How COVID-19 Has Affected the Railway Industry
With the Covid-19 pandemic grounding planes and pushing airlines into financial peril, alternative means of international travel such as rail could benefit. Investment banking firm UBS believes that a combination of improving rail market conditions and changing attitudes to train travel could enable this.
As part of its report – entitled ‘By train or by plane? The traveller’s dilemma after Covid-19 and amid climate concerns’ – UBS Evidence Lab surveyed 4,000 people in France, Germany, Italy, Spain, Germany and China. It found that the majority of business travellers surveyed were willing to accept travel times of two to three hours on trains. This time was much higher for leisure travellers, with the majority prepared to go on rail journeys five to six hours or longer.
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Meanwhile, UBS predicts that global air traffic growth will drop from 5.1% to 4.6% over 2018-2028. The company also estimates that there will be approximately 800 more high-speed trains in operation in Europe within the next decade, while 196 fewer planes will be required globally. If people opt to use trains instead of flying or driving, UBS says this could save as much as five million tonnes in CO2 emissions during the next ten years.
Can rail compete with flying?
There are some doubts whether rail travel could surpass flying as the international travel mode of choice, at least in the immediate future – unless there is a noticeable drop in both ticket prices and journey times.
“The trouble is that the economics of taking trains for medium distances across Europe is just much higher. So not only is there a time cost in that it’s slower, but it is likely to be more expensive,” says transport journalist and railway historian Christian Wolmar.
“I went to Romania this year. And to get to Romania, I would have had to take six trains and it would have taken me 40 hours. That’s just not feasible,” he adds. “On some common routes – like Barcelona-Madrid or Paris-Lyon – once you’ve got the high-speed trains, it wipes out the aviation market. But there are not many such routes, and there’s an awful lot of point-to-point kind of aviation that will take you to places very fast.
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By GlobalData“So unless you have a whole host of policies that are encouraging people to shift from plane to rail, I don’t think you can. But there is some potential there.”
It is clear that there will need to be greater consistency between international rail networks. While western and central Europe typically offers good quality rail networks, there is a noticeable decline as you travel further east.
Dr Roger Tyers is an environmental sociologist at the University of Southampton. Last year, he travelled from the UK to China by train. It took him almost two weeks just to make the one-way trip, getting 21 train connections across nine countries. The trip cost £2,000 compared to £700 in flying, but the carbon emissions were 90% lower.
“It’s almost like the further east I went, the more basic the services got,” he says. “The final step was the Trans-Mongolian train to get me to China. Fortunately, the scenery was very beautiful. But the train itself was like a historical artefact.
“Then things kind of flipped completely because when I was in China and taking the high-speed trains, they are probably the nicest trains I’ve taken anywhere in the world. Very modern, extremely fast. It’s like it’s almost like an aeroplane experience.”
Impact of Covid-19 on the railways: early signs show an appetite for rail
At present, no one can say for certain how traveller behaviour will be different once the coronavirus has run its course. Yet there are some early indications of rail’s success in the post-Covid-19 world.
CER supports @EU_Growth #tourism recovery strategy leading to #green transition, which must rely on #rail as #sustainable way of travelling. Read our letter: https://t.co/y4QKC1fOmR pic.twitter.com/CjVvgwEOiD
— CER (@CER_railways) May 6, 2020
“We have recently conducted an online survey among travellers that used a Eurail or Interrail Pass in 2018 or 2019 to measure the impact of Covid-19 on them,” says Eurail general manager Carlo Boselli. “Travelling by train with a rail pass was seen as the best option for the largest group of respondents, who indicated that they would prefer it for future travels when compared to cars, buses/coaches and planes.”
“Additionally, when asked to rank the different modes of transport based on how comfortable travellers would be to use them as soon as travel will be possible again, 82% of respondents chose [the] train as the most or second-most comfortable method of transport to use.”
Alongside this, there are some signs from China of a potential rail travel boom once lockdown has lifted across Europe.
“As has been the case in China, domestic tourism will be the first to benefit post-Covid-19. Regional travel then looks like the next beneficiary as [passengers] look to travel to neighbouring destinations rather than further afield. In the short-term, rail travel will likely experience an upturn as travellers venture domestically and to neighbouring destinations once restrictions are lifted, says GlobalData travel and tourism analyst Johanna Bonhill-Smith.
“A boom in rail travel may be possible as this offers a ‘middle ground’ between expensive flights and slow travel by sea. Looking to the long-term, however, once efficient measures are put in place, it is likely that air travel will resume, causing pent-up demand amongst certain age groups.”
A tough decade for airlines meets ‘the European year of rail’
There are predictions that air travel won’t recover to pre-crisis levels until 2023. A number of airlines have gone bust, with others appealing to governments for state aid. Despite Air France receiving a state bail-out, these funds came with strict conditions that banned the airline from competing with rail for all journeys lasting less than 2.5 hours. The airline is also required to slash emissions by 50% before 2024. Environmental groups have called for these conditions to apply to all state bail-outs for airlines.
The next decade was already going to be tough for airlines, with the EU requiring all member states to commit to a target of a 40% cut in greenhouse gas emissions from 1990 levels by 2030. In addition, the International Civil Aviation Organization’s (ICAO) ‘Carbon Offsetting and Reduction Scheme for International Aviation’ (CORSIA) is aimed at ensuring aviation CO2 emissions do not exceed 2020 levels.
In contrast, the European Commission is calling 2021 ‘the European year of rail’. As part of the European Green Deal, a series of initiatives have been designed to promote rail as a low-carbon form of transport. Meanwhile, the Fourth Railway Package effectively creates a single market for rail in the EU – allowing operators greater freedom to provide services across different member states. It is anticipated that this increase in competition will boost the number of trains running and in turn lead to ticket prices dropping.
There is also the suggestion that tax increases on airlines could be seen by governments as a means of recouping some of the considerable amounts being spent on handling the coronavirus. For example, while there is a relatively low air passenger duty (APD), there is no VAT charged on international flight tickets in the EU, nor is aircraft fuel currently taxed.
“I do think in the longer term, when governments are looking at eye-watering amounts of debt they’re going to owe over the next few years to pay back the costs incurred during Covid, we might see them having a long hard look at aviation and saying: ‘If we tax aviation just a little bit more, we could raise billions’,” suggests Dr Roger Tyers. “That would be a game-changer to really reduce those flights that could be done by train and to invest in really good train services.”
These views were shared by Responsible Travel CEO and founder Justin Francis. “Air passenger duty raises about £3.7bn a year; but if aviation fuel was taxed, that would come to about £10bn a year,” he says.
His company proposes ring-fencing APD, splitting funds between developing sustainable aviation fuels and improving railways, in what it calls ‘Green Flying Duty’.
Trends and future technologies that will impact the railways post-Covid-19
Ultimately, the success of future rail travel will require tickets and travel times to be competitive with air travel. Yet, even with current speeds, journey times can at least be partially offset if there is a resurgence of overnight services. These formerly common services were cut due to the prevalence of low-cost airlines in the late 1990s and early 2000s, but they are making a comeback due to increasing demand.
Looking further into the future, the Hyperloop concept could dramatically slash travel time. There are a number of companies developing this technology around the world. It would require the building of completely new infrastructure, but magnetic pods in a vacuum tube would be capable of travelling at speeds up to 1,200km/h. If the tracks and services were to hypothetically run continuously on the 12,000km route from London to Beijing, the journey would take closer to nine hours instead of nine days.
With a Virgin Hyperloop One system in the Middle East, we could move 45 million passengers per year, completely powered by the sun. This is a transformative solution that meets the scale of the climate crisis. pic.twitter.com/kxa2hhSjPS
— Virgin Hyperloop One (@HyperloopOne) January 22, 2020
“Rail holidays have been, over the last five years, one of the fastest growing of all the different 300- 400 different categories of travel on the site. Rail holidays have been in the top three in terms of fastest growing. We think that trend will most likely accelerate,” adds Justin Francis from Responsible Travel.
Francis also suggests that the rail industry may even take business away from the cruise industry, which also finds itself in serious difficulties.
“We think that the market will disperse into other sectors,” he says. “So we think that overland rail will replace a lot of cruises and we think that would be a good thing for both enjoyment but also from a sustainability perspective.”
