February 15, 2018

Scaling new heights: Westbahn targets 10 million passengers

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Despite strong competition from incumbent Austrian Federal Railways (ÖBB), Westbahn has made steady progress since it began operating open-access services between Vienna and Salzburg in 2011. CEO Dr Erich Forster outlines the company’s plans to Kevin Smith.

AUSTRIAN open-access operator Westbahn celebrated another key milestone in its short but impressive history on December 10 when it doubled its service offering between Vienna and Salzburg.

 

The operator’s existing hourly service from Vienna West was accelerated by three minutes to provide a travel time of 2h 25min with a single stop at Linz. This express train was rebranded as Westgreen while a new hourly stopping service, Westblue, was launched between Salzburg and Vienna Meidling and Vienna Main station, continuing to Vienna Praterstern via the S-Bahn trunk line. Together Westblue and Westgreen now offer a half-hourly link between Austria’s capital and its third and fourth-largest cities, with the first departure at 05.22, and the last at 20.22.

Westbahn2snow“With the new service we have a completely new offer in Vienna city centre,” says Westbahn CEO Dr Erich Forster. “The number of stops we have means that the service is similar to an S-Bahn and all of the metro lines in Vienna are now connected to our Vienna - Salzburg trains. This is very new and we don’t believe there is an offer similar to this anywhere across Europe. With one change, almost anyone in Vienna can reach our long-distance trains.”

Westbahn carried 5 million passengers in 2017, and after reporting turnover of €56.7m in 2016, revenue grew by 5% last year.

Forster told IRJ in mid-January that the new service is performing well and he expects Westbahn to increase its passenger numbers by 50% compared with 2017 over the next 12 months as it doubles its offer. “Every new line takes one to two to three years to reach full performance,” he says. “Our expectation for 2018 is to increase passengers and revenue by 50%. We are encouraged by our performance, even after only a few days, so maybe we will reach beyond our goals.”

Westbahn’s current load factor of 50% for an operator using an open ticketing system is very healthy according to Forster, with few operators reaching that kind of level in Europe. He is also optimistic that the open-access operator can achieve its target of transporting 10 million passengers in the next two to two-and-a-half years.

After all, Westbahn’s strength is its reach: 60% of Austria’s population lives within reach of its services. And if feeder lines are counted, this rises to 70%. It also has significant brand awareness across Austria, with studies conducted by the company showing that 90% of the population know who the operator is. In addition, Westbahn is popular with its existing passengers. Annual customer satisfaction surveys conducted in the past five years score the service at 98%.

Forster says this strong reputation has developed in spite of a relatively conservative approach to promotion, which has predominately focused on print advertising in daily newspapers, and only ventured onto TV with the launch of its expanded offering.

“For the first time with the new offer we have done a TV advertising campaign where we are introducing the new line,” Forster says. “We also have teams active in railway stations and at shopping malls to promote the service. They hand out leaflets to customers with the timetable and price information. We have some social media presence but not too much, and from studying our strategy we have found that print is the most effective channel that we use.”

The basis for this service expansion is the addition of 10 new double-deck Stadler Kiss2 trains to Westbahn’s fleet. The Kiss2 fleet is made up of one six-car and nine four-car sets, which seat 526 and 326 passengers respectively, and complements the operator’s original seven purpose-built six-car Kiss sets, which seat 501 passengers.

The new trains are equipped for multiple operation, with paired sets used on services between Vienna and Linz where there is often strong demand. Inside they feature more tables, lounge corners and additional folding seats, as well as vending machines selling food and beverages. Forster says this is proving popular with passengers and is translating into a 40% increase in onboard revenue on the new trains. Previously onboard staff often ran out of time to serve passengers because they were busy selling and checking tickets.

The use of smaller windscreens which are screwed rather than glued in place in order to ease maintenance is one of the design improvements over the older sets. Stadler-ÖBB crews, which maintain the trains at a new depot near Vienna West station, are able to swap a windscreen overnight. Doors are single-leaf to improve pressure resistance which is aided by a revised corridor connection between vehicles and fast-closing ventilation flaps. Bogies have also been improved with softer suspension and harder roll-damping to enhance ride quality.

Westchance

In September, the operator introduced a range of new discount fares called Westchance. Passengers can book these tickets up to two days in advance but only for a time frame of three-to-four hours. The operator informs passengers of the specific train for which their ticket is valid one day before departure. Fares range from €8 for journeys between Vienna and Linz, and €18 from Vienna to Salzburg. Standard fares are €19.60 for Vienna - Linz, and €26.50 for Vienna - Salzburg.

Forster reports that more than 50% of Westchance purchasers are new Westbahn customers. And while a settling in period was required as they got used to the service, he says frequent users who have greater flexibility when travelling, value this new offering.

Despite its encouraging performance and strong basis for growth, it has not always been plain sailing for Westbahn. The operator has consistently faced challenges to its operation - from a pricewar with Austrian Federal Railways (ÖBB) to ÖBB allegedly banning Westbahn promotional staff from working at stations in the early days of operation, and as it looks to expand further, the ability to access new markets.

Forster’s bullish forecasts for the future are based on three factors: competition, availability of fast lines, and parking restrictions in cities. While many Austrian cities are placing strict levies on parking, and ÖBB Infrastructure continues to deliver an extensive infrastructure improvement plan, with a focus on enhancing links to the south, which will dramatically reduce journey times between Vienna, Graz and Klagenfurt in the mid-2020s, all but inter-city passenger operations remain closed to competition.

Much to the frustration of operators like Westbahn, ÖBB has been directly-awarded several major regional operating concessions in recent years. This includes a €700m 10-year contract to operate regional services encompassing 7.1 million passenger-km per year in Tyrol in May 2017 and the operation of the Vorarlberg S-Bahn, which serves 400,000 passengers per day, in 2016.

But the tide could be about to turn. The passage of the Fourth Railway Package mandates competitive tendering for Public Service Obligation (PSO) contracts across the European Union in the majority of cases from December 2023. Forster praises the European Commission’s work to reach this position despite strong opposition from certain member states and large state-owned incumbent railways, which consistently sought to delay and obstruct market opening.

This breakthrough for future open markets in Europe was followed by the election of a new Austrian government in December, which has talked up the benefits of competition. While still awaiting clarification of its plans, Forster says that if the campaign rhetoric is anything to go by, the policy of direct award contracts could come to an end sooner than it might have otherwise done under the previous administration.

As for the type of services that Westbahn is hoping to operate, regional trains, which feed into its current long-distance service, are for Forster a natural extension of its service. “We are not looking at cross-border operations, but concentrating on our home market,” he says.

However, challenges remain. In particular, Forster says Austria’s railway regulator needs to act faster when making decisions, which will make a competitive market viable.

“The major problem we have is that it takes the regulator two-to-three years to deliver a concrete result,” Forster says. “A competitive market needs a regulator with a maximum timeline for a decision of six months. We are not getting this with the current Austrian regulator, and we think that in order to get that, we need a definitive change in style of regulation in Austria.

“The competitors have to pay for the regulator. But we are paying for a system that is not effective. We are asking for the same level of regulation and service that other industries are getting. If you say to the telecoms or the energy sector that a decision will only be made after five years, then they will say forget it. It is a question of resources but it is also a question of wanting to make a decision with 100% certainty with no matter of fact in the decision. You can never have a 100% guarantee that a decision is correct, so the current working style is not effective.”

Other challenges include providing suitable information to passengers of connecting trains on competing services. However, Forster is hopeful that AllRail, which is providing a unified voice for new entrants, including Westbahn, in Brussels, can push through its passenger rights legislation, which will serve to eliminate this issue.

“Everyone should have the ability to have all of the information about the different journeys and the price of tickets available to them,” Forster says. “I am not sure this is realistic under the current system, so we need this legislation. The incumbents often operate both long-distance and regional services and there is no incentive for them to promote another operator’s service. But if alternatives are available, passengers should have the right choose these services.”

With the new government bedding in, and key policy announcements expected in the next few months, 2018 could be another critical year in the Westbahn story. Forster is naturally cautious, but quietly optimistic that change is on the horizon. Indeed, the signs are positive that the open access operator could follow its 2017 service expansion with another in the not-too-distant future.

“It is too early to say, because the new government is still very new, and we have just had the Christmas break, but we expect progress in the next few months,” Forster says. “By the middle of the year we expect more concrete details will emerge on how exactly this will be delivered.”

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