European Rail: An Emerging Model For Sustainable Travel and Commerce

July 2022

Rail is in the spotlight, attracting investment in the wake of pandemic-driven disruption in air travel and accelerating support for sustainable development across Europe. Meanwhile, travel companies, retailers, and foodservice operators are building value in high-traffic train stations. European rail offers a model of value creation within a sustainable commerce context, showcasing new opportunities for growth through integrated consumer experiences and sustainably-minded travel options.

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Key findings

Continued challenges for airlines shift short-haul opportunities to rail

Consumer travel dynamics have changed rapidly since the start of the pandemic. The seemingly limitless growth in airlines on short-haul travel routes have given way to rail as a renewed and increasingly attractive regional travel alternative, driven by new incentives, new investments and sustainably-minded consumers.

Sustainability sentiment underpins growth

While still far from a tipping point, consumers are increasingly choosing more sustainable options when travelling. More than just consumer sentiment, however, rail is a target for both public sector investment that underpins net zero emissions ambitions, and private sector investment as train stations become predictable zones of commercial activity.

New patterns of movement create new commerce opportunities in and around train stations

New trends in flexible working have impacted consumer patterns of movement dramatically. Consumers travelling less frequently travel more thoughtfully, choosing trains and public transport more regularly. Increased foot traffic has created new commercial opportunities in train stations.

Value creation starts with booking and follows the consumer throughout a trip

With a higher percentage of direct bookings, rail companies enjoy greater consumer access and build deeper customer relationships, while rail-adjacent businesses are finding room to target consumers with convenient services throughout the journey.

European model highlights potential in other regions

European rail benefits now from both good timing - as political will and consumer demand merge in the wake of the pandemic - and right place - the infrastructure is well established. But, rail in other world regions is on the cusp of change. The Nordic markets, the US and China are particular standout markets given new consumer dynamics and in some cases, new funding for future-proof, sustainable transport options.

Introduction

Scope
Key findings

Rail state of play: The European context

Western Europe remains the world’s largest passenger rail market
Once a key threat, LCC competitive advantage diminishing
Airlines are rebounding, though rail remains competitive
High-speed rail connections could steal share from regional flights
Passenger rail companies lean on cargo for new revenues
Freight and logistics key to profitable rebound
Public investment flowing into European rail

Rail and sustainable development goals

Consumer sentiment for sustainability is growing
Rail an important pillar of EU sustainable development goals
European Green Deal fuels growth through investment
European countries top the Sustainable Travel Index
Central Europe stands out in sustainable rail
Austria: Global leader in sustainable transport
Sustainability incentives expected to boost passenger numbers
A continuous cycle of drivers supports long-term growth

Value creation on board and on the go

An emerging marketplace for services in rail
More direct bookings, more consumer attention, more up-sell potential
Partnering with air for multi-modal passenger transport
Train stations are the new traffic hubs in Europe
Central stations recreating the mall experience for a new generation
Valora bets big on increased traffic at train stations
The return of overnight trains generates further up-sell potential
Three areas of opportunity for creating value in rail
Identifying three regions of opportunity beyond central Europe

Key takeaway

Key findings

Travel

Travel encompasses several categories including tourism flows, lodging, travel modes, in-destination spending and booking.

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