November 2017, Amsterdam
5 indicators that rail is getting on the digital track
From rail operators to online travel agents and multimodal marketplaces for train tickets, firms are gearing up for rapid growth
“Rail is ready for an online revolution, and we’re ready to be a part of it. Rail’s shift online is one of the fastest growing areas of innovation in the $1.3 trillion travel market, and SilverRail is powering that innovation.”
Since making this statement following Expedia’s acquisition of tech firm SilverRail in May, Dara Khosrowshahi might have jumped to ship Uber, but that rail is ready for an online revolution remains indisputable.
As SilverRail’s Unlocking Rail Travel 2020 report highlights, today 80% of air travel today is booked online, yet for rail – an industry said to be worth $300 billion globally – it remains a mere 20%.
So making rail as bookable online as air is the goal, and yes it’s complicated, but there is momentum and the indicators are positive. Here are five:
1. Acquisitions, international expansion, growing competition
The $148-million Expedia-SilverRail deal, which cemented the commercial partnership first ignited back in 2010, is a significant one, in that it is the first step by one of the major online travel players to foray into online rail ticketing. But it’s not the only indicator that the shift to online rail distribution is accelerating.
Also this year, Voyages.sncf.com, a subsidiary of France’s state-owned railway company, acquired UK-based Loco2, in a move company GM Franck Gervais said aimed to accelerate international growth and bring “new capabilities as part of our development and new projects for the UK and European markets”.
International diversification has also been a focus for UK digital retailer Trainline, which acquired French rival Captain Train in 2016, and then this year appointed chief operating officer Mark Brooker to drive that process forward. In the eight months since joining, Brooker has been aggressively driving Trainline’s European expansion, as well as looking at ways to market to inbound travellers from further afield.
Aside from the above mentioned there are a growing number of platforms, many with a multimodal offering, where consumers can buy train tickets online – RailEurope, Rome2Rio, Kelbillet and Loco2 to name a few. Travellers can, and many still do, also buy tickets online directly from the rail operators, many of which are also investing in digital platforms to drive direct bookings. Eurostar, where tech development was brought in house in 2014 is one of those, and where there is a strong focus on delivering a great customer service, while also preparing the tech infrastructure for future development. Eurostar Head of Digital Neil Roberts says theirs is a two-pronged approach and what the customers sees is just the tip of the iceberg (See EyeforTravel’s article published on Tnooz today).
Other operators are choosing white-label solutions – something that Brooker says Trainline is delivering for nine UK carriers because, he says, “we can do it more efficiently, with better sales and conversion performance”.
2. The rise of the multi-carrier ticket, and the multimodal journey
One of the challenges is that booking train travel can be complicated and in many cases requires a visit to multiple websites. As Brenda van Leeuwen, Eurail.com’s chief executive officer explained in an interview earlier this year, the diversity of technical infrastructure within different European railways makes it a challenge to deliver a consistent customer experience.
Not all railways are ready to replace paper tickets with e-tickets and since Eurail is dealing with multiple companies, in multiple countries, with multiple technologies and rules, this presents a huge challenge.
There is a long way to go but progress is being made in delivering multicarrier journeys onto one ticket. Trainline, for one, uses deep integration into rail carrier inventory, and this, says Brooker, has enabled them to combine journeys into a single transaction. Loco2 is another example of driving the integration of national ticketing systems in places like France (SNCF), Germany (DB), Spain (Renfe), and Italy (Trenitalia), as well as the UK’s National Rail.
Trains may not go everywhere, so the rise of the multimodal offering is also a trend to watch. On Rome2rio, for example, consumers can now book trips with National Express and Renfe directly on its site, and further integration is expected.
3. High-speed, less stress
Fans of train travel, argue that this is a more rewarding, low stress alternative to flying. As the Man in Seat61, a website dedicated to rail travel, puts it, “it brings us closer to the countries we visit, and reduces our contribution to climate change”.
Rail travel brings us closer to the countries we visit, and reduces our contribution to climate change
The good news then is that across the globe, countries are announcing rail investment budgets of hundreds billions of dollars a year to build new hi-speed, hi-tech, electric and WiFi connected railway lines. To highlight two recent significant moves, China has said it will spend $504bn between now and 2020 on rail construction, and Russia has recently approved $2.5bn to expand and modernise the Trans-Siberian and Baikal-Amur railways.
Meanwhile, in Europe, over the next 15 years, high-speed networks that are currently under construction or being planned could lead to 4x increase in super fast rail travel.
Cameron Jones, Chief Commercial Officer at SilverRail is quoted on their website saying: “With Europe having invested heavily in its high speed rail network over the last few years, rail has gained a competitive edge over air. This is particularly apparent on high-speed routes of four hours or less, where travellers are increasingly choosing the convenience that rail offers over short-haul flights.”
In fact, SilverRail finds that 80% of travellers would choose to travel by rail rather than air if the journey time is reduced to 2.5 hours.
According to Brooker, three to four hour train trips are the industry sweet spot, because if a train journey time becomes comparable to a flight then why on earth would you fly?
4. Policy and regulatory momentum
In the UK, government has a stated aim of having e-tickets available across the rail network by the end of 2018 meaning that more accurate data will become increasingly available, driving more technology innovation.
That may not be happening so fast in Europe, but the EU has plans to deregulate the rail industry. Officially known as the 4th Railway Package, the aim is to open rail to more competition across the EU from 2020 by removing bottlenecks, building missing cross-border connections and promoting integration and interoperability between different modes of transport.
5. Rising passenger numbers, shifting consumer behaviour
The Office of Rail and Road says around 1.7 billion passenger journeys were made by rail in 2016-2017. That’s the highest recorded figure since the 1950s, and it’s growing. SilverRail is predicting a 200-300% increase in passenger volume by 2050! Those passengers are global!
Conquering China, where there are a growing number of independent travellers, has been a focus at Eurail, which shares its content on platforms including Qyer and Youku. To cater to the needs of Chinese online purchase behaviour, Eurail opened the first European flagship store on Fliggy (previously Alitrip) in 2015. Trainline too is seeing robust inbound interest from markets like Canada, the US and Australia. So while it may not be connecting rail operators in those markets yet, it is marketing to consumers considering a European journey.
Rail travellers are also increasingly mobile, and this presents a strong opportunity for rail ticket providers to make data-driven decisions. At Eurostar, says Roberts, they now have 100,000 active users of the app each month, and that is growing considerably year on year. Trainline is also seeing huge growth in mobile. Of the 45 million monthly visits, the digital retailer receives every month, over three quarters come from a mobile device.
So, yes it’s complicated, but online rail distribution is chugging along nicely.
Join us in Amsterdam (November 29-30) to hear more from Eurail, Trainline, Eurostar and numerous other movers and shakers in travel