High-speed rail vs. low-cost air : competing or complementary modes?
Date: 2016-02-22
Institutions: European University Institute
Subjects: air transport, carriage of passengers, organisation of transport, rail transport, transport economics, transport policy

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QM-AU-14-001-EN-N

ISSN: 2467-0405

High-Speed Rail vs. 
Low-Cost Air: competing or 
complementary modes? 
Editors: Matthias Finger, Nadia Bert, David Kupfer

Highlights

At  the  2nd  Florence  Intermodal  Forum  policy  makers,  regulators, 
associations and operators of both the rail and the air transport sector 
came together to discuss current issues that impact both sectors alike. 
The central question was whether high-speed rail and low-cost air were 
competing or complementing modes of transport.

After the liberalization of the European air market low-cost air carriers 
had taken over many medium length routes in Europe. High-speed rail 
could win back a lot of ground on many routes and remains dominant 
especially on city connection as illustrated by the Rome-Milan corridor 
example.  The  development  is  taking  place  against  the  background 
of  an  ongoing  liberalization  process  in  the  rail  market  which  has  an 
important effect on innovation in the sector.

Are the two modes serving different markets or are they in competition 
with each other? To what extent can they be complementary? What role 
does state aid play for each sector and how can policy work to address 
passenger needs?

fsr.eui.eu

FLORENCESCHOOL OF REGULATION 
 
Low-Cost Air and High-Speed 
Rail: an untapped potential for 
complementarity?
A comment by MATTHIAS FINGER | FSR-Transport Director

Comparing  air  and  rail  passenger  transport  is  a  difficult  task.  Apart 
from  serving  the  same  demand  that  is  mobility,  they  differ  in  several 
essential  aspects:  technology,  business  models,  customer  needs, 
ownership structure and type of infrastructure. Moreover, the regulatory 
and  policy  environment  is  completely  different.  Still,  from  a  mobility 
perspective, it is useful to look at both sectors simultaneously so as to 
better  understand  where  and  how  they  could  be  complementary  and 
become more integrated. 

The European Commission has promoted this view, and VP Siim Kallas 
made the integration of different modes of transport a high priority when 
he took office in 2009. However, when looking at European transport 
policy  and  regulation,  the  situation  rather  resembles  a  patchwork.  As 
a matter of fact, a twofold inconsistency can be detected, namely a lack 
of coherence between different national approaches as well as a lack of 
coherence between European policies. 

As far as the national level is concerned, cross-border passenger rail in 
Europe is still hampered by a patchwork of national regulations and a 
fragmented system of network managers. Even though harmonisation 
and the establishment of a single market in the air sector has been moving 
forward at much faster pace it is still facing enormous difficulties that 
result from conflicting national interests. Central elements of the Single 
European Sky initiative to harmonize Air Traffic Management systems 
and increase capacity are still in gridlock. 

As  far  as  the  European  policy  level  is  concerned,  there  is  a  problem 
with  competition  policy:  efforts  fostering  intermodality  by  means  of 
cooperation of different transport operators can potentially clash with 
European  competition  policy,  which  ultimately  leads  to  the  question 
how to harmonize cooperation and competition.

On the whole, and despite the attempts to establish a Single European 
Transport Area with a top-down approach, the policies to implement 
this goal did not prove to be effective so far. Yet, inevitably air and rail 
are becoming part of an integrated mobility approach.

Competing or cooperating?

While  there  are  prominent  cases  of  strong  competition  between  high-
speed rail and low-cost air, especially on city pairs such as Rome-Milan, 
Madrid-Barcelona,  Paris-Marseille,  the  list  of  win-win  constellations 

2 ■  FSR Transport ■ Issue 2014/01 ■ March 2014

between the two modes is long and could well be longer. Examples such as 
“Zug und Flug” in Germany have shown that “whole journey” bookings 
and integrated ticketing are not only possible but moreover meet customer 
demand. 

New entrants in the rail market appear to be particularly innovative when 
it comes to intermodality: Italian high-speed rail newcomer NTV made 
agreements  with  Cathay  Pacific  as  well  as  with  Italian  municipalities; 
passengers from Hong Kong can now book a single ticket including flight, 
train and local public transport in several Italian municipalities. This in 
turn  has  led  the  incumbent  Trenitalia  to  engage  in  similar  intermodal 
projects,  such  as  cooperation  with  car  sharing  companies.  Another 
example of such initiative can be found in France, where Air France and 
Thalys have teamed up when connecting Paris Charles De Gaulle. 

As  for  airports,  better  connections  of  different  transport  modes  to  the 
airports have proven very successful: for example, in the case of highly 
congested  airports,  replacing  short-haul  flights  with  high-speed  trains 
has  freed  up  precious  airport  slots  for  long-haul  flights.  In  the  case  of 
non-congested  or  regional  airports,  rail  access  can  actually  enlarge  the 
catchment area and create new demand for air travel.

It seems quite clear that there is an unexploited potential for cooperation 
between  air  and  rail.  Especially  railway  operators  have  shown  some 
activism  in  this  respect.  To  what  extent  also  low-cost  airlines  can  be 
involved in intermodal projects mainly depends on what type of business 
model they follow; established low-cost airlines like Easyjet and Ryanair 
are not part of Global Distribution Systems (GDS) which makes it hard to 
include them in integrated ticketing. However, some of them, like Vueling 
or Air Berlin, follow a different approach that appears to be closer to the 
traditional air carriers.

Still much is left to be desired in terms of better integration between rail 
and air in Europe. Yet, Japan can show the way for what is achievable by 
means of cooperation: Japan’s airlines do not perceive high-speed rail as 
competition to their business as they benefit just as well from increasing 
air traffic through the feeder services they provide.

In conclusion, there is the wish, from both policy makers at the European 
level and stakeholders, to look at passengers’ needs for mobility and to 
innovate  in  order  to  satisfy  them.  What  is  needed  for  a  more  efficient 
transport  system  is  more  coherence  between  European  policies  as  well 
as  bottom-up  initiatives:  policies  that  allow  for  collaboration  or  even 
incentivize them (in terms of interoperability, financing, investments, etc.) 
are crucial. At the same time all this must happen against the background 
of  competition  control,  i.e.,  by  making  sure  that  cooperation  does  not 
result in monopolies or collusion and that competition is maintained as a 
principle to incentivize actors to stay dynamic and innovative.

3 ■ High-Speed Rail vs. Low-Cost Air: Competing or Complementary Modes?

Summary of the 
discussion  
at the Forum

The  following  paragraphs  report  briefly  on  the 
discussions that took place during the Forum.  The 
debates  are  reported  without  identifying  name  or 
affiliation  of  the  speakers  so  as  to  comply  with  the 
Chatham House rule. 

The  discussion  touched  upon  a  variety  of  aspects 
reaching from markets, subsidies to complementarity 
and intermodal competition. Clearly, many aspects 
have  to  be  taken  into  consideration  when  aiming 
at  linking  two  fundamentally  different  modes  of 
transportation. The discussion was structured along 
the four following guiding questions.

Can high-speed rail continue to expand 
if low-cost airlines are taking over as the 
alternative also on short routes?

The  very  premise  of  the  question  was  challenged 
right  at  the  beginning  of  the  Forum:  looking 
especially  at  the  French  example  where  airlines 
massively reduced capacities after the establishment 
of high-speed rail (HSR) and seeing that today HSR 
dominates on most city connections, can one really 
speak of low-cost air “taking over”? It was presented 
that there are in fact many city pairs in Europe where 
rail has a modal share of over 50 %, such as: 

•	

•	

•	

Madrid-Seville:	Rail	83%	Air	27%

Paris-London:	Rail	81%	Air	17%

Paris-Brussels:	Rail	95%	Air	5%

Even  though  this  observation  is  more  relevant 
for  classical  air  carriers  than  low-cost  airlines,  the 
examples from Spain and Italy show that, especially 

4 ■  FSR Transport ■ Issue 2014/01 ■ March 2014

for  city  connections,  HSR  is  often  the  preferred 
alternative even to low-cost flights.

The  question  is  however  appropriate  in  several 
contexts.  The  emergence  of  low-cost  carriers  has 
certainly  caused  many  changes  in  travel  habits. 
One  such  case  was  illustrated  by  the  example  of 
the  Hamburg-Cologne  route:  the  emergence  of  a 
low-cost alternative to the rail connections in 2002 
had  caused  a  substantial  decrease  in  rail  passenger 
traffic, which was however recuperated at a later stage 
in  part  because  the  railway  operator  had  reformed 
its  pricing  regime  and  was  able  to  lower  the  ticket 
prices. Similar developments were demonstrated in 
the case of other city pairs as well.

Air  and  rail  are  only  substitutable  within  a  certain 
distance range. The choice of the passenger is mainly 
shaped by travel time, cost and travel comfort. It is 
however  crucial  to  make  the  information  about  all 
available  travel  options  and  their  characteristics 
available to the passengers in a transparent way.

is  also 

important  element 

An 
technological 
development: HSR has seen significant advancements 
and improved its travel time and frequencies, which 
made  competition  with  planes  on  city  connections 
possible.

The  discussion  clearly  showed 
that  different 
regulatory models can result in very different modal 
shares  in  otherwise  similar  situations.  Examples  of 
Japan  and  China  illustrated  very  different  patterns 
of modal shift, as well as market development in the 
rest of the world: China’s air carriers cannot compete 
with	 HSR	 even	 on	 distances	 of	 up	 to	 1,000km,	
because of high ticket prices and congested airports. 
Japan has a very high modal share of HSR and a fully 
integrated system with well-functioning intermodal 
links and has been operating high-speed rail for over 
50 years.

In  the  EU  especially  cross  border  rail  has  some 
severe  impediments  that  air  travel  is  not  facing: 
unexpected waiting times often occur at borders due 
to  a  lack  of  communication  between  the  different 

Competition and Cooperation in Rail and Air 

LORENZO	VANNACCI | European Commission Directorate General Joint Research Centre 
Unit	J1	Economics	of	Climate	Change,	Energy	and	Transport	Unit

Both  rail  and  air  transport  are  strategic  sectors  in  Europe, 
and  their  importance  is  fully  recognised  by  the  European 
Commission. 

Linking	 people	 and	 regions,	 air	 transport	 plays	 an	 important	
role  in  the  integration  and  the  competitiveness  of  Europe,  as 
well  as  for  its  interaction  with  the  rest  of  the  world.  It  makes 
a  vital  contribution  to  the  European  overall  economy  and 
employment.	Today,	aviation	supports	5.1	million	jobs,	directly	
and indirectly. It contributes one billion euros of European GDP 
every  day,  driving  trade  and  tourism.  Despite  the  economic 
crisis,  global  air  transport  over  the  long  term  is  expected  to 
grow	 by	 around	 5%	 annually	 until	 2030,	 as	 recently	 stated	 by	
VP Kallas.

Rail transport on the other hand is rapidly growing in the EU 
in  terms  of  modal  share  in  specific  corridors  thanks  to  the 
increase of the capacity of its high-speed rail network, boosted 
by	the	extension	of	the	high-speed	tracks	from	643	km	to	6,602	
km	between	1985	and	2010.	Despite	the	pressure	from	the	low	
air fares, passenger rail traffic has increased also as a result of 
improved  management  by  rail  operators.  For  example,  in  the 
Madrid-Barcelona  corridor,  the  new  RENFE  ticketing  policy 
has helped rail achieve 60% of the passenger market.

Nevertheless,  the  two  sectors  are  extremely  different:  air 
operates	 in	 a	 European	 single	 market	 since	 1990,	 while	 rail	
is  still  waiting  for  a  complete  opening.  During  the  Forum  it 
was  also  emphasised  that  while  airlines  are  likely  to  continue 
to  make  significant  cost  savings,  some  rail  operators  are  still 
bearing a high proportion of fixed costs related to infrastructure, 
therefore claiming a lack of level playing field in overall Europe. 
Further differences pertaining to operational costs, such as the 
current  lack  of  secondary  markets  for  rolling  stock,  make  the 
comparison between the two modes even more difficult, albeit, 
as  very  often  in  regulation,  the  question  is  whether  and  to 
what extent this is the consequence or the cause of the current 
regulatory framework. 

According  to  some  authors,  low-cost  airlines  are  changing 
their  business  model,  based  on  point-to-point  connections 
using  regional  airports,  originally  developed  by  Ryanair.  This 
structure is no more economically sustainable and it becomes 

pressing  to  change  and  improve  the  original  idea.  Along 
these  lines,  some  low-cost  airlines  developed  a  hub-and-
spoke  model  (Vueling,  Air  Berlin)  and  some  are  introducing 
business  services  (EasyJet).  Ryanair  is  starting  services  from 
main	 airports	 (Lisbon,	 Brussels,	 Rome)	 and	 is	 improving	 its	
customer services. Conventional airlines, on the other hand, are 
also seeking to cut costs in order to maintain their competitive 
position in the market. Therefore, over the last years low-cost 
airlines and flagship carriers have started to converge towards a 
very similar economic model for intra-European flights.

The  Forum  agreed  that  the  analysis  of  competition  between 
the two sectors could not be restricted to low-cost airlines but 
should	 include	 both	 conventional	 and	 low-cost.	 	 Low-cost	
airlines have brought important benefits to passengers, enabling 
millions  of  European  citizens  to  travel  more  cheaply  but  they 
also  receive  many  subsides,  particularly  from  regional  and 
local governments for operating new point-to-point links. Rail 
instead  receives  subsidies  from  national  Governments  or  the 
European  Union.  Certainly  there  is  a  lack  of  transparency  in 
local subsides to low-cost airlines through airport managers, but 
it is not clear how many of these are good investments. And that 
is the point: transparency is necessary in order to investigate the 
economic impact in terms of employment and contribution to a 
region’s GDP. Is there really a link?

In this context, the European Commission is modernising the 
rules about State aid control: the new guidelines will update the 
conditions  of  State  aid  rules  in  agreements  between  airports 
and airlines, and it will allow subsidies in cases of real transport 
needs, taking also rail transport into account.

In conclusion, the opening of high-speed lines has enabled rail 
transport  to  obtain  significant  market  share  on  routes  where 
time sensitive passengers would previously have travelled by air, 
especially in the point-to-point market. Furthermore we expect 
some changes in the aviation industry in the next three years due 
to new economic models of low-cost airlines and the updated 
regulations on State aid rules. The main challenge ahead is to 
make air and rail complement each other rather than compete 
at EU level, improving EU’s citizens mobility and bringing the 
European transport sector to new levels of efficiency.

The views expressed are purely those of the author and may not in any circumstances be regarded as stating an official position of the European 
Commission.

5 ■ High-Speed Rail vs. Low-Cost Air: Competing or Complementary Modes?

infrastructure  managers.  Crossing 
borders  also  creates  problems  for 
the responsible train manager as he 
technically has no legal authority in 
the train while it is on the territory 
of  a  state  different  from  his  own 

nationality.

It  was  furthermore  pointed  at  the  fact  that  the 
goal  from  a  European  perspective  was  not  only  to 
enable  competition  but  also  to  create  modal  shift. 
The question remained whether the current system 
would allow that.

How much did the subsidies (to both rail 
and air sector) influence the current market 
structure and the competition between the 
two modes?   

importantly  ground  handling, 

The  question  of  subsidies  and  state  aid  is  usually 
highly  disputed.  The  discussion  saw  very  different 
opinions  about  which  sector  benefited  more  from 
state aid. Airlines claimed that, unlike rail operators, 
they  fully  covered  the  cost  of  their  infrastructure, 
security 
most 
charges, and costs for air navigation services. From 
an  airline  perspective,  subsidies  to  the  rail  sector 
far  outnumber  those  going  to  the  air  sector;  in 
fact, low-cost carriers even claim not to receive any 
subsidies  at  all.  Furthermore,  no  airline  enjoys  the 
benefits of PSO (public service obligation) contracts.

Countering this argument, it was stated that aid to air 
is less visible: it was claimed that the entire business 
model  of  low-cost  airlines  depended  on  “deals” 
with regional airports that do not officially count as 
state  aid,  in  spite  of  the  fact  that  these  airports  are 
“fully  public”  and  operate  thanks  to  State  funding. 
Furthermore, airlines still enjoy a global exemption 
from fuel tax.

Is high-speed rail cheaper than classical rail and air 
transport? On this question there was no agreement 
and  it  emerged  clearly  that  there  was  dispute  over 

6 ■  FSR Transport ■ Issue 2014/01 ■ March 2014

numbers  and  the  question  to  what  extent  the  “full 
costs” were taken into consideration.

Regardless of the question which sector receives more 
state  aid,  it  became  clear  that  the  most  important 
next step is to create transparency. As a matter of fact, 
numbers  published  by  the  European  Commission 
on how much aid was granted to each sector in each 
country says little about how much aid there was in 
reality because large parts of subsidies are hidden and 
not  publically  disclosed.  This  is  important  because 
ultimately  it  involves  a  policy  question:  State  aid 
can be legitimate if it is transparent and for instance 
serves	 citizen’s	 transport	 needs.	 Low-cost	 airlines	
claim  that  it  would  be  a  good  strategy  to  further 
enable  the  point-to-point  business  model  they 
follow  by  investing  in  the  connectivity  of  regional 
airports: this would ease the capacity constraints on 
airport hubs and clearly be the cheapest alternative 
to extending existing airports with further runways. 
Furthermore it would reduce travel times by directly 
connecting regions.

From the Commission’s perspective it was clear that 
one of the most important goals that state aid should 
pursue  is  enabling  intermodality.  This  issue  was 
discussed in the following panel.

Given that high-speed and low-cost enter 
the same economic discourse and the so 
far failed attempt of developing integrated 
mobility regulation, is there room for effective 
intermodal legislation?   

Disagreement  came  to  light  as  to  the  assessment 
of  European  intermodal  legislation.  It  was  made 
clear  that  intermodality  is  an  integral  element  of 
European  transport  policy  strategy.  The  European 
Commission  wants  to  upgrade  railway  lines  and 
make  them  the  backbone  of  a  Europe-wide  multi-
modal  grid  (Trans-European  Transport  Network, 
TEN-T).	 It	 plans	 furthermore	 to	 have	 39	 major	
European  airports  connected  to  national  railway 

lines by 2050. Financial means are 
made available for this through the 
Connecting Europe Facility, which 
foresees  that  TEN-T  funding  is 
tripled  to  26billion  for  the  period 
2014-2020.	

This  panel  discussed  what  policy  can  do  to  enable 
intermodality. A central problem that was identified 
was  the 
limitations  of  a  top  down  approach 
to  intermodality:  situations  are  highly  diverse 
throughout Europe also with regard to the roles of 
the different transport modes. 

Poland, for example, is hesitating to invest in high-
speed  rail  which  is  not  yet  present  in  the  country 
in  spite  of  good  conditions  in  terms  of  geography 
and distances. Even if the EU would subsidize HSR 
in Poland, it would, according to experts, probably 
remain dependent on public subsidies for the simple 
fact  that  the  overall  economic  situation  and  the 
below  average  spending  power  in  Poland  does  not 
provide  for  a  sufficiently  big  customer  base.  With 
this  in  mind,  it  may  actually  be  the  better  option 
for Poland to invest in regional airports and enable 
domestic low-cost flights.

Spain, on the other hand, seems to be moving back 
from domestic low-cost flights, and HSR is catching 
up.  It  was  acknowledged  that,  due  to  significant 
travel  time  reductions  and  better  pricing  systems, 
rail  operators  were  able  to  outcompete  low-cost 
carriers on many routes. 

How can high-speed and low-cost be 
complementary? Do they serve different 
needs? Can they coordinate and consistently 
develop as two parts of the “whole journey”?

Looking	at	the	whole	journey	is	certainly	the	most	
important aspect from a passenger’s perspective. This 
passenger’s perspective is in fact often neglected. 

In order for transport modes to be complementary, 
there  is  a  need  to  increase  options  to  book 
multimodal trips on the same ticket. This is the most 
desirable  option  from  a  passenger’s  perspective. 
However, there was some disagreement, since, from 
a  business  perspective,  integrated  ticketing  creates 
disadvantages for the individual transport operator. 
It  could  be  questioned  whether,  in  a  competitive 
model, there is an incentive for operators to integrate 
information  and  ticketing  with  their  (potential) 
competitors.  Another  major  obstacle  to  integrated 
ticketing 
identified  during  the  discussion  are 
diverging  passenger  rights  in  the  transport  modes 
that  make  it  hard  to  have  single  tickets  for  both 
modes.

Some of the existing forms of cooperation between 
rail and air have also been criticized in the discussion. 
According  to  one  view,  traditional  air  carriers 
supported this type of cooperation because they saw 
it  as  way  to  subsidise  their  airports.  This,  in  turn, 
could be seen as a form of collusion.

Criticism  was  voiced  from  the  low-cost  airlines 
that far too little had been done instead to improve 
the  connectivity  of  especially  regional  airports  by 
improving intermodal links: key challenges remain 
because timetables are not adjusted and because of 
a lack of investment in rail connections to regional 
airports,  which  don’t  necessarily  have  to  be  high-
speed connections.

In fact, room for integrated mobility was identified 
but mostly outside of the sphere of high-speed rail 
and low-cost air. As a matter of fact, HSR connections 
can free up capacities on congested airports that can 
then be used for long haul flights; better connections 
of regional airports would increase their catchment 
area  and  enable  more  point-to-point  traffic,  thus 
easing  capacity  on  congested  airports;  and  existing 
forms of cooperation start to link HSR and even air 
with local public transport addressing the important 
“last mile” of a journey.

7 ■ High-Speed Rail vs. Low-Cost Air: Competing or Complementary Modes?

Competition between Air and High-Speed 
Rail: the case of the Rome-Milan Corridor 

EVA	VALERI | DEAMS, Faculty of Economics, University of Trieste, Italy

Recently,  interesting  dynamics  occurred  in  the  air  and  high-
speed rail (HSR) passenger transport markets in Italy. Over time, 
the  Rome-Milan  (Ro-Mi)  corridor  received  a  lot  of  attention 
from  the  European  Commission  and  the  Italian  Competition 
Authority.	 In	 particular,	 in	 2012	 the	 Italian	 Competition	
Authority  investigated  the  air  and  HSR  substitutability  for  the 
Rome	 Fiumicino	 airport-Milan	 Linate	 airport	 route	 between	
Alitalia-CAI and Trenitalia. The Ro-Mi case study is particularly 
interesting not only because it connects the two most populated 
Italian  multi-airport  cities  with  a  high  share  of  business 
passengers, but also because of the recent dynamics observed in 
both passenger transport markets (e.g. Alitalia-AirOne merger, 
market entry of Ryanair and Easyjet airlines, market entry of a 
private HSR operator -Nuovo Trasporto Viaggiatori- NTV1). 

The  aim  of  the  presented  research  project  is  to  analyse  inter 
and  intra-modal  transport  competition  in  the  Ro-Mi  corridor 
investigating travellers’ preferences. A joint Revealed and Stated 
Preference (RP-SP) survey was designed and conducted from 

2010	and	2011	collecting	1,386	interviews.	

The main drivers that affect both the Ro-Mi consumers’ choice 
and  determine  transport  competition  were  identified  by  an 
additional ad hoc survey revealing the relevance of such factors 
as:  total  travel  time  (access  time,  station-to-station/airport-to-
airport,  waiting  time,  egress  time)  ,  total  travel  cost  (access  cost, 
egress cost and fare), delay (minutes of delay), ticket flexibility 
(possibility to modify the ticket before the departure date) and 
on-board services (availability of on-board services).

Estimating joint RP-SP discrete choice models, total travel time 
and  cost  proved  to  be  the  most  important  factors.  However, 
interesting  results  were  found  for  the  relevance  of  on-board 
services  and  ticket  flexibility  attributes.  Especially,  “Mobile 
Phone use” appeared to be the most preferred among the tested 
on-board services (e.g. WiFi Internet connection). 

Table	1	illustrates	the	estimated	Ro-Mi	market	shares	based	on	
transport characteristics.

Table	1	-	Estimated	Ro-Mi	transport	market	shares

Transport service 

Trenitalia

NTV

Alitalia

Ryanair

characteristics

Total travel time
Time travel cost
Delay
Ro-Mi market shares

3h30’
€70
4’
40%

4h5’
€75
4’
23%

3h10’
€150
10’
36%

5h
€89
7’
1%

From  a  transport  operator  point  of  view  the  simulations 
conducted  imply  several  business  policy  suggestions.  An 
overview of the all simulated policies and their estimated impact 
is shown in Table 2.

Overall,  reduction  of  total  travel  time  is  the  most  important 
one for HSR operators, mainly for the competitor NTV, which 
could  increase  its  market  share  by  up  to  9%  by  this  means.  A 
fare  reduction  would  allow  Alitalia-CAI  airlines  to  strongly 

increase	its	market	share	(+11%).	The	market	entry	of	EasyJet	
airlines had an important impact on the Ro-Mi transport market 
competition as they obtained 6% of market share. Simulations 
suggest however that, given the aggressive competition by other 
Ro-Mi operators EasyJet could reduce its market share from 6% 
to	0.3%.

In the last few years, significant improvements have been made 
in  the  Ro-Mi  corridor  by  the  HSR  operators  to  reduce  travel 

1.	

Between	 the	 main	 shareholders,	 it	 is	 interesting	 to	 note	 that	
20% is owned by the French HSR operator Société nationale des 
chemins de fer français (SNCF).

8 ■  FSR Transport ■ Issue 2014/01 ■ March 2014

time.  In  fact,  currently  HSR  performs 
well on the Ro-Mi link with an average 
travel  time  of  2  hours  and  55  minutes 
for	 Trenitalia	 and	 3	 hours	 and	 20	
minutes  for  the  competitor,  NTV.  Also 
with reference to the daily frequency of 
transport services, the HSR system has over time improved its 
offer significantly especially in the early hours of the morning. 
Currently,	the	HSR	system	provides	57	daily	trains	while	the	
air	transport	system	provides	35	flights.

Regarding  the  level  of  fares,  an  ad  hoc  survey  based  on 
simulations  through  the  Ro-Mi  transport  operators’  web 
sites shows a progressive increase of Trenitalia average ticket 
price, a decrease for Alitalia-CAI and the NTV average ticket 
similar to Trenitalia. Except for Ryanair and Easyjet airlines, 
a process of fare convergence could be detected between all 

other Ro-Mi transport operators. Using discrete choice logit 
modelling, the cross-point elasticity measures2 are estimated 
performing also by segmentation analysis by type of passenger 
(time  sensitive  versus  non-time  sensitive).  Overall,  positive 
values  of  cross-point  elasticities  were  obtained.  Moreover, 
higher  values  were  found  for  travel  time  variations  rather 
than travel cost.With reference to the substitutability between 
the air and HSR transport in the Ro-Mi corridor, considering 
the  important  improvements  in  daily  frequency  and  the 
travel  time  reduction  of  the  HSR  system,  the  average  fare 
convergence among operators and the estimated cross-point 
elasticity  measures,  air  and  HSR  transport  operators  in  the 
Ro-Mi corridor can be considered as substitutes serving the 
same  relevant  market  for  both  time  sensitive  and  non-time 
sensitive passengers.

Table 2 - Overview of the simulated policy results

Policy 
nr.

Business strategy 
description

The Ro-Mi transport operators

Overall impact 
by sector

Trenitalia

NTV

Alitalia-
CAI

Ryanair

Easyjet

HRS

Air

1

2

3

4

5

Policy 
mix

Ro-Mi base scenario

Market entry of Easyjet

respect base scenario

NTV travel time 
reduction

respect base scenario

Trenitalia and NTV 
ticket price reduction

respect base scenario

Alitalia-CAI ticket price 
reduction

respect base scenario

Trenitalia and NTV 
travel time reduction

respect base scenario

Combination of the 
previous business 
policies

40%

38%

-2%

37%

-3%

42%

2%

33%

-7%

49%

8%

46%

23%

22%

-1%

30%

7%

24%

1%

19%

-4%

32%

9%

30%

36%

34%

-2%

33%

-3%

33%

-3%

47%

11%

19%

-17%

24%

1%

1%

0%

1%

0%

1%

0%

1%

0%

0.5%

-0.4%

0.4%

-

6%

-

-

-

-

-

-

-

-

-

0.3%

63%

60%

-3%

66%

3%

67%

3%

53%

-11%

81%

17%

76%

37%

40%

-2%

34%

-3%

33%

-3%

47%

11%

19%

-17%

25%

respect base scenario

8%

8%

-10%

-0.6%

5.7%

16%

-16%

2.  This  type  of  elasticity  is  the  percentage  change  in  modal 
‘A’,  caused 
choice  probability  for  transport  alternative 
by  a  change  in  the  travel  cost  (or  travel  time)  of  transport 
alternative ‘B’.

9 ■ High-Speed Rail vs. Low-Cost Air: Competing or Complementary Modes?

Further readings

Community	 Observatory	 on	 airport	 capacity,	 2013,	 An	 aviation	
stakeholder’s view on intermodality

This	document	is	based	on	the	work	plan	of	Working	Group	3	(WG3)	
of  the  Community  Observatory  on  Airport  Capacity  and  constitutes 
WG3’s	 main	 deliverable.	 It	 contains	 information	 collected	 during	
working  group  meetings,  in  particular  presentations  from  members 
and  invited  experts,  discussions  and  study  visits.  On  the  basis  of  this 
work, the working group members reached a common understanding 
of what intermodality at airports actually means, and is likely to bring to 
the airport capacity crunch currently faced within the largest European 
hubs. 

The aim of this document is not to present an exhaustive description of 
all intermodality issues, but to serve as a common basis for future policy 
discussions  on  intermodality  concerning  the  aviation  sector,  where 
aviation stakeholders intend to play an active role. 

The  document  has  been  finalised  and  delivered  at  the  end  of  the 
mandate	of	the	Observatory	(November	2013)	and	it	includes	a	set	of	
recommendations  to  the  European  Commission,  as  the  main  policy 
initiator. 

European Parliament’s Policy Department A: Economic and Scientific 
Policy	(ed.),	2013,	Proceedings	of	the	workshop	“Competition	in	the	
transport sector: Market entry barriers in railway and aviation?” PE 
507.475

Liberalisation	in	the	railway	and	aviation	sector	takes	place	at	a	different	
pace and the number of competitors to former state owned monopolists 
in particular in the railway sector is relatively low. The participants at 
this  workshop  discussed  practical  experiences  and  specific  problems 
in both sectors. Among others, Prof. Kay Mitusch (Karlsruhe Institute 
of  Technology),  Brian  Kogan  (Office  of  Rail  Regulation  UK),  Hubert 
De Broca (DG COMP, European Commission), Jean-Eric Paquet (DG 
MOVE, European Commission) gave their contribution to the debate. 
Following the European Commission’s Report on EU Competition Policy 
2012, the views exchanged during this workshop discussion provided 
support  to  the  members  of  the  European  Parliament’s  Committee  on 
Economic and Monetary Affairs in determining their position in regard 
to the then ongoing discussion of the Report on the ‘Annual Report on 
EU	Competition	Policy	2012’.

10 ■  FSR Transport ■ Issue 2014/01 ■ March 2014

European	Region	Airline	Associations,	2011,	Air	and	rail:	Setting	the	
record straight environment, investment, mobility and political bias

This  study  points  towards  the  need  for  a  radical  rethink  on  how  rail 
and  air  are  perceived  by  consumers,  politicians  and  industry.  One  of 
the main claims is that both air and high-speed rail offer a solution to 
providing intra-European transport, but there is the case for rail as the 
“preferred” mode by policy-makers and transport planners. 

The aim of this study is to present facts and well researched arguments 
that underline both the essential role played by air transport in Europe 
but also the bias shown towards rail across Europe. This study maintains 
that such bias results in distortions of competition between air and rail 
with the competitive balance loaded in favour of rail. This study looks 
at networks and the contributions of the two modes in addition to their 
environmental  impact,  the  return  on  investment,  competition  and 
substitution,  and  the  different  regulatory  approaches  taken  by  policy 
makers for each mode.

Hylén	Bertil,	2013,	High	Speed	rail	connected:	Intermodal	ticketing	
between rail and other modes

Europe  should,  according  to  the  EU  White  Paper  (EU	 2011),	 by	
2020  establish  the  framework  for  a  European  multimodal  transport 
information, management and payment system. The White Paper also 
stresses the connection of high-speed rail with other modes of transport. 

This  paper  describes  how  six  European  countries  have  introduced 
various  schemes  for  multimodal  or  intermodal  passenger  transport 
including through ticketing for long distance rail combined with local/
regional  public  transport.  These  schemes  are  referred  to  as  ICReg. 
Different systems for revenue distribution between the parties involved 
– rail operators, local operators, Passenger Transport Authorities (PTA) 
– also exist. 

The  six  countries  described  in  this  paper  (Spain,  Italy,  Great  Britain, 
Germany, Denmark, Sweden) have chosen different schemes but in most 
other European countries there are no similar schemes at all. There are 
century-old barriers between long distance and local/regional operators 
which need to be broken down. The author recommends that the rail 
and public transport sectors should not wait for ITS or the EU to solve 
intermodal problems on a European scale but start developments on a 
small scale taking into account different market conditions and easily 
available technical solutions.

11 ■ High-Speed Rail vs. Low-Cost Air: Competing or Complementary Modes?

QM-AU-14-001-EN-N
ISSN: 2467-0405

Florence School of Regulation,
Transport Area 

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San Domenico di Fiesole (FI)
50014	·	Italy

Contact FSR-Transport:
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FSR-Transport 

The Florence School of Regulation (FSR) is a project within the European University Institute (EUI) focusing 
on regulatory topics. It works closely with the European Commission, and is a growing point of reference for 
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this European Transport Regulation Observer.

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©	European	University	Institute,	2014
Content	©	Authors,	2014