Explaining Occupancy Rates in the European Railways: a Reduced-Form Approach

Occupancy rates of vehicles are often used to analyze the firm performance in the transport industry. The occupancy rates tend to be low in many of the European countries and there are important differences in occupancy rates among countries. To understand better the reserved capacity that transport companies are maintaining in the European railway sector, we propose using a reduced-form approach to identify the determinants of the observed occupancy rates. Our results suggest that demand uncertainty, adjustment costs, “fidelity” strategies and social obligations are important determinants of annual rates of passenger.