As any of the millions of young people who have roamed the Continent with a pack on their back and Eurail pass in hand can attest, there is something quintessentially European about traveling by train. Or was. European airline deregulation 12 years ago has turned hopping on a plane into a bargain-basement no-brainer. Thanks mostly to the increased competition, improved services and lower prices spawned by regulatory liberalization, air travel in Europe grew at an average annual rate of 4.5% between 1995 and 2005. Over the same period, the total number of miles traveled by all rail passengers chugged along at less than 1% annual average growth.
Now Europe’s railroad industry, for decades dominated by stodgy state-owned monopolies, is ready for a renaissance of its own. A looming round of deregulation is set to spark an industry restructuring, pitting existing state-owned railroads against smaller private upstarts. At the same time, countries including Spain, Italy and France are spending billions of dollars on new high-speed railroads and rolling stock to compete with airlines. All this means one thing for travelers in Europe contemplating a switch from increasingly stressful and time-consuming air travel to more civilized rail: all aboard.
The most radical change arrives this December, when European Union regulations will for the first time allow all rail operators to compete with one another for passengers on international routes. The change, which comes four years after similar moves in the freight sector, is designed to open up routes that currently are controlled by state monopolies. For travelers, deregulation will mean lower prices, faster trains and greater convenience for example, passengers now are usually forced to change to trains run by the incumbent state-owned operator when they cross into another country. Under the new rules, railroads will be able to operate seamlessly across borders and even pick up new passengers outside their home countries en route to their final destination.
By opening up the market, regulators hope to give rail companies room to offer more frequent and diverse services, like special business-class cars. “Our experience has shown that choice is important to travelers, and when you increase the range of choice with new products, services and suppliers, you increase the number of clients who want to explore those new options,” says Mireille Faugère, president of domestic and international passenger services for France’s state rail company, Société Nationale des Chemins de Fer Français . “For a company like ours which derives 20% of its business from international travel this liberalization is far more an opportunity than a threat.”
Even before deregulation, Europe’s rail industry has been modernizing and expanding. France, which has Europe’s largest high-speed rail network, plans to more than double its track length from 1,200 miles to 2,500 miles by 2020. Spain is aiming to leapfrog France as high-speed leader with a $130 billion expansion; when completed in 2020, 90% of all Spaniards will live no more than 31 miles from a station served by Alta Velocidad Española trains, which have a top speed of 218 m.p.h. . Italy and the Netherlands are also on a track-laying spree. All told, nine E.U. nations operating high-speed rail are set to spend a total of some $200 billion in the next decade to triple their combined track length from 3,100 miles to 9,300 miles .
This burgeoning of national high-speed networks is allowing trains to challenge airlines on shorter trips even before deregulation comes into force. The Eurostar service the lucrative 21⁄4-hour route between London and Paris already controls 70% of the travel market between the two capitals. Opened in 2007, a high-speed rail link between Madrid and Barcelona that cut intercity travel time to 21⁄2 hours has grabbed 50% of that market. Similar effects have been seen in Paris-Lyon, Paris-Brussels and Hamburg-Berlin transport links, where domination by fast trains has led airlines to reduce or drop services altogether. “When travel time is two hours or less, high-speed rail wins 90% market share [against] airplanes,” says SNCF’s Faugère. “It’s little wonder airlines like Air France are considering starting their own high-speed rail services to win some of the business back, something we find quite flattering.”