Railway Equipment

The rail market proves a tough nut to crack as start-ups struggle

German open access operator Locomore recently filed for bankruptcy after six months of its debut, as the country's largest rail operator, Deutsche Bank's low-cost and environmentally friendly way. For many people, Locomore's struggle to keep the climax reveals a number of barriers to entry into the monopoly-dominated European rail market.

In December 2016, Locomore made a triumphant entry onto the German market as the world’s first crowdfunded railway company, eager to provide eco-friendly access between Berlin and Stuttgart.

The new service was welcomed with optimism, even glee, by some: it personified the story of the underdog, a people-powered project focused on sustainability, promising to take on the country’s biggest rail company, Deutsche Bahn (DB), which currently operates a monopoly made up of 40,000 trains running daily across the 33,300km-long rail network.

But now only six months later, Locomore has filed for insolvency, announcing that its financial reserves have been exhausted due to slower than expected growth in both passenger numbers and revenues per passenger.

Its short stint on the German passenger rail market was branded by the Alliance of Rail New Entrants (ALLRAIL) as “an unwelcome reminder of the difficult climate for rail new entrants”.

The competition was indeed in line with the competition of many similar railway start-ups, after which the established operators took a number of administrative, operational and information barriers and cut off their sales facilities.

Article from:

http://www.railway-technology.com/