The impact of open access on intra- and inter-modal rail competition. A national level analysis in Italy

Abstract

a b s t r a c tDuring 2012 the Italian passenger market has experienced the entry of a new operator, Nuovo Trasporto Viaggiatori (NTV) on the high speed rail (HSR) market segment, in competition with the incumbent Trenitalia. The Italian market is the first and most extensive case in Europe where two railway companies compete for HSR services on open access basis. In this paper we empirically explore the competitive effects of the newcomer's entry in the passenger market tackling two issues. First, we study price and capacity effects of the stemming intra-modal competition. Second, we measure the impact of inter-modal competition by HSR on airline pricing behaviour. The results show that the two railway companies engage in strategic pricing, although to a different degree on different routes and that capacity and frequency are strategic variables. We also find that airlines significantly reduce fares when flights are in direct competition with HSR services.

Pricing strategies: who leads and who follows in the air and rail passenger markets in Italy

“…Therefore, the research scope on pricing behaviour has been enlarged, considering also the effects of inter-modal competition on airline and railway fares. Bergantino et al (2015) find that airlines significantly reduce fares on the Rome-Milan line when flights are in direct competition with HSR services. Moreover, Bergantino and Capozza (2015b) show that, for Italian city-pairs, airlines set higher fares when the inter-modal competition is limited.…”

“…The development of the HSR network over the past decades and the recent entry of NTV have fostered the intermodal competition between airlines and railway companies. Indeed, flights and train rides are considered substitutes when the total travelling time (pure travelling time plus access/egress time) is quite similar, preferably less than 4 hours, and the distance from origin to destination is between 200 and 800 km (Button,1 The intertemporal dynamics in the pricing of airline and train companies with the approximation of the departure date has been widely demonstrated (Gaggero and Piga, 2010;Alderighi and Piga, 2010;Capozza, 2015a, 2015b;Bergantino et al 2015). 2 See Bergantino (2015) for a detailed discussion on the changes that the European railway market has undergone in the recent decades.…”

The impact of delays on the welfare effects of on-track competition: The case of transfer passengers with operator-tied tickets

“…Simulation results show that the entry of a private TOC increases welfare only if it entails very large increases in rail-tra c demand. 6 Bergantino et al (2015), however, show that in Italy, on-track competition resulted in a substantial increase in (overall) frequency. The Italian market di↵ers from the German market, especially regarding the share of passengers who have to change trains (crucial assumption of our model), and the reduction of access charges in 2014 that helped to finance the increased frequency (?…”

Competition For Versus In the Market of Long-Distance Passenger Rail Services

“…However, when a competition in the market is put in place significantly, it seems to induce positive effects for the passenger. According to Bergantino, Capozza and Capurso (2015) and Bergantino and Capurso (2015), the open access in the Italian market would have led to an overall increase in rail supply and a significant transport price decrease (i.e., including the fares of air tickets) without leading the incumbent operator to engage in a too aggressive price war.…”