2022 will be a key year for the future of rail platforms and ticketing in Europe. Emmanuel Mounier, secretary general of EU Travel Tech, which represents the interests of global distribution systems, online travel agencies, travel management companies and other travel sellers in Europe, gives an outlook on what to expect.
For many years and almost as many European political cycles, the modal shift of passenger transport from air to rail has been a political priority for Brussels policymakers. As the decarbonization of Europe's entire economy currently dominates all discussions, one can see why modal shift is attractive when comparing the CO2 emissions of both modes. For example, a Brussels-Berlin one-way trip by train will add about 24 kg of CO2 to your carbon footprint, while a flight will cause about 117 kg of additional emissions. The glaring problem here, however, is that little modal shift has actually been achieved over the last decade.
One major reason why is that comparing and booking long-distance rail tickets continues to be a tedious and untransparent process for all travelers, including business. In air travel, on the other hand, there is a wide range of platforms and other comparison tools to make booking easy and user-friendly. Independent distributors, such as travel management companies and the platforms they operate, could bring better services to the rail market by connecting offers from many different railways, enabling comparison and price transparency and providing multiple language and payment options. However, they are hindered by a range of barriers, including unfair commercial terms from incumbent railways, lack of data sharing and an imperfect standards framework.
The policy machine in Brussels has recently been waking up to these issues, showing initiative to bring about improvement. Much of that movement started with the European Commission's 2020 Sustainable and Smart Mobility Strategy, which included a few broad headline goals for the future of transport in Europe and kicked off the work on more concrete items. Another milestone was the EU Rail Action Plan of December 2021, which named the main problems in no uncertain terms and promised action. As from now, the expert work is being done with a plan to present a proposal on so-called "Multimodal Digital Mobility Services" at the end of this year. This proposal is to tackle many of the barriers currently faced by rail platforms and will likely gain more political weight and headwind from large railways as the drafting work progresses.
The unfortunate truth is that the existing barriers are (for the most part) the result of large railways' commercial choice to limit independent distribution. Companies like Deutsche Bahn or SNCF today are quasi-monopolies in their domestic markets, both in the operation of trains and the sale of tickets. Independent distributors compete with their distribution arms and would allow for a fair comparison with up-and-coming players like Flixtrain or Italo.
The most important problem preventing many platforms, including TMCs, from selling and comparing rail tickets are unfair commercial terms. Because the big railways have such strong market positions, they become unavoidable partners for these platforms. This means railways are free to dictate the terms of any distribution agreement, to the point where distributors struggle to make any money selling rail. Another barrier is that platforms do not always receive the required data to both have all the necessary information on fares and inventory available, but also to keep their customers informed of any disruptions or delays. Lastly, there is a mess of half-implemented and incompatible private and public standards on rail distribution, making integration and distribution costly.
The outcome of these barriers is that many platforms are not able to operate in the rail market and even those that continue to operate are being held back by the actions of railways. Others, who gather their rail offers through cooperation with players like Amadeus or Trainline, are negatively affected in an indirect manner.
We think the answer to these problems is evident: adequate regulation at the European level. The current state of affairs represents a concrete market failure, which not only hurts consumers, but also the environment. EU Travel Tech has developed a set of policy recommendations, which address the barriers to independent rail distribution by ensuring platforms can sell rail tickets fairly, have access to the required contents and data and have a solid standards framework as a technical backbone.
Taken together, these four recommendations, rigorously enforced, can help the EU meet significant ambitions on the environment, by enabling integrated ticketing. Removing barriers can deliver a consumer-friendly, competitive, modern and growing rail distribution system:
- Ensuring fair, reasonable and non-discriminatory (FRAND) commercial terms
- Ensuring access to all rail content, including offers and fares, for all distribution channels also based on FRAND conditions
- Mandating sharing of dynamic rail data
- Creating a clear and cost-effective rail distribution standards framework
The railways themselves have promised many times to alleviate these issues through self-regulation, but very little has come of their efforts. With the European Commission's plans to propose a Regulation on Multimodal Digital Mobility Services at the end of the year, it's important for policymakers to get real on rail ticketing now.