Rail Competition Research Articles

Goodbye monopoly: The effect of open access passenger rail competition on price and frequency in France on the high-speed paris-Lyon line

The Paris-Lyon line is the busiest High-Speed Line in Europe and has been open to competition in open access since December 18, 2021. The main objective of the paper is to explore the effects for users with respect to price and frequency compare with the existing literature. The analysis is based on a large database (n = 1243) collected by web scraping from September 2019 to October 2022. The method relies on a descriptive analysis with a similar route without competition (Paris-Bordeaux) in the comparison group. The results highlight an increase of frequency by 15% and a decrease in price by 23%. The prices charged by the newcomer are lower than those of the incumbent (−30% to −50%). The comparison with the control route suggests a positive effect on price that moderates the economic catch-up effect following the COVID-19 pandemic in an inflationary context. More specifically, SNCF appears to take a wait and see attitude to competitive pressure from Trenitalia. It has moderated its prices since the new offer was introduced and has maintained its trains.

Competition and price dispersion: evidence from airline and high-speed rail competition in China

Abstract The introduction of the Beijing–Shanghai high-speed rail (Launch) and the Wenzhou bullet-train collision (Crash) in China provided a unique occasion to study the effect of competition on price dispersion. Results show that price dispersion increased by about 48% after the Launch, as airlines offered greater discounts to price-elastic consumers than to price-inelastic consumers. By contrast, price dispersion decreased by about 55% after the Crash, as airlines raised prices more for price-elastic consumers than for price-inelastic consumers.

Regulatory approaches to rail competitive entries

This paper reviews the regulatory approaches to open access passenger rail competition. This kind of competition has developed substantially in the EU during the past decade. There have been major entries into the national main lines in Italy, Austria, the Czech Republic, and Sweden. These entries have been very popular with passengers and rail ridership has gone up substantially. However, there have also been costs to these entries. The operations of the new entrants are diminishing economies of density, leading to higher unit costs. Further challenges include cherry-picking behaviour, scarce infrastructure capacity, tariff disintegration, and long-term sustainability. The major question is whether the social benefits outweigh the costs. This paper aims to review emerging evidence in the field of open access entries and approaches to their regulation. The scope of this paper is open access passenger rail entries in Europe after 2000 with a particular emphasis on the major entries that took place in Italy, Austria, the Czech Republic, and Sweden after 2011. The contribution of this article to the existing literature is threefold. Firstly, it provides an up-to-date review of open access entries in Europe. Secondly, it combines the results of simulation studies with empirical evidence to provide an overview of market impacts. Lastly, it reviews the spectrum of regulatory approaches.

The Impact of High-Speed Rail Competition on Airline On-Time Performance

The rapid development of high-speed rail (HSR) has posed substantial competition to air transport. In this paper, we build an analytical model to investigate the impacts of HSR competition on profit-maximizing and welfare-maximizing levels of on-time performance (OTP) improvement efforts by the aviation sector (both airports and airlines), as well as the corresponding realized airline OTP levels. It is found that different from airline competition, HSR competition would decrease welfare-maximizing effort levels by both airports and airlines. The profit-maximizing airport and total effort level would also be discouraged. However, the profit-maximizing airline effort level can be raised when both total effort level by the aviation sector and inter-modal air-HSR service substitutability are sufficiently high (i.e., sufficiently low air-HSR horizontal and vertical differentiation). The airline OTP is determined by airports and airlines’ joined efforts to improve OTP and also the air traffic (“effort effect” vs. “traffic effect”). The impact of HSR competition on realized airline OTP depends on the relative dominance of either effect, which does not have clear-cut conditions. Thus it is possible but not necessarily true that the airline would end up with a better OTP in the presence of HSR competition. As a result, when intervening in airline OTP, the regulator needs to differentiate OTP requirements on a route basis, considering the presence of HSR competition and the air-HSR service substitutability.

COVID-19 Impact on Transport: A Paper from the Railways’ Systems Research Perspective

This paper analyzes the possible impacts of the 2019 coronavirus disease (COVID-19) on the transport sector and specifically on the railways. It aims at investigating how the sector should approach the “new normal.” The pandemic had repercussions not only on the interaction between producers and consumers but also on the environment, therefore changing the supply chain. The health crisis halted passengers’ mobility and limited air and sea freight capacity significantly, consequently producing a positive impact on the environment. However, the low production trend of greenhouse gas (GHG) emission is expected to reverse once containment measures are lifted. Transport will have an important role in the predicted rebound effect of GHG emissions; thus, the development of green new mobility is essential. In light of these aspects, this study argues that a new resilient paradigm of mobility must be developed for future health emergencies which meets environmental demands. This paper introduces the five “R”s—resilience, return, reimagination, reform, and research—as the necessary steps the rail sector will need to address to better continue to provide services throughout future crises. In particular, the paper highlights new avenues for research which can play an essential role in enhancing rail competitiveness and resilience within future crises. In conclusion, this paper reminds that the pandemic might be considered as a testing ground for upcoming crises and an opportunity to introduce the discussion about a new green and public paradigm of mobility.

Geoeconomics, easy money, and political opportunism: the Perils under China and Japan’s high-Speed rail competition

ABSTRACT China and Japan have engaged in fierce competition over infrastructure lending in East Asia, particularly since the 2010s. Under the intense focus on the geopolitical roots of this competition, the political-economic effects of this competitive statecraft on the smaller Asian countries are less discussed. At first glance, lending competition seems to benefit borrowing countries through access to more financial resources. This paper argues, however, that competitive statecraft leads to an ‘easy money’ conundrum where overeager creditor countries, in pursuit of geostrategic goals, perpetuate political opportunism in borrowing countries. To support this claim, we examine China–Japan competition over two high-speed rail projects in Indonesia and Malaysia. Our process tracing analysis explains how push factors (easy money from China and Japan) and pull factors (the host government’s desire to exploit easy money for political gain) interacted to advance two troubled projects at the cost of borrowing countries’ fiscal discipline and government accountability.

A NEW APPROACH TO SPEED OPTIMIZATION OF EMPTY PLATFORM WAGONS IN THE SOUTHEAST REGION OF BRAZIL / UMA NOVA ABORDAGEM PARA A OTIMIZAÇÃO DE VELOCIDADE DE VAGÕES DE PLATAFORMA VAZIOS NA REGIÃO SUDESTE DO BRASIL

Matching the demand for rail freight transportation depends on the railroad network structure and the availability of the rolling stock, locomotives and wagons. The distribution of wagons optimization helps reduce transportation costs, and the efficient allocation of assets is essential for rail competitiveness with other means of transportation. The present study aims to develop a mathematical model for optimizing the allocation of wagons and minimizing the distribution cost, adopted as empty transit time. The model also calculates the empty transit time of wagons according to demand distribution, and reduces the necessity for rail freight assets, because it also minimizes the wagon cycle. An algorithm was developed from the characteristics related to the distribution of freight wagons, using planned cycles adjusted by the demand distribution, and mathematical modeling was performed, applying integer linear programming to minimize the empty wagon transit time in a railway company. As a result, a weighted and optimized cycle was obtained to perform the sizing of wagons and meet the transportation plan, as well as minimizing the transit time between unloading and loading of goods. The new model presents a contribution to the operation, because, in addition to directing the optimal distribution of the assets using an integer linear programming algorithm, it also allows the planned wagon cycle adequacy, according to the demand of the respective period.

Publicly-owned operators can also challenge incumbents. New cases of open-access passenger rail competition in Poland

Open-access passenger rail competition in Europe has mostly resulted from activities of the ‘new’, ‘agile’, ‘private’ entrants to the market. However, the existing operators can themselves take advantage of market opening opportunities. In this paper we identify and analyse eleven new minor current examples of long-distance open-access competition in Poland. Compared to the previously described short-lived (2009–2015) experience of an extensive and fierce market rivalry in the country (the Interregio case), the profile of these entries is very low and incumbent's reactions very moderate. We show that the limited scale of post-Interregio competition may partly result from regulatory routine. One interesting feature of the researched evidence is that almost all entries to the long-distance commercial market in Poland (including the Interregio case) were made from another market segment (regional public services). Interestingly, by publicly-owned operators. The relatively high number of such entries shows that expansion towards new markets can be a possible line of growth also for publicly-owned railway businesses. Our discussion includes some implications for pro-competitive regulation.

Open access passenger rail competition in Slovakia – Experience from the Bratislava–Košice line

The text seeks to analyse the circumstances of the private operator's entry to the line in detail and, in particular, the circumstances and reasons for its exit. After an initial literature review, we describe the situation on the passenger rail transport market in Slovakia, especially the position of the incumbent and the introduction of a non-standard government measure: free fares for students and seniors. Then, we analyse in detail the situation that occurred on the Bratislava–Kosice line after RegioJet's entry, especially the development of fares and changes in timetable and the number of services. After a short discussion of the results, we make conclusions and recommendations for further research.

Does the incumbent have an advantage in open access passenger rail competition? A case study on the Prague–Brno line

Open access passenger rail competition in the Czech Republic has developed substantially. From 2011, it has been in operation on the key Prague–Ostrava route. In 2016, open access competition was introduced to another important main line: Prague–Brno. There is substantial evidence regarding the macro impacts on the development of prices, ridership, and market shares. There has been less investigation, however, of the micro impacts of open access entries on the perceptions and behaviour of rail users. In order to explore these effects, we utilized data from a consumer survey organized in November 2017 to analyse travel behaviour. The results show that the customers highly valued the newcomer's services, but they often used the incumbent's services due to its denser timetable. The vast majority of travellers agreed that open access competition has very significantly changed the level of services on this line. The main changes were price decreases and quality increases, especially for the incumbent's trains. The results indicated that the incumbent's services were used more often by older people, people holding loyalty cards, and people on business trips. The results surprisingly indicate that customers seem to have a preference for the newcomer and not for the incumbent.

Principal Component Analysis of the Potential for Increased Rail Competitiveness in East-Central Europe

Increased rail competitiveness has been the objective of many countries around the world, including member states of the EU. Although railway market liberalization has always been accompanied by high expectations of increased efficiency and competitiveness, the overall impact of such decisions can be considered controversial. This paper aims to contribute to the scientific debate by conducting a factor analysis of some East-Central European countries from the aspect of rail freight competitiveness. Since many highly correlated factors influence competitiveness, its mathematical–statistical representation and analysis is difficult due to the high number of dimensions of the factor space. Moreover, competitiveness cannot be measured directly only as a latent variable which is a feature of Principal Component Analysis (PCA). The introduced PCA, model by way of reducing the number of dimensions, can highlight the relations among the attributes and determine the most crucial issues capable of increasing rail competitiveness in the given countries and also of clustering those national railway markets. Recommendations for structural changes in national rail freight markets of the region are also supplied. Our results show that international rail competitiveness depends rather on market efficiency than on market liberalization due to the fact that the Global Competitiveness Index and Export/Import attributes did not significantly correlate with market concentration. As for the larger domestic rail freight sectors, small freight forwarders—spawned by liberalization—are shown to play a significant role in increasing competitiveness.

Effect of high-speed rail competition on airlines’ intertemporal price strategies

In China, serious development of high-speed rail (HSR) is expected to affect airlines' intertemporal price strategies, which are important means for airlines to optimize revenue. We present the impact using a panel dataset of 22 city pairs. We found that HSR competition makes the airlines' intertemporal price curve steeper, meaning that the price strategy for leisure and business travelers has changed. Additionally, the increase in leisure demand increases airlines' average price (especially along HSR competition routes), while the airlines' average price is relatively low on the routes with high business demand. Notably, with HSR competition, a different pricing strategy is presented, wherein airlines’ average price is higher on the routes with higher business demand.

The Effectiveness of EC Policies to Move Freight from Road to Rail: Evidence from CEE Grain Markets

The European Commission years ago adopted a policy of encouraging the substitution of motor carrier haulage of freight with rail and water carrier haulage, as part of its “green” agenda of reducing fuel consumption, emission of pollutants, carbon intensity, and road congestion. Regarding railway freight in particular, one policy tool that the Commission has emphasized for this purpose is the restructuring of the rail sectors of member countries through the creation of competition for the incumbents by new train-operating companies (TOC’s) – on its face a less obvious policy choice than alternatives such as Pigouvian pricing measures or infrastructure subsidies. This paper focuses on one important commodity group – grain – in three EC member states and one non-member state – Poland, the Czech Republic, Slovakia, and Ukraine – to examine the degree to which increased rail competition has been associated with increases in rail’s modal share, and more broadly to learn what appear to be the binding constraints to increases in rail’s share. Such constraints seem more closely related to shortages in infrastructure capacity than to a lack of competition among TOC’s. This suggests that other “models” of railway restructuring may be more effective in easing this constraint.

IMPROVING THE DESIGN OF ROLLING STOCK FOR TRANSPORTATION CONTAINERS BY RAIL

Purpose. The growth of rail container traffic and competition with road carriers create prerequisites for finding new ways to organize transportation. Analysis of technical information shows that at present up to 80% of international transport of large goods carried out using containers that allow you to organize the delivery of goods using different types of transport. Therefore, the purpose of this study is to develop technical solutions to improve the design of rolling stock for the transport of containers. Methodology. Transportation of goods in large-tonnage containers is one of the perspective directions of development of railway transport. The constant growth of such transportation increases the need for specialized wagon-platforms. Therefore, the research methodology consists of analyzing the advantages and disadvantages of existing structures of specialized carriages for the transport of containers and developing technical solutions for the construction of rolling stock for the transport of containers using modern materials and advanced engineering technologies. Findings. The innovative designs of carriages-platforms for the transport of containers, developed by PDTB DNURT, considered, taking into account both the worked out technical solutions and the perspective developments in the field of railway engineering. Originality. Improved simulation models and calculation schemes of railway carriages for the transport of containers by rail, which, unlike existing ones, allow us to take into account not only the design features and the layout of the containers, but also the degree of influence of the manufacturing technology of the main structural elements. Practical value. Developed technical solutions to improve platform for transportation of containers by rail can used in the formulation for the production of new models of cars at machine-building enterprises and the modernization of existing models during repairs.

The rise and fall of Interregio. Extensive open-access passenger rail competition in Poland

Over the last few years there has been considerable interest in research into open-access passenger rail competition in Europe. However, the competition that existed in long-distance services in Poland between 2009 and 2015 has yet to be analysed. Surprisingly, there was fierce market rivalry between two state-owned enterprises answering to different levels of government: PKP Intercity (the central-government-run incumbent) and Przewozy Regionalne (a challenger owned by regional authorities). In comparison with the experience of other countries, this challenge was exceptional in terms of territorial reach and acquired market share (33%). In the polycentric Polish network, the challenger's services (branded under the name of Interregio) not only served up to 62% of all possible direct connections between the largest Polish cities, but also reached into more peripheral regional centres. Interestingly, we found no evidence of responsive price cutting in regular fares. In order to counteract aggressive low-cost entry, the incumbent opted for a differentiation strategy combined with a strategic use of political action. We found that although the incumbent's strategic behaviour did indeed contribute to the challenger's withdrawal from the market in 2015, its failure was mainly the result of a departure from the principal source of competitive advantage.

Compensating for the war. Railway nationalisation and transport policy change in Sweden, 1939–47

This paper deals with the negotiations and the decision-making process related to the nationalisation of the GDG rail network in Sweden during the period 1939–47. It highlights some of the distinct features of the railway nationalisation process in Sweden. It is noted that the nationalisation of GDG was exposed to factors and contexts that had not been anticipated when Parliament made the policy decision to nationalise the non-State railways in 1939. During World War II, the financial situation of GDG had benefited from new transport conditions which limited road–rail competition. Furthermore, the Social Democrats began to implement a more active transport policy as part of their post-war economic policy. This led to an outcome in 1947 where the GDG shareholders were compensated more generously than they would have been in 1939.

Open Access Passenger Rail Competition – Round Table Report

Sciendo provides publishing services and solutions to academic and professional organizations and individual authors. We publish journals, books, conference proceedings and a variety of other publications.

The effect of open access competition on average rail prices. The case of Milan – Ancona

Italy is among the few countries where open-access rail competition exists, and the entry of the newcomer NTV during 2012 radically changed the market conditions.The aim of this paper is to shed some light on the effect of competition on price strategies. To do that, we focused on the period before and after the opening of a new HS direct service between Milano and Ancona. Through a web crawler, we collected available fares, from 30 to 1 days in advance of departure and for 15 months, between September 2013 and December 2014. We statistically analysed the sample i) to estimate the price reactions of the incumbent after the new entry, and ii) to compare the price strategies of the two operators.Results show that the incumbent reduced economy class prices by about 15%. The newcomer is slightly cheaper for bookings well in advance of the departure date, but raises prices in the very last days before departure. Their fare strategy also changed after three months of operations, when they applied lower prices. Finally, we see that Trenitalia does not respond to NTV's prices, whereas the opposite is true, demonstrating that the newcomer is the price-taker in the short-run.

Air transport and high-speed rail competition: Environmental implications and mitigation strategies

We build a duopoly model to shed light on the environmental impact of HSR-air transport competition, capturing the effects of induced demand, schedule frequency and HSR speed. The net environmental effect can be negative since there is a the trade-off between the substitution effect – how many passengers using the HSR are shifted from air transport – and the traffic generation effect – how much new demand is generated by the HSR. We conduct a simulation study based on the London-Paris market where HSR has served 70% of the market. The introduction of HSR is detrimental to LAP, while it is beneficial to GHG emissions. HSR entry increases neither LAP nor GHG emissions when the ratio between HSR and air transport emissions is relatively low. Moreover, competition is more likely to be detrimental to the environment when the weight of the social welfare in HSR objective function is high. Since the magnitude of the environmental friendliness of HSR compared to air transport hinges on the mix of energy sources used to generate the electricity (which is heavily constrained by the country in which HSR operates), regulators should assess the implications of HSR entry taking into account the energy policy and mitigation strategies available to transport modes.

Airline network choice and market coverage under high-speed rail competition

While the existing literature has focused on the short-term impacts, this paper investigates the long-term impacts of high-speed rail (HSR) competition on airlines. An analytical model is developed to study how an airline may change its network and market coverage when facing HSR competition on trunk routes. We show that prior to HSR competition, an airline is more likely to adopt a fully-connected network and cover fewer fringe markets if the trunk market is large. Under HSR competition, the airline will, for a given network structure, have a greater incentive to cover more fringe (regional or foreign) markets if the trunk market is large, or the airline network is close to hub-and-spoke. Further, the airline will, for any given market coverage, move towards a hub-and-spoke network when the trunk market is large, or the number of fringe markets covered by the airline network is large. Both effects are more prominent when the decreasing rate of airline density economies is large. We further show that HSR competition can induce the airline to adopt network structure and market coverage that are closer to the socially optimal ones, thereby suggesting a new source of welfare gain from HSR based on its long-term impacts on airlines. Implications for operators, policy makers and specific countries (such as China) are also discussed.