Full speed ahead?

31 March 2008
April 2008

Rail travel is chugging into the 21st century to help buyers of business travel but progress is slow

Hurtling through the French countryside in comfort and with a sense of environmental self-righteousness, high-speed rail has long seemed a much more sensible travel option than air. And now that the British side of the Channel also has a high-speed line, so London-Brussels takes under two hours, it seems an even better idea.

In spite of everything rail has going for it - speed, productivity, punctuality and greenness - frustrations remain for corporate buyers and their travellers. There is much fanciful talk of a trans-European high-speed rail network, yet the reality is still some way off. Also, rail is often expensive and, especially for domestic services, corporate discounting is negligible. Moreover, while the trains themselves have moved into the 21st century, distribution of their tickets has remained in the 1980s.

Fortunately, the latter impediment is set to be removed. Eurostar has finally linked in to the global distribution systems (GDSs) - such as Galileo and Amadeus - used by travel management companies to sell airline seats. This will make fare checking and ticketing much easier for TMCs, and it will also allow them to compare air and rail fares and schedules on the same screen.

The switch to GDSs has, in time-honoured rail industry fashion, been delayed, but as SM went to press, trials in selected TMCs were going well and a full launch was said to be imminent. Jason Geall, head of UK sales for Eurostar, says it should then be straightforward to make seats available on corporate self-reservation tools, which use GDSs as their booking engines. This will be good news for Kate Dolman, EMEA travel and fleet manager for pharmaceutical firm Wyeth Europa. "It has been a real disappointment not having Eurostar on the booking tool," she says. "I get more and more queries about it from travellers."

Some booking tool providers say they will be able to provide price comparisons not only with traditional airlines but also with budget carriers, not all of which are on a GDS. What they will find generally, says Simone Buckley, managing director of the TMC Capita Business Travel and surface transport working party chairperson for the Guild of Travel Management Companies, is that Eurostar is roughly the same price as traditional airlines but more expensive than low-cost carriers.

However, according to Chris Reynolds, senior partner with the consultancy 3Sixty, there is usually more variation between peak and off-peak pricing for rail than for air, both for Eurostar and domestic travel. He therefore urges careful wording of policy to encourage off-peak travel where possible.

It is also important to take a rounded view of pricing when comparing rail versus air, especially the time saved by travelling from city centre to city centre and productivity gains. "A lot of our customers look at the door-to-door costs of the journey," says Geall, "and they are able to charge for their productive time on a Eurostar journey, which they couldn't do on a flight."

Dolman agrees that the fares alone are not sufficient grounds for comparison. "Eurostar is quite expensive, but we look at the total trip cost because people can work and it saves time," she says.

Eurostar does negotiate corporate deals, but it can offer only two routes (London-Paris and London-Brussels), whereas airlines can negotiate across a more extensive network. For domestic rail, the situation is much worse. In fact, says Buckley, "discounts are becoming nonexistent". A survey of UK travel buyers by AirPlus showed that 15 per cent have rail deals (and even that figure is surprisingly high), compared with 43 per cent having air agreements and 66 per cent with hotel agreements.

Furthermore, even where deals do exist, they are worth little. According to AirPlus, the average rail discount for British buyers is 10.5 per cent, compared with 25.7 per cent for air and 21.1 per cent for hotel.

Paul Tilstone, executive director for the Institute of Travel Management, is not surprised. "UK rail franchises are required to take on loss-making routes as well as popular ones," he explains. "They can't cherry-pick, so it is not a level playing field when competing with air."

Even so, the unwillingness of domestic train operating companies to negotiate is a source of frustration to Geall. He aims to persuade them to become more commercially minded so that more attractive through-ticket packages can be offered to the new catchment area in the Midlands and North that Eurostar has gained from switching to St Pancras.

Another area where through-ticketing has not been remedied is travelling beyond Brussels and Paris. The one exception is that a Eurostar ticket to Brussels includes free onwards travel within Belgium - and Geall says many business travellers continue to Bruges and Antwerp on this basis.

Thinking more ambitiously, Eurostar joined several continental providers in July 2006 to launch an alliance called RailTeam, but the avowed intention of co-ordinating schedules and pricing has not yet been realised. When Tilstone investigated travelling to Munich by train, the fare quoted was £800. "RailTeam is a step in the right direction, but we are not there yet," agrees Geall.

However, it also remains to be seen how much appetite there would be for long journeys by high-speed train. Received wisdom has it that the public will tolerate rail journeys of up to three hours before deciding air is preferable. Figures from Carlson Wagonlit Travel show rail has market share above 90 per cent for journeys under two hours, and 50 per cent market share for journeys of two to three hours, but less than 30 per cent for three to six hours.

Geall believes the green factor and the increasing inconvenience of airports are pushing the threshold nearer four hours. Others, such as Dolman, Tilstone and Buckley, say they understand this argument but have not yet seen it translate into practice. "Above three hours, travellers still seem to prefer air," says Hervé Bellaïche, director of account management and programme optimisation for Carlson Wagonlit. "They are also influenced by airlines' loyalty programmes, and travel managers have not yet done enough to push the advantages of rail."

Buckley suggests making travellers understand the difference in CO2 emissions between air and rail when they book. This facility is starting to be offered on self-booking tools. But a certain amount of stick may be required as well as carrot. Reynolds recommends rewriting policy to state, for instance, that rail is the preferred option for journeys of four hours or less, although a caveat could be added that this does not apply to day trips.

Meanwhile, London-Cologne is now only 4h45m by train. If that route gains popularity among business travellers, it will be clear rail is winning the argument.



ON RAIL

THE FUTURE OF HIGH-SPEED RAIL


2008 - Journey times for Brussels-Amsterdam are set to shorten this year from 2h30m to 1h30m.

2008 - Madrid-Barcelona, already recently reduced from 6h to 4h30m, will shorten again to 3h20m.

2008 - The 71-mile Beijing-Tianjin route will shorten from 1h20m to 30m in time for the Olympics.

2010 - Beijing-Shanghai will be cut from 9h to 4h.

There are also high-speed lines under construction in South Korea, Japan, Algeria and Morocco.

In future, rail journeys may be even shorter. Japan has announced plans for a maglev (magnetic levitation) line from Tokyo to central Japan, travelling at a top speed of 310mph, to open by 2025. In a test in April 2007, a French TGV train hit a top speed of 356mph.

RAIL TRAVEL

Rail as a proportion of business travel transactions (air, rail and car) for Carlson Wagonlit

Travel %

• Japan 45%
• France 40%
• UK 25%
• Germany 23%
• Benelux 20%
• Sweden 18%
• Italy 15%
• Spain 15%
• Canada 2%
• US 1%

 

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