Air vs. Rail: can rivals become partners?

Air and rail are two important transport modes that historically had limited interaction, with perhaps the exception of airport express trains. Nevertheless, technological developments such as the high-speed railway services and the increasing importance of environmental preservation in the national agendas have prompted railways to become serious competitors to air transport. In the face of this threat, how can airlines respond?

Railway vs. Air Transport: competitive dynamics

To understand the rivalry between air and rail, a benchmark illustrates the inverse linear relationship between railway journey time and its modal share in OD pairs served both by air and rail services: the shorter the travel time, the higher market share that the railway attains.

Railway market share vs. travel time

Railway clearly dominates for journey times below 2.5 hours, while air is the clear market leader when the journey time exceeds 4.5 hours. In between, there is active competition between the two transport modes driven by factors influencing passenger behaviour.

Driving forces

There are five main driving forces behind passengers’ choice for a particular transport mode: total journey time, cost of travelling, passenger experience, service availability, and environmental footprint. Understanding these forces and how they impact on passenger’s modal choice is the first step towards building a sustainable commercial strategy when facing multimodal competition.

Driving forces for passenger choice of transport mode

Total journey time

Total journey time is the total amount of time required for a passenger to travel from point A to point B, including access and the dwell time, in-vehicle travel time and the extra time needed to reach the final destination.

Railway services are considerably more accessible than airports, as train stations tend to be located in city centers and have much shorter processing times on both departure and arrival. Air transport, however, remains faster in terms of in-vehicle journey times, becoming more competitive as distance grows. This competitive advantage remains highly dependent on customers’ value of time, as this affects directly the willingness to pay and the importance attributed to shorter journey times.

The introduction of high-speed railway services on the Paris-Lyon route reduced railway journey time to 2 hours, leading to an increase of railway market share by over 30%, capturing 25% of air transport market share and 8% from road transportation.

Despite the fact that railway in-vehicle journey time is 50 minutes longer than the flying time, the railway service offers a more convenient and faster total journey time.

Cost of travelling

The cost of travelling includes the ticket fare and any additional costs for the initial and final segments, hence influenced by service accessibility.

Whilst railway ticket fares tend to be higher than air fares in mature, less-subsidized markets, the attractiveness and convenience of railway services on short routes driven by unbeatable door-to-door travel times allow railway to increase fares and still dominate the market. Despite the high railway fares, Tokyo-Osaka, London-Paris and Barcelona-Madrid are all examples of corridors where rail’s market share is above 60%.

Passenger experience

The passenger experience captures the experience of door-to-door travel, including all interactions users are exposed to and their subsequent emotional impact. Service providers’ aim to ensure seamless travel, prioritizing efficiency and personalization. The highly competitive environment and the increasing focus on ancillary services have contributed to an enhanced effort towards meeting passengers’ expectations.

Passenger experience on trains and aircraft can differ considerably, depending on the operator, class of travel, duration, etc. Railway passengers tend to report a better experience, especially with regards to comfort and space. Railway coaches are more spacious, run much smoother than aircraft and are not affected by turbulence, allowing passengers to move freely onboard.

In terms of onboard services and entertainment, air transport still has the upper hand, with complementary F&B, baggage allowances and on-board personal entertainment systems, extendable to a wider range of indulgencies in premium cabins. In short-haul trips, however, on-board services are less likely to become the factor of choice for the users, as proven by low-cost carriers’ no-frills-policy. In fact, even full-service carriers are continuously downgrading their complementary offering of on-board amenities, eliminating the competitive edge they used to have with the railway services.  

Additionally, air passengers go through a more tedious process before boarding the aircraft, mainly due to security and boarding documentation checks, which have a negative impact on the overall passenger experience.

Service availability

Service availability is related to the frequency and schedule offering of a transportation service, hence defining the travel choices available to passengers. Higher availability implies more choices for customers.

Frequency offering in air transport assures great flexibility for passengers, especially during peak times. Airport operators can leverage runway slots as an important income source to maximize revenue. In a highly competitive scenario, slot times are reduced to accommodate higher numbers of flights. As a consequence, traveler’s choice is not limited to a singular service option but involves high frequency services with minimum waiting times. This type of service offering appeals to customers who need to travel at specific times of the day, typically time-sensitive business travelers.

Railway services are generally less flexible to changes in demand requirements. This is driven by the particularities of the infrastructure and the technical aspects of rolling stock. Unlike airplanes, trains cannot be easily deployed to different routes, but instead, require complex and expensive homologation and certification procedures.

Environmental footprint

The environmental footprint of transportation is a growing driving force in the context of global warming. Nonetheless, passengers’ emphasis towards environment conservation may differ by region, due to culture and socioeconomic factors.

The railway industry has been increasingly regarded as a key player to support countries in their transitions towards sustainable transport by significantly reducing the externalities of transportation on society. Reflecting on it, the Community of European Railway and Infrastructure Companies (CER) has signed the European Green Deal that recognizes the role of rail in supporting the target of reducing transport greenhouse gas emissions by 90 per cent by 2050.

The airline industry, however, and despite efforts to reduce emissions by the means of programs such as ICAO ‘Carbon Offsetting and Reduction Scheme for International Aviation’ (CORSIA), is still reported to be responsible over 2% of the global carbon emissions.


About the authors
Ricard Anguera holds a MSc in Transport by Imperial College London and is a Senior Engagement Manager at ALG
Xavier  Esparrich holds a MSc in Aeronautical Engineering and is a Director at ALG.
For more insights, please check www.alg-global.com or contact:
ranguera@alg-global.com
xesparrich@alg-global.com