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Open access passenger rail competition in the Czech Republic

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  • Tomeš, Zdeněk
  • Kvizda, Martin
  • Jandová, Monika
  • Rederer, Václav

Abstract

This paper analyses open access passenger railway competition in the Czech Republic between 2011 and 2014. This competition emerged when the major railway connection between Prague and Ostrava, which was operated only by the incumbent, was entered by two private operators, RegioJet in September 2011 and LEO Express in January 2013. Theoretical studies and experience from other countries suggest that this competition should lead to a price war, intensive market dynamics and product differentiation. The findings from the market development on the Prague–Ostrava route are broadly consistent with these predictions. The open access competition has led to an intensive price war with 2nd class tariff declines reaching 46%. Innovative marketing and selling strategies have significantly increased the spread of prices, and price discrimination and yield management techniques are used extensively. All operators has been unprofitable on the line, leading to financial stress and accusations of predatory pricing on the part of the incumbent. The quality of service on the line has increased substantially with standardisation, new on-board services and higher frequency. The average number of seats per train has declined significantly, and new operators have been able to win 55% market share from the incumbent. Service frequency is higher but is strongly concentrated during rush hours.

Suggested Citation

  • Tomeš, Zdeněk & Kvizda, Martin & Jandová, Monika & Rederer, Václav, 2016. "Open access passenger rail competition in the Czech Republic," Transport Policy, Elsevier, vol. 47(C), pages 203-211.
    • Handle: RePEc:eee:trapol:v:47:y:2016:i:c:p:203-211
    DOI: 10.1016/j.tranpol.2016.02.003
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    References listed on IDEAS

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    Cited by:

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    5. Florent Laroche & Ayana Lamatkhanova, 2020. "Effects of open access competition on prices and frequencies on the interurban railway market: evidence from Europe," Working Papers halshs-02930864, HAL.
    6. Florent Laroche & Ayana Lamatkhanova, 2021. "Effects of open access competition on prices and frequencies on the interurban railway market: evidence from Europe," Post-Print halshs-02930864, HAL.
    7. Badura, Ondřej & Melecký, Aleš & Melecký, Martin, 2023. "Liberalizing passenger rail: The effect of competition on local unemployment," Economics of Transportation, Elsevier, vol. 36(C).
    8. Feuerstein, Lisa & Busacker, Torsten & Xu, Jingjing, 2018. "Factors influencing open access competition in the European long-distance passenger rail transport — A Delphi study," Research in Transportation Economics, Elsevier, vol. 69(C), pages 300-309.
    9. Król, Marcin & Taczanowski, Jakub & Kołoś, Arkadiusz, 2018. "The rise and fall of Interregio. Extensive open-access passenger rail competition in Poland," Research in Transportation Economics, Elsevier, vol. 72(C), pages 37-48.
    10. Jakub Chini & Martin Kvizda & Ondřej Špetík, 2023. "What is the real power of incumbents? Case study on the Czech Republic," Competition and Regulation in Network Industries, , vol. 24(1), pages 24-39, March.
    11. Tomeš, Zdeněk, 2017. "Do European reforms increase modal shares of railways?," Transport Policy, Elsevier, vol. 60(C), pages 143-151.
    12. Jurikovič Martin & Tomeš Zdeněk, 2017. "Public and Private Provision of Railway Services: A Case Study from Slovakia," Review of Network Economics, De Gruyter, vol. 16(2), pages 187-201, June.
    13. Vasily Astrov & Doris Hanzl-Weiss & Leon Podkaminer & Josef Pöschl, 2020. "Monthly Report No. 09/2020," wiiw Monthly Reports 2020-09, The Vienna Institute for International Economic Studies, wiiw.
    14. Pařil Vilém & Viturka Milan, 2020. "Assessment of Priorities of Construction of High-Speed Rail in the Czech Republic in Terms of Impacts on Internal and External Integration," Review of Economic Perspectives, Sciendo, vol. 20(2), pages 217-241, June.
    15. Tomeš Zdeněk & Jandová Monika, 2017. "Open Access Passenger Rail Competition – Round Table Report," Review of Economic Perspectives, Sciendo, vol. 17(2), pages 205-208, June.
    16. Ristić, Bojan & Stojadinović, Nikola & Trifunović, Dejan, 2022. "Conditions for effective on-track competition in the European passenger railway market: A yardstick for regulations," Transport Policy, Elsevier, vol. 119(C), pages 1-15.
    17. Desmaris, Christian & Croccolo, Fabio, 2018. "The HSR competition in Italy: How are the regulatory design and practices concerned?," Research in Transportation Economics, Elsevier, vol. 69(C), pages 290-299.
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    19. Fitzová Hana, 2017. "European railway reforms and efficiency: Review of evidence in the literature," Review of Economic Perspectives, Sciendo, vol. 17(2), pages 103-120, June.
    20. Tomeš, Zdeněk & Jandová, Monika, 2018. "Open access passenger rail services in Central Europe," Research in Transportation Economics, Elsevier, vol. 72(C), pages 74-81.
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    23. Brand, Christina & Sieg, Gernot, 2022. "An integral interval timetable for long-distance passenger rail services: Time to reconsider targeting on-track competition," Economics of Transportation, Elsevier, vol. 32(C).

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