Economic study on the economic space available for independent train ticket distributors in France

Compass Lexecon conducted an economic study for association ADN Mobilités, which regroups independent train ticket distributors Trainline, Omio et Kombo. In the study, we analyse the French train ticket distribution market and the economic space available for independent train ticket distributors. In particular, we assess the level of financial compensation independent distributors receive from French rail incumbent SNCF and the benefits an increase in this compensation level would have on both competition and consumer welfare.

The views expressed are those of the authors only and do not necessarily represent the views of Compass Lexecon, its management, its subsidiaries, its affiliates, its employees, or clients.

Situation

A few years after the sector opening to competition, incumbent railway operator SNCF still operates the bulk of passenger rail transport in France. In the adjacent market for train ticket distribution, despite the arrival of alternative distributors, the situation is also that SNCF still dominates the market. In July 2024, European Commission President Ursula von der Leyen expressed her ambition to propose a Single Digital Booking and Ticketing Regulation. It is in this context that ADN Mobilités asked Compass Lexecon to examine the economic space still available to independent online distributors in the French market and the implications an insufficient space would have on the market for ticket distribution and more broadly on the upstream market for passenger transport.

Our Role

In our study ‘On the level of commission applied by SNCF for the distribution of its train tickets’ (‘Sur le niveau de commission appliqué par la SNCF pour la distribution de ses billets de train’), we first analyse key competition issues arising in the distribution of train tickets and in the related market for passenger transport. Second, we assess independent distributors’ business models and the economic space available for independent distributors. We respectively compare commission levels in the rail ticket sector with those applied in other sectors, we analyse the profitability of independent distributors, and we identify a potential margin squeeze issue arising from current levels of commissions paid by SNCF. We find that an increase in commission could be necessary to ensure the viability of the French ticket distribution activity of main independent operators, both for effective competition in the rail passenger transport sector, as well as for the overall benefits of society. It could thereby warrant a regulatory intervention overlaying the sole application of competition policy principles.

Outcome

We presented our study and its main findings at events organised by ADN Mobilités and Trainline, organised in the context of the Single Digital Booking and Ticket Reservation Regulation. We emphasized the existing competition issues and the lack of natural incentives of the historical incumbent to ensure a level playing field under the sole constraint of market forces, thus calling for a vigorous intervention by public authorities primarily aimed at rebalancing the outcome of negotiations between independent distributors and the SNCF.

The Team

The Compass Lexecon team was led by David Sevy and Jeremiah Juts, including Hippolyte Brosse, Adrien Damade and Antoine Golovtchenko. We worked closely with Alexander Ernert (Trainline), Florian Audoin (Omyo) and Matthieu Marquenet (Kombo) throughout our study.