2024-10-01 15:38:02
In 2013, Ouigo appeared on the rails, the formula low cost of the classic TGV. Supposed to revive interest in the train, this also creates new competition for the TGV, which has become inOui. What impact does this new competitor have on the rail market?
Until recently, the high-speed rail offer in France was completely unified. Whether dressed in orange or Atlantic blue, the TGVs offered an identical service offering, managed by a single operator: SNCF. Big change on April 2, 2013: the blue and pink trainsets stamped “Ouigo” are launched at 300 km/h on the rails, offering low-cost tickets, with the reward being the obligation to arrive at the station in advance and to travel with limited baggage. This launch came at a time when TGV ridership was declining, driven by growing intermodal competition from carpooling (creation of Blablacar in 2006) and air travel. low cost (EasyJet on national routes from 2007). The Macron law of 2015 would subsequently open up a new modal alternative to competition low costlong distance buses.
And return of third class who doesn’t say his name, according to Dominique Memmi, director of social sciences research at the CNRS? In any case, Ouigo is a real success, for which Alain Krakovitch, boss of TGV-Intercités at SNCF Voyageurs, congratulated in June 2024, calling it “a real turning point in French high speed”.
By 2027, the fleet will expand from 38 to 50 trains, he announced during the same press conference, and all of the wagons will be renovated, with the installation of individual sockets and the development of a new design.
In 2017, the inOui label and the carmillon livery began to be applied to all classic TGVs. And this with the promise of “more comfort, services and connectivity”: wifi, access to the press and films via an accessible platform on board, catering at the seat…
The market is now segmented, without even mentioning the more recent arrival of Trenitalia high-speed trains between Paris, Lyon and Italy, and Renfe between Lyon, Marseille and Spain. Segmented enough to address different clienteles? How does inOui compete with Ouigo and other modes of transport? This was the question at the heart of our research work recently published.
How to appreciate the phenomenon?
We studied five routes to and from Paris: Lyon, Bordeaux, Toulouse, Nice and Brussels. The data relates to the period from September 2019 to March 2020, before the Covid pandemic and the arrival of foreign high-speed trains on the network, which makes it possible to isolate our case study from elements which could have disrupted the analysis. Nice and Toulouse are only partially connected to Paris by high speed: part of the journeys are made on the traditional network, and it is towards these destinations that competition from air is most felt. The train/plane split is approximately half and half. Data was collected over 13 Tuesdays for D-7 reservations.
Competition in the transport sector is assessed in particular on two points: ticket prices and train frequency. Concerning prices, the SNCF has been practicing since the 1990s yield managementthat is to say that it tries to maximize its income by varying the prices of the same journey according to different criteria such as the reason for the trip (professional/leisure) or the reservation date, for example. There literature shows that it is a particularly effective method in sectors involving high fixed costs and where a form of regulation is exercised, such as in the railways.
Several variables were taken into account and compared with the price per kilometer in first and second class of TGV inOui, as well as their frequency. We thus considered technical variables relating to the characteristics of journeys such as distance, travel time or frequency of offer by mode of transport; variables capturing the degree of competition (calculated, for experts, from theindice de Herfindahl-Hirschman) of Ouigo or other modes of transport, as well as the quality of the service (distance/time ratio); and finally variables relating to the socio-economic environment: the share of travelers who are rather young (15-29 years old) or rather older (60-74 years old), the size and employment rates of the destination cities.
[Déjà plus de 120 000 abonnements aux newsletters The Conversation. Et vous ? Abonnez-vous aujourd’hui pour mieux comprendre les grands enjeux du monde.]
Competition that weighs on prices, especially in first class?
The analyzes carried out reveal some salient points. In first class, distance has a negative effect on the price per kilometer: all things being equal, the greater the distance, the more the price per kilometer decreases, which was expected. The presence of a train offer low cost also has a significant negative effect, particularly during off-peak hours, which may seem more surprising for first class. However, these are times when first class is already cheaper due to yield management practiced and the desire of the SNCF to fill as many seats as possible. The company is in fact more interested in filling a chair at a lower cost than leaving it empty.
The higher the quality of service, the higher the price: in other words, the fewer intermediate stops, the higher the price per kilometer. Likewise, the lower the competition from other modes of transport, the higher the price. The latter also increases, all things being equal, with the size of the cities, but on the other hand decreases in the presence of a relatively young population in the cities of origin and destination.
In second class, we find the same effects of distance or the presence of a train offer low cost. On the other hand, competition from other modes of transport has no significant effect, this effect being carried over to the least crowded class during off-peak periods, namely the first class. The unemployment rate is also significant: the higher it is on an origin-destination, the more the price per kilometer decreases. Which would mean that in determining its second class fares, the SNCF takes into account the socio-economic characteristics of the populations of the cities served. The price determinants are thus partly common and partly specific between the first and second classes.
On frequency: substitution or compensation?
Concerning the frequency of TGV inOui, this is logically lower over long distances and when the travel time is long. Beyond three hours, fewer trains are offered, which may give way to other modes of transport. However, we observe that the frequency of inOui increases when that of buses, carpooling or Ouigo also increases in the most dynamic markets. Only the air low cost has a significant negative effect on supply. In the first cases, there would be complementarity between the modes, particularly when the dominant inOui offer is insufficient to meet all transport demand; with the plane, conversely, we observe a substitution mechanism.
In terms of socio-demographic variables, the frequency of inOui TGVs decreases with the size of the cities and the proportion of young people, who are more inclined to turn to alternatives. On the other hand, it increases with the share of seniors, demonstrating the attachment of this population category to traditional TGVs.
To conclude, there is limited competition between Ouigo and inOui services, which is largely explained by a strategic distribution of trains throughout the day. inOui trains are preferably scheduled during peak periods, the most profitable for the SNCF thanks to the travel of professionals who are less price sensitive, while Ouigo trains are positioned during off-peak periods, where leisure travelers are more attentive to prices. This system has the virtue of limiting substitution between the two offers. While it allows as many people as possible to travel at the price that suits them, it is sometimes necessary to agree to leave at a less convenient time, which better distributes demand over the day and fills all trains more, to the greatest benefit. of the carrier.
1727822303
#cost #challenges #traditional #TGV
