 9-10), Matthias Blume, Senior Manager International Distribution at Swiss Federal Railways (SBB), said that like most brick and mortar companies railways have not been the most agile, but until now there had been little impetus to change.

Today, however, thanks to a number of colliding factors, the ability for consumers to book long distance rail travel in Europe wherever they choose is becoming a political and commercial imperative. One of the main drivers is that travellers are looking for greener alternatives. Citing emerging trends in Sweden, where the anti-flying movement began, Mirja Sickel, Executive VP Amadeus & Ground Travel, said that demand for rail travel has risen by 12%, while across Scandinavia flight sales are down 10%. Sickel sees this trend spreading across Europe, as the implementation of the Fourth Rail Package (a raft of reforms to make rail more competitive) by 2020 drives further competition and the evolution of interesting business models.

European rail will have to liberalise, and incumbents must get creative

“European rail will have to liberalise, and incumbents must get creative,” said Sickel, who believes that competition will serve to expand the market further. In Italy, for example, demand for rail services has risen since Europe’s first high-speed operator NTV entered the market to compete on the same line with Trenitalia.

Tricky business

Large technology firms like Amadeus, Trainline and innovators like Paris-based multimodal app Moove are optimistic about the prospects for the European rail market but nobody said it was going to be easy.

Although SBB is one of several European operators already connecting to Amadeus’s rail hub, as Blume explained the distribution international rail fares is rather more complex than air travel. For one, the focus of airlines is global but rail networks have developed nationally, and so operators must often address the needs of local customers and local authorities that have “justifiable and understandable demands”. Another challenge is that air travel is point-to-point in nature, whereas multiple scenarios are possible for any particular rail journey, which makes it harder to yield prices. Competing with airlines, “which can apply sophisticated revenue management and offer entry-level prices that are much lower,” is therefore a tricky business. 

However, Blume admitted that there “is clearly some part of market that we are not addressing as well as other carriers,” which is why SBB and others are working with technology partners to address issues of connectivity. 

While multimodality has been on the European agenda for some time, Sickel admits that rail remains hugely fragmented. But she remains convinced that “a rail GDS will become a reality” because customers want it. They want be able to make informed choices about how they travel and not only to compare prices, but also travel options, time and environmental impact. And increasingly, they want to do so online - today 44% of rail tickets in Europe booked online.  

A rail GDS will become a reality because customers want it

Today, however, the presence of long distance rail inventory on online platforms is still rare, but technology firms like Amadeus Trainline and Silverail, are working on it. A recent concrete example of how this is playing out is a recent partnership between Germany’s Deutsche Bahn and Amadeus to develop a new booking engine that allows customers to purchase cross border trips outside of Germany on bahn.de, bahn.com and via the mobile app DB Navigator. In addition, Amadeus is working with lastminute.com to integrate rail fares from Deutsche Bahn, SCNF and Trenitalia, so that customers can build a hotel and train package.

*For the record, Guk Kim, Chief Growth Officer, lastminute.com, will be speaking at the upcoming EyeforTravel Revenue & Optimisation Growth Summit, Amsterdam 26-27*

Regulatory rumbles 

Although deregulation is only a matter of time in Europe, not everybody is happy about it. Some travel agents, for example, are concerned that new distribution capability (NDC) being rolled out in the airline business will create similar challenges for a rail GDS. In essence, NDC is an XML standard created by the International Air Transportation Assoication (IATA) to allow airline service providers to deliver rich content and ancillaries to their customers. While NDC may have created opportunities for airlines, Jerker Elming, Business Area Director of BIG Travel Sweden, sees a Wild West with a power game playing out between airlines, distributors, and technology firms, which does not necessarily benefit the consumer. “A mirroring of this situation in rail is what I’m afraid of. It’s a fundamental problem that EU regulators are not addressing,” he said. 

Although Sickel is upbeat about the rail opportunity, she acknowledges that regulation has become “far too complex”.  To address this challenge, she said industry collaboration would be crucial. Importantly, however, the focus has to on the traveller experience. “We have to focus on what the traveller is asking for. This is our responsibility,” she said.

Join us at the Revenue and Optimisation Growth Summit, Amsterdam, Nov 26-27 to hear from leading travel brands like lastminute.com and innovators such as Booking.com, Finnair, Louvre Hotels and many more