Should railways fear the sharing economy ?
Analysis of - Signalling technician and railways observer
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In recent years, we see that new ways to travel is common practice for many people. All these innovations have in common what is called "the collaborative economy", which affects all sectors, both travel side than the hotel industry or also the taxi business. The railways, which live widely under the state protection, seemed badly prepared for this new economy but can nevertheless to react. Analysis.

History, motivation and definition
The alternative marketplaces were initially organized by the Anarchist Movement as a form of resistance to the capitalist economic model. However, many consumer groups far removed from this ideological movement now utilize this model to stage public sharing events as a means of raising awareness about various issues including sustainability and overconsumption. But it seems that with the proliferation of many forms of alternative economies, there is now a problem of definition between the collaborative economy and the sharing economy.

According Rachel Botsman (1) collaborative economy is an economic system of decentralized networks and marketplaces that unlocks the value of underused assets by matching needs and have, in ways that bypass traditional middlemen. But sharing economy is an economic system based on sharing underused assets or services, for free or for a fee, directly from individuals. This the case of the french BlaBlaCar or RelayRides, which are genuinely built on the sharing of underused assets.
As described by some Finnish researchers « collaborative economy has been expected to alleviate societal problems such as hyper-consumption, pollution, and poverty by lowering transaction costs related to coordination of economic activities within communities…. The motivation to participate in collaborative consumption is often regarded as fuelled by the aspirations to do good, but at the same time collaborative consumption offers participants possible economic benefits. » (2) Other questions are more sociological. As reported Journalist’s Resource  « One central area of argument relates to whether the sharing economy is simply bringing more wage-earning opportunities to more people, or whether its net effect is the displacement of traditionally secure jobs and the creation of a land of part-time, low-paid work. » (2) « The uncomfortable truth is that the sharing economy is a rent-extraction business of the highest middleman order » wrote Izabella Kaminska in the Financial Times.

A new financial target
It is not a surprise: money is never far away from these good intentions. Some specialized offices have calculate that in the UK alone, an estimated 25% of people already take part in this type of sharing economy, and current global revenues of around £9bn could reach £230bn per year by 2025, wrote In the U.S., the sharing economy is expected to generate revenues up to $335 billion by 2025, and its impact is predicted to affect nearly all industries, according The new paradigme of the sharing economy seems to sharpen the business senses - and the financial appetite. Economists such as Robert Reich and Larry Summers wrote «It’s now possible to sell a new product to hundreds of millions of people without needing many, if any, workers to produce or distribute it ». Capitalism would not be death… We do not focus anymore towards these important social and political issues but we look more to the travel component of the collaborative economy.

The fact
Technological developments are allowing people to share more goods, skills and services than ever before, and new business models are springing up all around the world. What these services – such as Blablacar, Air&B - all have in common is that they are peer-to-peer networks making travel truly unique, sometimes unpredictable and more than anything a shared experience. Sharing is seemingly something we cannot get enough of, a rule which has proven to be more consistent than many thought possible in the travel industry. Collectively these websites have become so successful that they have begun to worry the established travel industry (3).

And the railways ?
In the travel area, car-sharing start-up BlaBlaCar is eating into rail's market share by playing to people's preference for flexibility and freedom, but is heavily data-driven. Indeed, the only railway technology - such as high-speed train - not enough to ensure sustainable growth. This was demonstrated recently with a report of the French Court of Auditors. And in Germany, Inter-City Express of the DB are also highly subject to competition despite a train per hour on all major routes of the country. As reported Railway-technology (4) at the Amadeus forum in Barcelona (in June 2015), Amadeus director of rail and ground travel Thomas Drexler highlighted that while high-speed rail infrastructure had almost doubled between 2002 and 2012 across the 28 EU states, rail travel's market share of transport had only increased 0.6%. The primary service of getting people from A to B had markedly improved, but something else had stopped the investment from delivering the expected dividend, says Drexler. Moreover, a very intense intermodal competition - by bus - is added to the sharing economy, which makes more pressure. It appears clear that the train journey through the traditional business model needs to be reviewed in the light of new clients settings, such as the door-to-door travel, that is the bane of the railways.

How to counter a sharing economy into a old technical industry from the 19th century ? That's the big challenge. The first lever is price, to meet the low-cost aviation, which does not part of the sharing economy. This is what the French did with the TGV Ouigo, which starts from the outskirts of Paris (and not from main stations), where the bar was removed and where the space between seats was reduced. Some people told about the come-back of the third class...But the low-cost railway is not enough to counter the business of car-sharing.

The real mobility, door-to-door
The first wave of actions is more basic : enter on the same market that your competitors and scrape together the maximum of market share,  without having to offer the same service. While BlaBlaCar is positioned more for long trips carpool, SNCF launched in September 2014 that carry people for shorter trips, daily, to get to work or train station. That's the answer to the door-to-door problems of many railways companies. Add to this the bike-sharing services are available in many stations and in many cities. So we are here in a less technological and more practical field, even more environmentally friendly.

The travel and the brand experience
The railway industry has focused too much on getting people to their destination and not enough on enabling them to enjoy the journey. Consequently, it must now put customer service at its core. It must look to learn more about those customers than just age and gender to understand why they are travelling and how get the most out of it, wrote Railway Technology (4). A research called ‘In Future Traveller Tribes 2030’ has identified  six categories of customer, from the ‘Simplicity Searchers’ to the 'Cultural Purists', including the ‘Ethical Travellers’ and the ‘Reward hunters’. For this, differential pricing, known to economists as ‘price discrimination’, is the practice of charging different prices for the same  product to different customers along the demand curve. Instinctively this may sound unfair, but many forms of personalised pricing already exist (based on age) and produce few objections. Low prices for particular demographics, like students and the elderly, are commonplace. (5) Now it would seem possible to go further.

The travel experience

An example is the ‘Stories Are Waiting‘ , which is a Pinterest-style gallery that aims to inspire EUROSTAR customers to explore top destinations with film and photos from the travellers, as well as top bloggers and photographers. Richard Branson, from Virgin Train (UK), has announced an overhaul of the service in an attempt to lure passengers from other forms of travel, starting with a swanky new ad campaign. The CEO of Eurostar told about  ‘the experience of travel’. « Don't think about just selling a ticket to a customer, but try to engage into a more meaningful relationship. » says Decius Valmorbida, Amadeus vice president of distribution marketing.

Other example is the travel experience by the 'brand experience'. SNCF announced in June 2015 the launch of a new offering "100% digital" for young travelers, called TGVpop. Inspired by the codes of the collaborative economy, it is described as "the first community TGV SNCF" : TGVpop gives users the opportunity to vote the departure of a train on a dedicated website and mobilize their communities to strengthen their chances of seeing him go, through the use of #TGVpop. If the TGV receives a sufficient number of votes, corresponding to almost a third of its total capacity, it is confirmed for sale in the four days preceding his departure. The user can confirm at the time of purchase and enjoy attractive rates of between 25 and 35 euros per ticket depending on the destination. Nearly 100 000 places in 203 TGV, toward 30 destinations in France, will be offered to visitors for departures during summer time. The categorization of customers and the travel experience are the second wave of actions to counter the competition of other sharing economies of mobility.

Open Data
The third wave of actions embraces the field the communicating devices connected to networks and the proliferation of applications, especially by mobile. That's a part of the concept of smart-city which connects all device as much as possible, such as the connected watches or the automatic positioning of everyone by mobile. Technology has the ability to connect the different parts of our everyday lives, and that, as simple as it sounds, is the entire premise of smart cities. All of these data can be aggregated to produce estimates of the number of clients available during a defined period of time. It is possible return them to travellers and customers by an app on mobile and to present the best choice of transport or by road. Many of these apps have need of sharing computer data on a large scale. As told Patrick Senti, the boss of Shrebo : « Lastly, I have done a lot with analytics. I realized there could be process improvement and optimization if people and companies could successfully share information and results. For example, we cooperate with Swiss Federal Railways, who awarded us a winner for innovation as a start-up, and they operate tons of trains and cars each day. The trains are very overused in many city areas. When they are full, commuters don’t know where to sit. In fact, this is a sharable resource. So, my “aha” moment here was about connecting people via a smartphone app—we could allow them to see and chose travel based on load and occupancy. They could make a conscious decision to board a certain train. We could really help improve this if we use predictive analytics. So, we do that too—this is much like managing meeting rooms but on a really large scale. » (6)

Open data and connections

As wrote UITP (7), public transport is taking steps to integrate all the different mobility modes, including traditional transport and newcomers like bike-sharing car-sharing and ride-sharing providers, as well as cycling and walking.

Have clear ideas
These new modes of travel and communication will undoubtedly benefit for many client. But it jeopardizes the traditional work of railwaymen and it may even decrease the number of jobs in the railway sector. In reality, the future depends on what perspective one takes. If you carry a mentality of technical differentiation, ecological train against polluting car, it is certain that the modal shift will not take place because the ecological conscience quickly eclipsed by the reality of the travel and the trip price. If we take as perspective a plural mobility, making no technology distinction, and using the best technologies for a better distribution of travel, then in that case one can achieve certain goals to counter the greenhouse gas emissions and even consider a world with less oil. Finally, we come back to the social and political issues ...