Sourcing rail travel

Rail is one of the most sustainable modes of transport we have. And yet this potential risks going to waste – cross-border trips account for just 7 per cent of the kilometres travelled by train.”

That was the warning given by EU transport commissioner Adina Valean as the European Commission set out its Rail Action Plan last year. Key to the document is a package of measures designed to encourage the creation of long-distance and cross-border rail services across the continent, along with changes to the Trans-European Transport Network (TEN-T) and unlocking funds from the European Investment Bank.

The plan could pave the way for easier and faster connectivity across Europe, providing travellers – particularly corporates – with an alternative to short and medium-haul flights, thus scratching the itch to reduce their carbon footprint.

Eurostar is one of the European rail companies looking to make continental rail travel a reality. It is in talks with sister company Thalys over a proposed merger, dubbed the Green Speed Project. The tie-up would create a singular booking system and loyalty programme for a network stretching across the UK, France, Belgium, the Netherlands and Germany.

Paul Brindley, Eurostar’s head of indirect sales and distribution, believes that proposition combined with the location of the stations it serves could prove popular with corporates. “We know our business passengers appreciate the speed and convenience of our city centre to city centre connections and this is a compelling alternative to air travel. Pan-European rail extends the scope, offering a greater range of accessible leisure and business destinations by rail.”

But in the UK at least, Julie Cope, managing director of TakeTwo Travel Solutions, says the idea of rail travel as the more sustainable option should consider more than just emissions. “In reality, it’s not always practical to travel by train instead of air or car. For example, a day trip by train from London to Glasgow isn’t practical, as it’s a five or seven-hour journey each way. [It] would be an incredibly long and exhausting experience for the traveller and impact on their wellbeing. The traveller would need to stay overnight in a hotel in Scotland, which in turn increases their carbon footprint. But if the traveller has several meetings spread over a couple of days, then train travel makes more sense.”

Cope continues: “European rail travel will be an interesting one to watch, as we may see more intra-European city travel. Continental Europe trains are so efficient and reliable, meaning it’s much easier for business travellers to go by train, for example between Paris and Amsterdam.”

"Buyers need to find the right balance between pricing and productivity, and now sustainability is also thrown into the mix"

However, with rail fares rising as a result of the downturn in travel during the pandemic, corporates will need to balance their sustainability goals with cost-saving objectives, which could prove difficult.

“For corporates with a high level of UK domestic travel, the key blockers at the moment are primarily cost, reliability of services, speed and overall value,” according to Scott Davies, CEO of the Institute of Travel Management. “Buyers are looking for a positive overall experience for their travellers in terms of onboard rail product and regular, reliable timetables. Travellers want to be able to work effectively on the train, so seating space and reliable, fast wifi are essential, plus timetables that mean they don’t have to wait for long periods between services on key routes.

“The cost of peak-time rail tickets and reliability of services does not provide sufficient value when compared with alternative air travel or travellers driving by car. Buyers need to find the right balance between pricing and employee productivity, but now sustainability is also thrown into the mix.”

Davies agrees that improvements in the railways that have been put in motion across the UK and Europe “would support an increased take up of rail travel”.

“Further integration of booking technology with existing travel and expense tools will also be beneficial, along with a sustained investment in product developments like wifi and touchless ticketing.”

PRICING AND DISTRIBUTION

In a recent guest column for BTN Europe sister news outlet The Beat, Emmanuel Mounier secretary general of EU Travel Tech, which represents the interests of global distribution systems and TMCs, said the key barrier preventing third party distributors such as TMCs from selling and comparing rail tickets is unfair commercial terms.

“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.”

He continues: “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.”

Further challenges lie in the provision of data to distributors covering all the required information on fares and inventory, plus a “mess of half-implemented and incompatible private and public standards on rail distribution, making integration and distribution costly.”

The prevalence of ‘quasi-monopolies’ also affects corporates’ chances of negotiating discounts with operators even when they have significant volumes of spend on specific routes.

Speaking at the GBTA Europe convention in March, one Germany-based travel manager sarcastically described negotiating with Deutsche Bahn as “so fun” and its corporate scheme as offering “great discounts.”

Things are changing, however. “Historically there has not been much competition, but what we saw in Italy when competition was introduced ten years ago was that fares dropped 40 per cent on key routes, passenger numbers doubled and there was more product innovation,” said Liz Emmott, director global distribution and business solutions at Trainline.

“Now there is movement in Spain, for example, with the launch of Ouigo, and Avlo is coming. And at the end of last year we saw Trenitalia launch in the French market with a route between Milan and Paris,” she added.

Emmott is no doubt that corporate demand for rail travel is increasing, citing an example of a large pharmaceutical company who recently told her anything that will take less than five hours by rail should be shifted from air travel – “that’s 65 per cent of their European air journeys. The demand is definitely there.”

NEW NORMS

The pandemic has brought about another major change that travel managers will have to consider moving forward thanks to the growing popularity of hybrid working.

“We may see that some people who traditionally commuted become in effect business travellers, with some of the old distinctions between those two groups becoming blurred,” says Champa Magesh, president of Trainline Partner Solutions.

Magesh says the key to managing the impact of rising fares in the UK will lie in booking tool functionality such as split ticketing and ensuring travellers understand ticket conditions.

Eurostar’s Brindley says travel managers should take a holistic approach to sourcing rail content. “We always recommend that travel managers look at the broader costs beyond just the price of a ticket. For example, it’s worth considering whether the lowest priced fares offer your employees the levels of flexibility they need should plans change.”

TakeTwo’s Cope adds: “There’s no silver bullet answer for corporates. It’s about balancing cost, sustainability, duty of care and practicalities. Buyers and travellers need to apply a common-sense approach. Firstly, ask if you need to travel. Secondly, what’s best practice to get the traveller to where they need to be based on your particular priorities. And thirdly, is it cost-effective?”

ESSENTIAL ADVICE

When it comes to negotiating rail travel fares it’s the operators that hold all the cards. With many European countries’ networks dominated by a single player, it is not the right environment for RFPs. Instead, small corporate discounts on fixed routes where there is sufficient volume are sometimes achievable.

“Where there is a monopoly within a country it’s rare for companies to negotiate corporate discounts,” says Rob Coomer, senior director, global customer management, CWT.

In the UK there are 28 different rail operators but very little competition since they largely serve different routes. Nevertheless, “where there are high-ticket volumes of fully-flexible open return tickets that are comparable in cost to the price of airfares, a 10 per cent discount may be possible,” says Coomer.

Some operators, like LNER and Eurostar offer corporate schemes with soft perks and benefits. And some offer fixed discounts based on specific volumes. Thalys offers customised discounts for those spending more than €100,000 per year on corporate fares, for example, while Deutsche Bahn offers a 5 per cent discount for corporates spending more than €200,000 annually.

“In the absence of loyalty schemes, soft perks and corporate negotiated discounts, split-ticketing is the best avenue to reduce the costs of tickets,” says Coomer. “However the largest saving, up to 60 per cent, is available on fixed round-trip tickets purchased in advance. However, most business travellers want flexibility on the return leg of a journey. For example, they may know the train they need to catch to a meeting but not what time the meeting will finish. Purchasing two, one-way tickets – one of them fixed and the other flexible – can save 40 per cent on the cost of a round-trip.”