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)
3.2 Challenger I: WESTbahn, Austria
tered services on December 11, 2011 by offering regular hourly scheduled services between Vienna and Salzburg. WESTbahn possesses sufficient financial backup as well as strong partnership ties with the leading rail industry players Stadler and SNCF. The company offers low prices with adequate benefit levels to outcompete ÖBB Personenverkehr. Its lean cost structure provides the necessary competitive edge.
As reaction to WESTbahn’s market entry the incumbent ÖBB Personenverkehr was able to use its lobbying capabilities to influence political decision making: After the challenger announced its market entry, the public subsidies for the route Vienna-Salzburg were cut by the infrastructure ministry of Austria. Additionally, ÖBB Infrastruktur AG has drastically raised infrastructure access prices, especially on the route Vienna-Salzburg (Gasser, 2011, p. 10; Kordik, 2011, p. 1). Although both incidents affect the incumbent ÖBB Personenverkehr AG and the challenger WESTbahn, the incumbent tends to compensate revenue losses and additional costs easier than the small WESTbahn company because of the incumbents’ broad network coverage.
At business level ÖBB adjusted its offers of WiFi internet on the route Vienna-Salzburg. On all trains the service is now available for free (Wirtschaftsblatt.at, 2011b, p. 1). After its initial launch WESTbahn offered 7,500 tickets on its connection for only 7.50 EUR. Austrian ÖBB Personenverkehr countered this aggressive offer by selling 25,000 15.00 EUR tickets for its similar connection (International Railway Journal, 2012, p. 4). Official evaluations of both sales measures have neither been published by WESTbahn nor by ÖBB Personenverkehr.
tered services on December 11, 2011 by offering regular hourly scheduled services between Vienna and Salzburg. WESTbahn possesses sufficient financial backup as well as strong partnership ties with the leading rail industry players Stadler and SNCF. The company offers low prices with adequate benefit levels to outcompete ÖBB Personenverkehr. Its lean cost structure provides the necessary competitive edge.
An initial investment amount of 130 million EUR was necessary to launch
the new enterprises WESTbahn Management GmbH. Expenses mainly arised in
the field of rolling stock purchase (110 million) (Gasser, 2011, p. 10;
Kordik, 2011, p. 1). The business plan of the company aims at
amortization of investments within five years of operations
(Eurailpress, 2011, p. 1). Average earnings of 26 million EUR per year
shall be achieved.
WESTbahn is operating seven newly manufactured KISS double-deck trains of the Suisse OEM Stadler Rail with a capacity of 501 seats per train and maximum speeds of 200 km/h (Gasser, 2011, p. 10; Stadler Rail, 2011a, p. 1). The initial geographic competitive arena of WESTbahn is the route Vienna-Salzburg that is operated with eleven connections per direction. The route offers a volume of estimated 14 million passengers per year. Quick expansion to further Austrian routes seems possible (Barrow, 2010a, pp. 20-21).
Regarding WESTbahn’s economic logic the company tries to offer low priced services with the highest quality level possible. In the field of pricing a standard ticket from Vienna to Salzburg costs 23.80 EUR. The price is less than the comparable offer of the incumbent OEBB with its 50 percent discount via VORTEILScard (50 percent discount) (Gasser, 2011, p. 10). Each WESTbahn train possesses only one single class and is equipped with a steward on each coach. Ticket sales are pursued only via SMS, online or onboard without additional fees (Barrow, 2010a, p. 21).
WESTbahn is operating seven newly manufactured KISS double-deck trains of the Suisse OEM Stadler Rail with a capacity of 501 seats per train and maximum speeds of 200 km/h (Gasser, 2011, p. 10; Stadler Rail, 2011a, p. 1). The initial geographic competitive arena of WESTbahn is the route Vienna-Salzburg that is operated with eleven connections per direction. The route offers a volume of estimated 14 million passengers per year. Quick expansion to further Austrian routes seems possible (Barrow, 2010a, pp. 20-21).
Regarding WESTbahn’s economic logic the company tries to offer low priced services with the highest quality level possible. In the field of pricing a standard ticket from Vienna to Salzburg costs 23.80 EUR. The price is less than the comparable offer of the incumbent OEBB with its 50 percent discount via VORTEILScard (50 percent discount) (Gasser, 2011, p. 10). Each WESTbahn train possesses only one single class and is equipped with a steward on each coach. Ticket sales are pursued only via SMS, online or onboard without additional fees (Barrow, 2010a, p. 21).
As reaction to WESTbahn’s market entry the incumbent ÖBB Personenverkehr was able to use its lobbying capabilities to influence political decision making: After the challenger announced its market entry, the public subsidies for the route Vienna-Salzburg were cut by the infrastructure ministry of Austria. Additionally, ÖBB Infrastruktur AG has drastically raised infrastructure access prices, especially on the route Vienna-Salzburg (Gasser, 2011, p. 10; Kordik, 2011, p. 1). Although both incidents affect the incumbent ÖBB Personenverkehr AG and the challenger WESTbahn, the incumbent tends to compensate revenue losses and additional costs easier than the small WESTbahn company because of the incumbents’ broad network coverage.
At business level ÖBB adjusted its offers of WiFi internet on the route Vienna-Salzburg. On all trains the service is now available for free (Wirtschaftsblatt.at, 2011b, p. 1). After its initial launch WESTbahn offered 7,500 tickets on its connection for only 7.50 EUR. Austrian ÖBB Personenverkehr countered this aggressive offer by selling 25,000 15.00 EUR tickets for its similar connection (International Railway Journal, 2012, p. 4). Official evaluations of both sales measures have neither been published by WESTbahn nor by ÖBB Personenverkehr.