Disruption, a word in the rail travel industry that conjures up images of delays, packed mainline station concours and the terms “leaves on the line” and “the wrong kind of snow”. But the rail sector is moving onto a new line of change that is as profound as when steam engines were dowsed down and diesel power plants coupled up and left the platform. As with all sectors, rail doesn’t face one disruptive force, but many and the majority are technology driven.
Icon Business Media, publishers of Horizon, is hosting a rail innovation debate later this month in Berlin, Germany. The city whose rail story is perhaps one of the most significant given the recent history of the German capital is an ideal setting to debate the falling away of previous lines of thinking in the rail sector. A series of interviews were carried out with leading innovation leaders in the rail sector. Mark Holt, CTO of Trainline ticket retailer and headline speaker of the Innovation Leadership Summit on September 20, 2016 shared his insights.
“Mobile has not fully penetrated yet, it is just 30% of the market,” the young CTO says from his new Holborn headquarters in central London. Holt and his team have been busy turning the mobile device into a first class experience. The App, for those of us that travel a great deal is basically as essential as food and water, and with platform, free seating (take note Labour leaders) and delays information it embeds itself into your rail travel experience.
The irony of Trainline is that here in the UK we have produced a world class rail ticketing operator, whilst the train operating companies – TOCs as they are known in the sector – do not invite the term innovation. At the time of our interview Holt had recently recruited 16 senior staff from across the EU and expects recruitment to be a major concern in the near term.
“The challenge is that there are 22 different companies and they have to agree on things,” Holt adds that the existing government controlled franchising model makes it hard for the TOCs to retain investment interest.
“To go through the training, media relations, trade union negotiations means innovation all becomes very complicated,” Holt says of the environment his customers exist within. Trainline has the same benefits as Uber, it sells the service, but doesn’t have to own and operate trains, manage leasing agreements or be the one the passenger complains to when the wrong snowy leaves are on the line.
“Innovation in the rail industry is hard,” he adds. A de-regulated market, as has existed in the UK since the previous Conservative government is seen being more dynamic by some European nations. Interestingly, as in so many cases, the current Conservative government is now looking to reshape deregulation as it prevents innovation and quality customer service as a result of the way the UK rail sector was deregulated.
“Everyone is at the whim of the rail operators and that makes life difficult,” Holt says of the challenges he and Trainline face on the line towards ticket innovation. Holt is a highly customer focused CTO and encourages his team to take ownership of ideas and to develop technologies that will improve the lives of the customer. The CTO says an increased focus on the customer and their technology needs is speeding through the UK rail sector, Holt highlights Virgin Rail offering pre-positioned video content following an analysis and realisation that the majority of the traffic on its Wifi lines was for streaming. Given the speeds the Virgin fleet can reach, online access is hard to maintain.
Virgin is early onto the data analytics platform. Holt says each of the different operators are running at different speeds when it comes to data usage.
“There is a lot of data being captured on the trains but they are not doing enough with it,” he says of the TOCs. Holt adds that load data on the trains is not made available, yet this could be a valuable resource to customers.
As the rail sector misses innovation opportunities, so the number of travel or communications platforms increases. Holt says the German high speed rail operator reports that it is losing the equivalent to a train load of passengers every week.
Holt sees the disruption to rail coming from innovations outside of the sector, pointing out that the German experience is a result of the excellent autobhan network in Germany. Recent de-regulation of the coach sector in Germany which is using that autobhan as its platform is challenging the rail sector. France is also experiencing a similar set of disruptions and increased competitions between rail operators. Car sharing has grown exponentially in France with BlaBlaCar a ride sharing site that allows travellers to share a car journey reports its average user travels for 320 kilometres (200 miles), the length of journey where rail once had the upper edge. Like Germany, France has an excellent and efficient road network and with tolls on major roads those opting to use sharing economy platforms like BlaBlaCar have an increased level of transparency about the cost of a journey.
“Car sharing is massive in Europe and it is really competing with rail,” Holt says.
The rail sector is innovating though Holt says in response to the challenges ahead. In Italy Holt has seen business only rail services with meeting rooms and a city centre to city centre service from capital Rome to financial centre Milan. Holt’s own organisation now provides coach tickets too on the Trainline platform, yet the increased choice has actually driven an increase in rail ticket sales.
But the greatest challenge to rail is arguably stationary: “The big threat to rail is virtual reality. It is so good. So doing a virtual reality meeting would be just as good. Virtual reality is the one that keeps me up at night,” he says.
Holt’s fellow Innovation Leadership Summit speaker Stephen Docherty, CIO for the South London and Maudsley NHS Trust is also pioneering the use of virtual reality, for very different reasons, but it is significant that leading business technology leaders are well aware of the opportunities virtual reality offers.
Choice and convenience through digital channels has disrupted sectors such as retail and financial services, rail has to make itself the preferred choice by being convenient.
Join 100 registered CIO peers and secure the last places at the 2016 Innovation Leadership Summit request a ticket at: http://www.horizonbusinessinnovation.com/2016-innovation-leadership-summit/