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Blitzkrieg 2013? October 23, 2010

Posted by supersonicswan in Uncategorized.
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A while ago I wrote about the spanish high-speed trains AVE and how they managed to wipe out a big chunk of airline revenues on the BCN-MAD route. There’s been a bit of a hype around the world about rail transport being more environmentally friendly; also it was pictured as less troublesome in comparison with what short-haul European flying is nowadays. Has HSR got the potential to threaten European air transport? Well, apparently it does as rumours that first surfaced aometime around February this year have eventually made the headlines this week. Deutsche Bahn is well underway with their plans to connect Frankfurt with London via high-speed link. KA-BOOM.

First trials took place last week with more to come and DB is to operate the service with one of the 15 strong fleet of ICE3 Class 407 trains. Although the program is still pending final approval from the Eurotunnel, owing mainly to security issues, it would involve triple-daily return frequencies connecting Frankfurt-Hauptbahnhof with London-St. Pancras through Cologne, Brussels and Lille. Should it be introduced in late 2012/early 2013, rail journey time from Frankfurt to London would see a reduction to just above 5 hours whereby from Cologne the British capital could be reached in less than 4 hours.

Air market between London (all 5 airports) and the Frankfurt area (FRA, CGN, DUS), which could potentially be affected by intermodal substitution,  amounted to about 2.3m pax in 2009. A rough calculation for 2010, based on available capacity and assumed average LFs of 60% across services of different specifications (LCY-FRA by LH versus STN-CGN by 4U), shows the market is likely to have grown to about 3m pax in 2010 (alternatively, my LF estimate was still too optimistic…).

DB forcasts that their high-speed link could fetch as many as over 1m pax per year taking away anything between 30 & 40 percent off the air travel market value. How likely is that?

Very, me thinks. And not only because HSR did it before.

Business market could love it – 5 hours city centre to city centre is better than 1.5 hour to the airport, minimum 40 mins at the airport, 1.5 hour flight and at least another 40 mins on the other end, especially if you can walk about, seats are more comfy, wifi can be used and the atmosphere is generally more work-friendly. Plus you save yourself the pleasure of visiting LON’s airports. LCY is that tiny bit different but I’m not sure that the 50% LFs on LON-FRA route I’ve heard about speak that much in favour. Now, small businesses should go for the rail option if prices were competitive; even more so on the LON-CGN stretch. Surely there always will be an unaffected percentage, namely the connecting market but essentially O&D could be badly hit.

On the leisure side of the moon people go on holidays to relax and to have fun, and they like to take enough stuff along to be prepared for the English weather. No, they don’t like baggage restrictions that much and I can see people sacrifying that half an hour for the sake of a bigger suitcase.

HSR means competition for the airlines and if DB manages to lure over one third of customers away from the air market then airlines should seriously rethink the idea of intermodal interlining which I believe would mean a better use of resources and most importantly, transformation of a threat into a business opportunity.

Do you think DB will get the go ahead from English and French owners of the Eurotunnel? Does the LON-FRA HSR link sound attractive to you? Is it a real threat for the airlines in the market?

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