HIGH-SPEED RAIL VS. LOW-COST AIR: COMPETING OR

Transcription

1 2 ND EUROPEAN INTERMODAL TRANSPORT REGULATION SUMMARY HIGH-SPEED RAIL VS. LOW-COST AIR: COMPETING OR COMPLEMENTARY MODES? A SUMMARY OF THE PRESENTATIONS Florence, 3 rd March 2014 Editors: Matthias Finger, Nadia Bert, David Kupfer Forum Summary Document

2 (Florence, 03/03/2014) 1

3 The present document summarises the content of the presentations delivered during the 2 nd Florence Intermodal Forum, and the following paragraphs offer short summaries of each presentation, illustrating the main points made and matters treated. To open it, go to florenceschool.eu, choose transport from the top menu bar and select European Transport Regulation Forums among the activities. Clicking on the title of the forum will take you to the relevant page. Alternatively, by clicking on a presentation s icon you may activate an internet link taking you to the full presentation, when available. Presentations are hosted on the FSR website by permission of the authors. Introduction to the 2 nd Florence Intermodal Forum Prof. Matthias Finger, Director of FSR- Transport and of the chair of Management of Network Industries (MIR), École Polytechnique Fédérale Lausanne (EPFL) In his introduction, Prof Finger presented the Florence School of Regulation within the European University Institute, its history, functioning and position. He continued by describing the FSR Transport Area s goal of growing as a platform for open discussion among relevant stakeholder who share the aim of contributing to the ongoing debates about transport s regulatory aspects and challenges. Turning to the subject matter of the Forum, Prof Finger recalled the milestones of the history of liberalization in the air and the rail sectors in Europe. Despite aiming at the same goal, they have followed different paths, and rail and air liberalisation are now at different points of the liberalization process. Then, Prof Finger introduced the main questions of the day, introducing the topic of intermodality and the dichotomy competition vs. complementarity. Prof Finger concluded by stressing once again that this 2 nd Florence Intermodal Forum seeks to identify and lay out the possible points of convergence and the main incompatibility between air and rail, which ultimately serve the same demand for mobility. (Florence, 03/03/2014) 2

4 High-speed rail vs. low-cost air: competing or complementary modes? Elisabetta Righini, Member of Cabinet Vice-President Almunia, responsible for State Aid Policy and Enforcement in Transport Sector, European Commission In her opening statement Ms Righini underlined the importance of the interplay between liberalisation, competition and consumer choices in network industries, where the challenge of managing finite - often singular - resources, the networks, has made the continuous iteration of these three elements an indispensable feature. The question for her was therefore to what extent this ideal process has worked in the two modes rail and air. She underlined that since the start of the liberalisation in the 1990s civil aviation has changed profoundly in the EU, with low cost airlines having developed a completely different business model than traditional airlines. Competition has also played a strong role in this sector, both through antitrust instruments and State aid control. With regard to the latter, a very important step ahead in ensuring further a correct development of the finite infrastructure are the new Guidelines adopted on 20 th February 2014, which foresee clear rules on maximum possible subsidisation. In rail, the liberalisation process has developed much later and at a much slower pace: international and national freight transport have been liberalised only since 2007, and international passenger transport only since The result is that, today, former incumbents still occupy large shares of the rail market and that competition is still at a very early stage. Turning to the element of competition between high-speed rail and low-cost air, she stated that the development of high-speed rail has led to some competition however restricted to time sensitive passengers. Low-cost airlines serve different destinations and are hardly present in the big cities. On the whole, she concluded, it is still very difficult to consider air and rail, even in the more limited definition of LCCs and high-speed trains, as competing or complementary modes of transport. What is needed is more regulation and more competition in rail and further enforcement of State aid control in aviation, so to ensure enough choice - hopefully in a limited amount of time - for consumers. (Florence, 03/03/2014) 3

5 High-speed rail vs. low-cost air: competing or complementary modes? Emmanuelle Maire, Head of Unit - EU Aviation market and airports, European Commission In her opening statement Ms Maire commented on the discussion question which she perceived as provocative at least when considered from an airline-perspective. She questioned the implied increasing dominance of air travel on medium routes by listing several important city pairs in Europe and the modal shares of traffic between them: Madrid-Seville: Rail 83% Air 27% Paris London: Rail 81% Air 17% Paris Brussels: Rail 95% Air 5% She recalled that the liberalisation of the air market has been a big success. However the introduction of HSR was followed by a substantial drop in air shares and even though this mainly affected traditional air carriers, the presented numbers show that still today rail is very strong compared to air on those city routes. She recalled that the low cost industry that has emerged in Europe is very strong and competitive. European Low Cost Airlines are more efficient than their counterparts in the US and may see substantial expansion in the future. In the Asian market there would be enormous potential for low cost air carriers but as those markets are still closed they are not accessible at the moment. Recalling the example of China that had been mentioned before she stressed that the efficiency gains in air travel that were realized in Europe were something other countries would look up to as they still face high fares and a system of inefficient monopolistic air carriers. Turning to the rail sector she recalled that it is critical to the functioning of European economy and one should not forget that ultimately the overall goal for both modes was to move traffic away from congested roads. Still the rail sector is in a critical state and required a lot public money. Unlike air the sector is still fragmented with highly divergent national rules and standards and protected markets. Ultimately she turned to the issue of subsidies and defended that in spite of the important and known exceptions of regional airport support and tax exemptions for aviation fuel, airline operators do pay for the cost of their infrastructure: amongst others ground handling, security charges, and costs for air navigation services. Furthermore unlike rail companies, airlines don t enjoy the benefits of allotted PSO contracts. All in all rail is an important alternative to road transport and a convenient mode of transport but is far behind in on its way to becoming an internal market in Europe. Reforms should therefore be pushed forward especially in the rail sector. (Florence, 03/03/2014) 4

6 HSR v LCC: competing or complementary modes? - Elements to open the discussion Stephen Perkins, Head of the Research Unit at International Transport Forum / OECD In the beginning of his presentation Mr Perkins pointed out that all markets are different and that the ideal market is generally hard to achieve in transport. The role of regulators in such situations is to try to create the results of normal market competition. With the extremely high fixed cost for infrastructure normal market competition in rail isn t possible. In order to differentiate prices in a way that they allow to cover these high costs regulation needs to create some sort of exclusivity for the operators. Which is why normally in rail there is a competition for the market as opposed to competition in the market: new entrants compete for concessions which they are then able to make use of exclusively. Today a lot of rail operators operate commercially and cover of their costs, especially high speed rail operators. Mr Perkins presented several graphs on research results on the modal split between rail and air and the factors that have an impact on them. There are several factors to be taken into consideration when looking at the competition between rail and air connections. Most importantly travel time and cost structure. For high speed rail it is important that a travel time below 3h is normally what business clients demand as this is the threshold under which a one day return trip to meet with business partners is feasible. He mentioned the different cost structure of low cost airlines and made the assessment that because of their lower prices low cost airlines should be able to outcompete highspeed rail on any routes above 200km on prices. However the higher frequencies that HSR can offer gives it an important advantage on those routes. The main share of passengers that switched to low cost air came however from traditional air carriers and not so much from rail. In one example Mr Perkins pointed at the completely different situation in China: there, rail has a share of over 80% in travel distances around 1000 km. The reasons for this are on the one hand the higher frequency of rail services and the frequent and long delays on airports, but on the other hand the high fares for air travel and the non-existence of a low cost air sector. These factors are clearly the result of the still closed air markets in China with dominant state monopolies. The current structure would be massively changed if air travel was liberalized in China, as potential competition from low cost carriers is being supressed by the current situation. The example of the Cologne-Hamburg route showed how rail operators could react once they are faced with competition from low cost air: when Hapag Lyod entered the marked on this route in 2002 rail share declined heavily at first but were stabilized later by means of price differentiation by the rail operator. While lowering the revenues of the operator the measure benefited the consumer by creating a lower average ticket price. (Florence, 03/03/2014) 5

7 Can high-speed rail continue to expand, if lowcost airlines are taking over as the alternative also on short routes? Ichiro Takahashi, Head of the Brussels Branch, East Japan Railway Company Mr Takahashi illustrated the role of high speed rail, intermodal competition and the structure of East Japan Railway Company, Japan s biggest railway operator. He stressed several important factors that could be considered the main differences between the European and Japanese Railway systems: Besides being the largest, JR East has a lot of competitors - there are over 200 railway companies in Japan Metropolitan, regional and high speed rail are not separated but part of the same integrated company Unlike in Europe Passenger expectations are very high in Japan: the general level of punctuality and quality of service is much higher because of that Japan has a long tradition of high speed rail: this year it celebrates 50 years of high speed rail In spite of being categorized as a private monopolistic company by the European Commission, East Japan Railway Company does not receive any public funding, is not awarded PSO contracts and none of its shares are owned by the government. Turning to the air sector Mr Takahashi pointed out that with respect to the small land size Japan has with about 100 commercially operated airports a fare denser structure of aviation infrastructure than Europe. However as illustrated by an overview of modal shares on certain distances, rail has large shares as, for example 57% on traffic between 500 and 750 km. It was furthermore illustrated that HSR dominates on most city pairs with most having a share of rail of 100%. Takahashi concluded that Competition with Airlines only starts from distances from between km but feeder services which are well developed rail in Japan also benefits from air connections. Overall the market approach seems to have been successful from a Japanese experience in rail sector. (Florence, 03/03/2014) 6

8 Can high-speed rail continue to expand, if low-cost airlines are taking over as the alternative also on short routes? Sandro Löw, Head of Legal & European Affairs, Thalys International Mr Löw presented the views of Thalys on the question of competition between Highspeed Rail and low cost air. As a uniquely international European rail company whose trains cross several borders on most of their routes Thalys is especially familiar with the obstacles to cross boarder passenger travel in the EU. He listed the advantages of HSR on medium routes such as Brussels Paris Shorter travel time Connection to city centre Productive travel time: wifi and more space Rail is more environmentally friendly and considered more safe It is mainly for those reasons that rail today has a modal share of 95% on this route. Problems that impede rail from competing with air include the higher flexibility of the air operators when planning their routes. Rail has to make long term commitments and book slots two years in advance. He elaborated on another problem that cross border rail faces: unexpected waiting times often occur at borders due to a lack of communication between the different infrastructure managers. Crossing borders also creates problems for the responsible train manager as he technically has no legal authority in the train while it is on the territory of a state different from his own nationality. Feeder services prove difficult for Thalys because of, amongst other reasons limited luggage space in the trains. He also questioned whether High Speed Rail would want to be associated with low cost air from an image perspective. For regional airports an additional problem is that low cost carriers are not included in the established ticket distribution channels: therefore it is hard for passengers to book the whole journey when it includes a low-cost flight. He finished with an anecdote, stating that the little known cheapest connection from Brussels to Dubai includes a Highspeed Train and a low cost airline: Taking the Thales to Cologne and continuing the journey with low cost Wizz air to Dubai amounts to only around 120. (Florence, 03/03/2014) 7

9 Competition between air transport and rail. An unlevel playing field European Low Fares Airline Association s perspective John Hanlon, ELFAA s Secretary General In his presentation Mr Hanlon defended the role of the low cost Airlines and presented their perspective on the role of subsidies to both rail and aviation. Low fare airlines are a child of liberalization and are therefore indebted to the European Commission for pushing forward market liberalization; nevertheless they don t perceive the current state of competition between the two modes rail and air as fair. Especially low cost airlines with their point to point service deliver an essential contribution to important goals of the European Union by: supporting regional economic development connecting regions - Low cost airlines have established 426 new city pairs bypassing over congested hubs offering more mobility to citizens and democratizing air travel by making it accessible to large parts of the society Another important advantage of low cost airlines was the potential of regional airports to ease the situation at congested airports: It would be much more rational to invest in the land connection of regional airports thus enabling further point to point to point services and easing the situation for major hubs. When compared to the construction of new runways on congested airports, this would be a far cheaper option. In ELFAA s view there are excessive subsidies to rail as well as to conventional air carriers: taxpayers largely fund the railway infrastructure whereas airlines pay for all the costs related to infrastructure themselves air traffic management costs, airport operations etc.). National governments still support their national air carriers creating market distortions. Lastly Mr Hanlon mentioned further obstacles to intermodality one of which being a lack of integrated scheduling for train connections to airports which would have a huge potential to improve the connectivity. (Florence, 03/03/2014) 8

10 High speed rail vs. lowcost air: competing or complementary modes? the incumbent Italian operator s point of view Alberto Mazzola, Senior Vice-President International Affairs, Ferrovie dello Stato Italiane In his presentation on the question of the influence of subsidies for the development of the rail and low cost air sector Mr Mazzola started by differentiating on how to define the figures for government subsidies which, as it turns out are somewhat disputed. According to his calculation subsidies to rail were much lower than previously stated in in a presentation by the Low Fare Airline Association. He stressed that the single market in rail unlike the single market in air still has to be achieved and that his company was keen on moving on with it faster. He listed the reforms that were still needed to achieve the single market in rail such us a single licensing institution for trains: He illustrated that his company s initiative for a passenger rail connection between Milan and Paris failed because trains wouldn t be licensed in neighbouring countries. In this respect he underlined the importance of the establishment of a European Railway Agency. While the single market in air was a big success it has only partly been achieved in rail: While the freight market has been liberalized as well as the international passenger market (which however faces constraints due to the before mentioned lack of interoperability) markets for domestic passenger transport remain largely closed with the exception of HSR which would be opened with the implementation of the 4th railway package. On this point he illustrated that Italy had made good experience with introducing competition in High Speed Rail. In order to allow for competition Ferrovie dello Stato facilitates the use of infrastructure by its competitors. Finally on the question of competition he predicted that the development will continue that HSR is in the first place an important alternative to road transport and not so much on air as most new passengers had previously been using the car on their routes. (Florence, 03/03/2014) 9

11 Policy competition between air and HSR transport in the Rome-Milan corridor an academic view Eva Valeri, University of Trieste Recently, interesting dynamics occurred in the air and High Speed Rail (HSR) passenger transport markets in Italy. Over time, the Rome-Milan (Ro-Mi) corridor received a lot of attention by the European Commission and the Italian Antitrust Authority. In particular, in 2012 the Italian Antitrust Authority investigated about the air and HSR substitutability for the Rome Fiumicino airport - Milan Linate airport route between Alitalia-CAI airlines and Trenitalia operators. The Ro-Mi case study is also particularly interesting not only because it connects the two most populated Italian multi-airport cities with a high share of business passengers, but also for to the recent dynamics observed in both passenger transport markets (e.g. Alitalia-AirOne merger, market entry of Ryanair and Easyjet airlines, market entry of a private HSR operator -Nuovo Trasporto Viaggiatori -NTV). The aim of the presented research project is to analyse inter and intra-modal transport competition in the Ro-Mi corridor investigating travellers preferences. A Revealed Preference survey and Stated Preference survey were designed and conducted from 2010 and 2011 collecting interviews. The main drivers that affect both the Ro-Mi consumer s choice and determine transport competition were identified by an additional ad hoc survey revealing the relevance of such factors as: total travel time, total travel cost, delay, ticket flexibility and on-board services. While total travel time and ticket prices proved to be the most important factors, interesting results were found for the relevance of on-board services and ticket flexibility attributes. Especially, Mobile Phone use is the most preferred among the tested on-board services (e.g. WiFi Internet connection). Moreover, consumers prefer to have the possibility to change their tickets even when this involves paying an extra-fee (ranging from 40 to 60 ). In the last years important improvements were made in the Ro-Mi corridor by the HSR operators to reduce travel time. In fact, currently HSR performs well on the Ro-Mi link today with an average travel time of 2 hours and 55 minutes by Trenitalia and in 3 hours and 20 by competitor NTV. Also with reference to the daily frequency of transport services, HSR system has over time improved significantly its offer especially in the early hours of the morning. Currently, the HSR system provides 57 daily trains while the air transport system provides 35 flights. Regarding the level of fare, an ad hoc survey based on simulations through the Ro-Mi transport operators web sites shows a progressive increase of Trenitalia average ticket, an Alitalia-CAI fare decrease and the NTV average ticket similar to Trenitalia. Except for Ryanair and Easyjet airlines, a fare convergence was found between all others Ro-Mi transport operators. With reference to the substitutability between HSR and air transport in the Ro-Mi corridor, considering the important improvements in daily frequency and the travel time reduction of the HSR system, the average fare convergence among HSR and air operators and the estimated logit models and crosspoint elasticity measures, HSR and air transport in the Ro-Mi corridor should be considered as substitutes and belong to the same relevant market both for time sensitive and non-time sensitive passengers. (Florence, 03/03/2014) 10

12 Is there room for effective intermodal legislation? - The perspective of the DG MOVE Emmanuelle Maire, Head of Unit - EU Aviation market and airports, European Commission When VP Siim Kallas took over as European Commission s Vice President for Mobility and Transport, he issued the White Paper Roadmap to a Single European Transport Area Towards a competitive and resource efficient transport system (COM(2011) 144 final), a reference document for transport policy whose main goal was to develop the Single European Transport Area by switching from a patchwork of national systems towards a fully connected European transport network. As far as infrastructures are concerned, the revised guidelines for the Trans-European Transport Network (TEN-T 1315/2013) published on 11th December 2013 aim at creating a global transport network according to a multimodal approach. In this context, it was decided to upgrade the railway lines, and make them the backbone corridor of a larger multimodal grid. Another main obligation for the EU is having 39 main EU airports connected with the national railway lines (no light rail, no dead end connection) by This commitment is coupled by the new regulation regarding the financial means (Connecting Europe Facility 1316/2013), which established that the funding dedicated by the EU to the TEN-T between 2014 and 2020 should to be tripled (26billion for the years ahead). In addition, this new map of Europe will have an impact on the management of both the regional- and the cohesion- fund, as their priorities will have to take the TEN-T maps into consideration. All the projects outlined within the TEN-T regulation will be cofunded (max. 50% studies, max. 20% works) by the EU. In particular, the first call will be launched in the second half of The money will be involved for intermodal links! The planning and the financial commitment for the construction of the intermodal links are not the only ways in which the European Commission looks at intermodality! Indeed, at the beginning of his mandate VP Siim Kallas also highlighted the importance of Intelligent Transport Systems (ITS SPEECH/10/325), launching the debate on the so-called multimodal travel information, planning and ticketing services and this issue is still in the Commission s agenda as still a lot has to be done! In Europe more than 100 multimodal journey planners are available, but a lot has still to be done: first and foremost, the offer is very fragmented in geographical terms; secondly, the modal coverage is not sufficient (ie car sharing is not included); most importantly, there is almost no possibility to get information in real time, especially in case of unexpected diversions or delays; last but not least, integrated ticketing are still limited, and this is why the European Commission will release a study on passengers transport information and booking interface across transport modes soon. Therefore, the Commission (supported by the member states) will soon work on a new initiative to disclose access and availability of multimodal travel and traffic data. (crucial aspect of the distribution of data) In spite of the fact that obstacles to integrated mobility are still in place (the conciliation of passengers' rights in different modes, and the check-in and drop-off of the baggage for a multimodal traveller just to mention a few) and a lot has still to be done in terms of effective intermodal legislation, the TEN-T regulation is a good initiative that looks at infrastructure globally and the commitment of the European Commission towards the access to data is very important as well. (Florence, 03/03/2014) 11

13 Air Transport and High- Speed Transport: the Spanish Case Ricardo Génova Galván, Aviation Consultant and Former VP Iberia The presentation of Mr Génova focussed on the evolution of high-speed rail and air transport in Spain, one of the biggest European markets for both aviation and high-speed trains. In fact, despite the recession in the last few years, air passenger traffic in Spain has grown (the Spanish market is now the second biggest in Europe in terms of passenger traffic, Madrid is the first EU airport in terms of domestic passenger traffic) and the expansion of the high-speed network brought Spain up to the second place globally. Two main aspects of the Spanish numbers should be highlighted. Spain is the EU country with the most point-to-point operators and where low-cost companies dominate and the extension of its high-speed rail network is the second biggest network in the world. On the other hand, at least in some major corridors like the Madrid-Barcelona link - which is the busiest air link in Europe -, data on the evolution of the market shares show how passengers are shifting from airplane to high-speed rail. In this case, since the opening of the high-speed train link the total number of passengers on the route did not increase significantly yet the number of air passengers has nearly halved. This behaviour is reproduced in every Spanish city pair in which high-speed rail is competing with airplane, thus showing that high-speed rail offers an alternative to air travel. But what are the main reasons why passengers are opting for high-speed trains? First of all, since the introduction of stricter security measures following 9/11, passengers are obliged to go through time consuming procedures and to comply with very restrictive security checks on luggage. Secondly, looking at the technological evolution of high-speed trains, Mr Génova introduced a key element in the competition between air and rail, which can be generally applied also outside Spain: despite the possibility for an airplane to reach higher speed in the long distance, on short-medium distances such as those on internal connections, trains are improving their performances whereas airplanes cannot. Given these two aspects, high-speed trains will soon become the main means of transport connecting cities within km in the shortest time. Based on these numbers, Mr Génova concluded that the future transport in Spain and on all routes of similar length is high-speed rail. As passengers shift from airplane to high-speed rail the profitability of domestic flights feeding the hub in Madrid from airports in the Spanish seaboard will fall, obliging airlines to reduce the number of services and thus reducing the quality of the service. Therefore, collaboration between airlines and rail operators will be just necessary and it will be the responsibility of the two sectors to make the market work. (Florence, 03/03/2014) 12

14 High Speed Rail and Low Cost Air Intermodality - The perspective of the UIC Ignacio Barrón de Angoiti, head of Passengers and High Speed Department at the International Union of Railways Mr Barrón introduced his presentation on intermodality by looking at the main characteristics of rail transport. Railway is an efficient system, as its basic principles refer to two main concepts: on the one hand, railway is a self-guided system with a high level of safety; on the other hand, railway allows pushing a certain weight with little power, thanks to the low deformation and low friction of the system. Because of this, trains (high-speed trains even more) are providing capacity in a more efficient way than other modes of transport. Furthermore, Mr Barrón maintained that railway is also the most sustainable means of transport as it is the mode that makes society pay on average the lowest external costs. Turning to high-speed rail, first of all Mr Barrón highlighted the nature of high-speed as a complex system that aims at moving people at a certain condition of time, frequency, safety and comfort optimising all the elements that are part of the system. Secondly, he stressed that high-speed is similar and at the same time different everywhere and that the concept must be adapted to the country looked at. For instance, while high-speed is a luxury good in Spain, it is the means of transport for almost all commuters in Japan, and it offers a regional service in France. Thirdly, Mr Barrón pointed at the expansion of the high-speed network, which now exists in Western Europe and in Eastern Asia and is on the way to become a global phenomenon. Looking at intermodality between rail transport and air, Mr Barrón stressed that this faces big challenges. The first one relates to traffic volumes and namely to an intrinsic characteristic of the two transport modes: rail works on high-capacity whereas air cannot overcome the burden of lowcapacity. The second challenge relates to the different commercial nature of the two and the different services offered to passengers, which are highly differentiated (ticketing and reservation systems, security measures, type and number of baggage). Thirdly, air and rail operations differ greatly as they have to be conducted on different scales, namely the logistic in the air infrastructure is much more restricted and controlled than in rail. Last but not least, the role of the governance and who is taking decisions in the two modes is separated. However, this is the very challenge for intermodality. Rail and air can be seen either as competitive or complementary modes, yet the challenge on governance includes both. (Florence, 03/03/2014) 13

15 High speed rail vs. low - cost air: competing or complimentary modes? A view from Poland Marcin Wolek, PhD, Department of Transportation Market, University of Gdansk Mr Wolek focused his presentation on Poland, which offers an interesting case study as it is a country where low-cost airlines already entered the market whereas high-speed rail is still on hold. As for railway, in his opening remarks Mr Wolek stressed the importance of the overall economic situation of a given country, which is a often neglected as a factor when deciding on the construction of high-speed lines. The economic factor is however just as crucial as geography and geology. Even though Poland is an almost flat country with low seismic activity (crucial elements for the construction of railway lines), Mr Wolek claimed that the construction of a high-speed railway network should be adjusted to an appropriate level of economic development, which does not yet exist in Poland. Namely, even if the European Commission could support the project and the construction phases of new high-speed lines, the costs of operating the lines would still be too high for Poland to afford. Therefore, high-speed railways in Poland could probably not function without subsidies. Moving to the evidences emerging from the air market, Mr Wolek stressed that the increase of numbers of passengers in the Polish air transport market reflects the increase of the GDP per capita that followed to the EU accession. Furthermore, Mr Wolek highlighted a very important characteristic of the air market in Poland: as the market share of low-cost airlines is about 50% and the major destinations of all trips is London (where many Polish citizens live) it can be said that the development of low-cost carriers has an important social dimension as it allows Poles working abroad to stay in close contact with their families at home. Regardless of the means of transport, a key characteristic of the Polish transport is that passengers are generally price-sensitive. Therefore, price competition among transport modes (also with individual cars and coaches) is very strong and dynamic. However, comparing regulation in air and rail is quite challenging, as the two sectors are characterised by very different elements: Air traffic is normally international whereas rail is domestic Low cost air lines have a completely different business model than rail operators but also traditional air carriers. Provision and access to infrastructure: for example for million Euros it is possible to convert a former military airport into a regional airport for low cost airlines while no comparable traffic connection could be established in railing with an investment of this size. As a concluding question Mr Wolek made reference to examples given before: It had been discussed how different regulatory systems may give preference to either high speed rail or low cost air on distances of 500 to up to 1000 km. Given the characteristics of the Polish market and the current situation where there is a certain reluctance to massively invest in a high speed rail network while Ryan air is able to offer fast and affordable connections that would require investments of a much smaller scale, the question may be asked in a completely different way: could high speed rail compete with the prices of low cost carriers on even shorter routes of km? (Florence, 03/03/2014) 14

16 How can high-speed and lowcost be complementary? - The view of the European Passengers Federation Trevor Garrod, Chairman of the European Passengers' Federation Mr Trevor Garrod, Chairman of the European Passengers Federation (EPF) addressed the topic of complementarity between high-speed and low-cost mainly focussing on three key questions: how can high-speed rail and low-cost air be complementary? Do they serve different needs? Can they coordinate and consistently develop as two parts of the whole journey or the journey chain? Particular attention was dedicated to the last question as it relates to the core issue EPF is dealing with. When EPF started in 2002, it was predominantly a body for rail passengers, but very quickly became active in all modes of passenger transport focussing especially on connected public transport as a way to promote public as an alternative to private car use. Mr Garrod stressed the importance of the possibility for customers to have a choice and their ability to use which mode or which group of modes they prefer. He stressed the importance of fair competition in the transport market, which from a passengers perspective meant first of all the availability and comprehensive and objective information and a high degree of flexibility. When making their choice on which transport mode to use in order to arrive at a certain destination travellers decide early on to either go by train or by plane because they appreciate certain specific features of the different modes. Whether or not a high-speed or a normal train or a low-cost instead of a traditional air carrier was available on the route was of secondary importance. The attributes passengers connect with a certain mode of transport e.g. quality, frequency, comfort, accessibility of airports and stations generally play a greater role according to Mr Garrod. However, for passengers on longer journeys train and plane may both be part of the journey chain. Integration between modes (i.e. railway tracks connecting airports) and within modes (i.e. high-speed trains may not use high-speed lines all the way) is important, as well as integration with local public transport and the possibility of booking in an easy and flexible way. Mr Garrod concluded his inputs with three remarks: first and foremost, wherever possible, customers should have a choice; secondly, both customers and journeys vary, but passengers always need clear information; and finally practice shows that there is scope for co-operation between all train and plane operators. (Florence, 03/03/2014) 15

17 Air and rail: competition or complementary use? - The view of the Airport Council International Chrystelle Damar, ACI Europe, Head of Environment and Intermodality The introduction given by Ms Chrystelle Damar, Head of Environment and Intermodality at ACI Europe, drew the attention to the variety of members of the association in order to highlight that different business models can articulate common interests, and this is the case for both low-cost and traditional airlines when they deal with intermodality at the airports. In fact, as it was also recognised by the TEN-T guidelines, airports are intermodal nodes by nature. They should therefore be considered as a strategic asset in the development of a European-wide intermodal strategy that aims at providing an adequate service to the passengers in terms of service quality and minimization of connecting times. Ms Damar highlighted how external shocks can in some cases boost intermodality. This was the case for the Recommended practices in case of disruption of traffic initiative elaborated in cooperation with the Community of European Railways (CER) in the aftermath of the Icelandic volcano crisis in 2009 with the aim of improving communication to the passengers. Beside the contingencies, Ms Damar stressed the overall commitment of airports towards intermodality. In fact, there are several initiatives that go in this direction as for example the Intermodality Working Group of the Community Observatory on Airport capacity in which airports play a key role. Furthermore, today s forecasts predict growth in travel demand in Europe. With regard to this, Ms Damar proposed a paradigm shift taking the assumption that intermodality creates mobility: on certain routes, substitution effects will be inevitable, but in general the more choice will be given to customers, the more mobility will be created. Therefore, there is the need to elaborate a rational model for intermodality: given the costs that developing new (high-speed) rail connections would have, a crucial role has to be played by aviation and especially by regional airports. From an airport perspective, surface access to the airports is crucial. However, integration of high-speed connection with the airports has to be done in a wise way, as airport size, geography, and travel time are elements to be considered differently in every airport. Therefore, other means of transport such as conventional rail, urban rail access to the city centre, non-rail urban transport might be more suitable options to connect airports to other modes of transport. Furthermore, the success of intermodality at the airports might is determined by other elements as well, such as integrated scheduling, ticketing and check-in. In conclusion, Ms Damar recalled that, from an airport point of view, rail and air are not substitutes as they serve different needs. Furthermore, intermodality is a key component to the airport industry: at congested airports, HSR access can free some short-haul for long-haul slots; at non-congested airports, rail access can enlarge the catchment area and create new demand for air travel. In general, landside access to airports remains critical and should be addressed in order to improve passenger experience and limiting the environmental impact of the travelling. (Florence, 03/03/2014) 16

18 How can High-Speed and Low- Cost be Complementary? The view of a new entrant operator Andrea Giuricin, Studies Office of Nuovo Trasporto Viaggiatori and Professor at University of Milan Bicocca Mr Giuricin started his presentation by stressing one specific aspect of intermodality: the importance of the enlargement of the catchment area for every transport operator by means of agreements with other transport operators and the integration of ticket distribution through Global Distribution Systems (GDS). In a second remark Mr Giuricin referred specifically to the impact of competition in Italy s liberalised rail market. A graph illustrating the modal shift and competition in the Rome-Milan corridor was used to demonstrate that competition between railway operators has been highly beneficial for the railway system as a whole in comparison to air transport. Generally, also other elements of liberalisation and innovation in the railway system (like new management and revenue management in Spain) gave a competitive advantage to rail vs air transport, as it was shown by the case of Madrid-Barcelona. Overall, the data presented by Mr Giuricin showed high-speed rail as a competitor of other transport modes, at least in the domestic market. He illustrated the sources of the growth in demand for high-speed rail in Italy in spite of the drop in GDP: not only thanks to the newly generated demand (supported by the decrease of prices and the increase of frequencies brought about by competition), but also thanks to the shift of passengers from air, car and intercity rail. However, referring back to his initial statement, Mr Giuricin pointed out that high-speed rail can also be seen as a complementary element to other modes of transport, especially thanks to the opportunities that both the global market and public transport offer. Speaking about complementarity between low-cost and high-speed is more difficult though for two main reasons: first of all, one should distinguish between different types of low-cost air carriers, as not all of them work according to a business model that favours integration with other means of transport (i.e. some low-cost sell their tickets only directly); secondly, especially on national routs, competition between low-cost and high-speed discourages collaboration. Mr Giuricin concluded that, in his opinion, nowadays there is little space for intermodality between high-speed rail and low-cost air, but there is room for intermodality between high-speed railway operators and urban public transport providers, car sharing and traditional air-carriers even from all over the world, as intermodality responds to the common shared need of enlarging catchment areas. (Florence, 03/03/2014) 17

19 How do passengers get to and from the airport? Bike or rail? An analyst perspective Bertil Hylén, FSR-Transport Advisor and Formerly VTI Transport Research, Sweden The presentation of Mr Bertil Hylén began with a quote of the European Commission 2011 White Paper, which aims at promoting intermodality and lists among its goals: maintaining a dense rail network in all member states (goal nr 4), establishing a fully functional and EU-wide multimodal TEN-T core network (goal nr 5), connecting (possibly high-speed) rail with core-network airports (goal nr 6), and enhancing a framework for a European multi-modal transport information, management and payment system (goal nr 8). But how do passengers travel in an intermodal way? Mr Hylén presented his research on how people travel to and from airports, and the main conclusion was that there is a general lack of data. However, some relevant aspects could be highlighted. Quite interestingly, Europe is the region in the world where the percentage of passengers reaching the airports by train is significant (16%), even if train is still the last means of transport after bus, taxi and private car. The situation differs a lot though between airports, as no generalisation in terms of size (big or small airports), connection to the cities in the catchment area (local agreements), size of the population in the catchment area, and type of traffic (connecting hub or airport as final destination) can be made. The lack of information was stressed by Mr Hylén also with regard to the scarce information that are often provided by certain mode operators regarding the connections that can be made with other transport modes at destinations. Some well working examples have been quoted, but the need to improve information on urban public transport at destination also through integrated ticketing was called for. (Florence, 03/03/2014) 18

20 FSR-Transport: Events 2014 Presentations and summaries from past events are available on the FSR website: Date Title 3 March nd Florence Intermodal Forum 24 March th Florence Air Forum 28 April th Florence Rail Forum 6 May th ECOMM: Creating a bridge to a green, fair and prosperous mobility management 13 June rd Conference on the Regulation of Infrastructure Industries FSR-Transport: Contacts Director: Coordinator: Prof. Matthias Finger Nadia Bert tel: address: matthias.finger@epfl.ch FSR.Transport@eui.eu Florence School of Regulation, European University Institute Via Boccaccio Firenze Italy To go directly to the FSR-Transport home page with your mobile device: For specific information on FSR-Transport and up-to-date information on our events, please refer to our website following the transport link on the menu bar: (Florence, 03/03/2014) 19