RAIL TRAVEL
CHANGING TRACKS
As an enabler of more sustainable travel, rail’s time to shine is now – but booking and managing it remains far from straightforward
By Andy Hoskins (published 22 November 2024)
Rail travel has been billed as the great enabler of more sustainable business travel programmes, yet it faces numerous hurdles that continue to dog its uptake. In Europe, many corporates are making concerted efforts to shift travellers off planes and onto trains for short-haul journeys and, although there are plenty of success stories, it is far from straightforward.
At recent industry events featuring panel debates on the subject, buyers discussed the issues hampering the greater uptake of rail among their travellers, including content availability, booking tool functionality, cross-border connectivity, data and pricing.
Speaking at the Institute of Travel Management’s autumn conference in London, one buyer said: “We really want to drive rail adoption in Europe and see a reduction in air travel but it’s a challenge. We want to make booking rail really easy for our travellers but at the moment it’s difficult. Ideally, we want one [booking] tool that can deliver air, hotel, car and rail but it’s all very fragmented.”
While some rail content is integrated in the buyer’s OBT, some requires a punch-out, they said. In addition, their travellers also book rail tickets directly with operators and then expense it, undermining the company’s duty of care programme.
“We want to get all our data into our system so that we know where our travellers are, but there’s been a real issue feeding those rail bookings through to our duty of care provider,” they added.
Another buyer expressed similar grievances, adding that the price of rail travel can also be a barrier to adoption. “I’m trying to convince travellers to shift from air to rail but it’s not easy – rail can take twice as long and often costs more too, so how can you justify that? It’s hard to persuade people.”
Putting policy into practice
At the GBTA Europe conference in Copenhagen earlier this month, Jenny Sabineu, senior manager, travel (EMEA/LATAM) and sustainability at Salesforce, described her company’s achievements in rail adoption, but conceded that “it’s difficult to get the perfect mix in the OBT for rail, with duty of care, cost, emissions and traveller experience all part of the equation.”
A “first stab” at ramping up rail use among travellers saw Salesforce “strongly encourage” employees travel by train for journeys of up to 300 miles as long as it added no more than two hours to the journey time. “We programmed nudges into our OBT on those applicable routes and saw a bit of a shift over a couple of years but it wasn’t enough,” said Sabineu.
So in June this year Salesforce passed its first policy requirement, stipulating 35 routes globally where employees should take the train, including city pairs in Europe and the North East US. “The US is actually winning in terms of conversion,” said Sabineu, with 90 per cent of trips between Boston and New York now made by train. Overall, of its top ten routes globally, rail travel now accounts for 52 per cent of trips, up from 42 per cent a year ago.
“We’re seeing massive growth because we connected with the right operators, got all the content we could into our OBT, and made it policy,” she explained, adding that challenges nevertheless remain. “There’s not a true procurement process for rail. In many markets there’s only one operator so there’s no competition to even have an RFP and it’s difficult to find a rail operator who’ll give you an account manager, let alone a discount. In every other vertical we have account managers to tell us about their products, educate our travellers, and help us work better together.”
Salesforce is not alone in its modal shift achievements. BTN Europe has also documented the success stories of Parexel, EY, AstraZeneca, with first class rail travel often the carrot dangled in front of travellers to help drive adoption. Something they all have in common with Salesforce is the backing of a strong policy and the identification of specific routes where rail should be the default choice.
Although corporates often state that rail content is rarely displayed alongside air travel in booking tool search results, some commentators argue that without strong policy to back up greener decisions, it’s a moot point.
“In this day and age, a good OBT will, as a baseline, show you air and rail on the same page,” says Raj Sachdave, managing partner at consultancy Black Box Partnerships, adding, however, that “rail is rarely on a level playing field when being compared with air in booking tools.”
He argues that travellers are not provided with sufficient information at the point of sale to convince users that rail is a practical or viable option and, therefore, that employers shouldn’t expect organic rail adoption among travellers.
“The logic of OBTs is fundamentally flawed. If your policy is based on fastest time or cheapest fare, you’re unlikely to see rail at the top of search results,” says Sachdave. “But with a flight, what about the two hours spent at the airport before your flight takes off and the 45 minutes spent disembarking? Include that and suddenly that trip looks a lot longer.”
The answer, he says, is the display of “real-world journey times” in booking tools that incorporate the end-to-end airport experience, not necessarily by default but as a sustainability feature which corporates could switch on.
“It’s not difficult to do and corporates could turn it on for selected city pairs. Do it for Berlin-Basel, Paris-Milan, London-Edinburgh… suddenly rail is on a level playing field with air. We need to challenge the industry to talk about real-world journey times, not just the published flight time,” says Sachdave.
Brett Ring, VP commercial at SilverRail, sees the same challenge, but brings pricing into the debate too.
“Air and rail don’t really compare very well because of journey times and because of pricing,” he says. “Rail is city centre to city centre and you’re not wasting time at an airport, but that’s not reflected in booking tools. The other thing that puts rail at a disadvantage is that the price you see in the search results is the price you pay, but for air you’re often only getting the base fare and there can be a multitude of added costs.”
A lesson in rail distribution
While some discussions centre on the ability of booking tools to provide air and rail options alongside each other – and that capability varies widely – simply integrating rail content at all is a challenge in what is a highly fragmented and non-standardised sector beset by legacy issues including state-owned monopoly operators in some markets.
Typically, global distribution systems, online booking tools and travel management companies go down one of two avenues to source rail content: they can establish direct connections with individual train operators or use an aggregator such as Trainline, SilverRail or Rail Europe. Each route has its pros and cons.
Direct connections require a lot of development work and maintenance by the third party, plus the labour costs associated with that, but the tech provider has complete control and avoids the costs introduced by an intermediary.
Aggregators present a quicker route to market, providing all the required content through a single ‘super API’ and crucially bring a level of standardisation in the process. There is still work to be done by the intermediary for each operator integration, however, and costs come in the form of booking fees.
Alice Coverlizza, vice president of Trainline Partner Solutions, explains: “Our core job is providing content to GDSs, OBTs and TMCs – giving them visibility of routes, schedules, fares… enabling them to consume all of that and their customers to book it. We pack it all up in one solution, our global API, and we standardise it from a tech perspective but retain nuances within the content – seat selection might be relevant for one operator but not for another.”
Coverlizza believes that while some of Trainline's customers have pursued direct connections in the past, there is a discernible shift towards the use of aggregators. “We’re hearing loud and clear they want a single solution that they don’t need to maintain,” she says.
“If you look at it purely from a development perspective in terms of the cost of development and the speed benefit, aggregation is the winner every time,” says SilverRail’s Ring.
Aggregators also do the hard work of ‘stitching’ different operators together to enable multi-operator and cross-border journeys. With direct connections, an intermediary not only must build each connection but then must also connect them all up with each other and maintain it all.
“The technical piece, the stitching, it’s not easy. But the solutions we provide means the end user has the same search and booking experience for cross-border travel as they would for domestic travel,” says Coverlizza. For those going down the route of direct integrations, “it’s not just about the integration piece of each connection, but then it’s joining them all up and maintaining it every single time an operator changes fares, for example.”
With a single state-owned operator in some European countries, many domestic agencies have in the past chosen to do a direct integration with their national operator, but liberalisation and new entrants in some markets have challenged that. In the UK, with multiple operators, using an aggregator like Evolvi – which is working on adding European rail – has been the preferred option.
Super APIs still need work
“Just because you’re plugged into a global API from an aggregator doesn’t mean you connect once and you have the whole of Europe,” says Sachdave. “There’s a multitude of connections and incremental work, and each of them has a different sign-off or accreditation standard from the operator.”
Ring agrees: “People often think that if you connect to an aggregator’s API, then you get access to all the markets right away, but it's not quite as simple as that. You do an integration every time you enable a new carrier. There's always a little bit of work to do because every carrier is bespoke, but it's a lot less than if you were to do a brand new direct integration with that carrier.”
There is also the matter of licensing. TMCs require a licence from operators to sell their content – and thus settle fares and commissions – and the nature of those agreements depend on factors including sales volumes and the markets in which content is being sold, among other factors.
But another selling point of aggregators is that they can hold the operator licence on behalf of TMCs, particularly for markets in which it has low volumes. “We can be the tech provider and the merchant,” says Coverlizza.
A TMC booking high volumes of rail in multiple markets, however, may need to establish its own commercial agreements with each operator. All parties BTN Europe spoke to stressed the many and diverse variables impacting the necessity and scope of direct commercial agreements.
“The ideal situation is that agencies wouldn’t need to have their own licences with each operator and they just trade through the aggregator’s licence. But right now there are limitations with those sub-licences like how much an agency can spend per year before they must have their own agreement. It’s not yet as simple as it could be,” says SilverRail's Ring.
“TMCs don’t mind getting an agreement with a carrier if they’ve got lots of volume in a market – they like that direct relationship – but if you’re, say, a UK-based TMC booking only a few tickets in Germany every year do you really want to go to Deutsche Bahn and sign a settlement agreement? Probably not.”
Another player, Berlin-based Distribusion, is a relative newcomer to the rail space, but has specialised in aggregating ground transport content for more than a decade.
“For 99 per cent of content inside our platform, a TMC does not need to sign a commercial agreement with the operators,” says Romain Ventanas, the company’s head of rail partnerships. “We know how complex it is to undertake those agreements – it’s painful – so we facilitate it. But if a TMC has higher volumes, or the value of what they deliver might enable them to negotiate a higher a commission than the one in our portfolio, then they can sign their own agreement.”
The company recently became a member of the Business Travel Association and is currently working with TMCs in the UK, France and DACH region.
The commercial conundrum
While the benefits of aggregation are clear, there is on the flipside a different commercial model. Aggregators charge booking fees and that has to be absorbed somewhere in the chain. “If the operators started paying better distribution fees to the aggregators, the need to charge booking fees goes down, and then it becomes an easier decision to go through the aggregation route,” an industry commentator told BTN Europe.
“Every operator will pay a different commission to aggregators and to travel agencies. Some will pay aggregators nothing and they might not even pay the TMC anything. Others will pay a small fee to the aggregator and a percentage commission to the agency. Either way, no one pays much. No one at a booking level makes a ton of money out of rail.”
They continued: “If the carriers start incentivising the aggregators and TMCs better, that would help us all. But if they won’t then, being blunt, buyers probably need to accept higher TMC fees to allow the supply team to use aggregation and speed up the rollout of rail.”
Indeed, another source that BTN Europe spoke to posited that as long as TMCs continue to benefit more – from a commercial perspective – from the booking of air fares than of train tickets, enhancing the provision and bookability of rail might not be a top priority for them.
The good news for intermediaries in the UK, however, is that commission for corporate travel agencies selling rail travel will rise from 3 per cent to 3.5 per cent in April 2025. At the same time, commission for leisure agencies selling UK rail travel will drop from 5 per cent to 4.5 per cent.
“Commission has never gone up before – it’s only ever gone in one direction,” says Paul Bowden, commercial director at Rail Delivery Group (RDG), which represents train operators in the UK. “The engagement we have had from TMCs was strong and constructive. They got their message across clearly that there is a big opportunity to grow business travel by rail and that there is desire to work with the industry on that,” he adds.
“An uplift of 16 or 17 per cent is pretty good,” says Black Box Partnership's Sachdave. “Industry costs are coming down and there’s more functionality that keeps the post-transaction online with zero touch, so it becomes increasingly attractive. Look at short-haul flights – commission is being squeezed or has gone entirely.”
Liberalisation and competition
A legacy challenge for rail aggregators, agencies and corporates alike is the reluctance of some state-owned operators to make their content available to third parties.
Deutsche Bahn is a case in point. For one Germany-based corporate that BTN Europe spoke with, it means that while some European rail content is integrated in its booking tool via an aggregator, a punch-out is necessary for booking Deutsche Bahn tickets.
But the impact of liberalisation and competition has already been demonstrated in the likes of France, Italy and Spain where new entrants have arrived, challenging legacy operators by adding choice and capacity and, crucially, have helped to drive down average fares.
Even in the UK there are a number of ‘open access’ operators bringing new competition, including Lumo which operates between London and Edinburgh. “We’ve heard many positive things about them from the business travel community,” says RDG’s Bowden. “It’s giving people choice, and there are more open access operators likely to come in the next few years.”
Speaking at the recent GBTA Europe conference, Trainline Partner Solutions’ Charlie Baikie said: “The European landscape is really changing and some markets are becoming liberalised. You have Trenitalia in France and Renfe operating from Madrid to Marseille, for example.
“They are baby steps but it’s a huge breakthrough that should drive a lot of change in the next ten years. You get better product, more scheduling and competition on price point,” she added, noting that average fares have fallen 40 per cent in Italy since competition arrived a decade ago, with aviation’s share of the domestic market falling from 50 per cent to 17 per cent in that time.
Speaking in the same panel discussion, Jakop Dalunde, a former Member of European Parliament, bemoaned the reluctance of some state-owned operators to open up their content to third parties.
“You would think it’s in the operators’ own interests to make their tickets available but they are generally not in favour of ticketing reform. They think ‘let’s maintain our monopoly’, but they’re missing an enormous opportunity to grow the pie by giving more people access,” he said.
Deutsche Bahn and Renfe have both received a slap on the wrist in recent years for anti-competitive practices, with Trainline, EU Travel Tech and BT4Europe among groups lobbying for greater liberalisation.
EU initiatives
Although the EU has plans to develop more high-speed lines across the continent and is pursuing initiatives such as the Multimodal Digital Mobility Services (MDMS) regulation to deliver more integrated trips, and the Open Sales and Distribution Model (OSDM), to help standardise the way content is delivered, Dalunde believes ticketing reform is “dead in its tracks” while the new European parliament establishes its processes and policies.
One way forward, he argued, could be to mandate incumbent operators to sell the tickets of competitors, while another option is to require them to open up their content to third parties.
“Brussels and the industry need to choose. Some prefer A and some prefer B… if we want to shift [business travellers] from aviation to rail, option B is preferable. And let’s give vendors not just access [to content] but commercial agreements too,” said Dalunde. “I’m optimistic that operators are starting to see the light – the business opportunity – and that reform is coming.”
As rail travel gains momentum, operators, aggregators, tech providers and TMCs must collaborate to overcome the multitude of challenges currently standing in the way of greater corporate rail adoption for long-distance and cross-border journeys. With the right strategies and solutions in place, rail can become a cornerstone of sustainable business travel.
Built with Shorthand