German private passenger operator back in business after insolvency

RELATED TOPICS: INTERNATIONAL | PASSENGER | OPERATIONS
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9O8A6730HectorLocomore242517berlinHbf31March2017KeithFenderlores
A Locomore train arrives in Berlin main station in April. The new operation will use the same leased equipment.
Keith Fender
BERLIN — German private intercity operator Locomore re-started service on the Berlin to Stuttgart route on Aug. 24 after being bought out of insolvency by new investors led by Czech private rail operator Leo Express and major European long distance bus operator Flixbus which is backed by private investors in Germany and the United States.

Locomore — operating using leased equipment on an "open access" basis using the tracks owned by German national rail operator Deutsche Bahn started operations on the 450-mile Berlin to Stuttgart route in December 2016. The new start-up had raised around $1 million in initial funding using internet crowd funding but found the cost of operating daily service to be too high and announced on May 11 that it was filing for insolvency.

From the start of services on the Stuttgart to Berlin route in December 2016 to April 2017, more than 70,000 passengers had been carried. Locomore initially offered one round trip a day but quickly reduced this to four days per week from January to save operating costs and to assist with equipment maintenance. The company said in early May that while passenger numbers and revenue had been increasing — weekend trains were carrying more than 1,000 passengers each trip — they had not been rising quickly enough to enable it to break even and as a result, all its financial reserves had been used up within six months of starting operation. Locomore was charging full fares that were up to $100 less than the equivalent from competitor DB although both operators offered similar priced advance purchase tickets used by many passengers.

Open access operation middle and long distance competition between rail operators is now common in several European countries although in most countries private operators find it is very difficult to make money as the cost of using the rail network itself is a significant part of the operating cost. In Germany, several other competitors to DB have started and then closed their businesses as the mixture of poor timings (new trains have to fit in with all the existing regional, intercity, and freight trains) plus the expense of per mile charges that are set based on full cost recovery (as opposed to the marginal cost of one more train) mean that profits are hard to make. Apart from Locomore, only U.S.-based Railroad Development Corp.'s German affiliate HKX remains in business in Germany competing with DB on the Hamburg to Cologne route — but operating mainly at weekends when trains are busiest.

In the Czech Republic track user charges (set by government owned rail network administration SZDC) are lower and several private operators now compete — this is where Leo Express (now investing in Locomore) established their business running rail service out of Prague, competing not just with the national government owned railroad but also another bigger private competitor called Regiojet.

Private rail operators pay lower track user charges in certain other European countries than established operators — in the UK this has led to several successful open access operators such as Hull Trains (London to Hull, England) and Grand Central (London to Sunderland, England). The last one is owned by Germany's DB.

NEWSWIRETrains News Wire

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