All Aboard?

Buses Overtake Trains

Private Train HKX_DPA
HKX will no longer offer long-distance passenger service.
  • Why it matters

    Why it matters

    Fierce competition from new low-cost bus operators may force the government to rethink its long-distance bus policy if it wants to retain a competitive rail service.

  • Facts

    Facts

    • Deutsche Bahn’s only long-distance rail competitors are exiting the market.
    • Hamburg-Cologne Express and Veolia Transport both say they cannot compete with bus companies.
    • Veolia Transport complains bus firms have unfair competitive advantages.
  • Audio

    Audio

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The leaders of railway reform celebrated at the start of the year. At a ceremony in Berlin, former presidents, board chairmen and others praised the liberalization of rail transportation and the beneficial effects of competition. Today, almost a third of freight traffic is carried by competitors of the former monopoly Deutsche Bahn, as well as a quarter of local commuters. And the numbers are rising.

By contrast, little competition exists in long-distance passenger transportation. Only two rail operators dared to compete against Deutsche Bahn: the Hamburg-Cologne Express, also known as HKE, which is financed with U.S. money; and Interconnex between Leipzig and Rostock, which is run by the French group Veolia Transport. Both attempts have not been successful.

Interconnex will “decide in the coming weeks if and how to continue,” said Christian Schreyer, the German chief executive. The company has been operating for 12 years.

HKX, however, will continue to operate between Hamburg and Cologne but no longer provide long-distance passenger service. Instead, the company will offer local commuter services along this route.

 

Fernbus_DPA
Private train companies cannot keep up with long-distance bus services. Source: DPA

 

The Hamburg-Cologne Express and Interconnex have failed to establish viable long-distance passenger services not only because of Deutsche Bahn, but because of the arrival of long-distance bus operators. The new bus companies, in business for about 18 months, are shaking up the market with low prices. They now offer more than 230 long-distance connections.

Mr. Schreyer claims long-distance rail operators can’t compete with bus rivals charging about €1.50 ($1.93) per kilometer. He said offers of €7 for service between Berlin and Leipzig “don’t even cover our costs” for using Deutsche Bahn’s tracks. Interconnex has meanwhile dropped the route.

Long-distance train operators are complaining of unfair competition, noting, among other things, that bus operators don’t have to pay infrastructure usage fees.

Today’s long-distance passenger rail service, with the exception of Deutsche Bahn’s high-speed Intercity service, “can only be saved through political decisions,” Mr. Schreyer said.

Deutsche Bahn itself is fighting back: The company claims it has so far lost revenue of more than €50 million due to the new competition but has responded with a new service, called the Inter-Regional Express, or IRE. It’s a combination of the company’s Regional Express and Intercity service, and a ticket for the Hamburg-Berlin route costs €29: a price that comes closer to luring bus travelers back to its carriages.

Dieter Fockenbrock is Handelsblatt’s chief correspondent for companies and markets. To contact the author: fockenbrock@handelsblatt.com

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