Air / rail competition & complementarity
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The opening of new high speed rail (HSR) lines has enabled rail to obtain significant market share on routes where time-sensitive passengers would previously have travelled by air, such as Paris-Lyon.
However, the expansion of low-cost airlines means that on some routes, particularly in Germany and the UK, prices for air transport are now similar to or below those for rail.
At two European airports, Frankfurt and Paris CDG, there are long-distance HSR lines direct to the airport – providing the potential for rail and air services to complement each other.
Our role
Steer Davies Gleave undertook a study on behalf of the European Commission to investigate the ways in which rail and air travel could both complement and compete with each other.
In a recent review in the Journal of Transport Economists' Group, Peter Gordon, the journal's editor said: "In my opinion, this is one of the best reports I have seen on the topic. It is highly recommended and should be read by anyone with a professional or general interest in the area."
How we did it
Steer Davies Gleave’s aviation team undertook eight case studies of air/rail routes in order to understand the key drivers of market share – finding that rail journey time was the single most important factor.
We researched the operating costs of regular and low-cost air services, and rail operators, and compared the costs of each. We found that low-cost airlines had the potential to undercut rail on a per-passenger basis on most of the routes we studied.
We then developed a model of rail/air market share and used this to project trends in market share and operating costs in the next 5-10 years – both for a base case and for various scenarios.
Finally, the team looked at the introduction of measures to encourage complementarity such as through baggage handling between HSR and the aircraft and a single e-ticket for both modes. We assessed if these would pose any security risks and if they would be financially viable.
For more information please contact
Stephen Wainwright
t +44 (0) 20 7910 5000
e aviation@sdgworld.net