The impact of market opening on the supply of interregional train services

A stepwise deregulation of all interregional passenger rail services in Sweden was legally completed in 2010. The incumbent operator (SJ) thereby lost the sole rights to commercial services. The most evident supply increase is the establishment of services in the low-cost niche, which rather complements than competes with the incumbent’s supply. Public Transport Authorities’ (PTAs) joint services have however resulted in strong competition on at least one main line.Despite a period of almost five years since deregulation, the potential effects of the market opening have not yet fully materialised. The business risk for commercial rail operators seems to be much greater than for other modes like air and long distance coach services. SJ have also during decades of deregulated intermodal and years of intramodal competition developed their products and skills and seem well prepared for competition.     

Rail access charges and the competitiveness of high speed trains

This paper examines rail access charges for high speed trains on new high speed lines in Europe and the impact these have on the market position of high speed rail. It examines the latest evidence on the marginal infrastructure and external costs of high speed rail, finding that the best evidence is that these are both not more than 2 €/train-km. However, current legislation states that environmental costs should not be charged for unless they are charged for on competing modes. Mark ups based on Ramsey pricing principles might reasonably raise prices by 100–200%, given that infrastructure charges are only a part of the final price of rail. The paper then examines the actual prices charged in the main European countries operating high speed trains and the impact these are likely to have on traffic levels and mode split. It is found that mark ups often exceed even the optimal Ramsey levels, with a significant impact on rail volumes and market share. It is concluded that, whilst it is not surprising that governments wish to recover some of the construction costs of new high speed rail lines from users, they should consider carefully whether the level of charges is actually significantly reducing traffic on and benefits from these lines.     

The distinction between commercial and non-commercial bus services in Germany: Given by nature?

German public transport services by bus are characterized by a regulatory framework that distinguishes between commercial and non-commercial services. Contrary to the apparent views of legislators, this paper shows that costs and revenues are not the only parameters determining whether or not operators are able to provide services in a commercially viable way.Apart from the local characteristics of the specific service, we show that the classification of services as commercial versus non-commercial is determined in large part by the public transport authorities that set minimum quality standards to be provided by operators. Our analysis shows that the authorities awarding the contracts in some cases affect market organization significantly depending on how they make use of this power. Furthermore, market organization differs substantially with respect to the awarding structure and the contractual relationships, thus creating a challenge for operators and authorities in an embryonic market.     

Post pandemic aviation market recovery: Experience and lessons from China

China was the first aviation market in the world hit hard by COVID-19 and has been recovering gradually as the pandemic became largely under control within mainland China. This study reviews the recovery pattern influenced by the Chinese government's aviation policy choices, in the hope that our discussions and findings will help improve aviation policy responses elsewhere. While the domestic market in mainland China has enjoyed a quick recovery to about 80% of the pre-crisis level by July 2020, the recovery of international services has been much slower, due to the bilateral route and flight frequency/capacity control and strict requirements for health check and quarantine. China's domestic aviation market was recovered by about 80% in two months after the pandemic became under good control. Most other countries with a “curve flattening” strategy, instead of full pandemic control, may not expect the fast recovery path China has achieved. A British “travel corridor” approach may be more practical for Western countries to follow, albeit more likely to be subject to serious setbacks and disruptions. The aviation fee reductions and cost support China and many other countries have been using are helpful by reducing airlines' marginal costs, but not sufficient for carriers to return to profitability or sustainable operations. Capital injection and/or credit guarantee may be needed for many airlines to survive. With various, often uncoordinated, regulations imposed in international markets, airlines based in open economies that have small domestic markets will face particularly serious challenges during the recovery process.     

Challenges confronting new traction providers of rail freight in Germany

Germany is one of the most liberalised countries in Europe for rail freight. Since the market became deregulated in 1991, 299 companies have obtained licences to haul freight of these approximately 130 actively engage in providing traction, but 85% of the market is still dominated by Railion, the freight arm of DB. Many obstacles to market entry have been identified in the literature since liberalisation. The goal of this paper is to assess if these obstacles persist and what new challenges have arisen. The study, based on a survey of new rail traction providers, suggests that several of the challenges identified in the literature have been overcome, but major problems persist because of the dominance of DB through its control of infrastructure and its market power.     

Rail infrastructure charging and on-track competition in Germany

Germany was one of the pioneers amongst the European railways in opening up the network for third party access and introducing track access charging schemes. Several rail companies run services on the tracks of the incumbent company DB. This paper analyses the rules for network access, the track access charging scheme and the problems of competition in the rail market. The focus is on regional rail passenger transport due to the fact that this is the most lucrative and promising market for new entrants. The main result is that in this segment in particular non-DB companies have increasingly used the chances which were opened by (paid) access to DB tracks and competitive tendering by regional authorities. However, although their market share has grown DB is still the major carrier. The failure to set an appropriate institutional and regulatory framework has proven to be the major obstacle to a more intensive competition in the rail market.     

Modelling inbound international tourism demand to Portugal

In this paper the Johansen cointegration analysis of time series is used to model the Portuguese inbound international tourism demand from five countries of origin—France, Germany, The Netherlands, Spain and UK. This approach examines the long‐run relationships between the demand for holiday visits and the variables that affect holiday travel such as income, destination prices and travel costs (airfares and road costs). Demand functions, for each country of origin, are estimated using annual data on tourism flows from 1975 to 1997. Copyright © 2002 John Wiley & Sons, Ltd.     

The growth of Arabian airlines from a German perspective – A study of the impacts of new air services to Asia

Airlines from Bahrain, Kuwait, Qatar, the United Arab Emirates and Oman have gained significant market shares in international air transport. Traditionally travellers have chosen hubs like Amsterdam, Frankfurt, London or Paris as transfer points for trips to Asia. With the inauguration of non-stop services to places like Abu Dhabi, Doha or Dubai, new choices for air travellers have emerged. We analyse data derived from German air transport statistics on the effects of passenger flows between the airports of Düsseldorf and Hamburg to Asian destinations. They suggest that services introduced by Emirates stimulated passenger demand for Asian destinations, while incumbent hubs do not lose transfer passengers. Regarding travel times and connection quality of routings between secondary airports in Germany and Asian destinations, comparing routings of Emirates Airlines and Lufthansa suggests that due to geographic and scheduling constraints, services via Arabia do not constitute a perfect substitute for time-sensitive passengers.     

Peripheral market entry,product differentiation,supplier rents and sustainability in the deregulated European aviation market – a case study

Ryanair, in its net margin and passenger numbers compared with its national airline, is the most successful new airline in Europe. The history of the airline is examined briefly and the Ryanair product is analysed. The airline has developed a very low fare product with high staff productivity. It has also tackled costs to airlines of services such as airports, handling, reservations and ticket retailing. Ireland’s island location was an attractive base for a low cost airline and rapid traffic growth has resulted from Ryanair’s entry to the market. The paper examines the sustainability of the low fare Ryanair product in respect of passenger preference, labour markets, and external costs such as airports and reservations. The optimum regulatory environment for the successful operation of low cost airlines is examined in the light of the Ryanair experience.     

Do the regional growth effects of air transport differ among airports?

This paper empirically studies the contribution of air transport to regional economic development in Germany. We find that the scale and direction of output effects of air services and airport infrastructure differ among airports. These differences are driven by ‘opportunity costs’ of airport capital and by positive output effects from air transport connectivity. We argue that the latter impacts potentially depend on traffic characteristics.     

The market potential of all-premium class services on medium haul leisure routes from Germany

In this paper, we analyse the potential demand for premium products on medium haul leisure routes, which is currently not met by appropriate supply. More precisely, we discuss if all-premium class services targeting the wealthy tourist could be viable on such routes. In a case study approach, we estimate potential costs, average ticket prices and demand for hypothetical all-premium class operations between Germany and Spanish islands Majorca, Gran Canaria and Tenerife.     

Making public transport financially sustainable

Over the past two decades, Germany has improved the quality of its public transport services and attracted more passengers while increasing productivity, reducing costs, and cutting subsidies. Public transport systems reduced their costs through organizational restructuring and outsourcing to newly founded subsidiaries; cutting employee benefits and freezing salaries; increasing work hours, using part-time employees, expanding job tasks, and encouraging retirement of older employees; cooperation with other agencies to share employees, vehicles, and facilities; cutting underutilized routes and services; and buying new vehicles with lower maintenance costs and greater passenger capacity per driver. Revenues were increased through fare hikes for single tickets while maintaining deep discounts for monthly, semester, and annual tickets; and raising passenger volumes by improved quality of service, and full regional coordination of timetables, fares, and services. Those efforts by public transport agencies were enhanced by the increasing costs and restrictions on car use in German cities. Although the financial performance of German public transport has greatly improved, there are concerns of inequitable burdens on labor, since many of the cost reduction measures involved reducing wages or benefits of workers.     

Competition in railway monopolies

The transformation of railways from monopolies to markets open for internal competition is described and explained in a theoretical framework, and a model for the evaluation of the transformation’s impact on efficiency is developed. Using the model in an empirical study of the Swedish railway sector, it is found that external competitive pressure is strong in most supply segments and, focusing on loss of scale advantages, that the transformation will result in significant costs. Comparing the potential for gains by competition against the costs, it is concluded that increased efficiency by internal competition only seems possible to achieve for two train products: domestic combined transport and dedicated trains (both freight services).     

Airport regulation and competition

In the airports industry, there is a trade off between imperfect (or monopolistic) competition and economic regulation (with the latter introducing separate economic distortions). The nature of the imperfectly competitive market in the supply of airport services is examined and it is suggested that market power is the consequence of the problems of gaining access to competing sites rather than of natural monopoly. Nevertheless, there are opportunities for substitution between airports (and other modes of transport) depending upon the characteristics of the market and historical and geographical circumstance although substitutability is too narrow a criterion for judging market power because of the transmittal effects of price competition in a spatial market. It is then suggested that some unusual economic characteristics of the industry provide an incentive for airports not to exploit market power and, absent these incentives, the adverse economic costs of exercising market power might be small. The paper concludes by suggesting that ex-post regulation of conduct provided for under normal competition law is probably sufficient to curb monopolistic excesses.     

International tourism specialisation of small countries

International tourism has expanded enormously over recent decades, fuelled by changing consumer tastes, advances in transport and new holiday destinations. The present study aims at analysing the linkages between economic growth and tourism‐based economies. An econometric model for a selected number of small countries has been implemented to investigate the nature, magnitude and overall significance of the demand for tourism. Countries were selected to capture regional diversity, differences in market orientation and a range of experiences, from emerging to long‐standing industries. The results show that tourism can be a significant engine of economic growth, when the elasticity of substitution between manufacturing goods and tourism services is < 1. Finally two stylised facts emerged, namely: (i) countries specialised in tourism register good economic performances; (ii) these same countries have small dimensions as defined by international trade theory. Copyright © 2006 John Wiley & Sons, Ltd.     

Some stylized facts about high-speed rail: A review of HSR experiences around the world

After collecting information on 166 high-speed rail (HSR) projects across the world, this paper examines some of the most relevant empirical issues related to the implementation of this transport technology in recent years. We firstly discuss the economic definition of HSR, trying to identify its different development and operating models. Then, we provide what could be considered as a range of actual cost values of building and maintaining a high-speed rail infrastructure. A similar analysis is carried out regarding the operating and maintenance costs of high-speed rail services. Some information on external costs is also provided. We finally deal with current demand and its projections, and try to draw some inferences about its future evolution.     

Nationality and low-cost trip duration. A microeconometric analysis

This study examines the determinants of trip duration of international tourism using low-cost carrier services from the UK, Germany, France and Italy; top tourist emitting countries in the EU. Data is from a survey conducted for one of the largest low-cost carriers tourist markets; the Girona–Catalonia region in Spain. A model of traveller/tourist demand is estimated using an econometric duration model. It is found that that while there are some common effects for associated with the four nationalities of tourist, some differences exist relating to such things as age or education.     

The value and effects of introducing high standard train and bus concepts in Blekinge, Sweden

A set of improvements were introduced on a railway line in the south of Sweden in January 1992, including a new train concept, improved timetable and lower fares. The new train replaced a combination of old rail cars and standard coaches (bus). Furthermore, 18 months later, a new high comfort coach (bus) service was introduced as a complement to the train timetable to increase the number of departures. Forecasts from a national four-step model system, based on Revealed Preference data, which did not cover explanatory factors like mode concept, comfort, mode image, was made and compared with a forecast based on stated preference data choice model. Both type of forecasts were compared to travel statistics. Stated Preference data have been collected from car drivers, coach and train passengers. The set of improvements have been included in the SP alternatives presented to the subjects. A structured logit model, a regression model and a linear programming model are compared. Unstructured and structured logit models are compared. Logit models have been estimated and used to form a mode choice model which predicts the changes in market shares between the train and car. The choice model forecast coincide, accidentally, with actual demand 8–9 months after the introduction of the set of improvements (a 40% increase in journeys). The set of improvements, including the new train service, has proven to be a success with more than 100% increase in travel after only two years of operation. Differences in estimated logit models for 1991 and 1992 are explained as partly due to asymmetry effects and partly to shortcomings in the SP data collection technique. Logit model estimates for train and coach are compared. The value of high standard coach service, running in parallel to the train, is estimated. The new coach gained few new passengers and also a much lower monetary value than the train by both train and bus passengers.     

Measuring foreland container port connectivity disaggregated by destination markets: An index for Short Sea Shipping services in Spanish ports

The present research aims to develop a Foreland Port Connectivity Index (FPCI) including both qualitative and quantitative variables related to the characteristics of the maritime services provided. To that end, the FPCI incorporates two discount factors—the number of shipping services and destination countries—as penalties to correct for the quality of a port connection. After defining the FPCI, the index is applied to Spanish ports to study their connectivity in terms of container Short Sea Shipping (SSS) services. Although the connectivity of SSS traffic has not been widely studied, it is an interesting case study as small ports play a more relevant role in facilitating access to international markets for importing and exporting companies. According to the results, the port of Valencia is the most connected, followed by the ports of Barcelona and Algeciras. Furthermore, this is the first research paper to attempt to study foreland port connectivity disaggregated by destination market. This geographical approach enables a more precise identification of the main port competitors by destination market, thereby providing more detailed information to support port managers and policy-makers in their decision-making.     

How thick is the border: the relative cost of Canadian domestic and cross-border truck-borne trade, 2004–2009

Despite the elimination of tariff barriers between Canada and the United States, the volume of trade between the two countries is less than would be expected in the absence of impediments. While considerable work has been done to gauge the degree of integration between the Canadian and U.S. economies through trade, relatively little analysis has parsed out the underlying costs of the border. The costs of crossing the border can be divided into formal tariff barriers, non-tariff barriers, and the cost of the transport system. This paper focuses on the latter by estimating the cost of shipping goods by truck between Canada and the U.S. during the 2004–2009 period. The incremental cost of import and export over domestic shipments is measured in both absolute and ad valorem terms. The latter provides an estimate of the border increment in transportation cost as a tariff equivalent. The incremental cost is further broken down into fixed and variable (line-haul) components. Higher fixed costs are consistent with border delays and border compliance costs being passed on to the consumers of trucking services. Higher line-haul costs may result from difficulties obtaining backhauls for a portion of the trip home, which may stem from trade imbalances and regulations that restrict the ability of Canadian-based carriers to transport goods between two points in the U.S.