Competition on the tracks – Passengers’ response to deregulation of interregional rail services

Abstract

On the West Coast Line (WCL) in Sweden, de facto competition in interregional rail travel has been in effect since 2009. While the Öresund trains are subsidized by regional authorities, SJ runs interregional services on a commercial basis in parallel. How do passengers’ valuations affect demand?This paper presents the findings of a study conducted to examine the newly deregulated market for train journeys and travelers’ preferences as regards two different train operators and several service levels. A stated choice study was conducted among existing train travelers, and a multinomial logit model structure was applied in the study to examine the benefits derived from choosing a specific train. The models are estimated on segments of the train travelers in order to investigate how the preferences differ among different categories of travelers. In addition, more questions were asked on the supply to provide better understanding of the effects.The findings show that fares and short travel times are important factors for interregional passengers (more than 100km) when they choose an operator on the WCL. Frequency of departures is also important but seems to be less significant when respondents are asked about suitable departure times. However, the importance of traveling time and comfort increases with longer journeys, which gives advantages for the commercial operator (SJ) over Öresund trains. Moreover, well-known SJ was ranked higher than Öresund trains by all passengers except a group of particularly price-sensitive travelers.This case shows that operators together have achieved a better supply and a widened travel market for interregional journeys and also that segmentation has occurred between price-sensitive and time-sensitive passengers.