In 2014, rail bookings in Europe’s key markets topped 31 billion euros – approximately double the amount spent on low-cost airline tickets – but despite the growing market for rail travel, the industry has failed (unlike flight and hotel search) to exploit online, user-friendly booking procedures.
The recently-published “Rethinking Rail” report – commissioned by SilverRail Technologies from independent global travel industry analysts PhocusWright – is an in-depth examination of Europe’s rail market in the context of online distribution and mounting competition among travel intermediaries to integrate rail.
In 2014, rail bookings in Europe’s key markets topped 31 billion euros – approximately double the amount spent on low-cost airline tickets – but despite the growing market for rail travel, the industry has failed (unlike flight and hotel search) to exploit online, user-friendly booking procedures.
Service fragmentation and data complexity have slowed the pace of rail’s integration into mainstream online travel shopping channels. But as rail goes digital to compete, on equal terms, with air and coach services, the potential for disruption to operators and intermediaries is very real. “Rethinking Rail” examines the challenges, opportunities and risks associated with these changing market realities.
Key Findings:
- Online channels could capture up to half of rail volume by 2020. Online rail gross bookings will grow more than 7% annually at least through 2016. By 2015, total transaction value will reach 11.4 billion in online bookings. Projected online penetration will reach 44% across Europe’s major markets by 2020.
- Rail operators’ attitudes towards data sharing are shifting. Deregulation and increased competition between rail operators, coach services and airlines is incentivising rail operators to look more favourably on third-party distribution. This is critical to integrating rail into the broader online travel ecosystem.
- Direct price comparison with flights – the Holy Grail for rail operators. Putting rail alternatives side-by-side with online airfares would boost ridership significantly. With limited information on rail options, many potential travellers opt for flying. Rail operators would benefit from working with multimodal and metasearch specialists to help drive public awareness.
- Integrated mobile ticketing will grow online bookings. By 2016 mobile will account for around 8% of total rail bookings. In addition to strong mobile web penetration, improved mobile ticketing functionality is incentivising consumers to book on mobile, but future growth is dependent on rail operators’ ability to provide consumers with seamless booking experiences for long and short distance travel.
- Lack of rail could be OTAs’ Achilles’ heel. The challenge of incorporating rail products into third-party distribution is immense; the effort extends beyond providing access to accurate schedule and pricing data. Mobile apps, marketing, social media, public relations and other functions must also shift to incorporate rail.
Will Phillipson, Co-Founder and President of SilverRail Technologies, said: “The “Rethinking Rail” report is unashamedly evangelical about the potential for exploiting rail travel. The industry has the opportunity to facilitate this, but first it has to recognise the need for change.
“The report highlights the current inefficient and non-cohesive approach to booking rail journeys online: it doesn’t match up to the air or hotel booking experience. Legacy systems, fragmentation and outdated processes have, so far, prevented the introduction of an elegant online booking solution.
“We need to press for the industry to adopt five key standards:
- A common language for global rail – standardisation across equipment, fare classes, amenities, stations and tickets.
- A common index for all journeys – so anyone, anywhere can plan, manage, and book a journey no matter where that journey is to or from.
- A comprehensive inventory of global rail – rigorous in its accuracy, relevance and consistency.
- Real-time routing, pricing and scheduling.
- A single, seamless ticket for any journey.”
Rethinking Rail: Disruption and Digital Distribution in Europe’s Online Travel Market
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
