Trains, Planes and Computers

Abstract

A link is made between the problematic introduction of a new computerised reservation system (CRS) at French Railways in 1993 and the high-speed train technological innovation, the TGV (Train a Grande Vitesse) successfully introduced in 1981. Both are about modernising railways and one interesting factor is that French Railways chose to purchase a computer system from American Airlines in 1989. The strategic role CRS played in the US airline industry in the 70s and 80s partly explains this choice. But emulating the competitive advantage American Airlines gained with the same computer system through yield management and electronic control of distribution channels proved more difficult in the French context due to differences between rail and air transport modes, US air and European rail market structures and regulation regimes. The new computer system is closely related to the high-speed trains through differentiated pricing and yield management. Some price differentiation, together with compulsory reservation, was first introduced in French Railways on the TGVs in 1981. Yield management and quota management, heavily used in airlines, was made possible through the new CRS implemented in 1993 but proved problematic. Revisiting the TGV project helps understand the CRS implementation difficulties by recognising the French notion of rail transport as a public service and its associated social, cultural and political dimensions; how this led French Railways to conceive of TGV technology as a way to prevent rail transport decline; how the existence of the TGV shifted the focus from road/rail to air/rail competition; and how the subsequent link between the TGV and the new airline computer system, in particular through yield management, had detrimental effects. It was interpreted as imposing commercial principles on the whole French rail network and as an attack on French Railways’ public service mission. The import of new tools such as CRS and yield management did not lead to a direct adoption but an adaptation of these management models to a specific national context.