Publication details

Open access passenger rail competition in the Czech Republic

Authors

TOMEŠ Zdeněk KVIZDA Martin JANDOVÁ Monika REDERER Václav

Year of publication 2016
Type Article in Periodical
Magazine / Source Transport Policy
MU Faculty or unit

Faculty of Economics and Administration

Citation
Web http://www.sciencedirect.com/science/article/pii/S0967070X16300397
Doi http://dx.doi.org/10.1016/j.tranpol.2016.02.003
Field Economy
Keywords Competition; Railways; Czech Republic; Open access; Liberalisation; Vertical separation
Description The 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 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 standardization, 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.
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