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Open access passenger rail competition in the Czech Republic

Author

Listed:
  • 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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    1. Xavier Deville & Fabienne Verduyn, 2012. "Implementation of EU legislation on rail liberalisation in Belgium, France, Germany and The Netherlands," Working Paper Document 221, National Bank of Belgium.
    2. Bergantino, Angela S. & Capozza, Claudia & Capurso, Mauro, 2015. "The impact of open access on intra- and inter-modal rail competition. A national level analysis in Italy," Transport Policy, Elsevier, vol. 39(C), pages 77-86.
    3. Bergantino, Angela S. & Capozza, Claudia & Capurso, Mauro, 2015. "The impact of open access on intra- and inter-modal rail competition. A national level analysis in Italy," Transport Policy, Elsevier, vol. 39(C), pages 77-86.
    4. repec:eee:jotrge:v:46:y:2015:i:c:p:189-200 is not listed on IDEAS
    5. Fabio Croccolo & Alessandro VIOLI, 2013. "New Entry in the Italian High-Speed Rail Market," International Transport Forum Discussion Papers 2013/29, OECD Publishing.
    6. John Preston, 2009. "Competition for Long Distance Passenger Rail Services: The Emerging Evidence," OECD/ITF Joint Transport Research Centre Discussion Papers 2009/23, OECD Publishing.
    7. Nash, Chris, 2010. "European rail reform and passenger services - the next steps," Research in Transportation Economics, Elsevier, vol. 29(1), pages 204-211.
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    Citations

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    Cited by:

    1. Vigren, Andreas, 2016. "Competition in Swedish passenger railway : entry in an open-access market," Working papers in Transport Economics 2016:18, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    2. repec:eee:retrec:v:69:y:2018:i:c:p:300-309 is not listed on IDEAS
    3. repec:eee:retrec:v:72:y:2018:i:c:p:37-48 is not listed on IDEAS
    4. repec:eee:trapol:v:60:y:2017:i:c:p:143-151 is not listed on IDEAS
    5. 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.
    6. repec:eee:retrec:v:72:y:2018:i:c:p:74-81 is not listed on IDEAS
    7. Broman, Emanuel & Eliasson, Jonas, 2018. "Welfare Effects of Open-Access Competition on Railway Markets," Working papers in Transport Economics 2018:12, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    8. repec:eee:ecotra:v:11-12:y:2017:i::p:49-59 is not listed on IDEAS

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