If you travel around Europe by car, you can barely notice border crossings, but do the same on a train and you will become painfully aware of the old borders.
The digital economy has set expectations for a minimal friction shopping experience, sometimes a one-click ordeal, rail is often marked by eye-glazing complexity. Although we can imagine a brighter future for rail travel in Europe by looking at aviation and intercity bus travel as examples.
Flixbus
Flixbus was founded in 2011 and starting with three routes in 2013, it has grown to cover 2500 destinations in 36 countries and achieving a 90% market share in Germany. The Munich start-up followed a common recipe in the digital age: a mix of a great customer interface, strong brand, clever use of data and IT, sub-contracting its main assets and deep venture capital pockets. Alltogether this enabled enticing customers with cheap tickets and buying out competitors at a breathtaking pace.
Most parts of the Flixbus’ business model are hardly new. A one-stop shop for intercity bus travel in Europe is convenient, but Eurolines and Ecolines (Central and Eastern Europe) had done that before through a joint-venture of operators. The Flixbus difference is their focus on owning, perhaps monopolising demand, whereby they focus a lot of their resources on low prices, brand, app, website and marketing. The mantra of the digital economy is “whoever owns demand, owns the market”, and supply, buses and drivers, can be hired like a commodity. This is similar to how Google and others have built their business, content (supply) is plentiful, demand drives the market.
Railways need to be more customer-oriented
The railway business is the opposite. Supply is highly concentrated on one operator per country, access to trains and tracks is not easily available, therefore owning supply is key. In rail customers often seem an afterthought. It is for most segments the most expensive mode, websites and apps for national travel are often clunky and difficult to use, customer information is abismal, especially in case of disruption, and freight customers complain they cannot know where their goods are – reminder: rail is a 100% planned system. Booking a cross-border journey with different operators is a complete horror.
The upside potential for a digital, customer-comes-first interface is huge. This should be a priority for politicians and the railway companies. It always amazed me how the larger national rail operators do not set up a joint company and invest in one outstanding website and app for the whole of Europe, instead of every one squandering money on mediocre digital channels.
The Amadeus for rail
The European Commission should force the national giants to open their train and ticketing data to third-parties. This would force the national operators to finally clean up their act and improve their digital channels, on the risk seeing someone else steal their lunch. Rumours in the sector are that the greatest fear of the railway companies is to lose the customer interface and be forced into the role of a commoditised supplier. It is true that airlines feel threatened by the intermediary Amadeus, but they are nowhere near the position of the commoditised Flixbus subcontractors, and in any case, railways is a business where owning supply is and will remain key, as access to trains and tracks is more difficult than in the airline business.
If the all the European railway travel in Europe becomes condensed in one set of digital channels, this is a first step towards a one stop shop for all travel modes. This requires a scale and investment capacity that is beyond any single company. Additionally, by having a strong company, or a few strong companies owning Europe-wide demand, this could bring a more customer-friendly railway and push operators to provide better service and value for money. Alternatively, as with Amadeus, focusing on business to business (B2B) and leaving the customer interface to others.
Curiously, Amadeus was founded by a group of European airlines to harmonise ticketing and distribution. Building such a joint-venture of rail operators, would dispel fears of operators of being commoditised and ensure the profits are reinvested in the system. It would be essential for this company to be starkly independent from its owners, allowing professional management the freedom to design a superior customer experience and some clout over train operators and infrastructure managers, as nothing will work if they do not change their business along the way.