Recently, the German rail operator, Deutsche Bahn, applied for the rights to run their trains through the Channel Tunnel and therefore into the UK, paving the way for direct routes from the UK to Germany. This is the first true signal that the deregulation of the European passenger rail market is really taking hold, and is great news for the rail market in general, as rail becomes a viable alternative across the regional European market.
As a bit of background, the EU-enforced deregulation of the passenger rail market took effect in January 2010, and allows any rail operator to apply to run trains in any other country. Historically, only rail operators such as Thalys and Eurostar (both joint ventures between multiple carriers) were able to operate in multiple geographies. Now, with the new rules in place, Germans can run trains in France and French can run trains in Spain etc etc.
It is also interesting that London is one of the first destinations Deutsche Bahn is focusing on, as it is just about on the borders of the range that we mentioned in our previous blog post, for a reasonable route for rail to take share over air. Frankfurt to London is estimated at about 4 hours, which suggests that the train could take about 40% of the share.
A basic search on ebookers.com shows that there are 29 flights this Friday from London airports to Frankfurt (having been to Frankfurt from London on business, I'm surprised it isn't more - but we'll go with this!). Let's assume that each flight is 200 seats, 75% full. That's 4,350 passengers per day, paying about £150 per passenger. Muliplying all that through (see assumptions below), you see that DB is making a pretty good bet, in that even given these pretty conservative assumptions, it is a $125m market, just between those two cities, completely ignoring all the cities in between.
As a rail aggregator, it is also great news for us at SilverRail, as we can help rail carriers connect to distribution channels globally. So once these trains are in London, DB needs to fill them back up, and to do that an international distribution strategy is required, which is something that SilverRail is positioned perfectly to facilitate.
The future of rail in Europe is upon us.
Flights / day
|Seats / plane||200|
|£ / ticket||£150|
|Business days per year||240|
|Total Revenue for rail||£125m|