Railways are undergoing major industry changes with management and business planning at the forefront that encompasses operational, customer and intermodal competition issues with innovative technologies removing earlier barriers. The presentation highlights trends in engineering, operations, stations design, passengers’ expectations and ticketing & collection while touching on issues like network capacity, demand forecasting & fare policies.

2. "There aren't
many companies
that have durable
assets that last up
to 50 years,
which, if you
make a mistake
in “forward
purchasing”, you
won't be able to
correct in a
lifetime."

3. • Removing Barriers With Innovative
TechnologiesEngineering
• Delivering Efficiency, Sustainability and Safety
ManagementOperational
• Capacity, Demand Forecasting & Fare PoliciesNetworks
• Commercialized and Intermodal HopsStations
• From Paper-Based To Magnetic to Smart Cards to
MobilesTicketing & Revenue
• New 4G Travelers' ExpectationsPassengers Experience
• Revenue Data Driving Targeted MarketingEU Liberalized Markets
• Intermodal CooperationIntermodal Competition

5. Rail Must Embrace Innovation to Survive! –
Summary Notes IRJ
 Railway industry needs more innovation if it is to remain competitive with
other modes. The rail industry spends just 3% of its revenue on research
and development compared with 7% for air transport and 11% for roads.
 Improvements in energy efficiency are needed where nearly all other modes
are outperforming rail - since 2000, cars have been gaining an average of
2.1% a year in energy efficiency , compared with 1% a year for aircraft and
heavy Lorries, 0.7% for buses and just 0.35% for trains.
 Whether railways should be pushing suppliers to produce more energy-
efficient or lighter trains’ remains an open issue, however, delinking
innovation from specific efficiency targets in projects is important.
 Pro-longed rail vehicle certification process in Europe is a major barrier
to innovation.
 Competitive tendering to ensure fair play in state-owned organizations
deters innovation.
 Informed buyers are key as they are able to specify the level of quality
and reliability they require which enables them to buy on equalized
price based on the concept of life-cycle costs.

6. Future Passenger Rail
Engineering Design Goals
 Increasing train speeds to 400 km/h
 Halving the specific energy consumption
 Noise reduction
 Increasing passenger comfort
 Improving rains safety
 Reduction of wear and life cycle costs
 Cost-efficient design by modularization
 Systems integration

8. Options to Improve
Railways Capacities
With Infrastructure costs accounting to nearly 40% of the
cost of running a railway, new infrastructure for railways are
not usually the first option.
There are many options to improve capacity of existing
rail including;
 More tracks (expensive)
 Replacing trains with greater acceleration and
deceleration or higher top speed, so more tracks are
covered.
 Lengthening trains to provide more carriage
 Changing the seating configuration, thus fitting more
people in

9. Railway Operational
Efficiencies
 Railways differ in terms of their efficiency across countries due
to reasons controlled by management and/or governments.
 Asset utilization, staff productivity, passenger / freight rates,
and cost/revenue ratios are key indicators for operational
efficiency that depend on national or region-specific factors.
 Regulations and infrastructure constraints, such as limitations
that impact train length, have major impact on efficiency.
 New technologies are a central driver of railway efficiency, as
effective technology allows for improved and more effective
maintenance of assets, better communication with customers,
and automation of processes.
 Levers to efficiency can include opening rail market to
competition and providing steady, reliable funding for rail
improvements that improves public mobility.

10. High Speed Versus
Medium Speed Railway
Railway expansion options include
new very high speed rail lines with design speeds at or above 300 km/h,
(i) new medium high speed rail lines with design speeds at 250 - 280 km/h,
(ii) upgrades of conventional lines typically at 200 - 220 km/h.
At a high economic level driven by
(i) Passenger demand
(ii) Railway infrastructure cost and train operators’ costs
(iii) Commercial revenues, user benefits
(iv) Wider socioeconomic benefits,
The followings can be noted;
 Operations costs of modern and purpose-built train are lowest at design speeds
between 250 km/h and 300 km/h and gradually increase at speeds beyond 300 km/h
as a result of higher train mileage covered by faster trains with the same time.
 Labor costs and rolling stock capital costs decrease with higher speeds. These costs
are counter-balanced by the cost of increasing energy consumption at high speeds.
 Infrastructure, typically the dominant cost component is almost the same,
regardless of whether the system is very high speed or lower.

12. Railway Cost
Advantage
 User benefits in railway, specifically passenger travel time
savings, are major non-commercial but socioeconomic
benefits. Effective travel time savings and passenger
volumes translate directly into user benefits.
 The driver for travel time gains is “effective or network
speed”, not design speed. The investment for high speed is
justified if high speed yields can be achieved.
 Rail has external cost advantages over air and still
more so over road transportation. In many cases,
higher speed rail not only shifts traffic but induces
new demand.
 External costs (emissions, land use, safety risks) of all
transport modes are significant but differences amongst
transport modes are relatively small.

13. Integrated Scenario
Planning in Railway
 Continuously evolving and changing frameworks in the transportation industry
create significant challenges for all market professionals with respect to both
short- and long-term planning.
 Traffic infrastructure is designed and built for the long-term, however, the
logistics / demand behind the plans need to be dynamic and able to respond and
react to changing requirements.
 Therefore, railway operators need to continuously assess demand and adjust
utilization of existing assets to achieve the best possible efficiencies.
 Integrated scenario planning tools helps railway operators to;
 Continuously monitor markets and update traffic forecasts,
 Translate traffic forecasts into capacity scenarios,
 Connect forecasting results to pricing scenarios covering direct (e.g.
tariffs) as well as indirect revenue streams (e.g. concessions, retailing,
parking)
 Monitor and evaluate business opportunities for driving growth.

14. Benefit / Cost Ratios Amongst
Various Rail Speed Options
 In corridors with high travel time elasticity, the business
case for higher and very high speed options can be made,
because the increased demand from markets with sizeable
passenger volumes translates into higher revenues with a
benefit-cost ratio as high as 2 to 3.
 In more modest demand and elasticity scenarios, very high
speed and conventional upgrade benefit-cost ratios tend to
be similar but with proportionally lower absolute values.
 The medium high speed option, in contrast, often has a
lower benefit-cost ratio compared to other options since
infrastructure costs are approximately the same while the
demand is lower.

15. The Case for Very High
Speed Railway
 Very high speed is preferable over conventional upgrades in
certain instances as in reality expenditures can near costs of
higher speed options especially in densely populated urban
areas or when more fundamental changes in the alignment
and equipment of a corridor are needed.
 If capacity constraints are an issue, very high speed has the
best ability to help alleviate future congestion. Increased
effective speed and shortened cycle time of trains result in
increased network capacity. On congested networks, the
construction of a new corridor also frees up conventional
lines for other uses.
 In networks with foreseeable and sustained growth rates,
very high speed systems offer higher capacity reserves for
the future than lower speed options.

16. The Case for Railways
Upgrades
Upgrading conventional lines to speeds of 200 - 220 km/h
makes sense in a variety of scenarios and can achieve
better benefit-cost ratios;
 Time savings and additional revenues can be generated
in cases where upgrading represents a substantial leap
forward compared to the previous railway offering.
 In situations where high or medium high speed rail
designs can-not deliver superior speed yields.
 In densely populated urban areas or when new
corridors are not available and the cost of disruption is
high.

18. Moving Towards Future
Railway Stations
Stations Basic Functions
 Circulatory – getting people on and off.
 Operational – changing staff, selling tickets etc.
 Iconic – advertising station.
 Commercial – offices and shops.
Stations should be located where:
 There are the greatest number of passengers
 They take up the least land (e.g. underground!)
 Facilities can be clearly visible and accessible
Designing Considerations for Future Railway Stations
 Space - Affects passenger’s comfort
 Capacity – To handle peak traffic.
 Access – Multiple entrances ,
 Circulation - Ramps instead of stairs.
 Flow – Passengers exit stations in one big mass.

21. Intelligent & E / M - Ticketing
 Intelligent / Smart cards (Dubai Metro, Google Wallet, Apple
Passbook) and e / m –ticketing (bar codes) sent to mobile
phones or tablets are evolving fast with applications that
can tell passengers;
 The next available service based on distance from the station;
 When they need to get to the station and boarding location;
 Trains seats preferences; Locating Passenger by GPS
 Get alerts when trains are delayed or disrupted and be advised of
alternative routes.
 Surroundings terrain info- Matching window view to display.
 The fastest group to adopt mobile timetable/ticketing
applications are woman and older ones in particular.

22. New Approaches to
Transport Ticketing
Implementing open payment scheme in non‐retail environments with
performance matters raises certain technical (interoperable IT systems) and
commercial (tickets re-issue) issues for Operators, however;
EMV (Europay, MasterCard and Visa) and e-ticket based payment schemes
raise a multitude of possibilities for payment for travel to be packaged in a
different and more convenient ways with multiple ticket distribution / sales
channels.
More sophisticated and flexible products can to be offered that take
advantage of calculations being made at the back office, rather than the gate;
 A range of adjusted peak rates; daily time bands and seasonal as price
differentials reduces overcrowding.
 Advance and bulk buying discounts.
 Bundle of journey opportunities rather than a single travel pass
supported by railways interlining and code sharing standardization &
cooperation agreements (similar to Airlines).

23. Revenue Management in
Railways
The industry is fragmented in terms of revenue
systems with most railway companies preferring
incremental service steps improvements rather than
drastic change that can knock demand.
HOWEVER
 Rail operators are moving away from the
distance‐based pricing models to a more fluid pricing
model that can effectively compete with airlines.
 For companies that invest in pricing optimization and
demand forecasting; the ROI uplift can be expected
within 2 to 5 percent.
 The approach of adding value for the customer thru
the Operator or third party service providers , is far
better than making money off them.

24. The Big Data Age – Driving All!
 Transport Planners are considering “big Data" to
improve the design of urban rail networks and
operations by predicting ridership and timetables.
 Operators are using customer data to optimize trip
chain – waiting, transferring, access, travel time and
egress time.
 Marketing Planers are leveraging customer data to
drive promotions and brand loyalty by pushing out
targeted promotions to customers.
 Financial Planners use customers data to assess railway
service reliability on quantitative basis using cost
benefit analysis.

26. Expectations from Railway Passengers –
5 key findings – Accenture Research
1. Rail travellers request a one-stop booking platform today on
their PC, tomorrow on their mobile devices
2. Pricing transparency and ticket refunds pose the biggest
challenges for passengers
3. Rail operators need to provide real-time multi-channel
information
4. Most passengers are willing to pay to enhance their on-
board comfort - being connected and entertained are top of
the list.
5. To increase retention, rail operators will need to customize
and enhance their reward and loyalty schemes.

27. Possible Impacts of Accenture
Research on Railway Operators
 Rail operators may no longer be the primary recipients of
customer data and could lose out on selling ancillary
services.
 Rail operators need to think about more travel booking
options beyond core rail services, which form only one
portion of the consumer’s door-to-door journey.
 Rail operators need to develop their multi-channel
strategies to better connect with and understand online
consumers.
 Operators need to better use technology and going
beyond mere loyalty management.

28. Services Designed Around Passengers
“Door to Door Journey”
Consumers are driving the railway market, making travel choices,
comparing prices, incentives and companies they want to travel with
in real time .
ALSO; Customer expectations are being redefined by the railway
industry in terms of design & interiors, service reliability and
connectivity;
 Smarter use of self-service technology and better mobility solutions
including passenger information, way finding technology, onboard
catering, Infotainment / Wi-Fi, on board movies.
 Stations are being designed to be vibrant retail / kiosks oriented places
enabling travel with minimal hassle in which passengers can navigate
quickly and easily from the entrance to their train seat and vice-versa.
 Dedicated high speed passenger trains to a wide range of destinations
running consistently in each travel direction with no track crossovers or
congestion; i.e. faster journey times with no compromise on speed.

30. EU Railway Markets -
Fierce Competition
 Europe’s passenger rail market is seeing a huge growth
in competition as a result of deregulation;
 New privately owned railway launchings to take on
state-owned incumbents,
 National railways are starting to branch out beyond their
own boarders.
 Operators are trying to find new ways to connect with
consumers, to market their offerings and to provide a
door-to-door experience.
 As competition grows, so does investment in digital
services and new IT platforms.
 Pricing shifts are expected to take place from systems
where prices are regulated to a single ceiling price to a
point where prices will be market driven.

31. EU, Competition
Challenges
Previous nationalized rail markets are still facing
problems and disruptions in the transformation
towards a more free market for commercial rail
operators.
 Technical differences in safety certificates and vehicle
authorizations are still not converged in the EU.
 Fair and stronger legal framework with the same
criteria and the same technical standards, still not in
place.
 National differences, technical as well as social, are
still a hurdle towards integrated rail market.

33. Demand Elasticity in
Railway
 Rail used to compete with airline companies up for
journey times of to 2 or 3 hours whereas today we’re
seeing passengers choosing rail over air on journeys up
to 4 & 1/2 hours.
 Demand elasticity of higher speed rail systems show
the competitiveness of high speed rail compared
against other modes is highest at distances between
300 km and 800 km.
 Additionally, the potential to charge a price premium
for higher speed rail services can be used to increase
revenues further.
 At longer distances, air travel tends to maintain its
competitive advantage.

34. Agreement
Type
Definition Brand Airline Railway
Retail
Channel
Light
Interlining
An airline sells a unique ticket for a trip
that includes one cross-border self-
operated leg and a connection to a
second leg operated by a railway
Flyrail SAS SJ
Dedicated
website
Light
Interlining +
Code Sharing
Same conditions as light interlining. In
addition, the rail leg is identified by
the airline’s brand code (even if rolling
stock often carries the railway’s brand)
TGV Air,
AlRail,
AirTrain
11 airlines,
LH, Swiss
SNCF,
BD, SBB
Airline, LH,
Swiss
Full
Interlining +
Code Sharing
Same conditions as light interlining +
code sharing. In addition, there is a
checked-through luggage service
Air +
Train
AF SNCF
AF
Retail
An airline sells generic tickets for non-
bookable trains, to be used just
before/after an international flight
Rail &
Fly
Many DB
Airlines +
partner TOs
Joint Venture
Joint Venture - High-Speed Alliance
(NS HI speed – KLM
joint venture), Operating FYRA jointly
with SNCB
Air-Rail Cooperation

35. Rail -Rail Cooperation
Cooperation Definition Examples
Retailing
 A railway retails another railway’s
services, for trips that imply no
connection with its own trains
 SNCB Europe sells DB tickets (e.g., Brussels-
Koln on ICE)
 Renfe sells Elipsos tickets
Light
Interlining
 A railway sells a unique ticket for a trip
that includes one self-operated leg and
at least one connection and a second leg
operated by another company
 There is no checked-through luggage
service
 SNCB Europe sells tickets for Antwerp-Berlin
trip that includes a leg (Antwerp-Brussels)
operated by SNCB, a leg (Brussels-Koln)
operated by Thalys and a leg (Koln-Berlin
operated by DB
 SBB sells tickets including SBB and ICE (DB)
legs
Joint
Operations
 Two companies operate jointly a specific
segment with their rolling stock
 Timetables are jointly defined, ticket
retail is shared and a co-brand can be
used for the service
 FYRA is jointly by High-Speed Alliance (NS
HIspeed and kLM JV) and SNCB
Joint
Venture
 A joint venture owned by two operators
is dedicated to passenger transport on
specific routes
 Eurostar is a Joint Venture owned by SNCF,
SNCB and L&CR
 Thalys is a Joint Venture owned by SNCF,
SNCB and DB
 Tgv Lyria is a Joint Venture owned by SNCB
and SBB

37. Industry Drivers
 Customers will continue to
drive the industry ; High
speed rails, modal hubs, etc.
 Air-Rail and Rail-Rail
Cooperation can determine
future profitability & survival
 Technology / Big Data
advances will continue to play
key role to meet railways
increasing and complex
challenges – IT / Systems
Interoperability is key.
 Government policies (e.g.
fares, regulation,
liberalization, cross border
policies) can determine the
future quality and financial
sustainability of a railways
 Network Speed and Service Performance
– KPI’s and benchmarking
 Railway Ownership & Funding Models
– More market responsive
 High Speed Railway Safety
– Multiple protection systems
 Full Time Circle Concept
– Door to Door or City Center to Center
 Fares
– From distance cost based to willingness to
pay to revenue management with innovative
travel offerings and value added secondary
offerings – advertising, retailing, etc.
 Capacity Planning, Demand Forecasting
– Econometrics, Trip end modeling, Gravity
model
 Bundling With Transportation Modes
– Railway cannot be accessed from anywhere!
Railway Future Issues