Generic railway strategies TOCs
train operator strategies
a research-oriented knowledge base for train operating companies (TOCs)
a research-oriented knowledge base for train operating companies (TOCs)
3.3 Challenger II: Hamburg-Köln-Express, Germany
Financially Hamburg-Köln-Express GmbH is held by Railroad Development Corporation with 75 percent of shares, by the German Locomore Rail company with 17.5 percent and by the British private investor Michael Schabas with 7.5 percent (Focus Online, 2011, p. 1). For its proposed services HKX plans to use refurbished former ÖBB coaches with new inside and outside design. Each train set will consist of six coaches, five basic coaches and one premium coach (International Railway Journal, 2011b, p. 7). Refurbishment was executed by Polish H. Cegielski rolling stock company in Poznan and seemed to be a bottleneck of operation launch (Der Mobilitätsmanager, 2010, p. 1; Doll, 2011, p. 1). At the point of operation launch the refurbishment did not succeed in time. Contracts with the Polish supplier were dissolved and trains from the German Voigtland-Bahn had to be lent.
In its competitive arena the company picked one of several attractive routes in Germany. Operations between Hamburg and Cologne are planned three-times per day in the morning, at mid time and in the evening. On the chosen route HKX does not directly compete with DB Fernverkehr’s modern ICE trains but with its older IC trains (DB Mobility Logistics AG, 2011, p. 1). HKX’s train operations will approximately take 4:05 hours (Hamburg-Köln-Express GmbH, 2011, p. 1).
HKX's economic logic is based on yield management with high variances in a closed ticketing system (see interview 2 in the thesis). Cheapest prices of HKX shall be below those of Deutsche Bahn. However, the company will also focus on calculating prices according to demand (Barrow, 2012b, p. 28). Tickets will be sold via telephone, internet, on trains and eventually also in stations (Doll, 2011, p. 1). At-seat-meals will be served in the premium class and WiFi internet is accessible throughout all coaches (International Railway Journal, 2011b, p. 7).
As a reaction on the emerged competition the incumbent DB Fernverkehr seems to leverage its contacts in the vertically integrated DB holding. In early 2011 infrastructure manager DB Netz AG offered station prices to HKX that were 135 percent above those offered to DB Fernverkehr. After claims of HKX the German regulator Bundesnetzagentur instructed DB Netz AG to offer similar stations access prices for both companies (Klimm, 2011, p. 6). Moreover, DB Station and Services AG denied access to national ticketing automates and sales centers to HKX because the DB Station and Services’ lead customer DB Fernverkehr was not accepting sales facility access for the new challenger. HKX is also willing to win proceedings in this case to access essential facilities in a non-discriminatory manner.
The Hamburg-Köln-Express (HKX) is challenging the German incumbent Deutsche Bahn in one of Europe’s most attractive markets. Initially planned to launch in April 2011, HKX finally kicked off operations on July 23, 2012. The three-times per day services aims at attacking the German incumbent DB with lower prices and a more flexible yield management mechanism.
Financially Hamburg-Köln-Express GmbH is held by Railroad Development Corporation with 75 percent of shares, by the German Locomore Rail company with 17.5 percent and by the British private investor Michael Schabas with 7.5 percent (Focus Online, 2011, p. 1). For its proposed services HKX plans to use refurbished former ÖBB coaches with new inside and outside design. Each train set will consist of six coaches, five basic coaches and one premium coach (International Railway Journal, 2011b, p. 7). Refurbishment was executed by Polish H. Cegielski rolling stock company in Poznan and seemed to be a bottleneck of operation launch (Der Mobilitätsmanager, 2010, p. 1; Doll, 2011, p. 1). At the point of operation launch the refurbishment did not succeed in time. Contracts with the Polish supplier were dissolved and trains from the German Voigtland-Bahn had to be lent.
In its competitive arena the company picked one of several attractive routes in Germany. Operations between Hamburg and Cologne are planned three-times per day in the morning, at mid time and in the evening. On the chosen route HKX does not directly compete with DB Fernverkehr’s modern ICE trains but with its older IC trains (DB Mobility Logistics AG, 2011, p. 1). HKX’s train operations will approximately take 4:05 hours (Hamburg-Köln-Express GmbH, 2011, p. 1).
HKX's economic logic is based on yield management with high variances in a closed ticketing system (see interview 2 in the thesis). Cheapest prices of HKX shall be below those of Deutsche Bahn. However, the company will also focus on calculating prices according to demand (Barrow, 2012b, p. 28). Tickets will be sold via telephone, internet, on trains and eventually also in stations (Doll, 2011, p. 1). At-seat-meals will be served in the premium class and WiFi internet is accessible throughout all coaches (International Railway Journal, 2011b, p. 7).
As a reaction on the emerged competition the incumbent DB Fernverkehr seems to leverage its contacts in the vertically integrated DB holding. In early 2011 infrastructure manager DB Netz AG offered station prices to HKX that were 135 percent above those offered to DB Fernverkehr. After claims of HKX the German regulator Bundesnetzagentur instructed DB Netz AG to offer similar stations access prices for both companies (Klimm, 2011, p. 6). Moreover, DB Station and Services AG denied access to national ticketing automates and sales centers to HKX because the DB Station and Services’ lead customer DB Fernverkehr was not accepting sales facility access for the new challenger. HKX is also willing to win proceedings in this case to access essential facilities in a non-discriminatory manner.