As countries across the world grapple with climate change, the shift to passenger rail offers an important lever for reducing CO2 emissions in the transport sector. Identifying what motivates consumers to opt for train travel can give operators and policymakers insight into how to improve the attractiveness of this mode of transport.
In Europe, various stakeholders—including railway companies, governments, and corporates—have already taken a variety of approaches to entice travelers to take the train. For instance, train operators have invested in new high-speed trains to increase attractiveness and convenience. They have also introduced price caps for high-speed lines, or granted free travel for children and youths. Moreover, infrastructure managers have inaugurated new high-speed lines, some of which drastically reduce travel times between different metropolitan areas. Even night trains are experiencing a revival across Europe.
Governments are setting high ambitions for increasing rail’s modal share, especially in the context of their sustainability efforts. The European Commission launched the Sustainable and Smart Mobility Strategy which lays the foundation for how the European Union transport system can achieve its green and digital transformation and become more resilient to future crises. The strategy includes targets for rail, such as doubling high-speed rail traffic by 2030 and tripling it by 2050.1
At the same time, countries are pushing to promote passenger rail travel. For example, Germany launched a ticket that allows the use of all regional trains and local public transport at a price of €9 per month for a test period of three months.2
Organizations across sectors have also committed to decreasing their carbon footprint by shifting their corporate travel toward rail. The Dutch bank ABN Amro, for example, plans to reduce its air travel by 50 percent compared with 2017, over the next five years, by ensuring staff travel by rail between European offices.3 Similarly, Lloyds Bank has pledged to peg carbon emissions from business travel and commuting at 50 percent below pre-COVID-19 levels, and service providers such as American Express Global Business Travel are striving to “put rail at the heart of business travel”.4
To facilitate this shift to rail, train operators and policy makers can make an effort to better understand customer expectations. This could help them to design an offering that competes even more successfully with other modes of transport. Speed, price, accessibility, comfort, and connectivity are the most common criteria that stakeholders in the sector consider as being important to passengers. These expectations can change over time. For example, Wi-Fi and connected services are now almost taken for granted in many regions, while a focus on sustainability might also sway a traveler’s decision. In addition, external events can change expectations—for example, the COVID-19 pandemic gave rise to concerns about cleanliness and health.
While these criteria might be relevant for customer satisfaction, they may not shed light on what actually makes people decide whether or not to take the train when compared to alternative modes of transport like car travel.
Therefore, McKinsey conducted a targeted customer research survey with the goal of understanding the criteria and trade-offs that influence people’s decisions on mode of transport. This article focuses on results from the European countries in the study, and details findings around customer preferences, highlighting the implications for decision-makers in the rail sector when it comes to making rail an attractive alternative to other modes of transport.
Overall, customers care about price
When being asked about their travel decisions more generally—without simulating a specific decision situation that enforces the need to balance criteria—passengers consider a broad range of criteria, from the core product offering to auxiliary factors such as the image or status that is associated with a specific mode of transport (see sidebar, “About the survey”).
Participants across the nine countries surveyed care more about price than they do about features such as the booking process or additional services. Especially in the five European countries surveyed, price is the priority when choosing how to travel. While sustainability and ecological footprint are deemed relatively unimportant, safety and reliability are valued highly (Exhibit 1).
What actually matters to people when making decisions on their mode of travel
While these general results shed light on what passengers care about, they do not show how passengers might go about making a decision on whether to travel by train for a specific journey. It is important to understand what actually matters to people when making decisions on their mode of travel. Only then is it possible to determine which improvements could encourage people to switch to rail, and which improvements may enhance the customer experience—but not necessarily lead to an increase in modal share.
Therefore, the research included a conjoint analysis where several situations were proposed to participants for which they had to express the mode of transport (for example, car, train, plane) they would prefer.5 Safety and reliability are at the heart of customer trust. However, these factors typically inform a more fundamental decision on whether to use a means of transport or not, they do not trigger day-to-day trade-off decisions between the car or the train. As safety, especially, must not be part of an equation to optimize the economic model for train travel, we have not included this factor in our customer trade-off situations.
These situations ranged from short trips (about 30 minutes of travel time, costing up to €15), medium-distance trips (about two-and-a-half hours, between €20 and €300), to long trips (about six hours, between €30 and €500). In addition to travel time and costs, further factors were included such as time to station, frequency of connections, number of required changes, as well as occupancy and the type of dedicated space (for example, a first-class offering). The participants were faced with specific hypothetical travel options thereby simulating actual, real-world, and everyday decisions around the mode of transport.
The results of this conjoint experiment confirmed the general findings that in the majority of situations, price is the decisive factor. The second most important factor is travel time, together with the frequency of connections offered. All other attributes might influence overall customer satisfaction but are not directly part of the customer’s evaluation process.
When comparing trips of different lengths, long-distance travelers care less about the price, but more about factors related to overall travel time (including the number of required changes), as well as space and comfort of the ride. This is in contrast to medium- and short-distance travelers, who put more emphasis on ticket price (Exhibit 2).
Train versus car: Changes in price and time really matter
The study also provides insight into what impact a change in price or travel time could have on rail modal share, across medium- and long-distance trips.
For medium-distance trips, if price and travel time of car and train are the same, 25 percent of travelers would take the train and 75 percent would opt for car. The results show that a shift in a train trip’s price or time advantage can dramatically alter this ratio. In general, passengers are much more sensitive to change of price than any other criterion.
The journey from Sevilla to Malaga, in Spain, can be used as an example to contextualize the impact of price and time changes for a medium-distance trip. This journey by train would cost around €40 and take about two hours to complete. The same journey by car (about 200 kilometers) would also take about two hours and cost €70.6 This presents a cost advantage of €30 for the train, at time parity. Within the survey, for this case, 30 to 35 percent of participants opted for the train, while the rest chose car. A 10 percentage-point increase in rail’s modal share could be achieved, for example, by a combination of decreasing ticket prices by €30 and decreasing travel time by 20 minutes (Exhibit 3).
On long-distance trips, rail’s modal share—under parity of travel time and price—amounts to about 45 percent, which is higher than for medium distances at around 25 percent. But the overall relationship between time and price is much the same. For example, the train from Cologne to Leipzig takes around five hours and costs about €140 for a one-way ticket in second class, standard tariff.7 The same journey by car (about 500 kilometers) also takes about five hours and costs around €170. This means it is €30 cheaper to travel by train, at time parity (Exhibit 4). For this scenario, about 50 percent of the survey participants said they would take the train, while the other half opted for travel by car (in this case not accounting for other possibilities such as air travel).
In this context, one way to increase rail modal share by ten percentage points would be to decrease train ticket prices by about €90. Conversely, if the relative price of train travel compared to car travel increased by €90 (as ticket prices increase or cars become cheaper) rail’s modal share would drop by 20 percentage points.
These insights reveal that there is a baseline of people who opt for train over car if the travel time and price are the same. This baseline increases with trip distance, although the train remains below 50 percent. Even for long-distance trips, the car is on average preferred to train.
If operators and policymakers want to shift this baseline, they can consider the overall price differential between transport modes, and also, their performance relative to each other. For example, investments into better road connections would entail commensurate investments into rail to keep up existing modal share.
Time is money: Decreasing travel time improves value
When weighing the relative importance for travelers of price versus travel time across distances in Europe, a travel-time improvement of one minute roughly corresponds to a value of €1. Although this correlation can only be a rough estimate, and varies across distances, it is an important insight for decision makers in the rail sector.
Rail modal share can be increased by decreasing travel times or decreasing prices to have a higher cost advantage—or by a combination of both. For instance, making a connection 30 minutes faster will likely increase modal share the same amount as cutting prices by €30.
Customer segmentation: The impact of trip purpose, traveler attributes, and country differences
Travel mode choices vary according to customer segments, as well as individual preferences. Trip purpose is a decisive factor, specifically if it is for leisure (visiting friends and family, going on vacation) or for business travel (including commuting).
Unsurprisingly, the analysis shows that business travelers set more store in time savings and tend to care less about price. Conversely, leisure travelers tend to prioritize cost savings over shorter travel times. These findings highlight the importance of tailoring offerings for different customers. If operators and policymakers want to lure more business travelers to trains, they may have to invest in high-speed services. These investments might include high-speed rail networks, new rolling stock, and premium-priced, non-stop express trains that connect cities and business hubs, in parallel with regular service.
The survey results indicate that personal travel preferences are influenced significantly by whether or not a traveler owns a car. Having a car parked in front of the house might present a highly convenient default option that doesn’t involve paying a ticket price (even if the true costs might be higher). And those who do not own cars are far more likely to take a train than car owners—possibly because they do not have any other options. Nonetheless, the distance traveled influences the extent of this preference, as does price. Overall, regardless of other factors, non-car-owners, on average, show 50 percent higher rail modal share, depending on price and speed.
Above that, car owners’ preferences reveal that factors such as the time it takes to travel to the train station, and the availability of family discounts are relatively more important to them. This also points to what might prevent them from taking the train: in most cases, the car is available, and additional family members can be taken on board at no extra cost. For these types of passengers, the train has to compete against a high level of convenience and value for money.
The survey also compared urban and rural populations. While the relative importance of decision criteria does not differ significantly between the groups (Exhibit 5), in rural populations the distances to the train station can present a barrier to using rail. In general, results indicate that modal share for urban responders is about 25 to 40 percent higher than for rural responders, ranging from one percentage point to 15 percentage points additional modal share in most cases.
This highlights that access to the train network, and lack of other transportation options, are major factors in people’s choice of travel. Operators and governments could entice more rural residents to take the train by improving the capacity and frequency of trains, thereby rendering the car as the less convenient option while offering cost advantages.
Finally, data on a country level shows that sensitivity to improvements in travel times and prices varies between countries. For example, reducing travel time by 30 minutes and price by €60 on a medium-distance trip would increase rail’s modal share by about 80 percent in the UK, and about 65 percent in France, Germany, and Spain, while only by about 40 percent in Italy (which has the lowest rail modal share, at around percent, among these countries). This underlines that even though significant impact can be achieved by improving travel times and prices, other basic parameters of the rail offering and surrounding conditions in society need to be taken into account. This also highlights the importance of applying the right levers based on the region.
Overall, a targeted approach that suits customer preferences in different segments may be key to improving modal share.
There is potential to increase modal share
In principle, results indicate that trains are reasonably competitive against car travel if costs and travel times are equal, and there is potential to increase rail’s modal share. However, modal share for trains seem to have clear lower and upper boundaries.
At the lower end of all analyzed scenarios for Europe, even when the train offering is drastically disadvantageous in terms of cost and travel time compared to the car connection, there is a baseline clientele of around 10 percent of people who seem to take the train regardless of conditions. At the upper end, even when the train significantly outperforms the car in terms of travel time and price, about 40 to 45 percent of respondents are still unwilling to take the train. This indicates some maximum attainable modal share for trains versus cars, if operators can make rail price and time competitive.
In the five European countries in the survey, the average modal split in 2019 was about 9 percent for trains and 91 percent for cars (not accounting for alternatives such as bus and plane).8 Hence, the train offering seems to reach the baseline clientele, who would take the train no matter what, which means there is huge potential to increase rail’s modal share (Exhibit 6).
Getting rail on track
These findings could have several implications for decision makers in the rail sector. Customers consider basics such as safety and reliability as given—and if these conditions are not in place then they should be tackled first.
Overall, ticket price is the main lever that operators can pull to improve rail’s attractiveness, for journeys of all distances. Travel time is also important, especially on longer routes. Accessibility matters too, and the offer can create demand.
While other factors such as station connectivity, comfort while traveling, and an integrated end-to-end travel experience are important and cannot be neglected—these and other additional services may not increase modal share on their own. Tweaking ancillary services will not have as much impact as getting the price and time right.
It is important that operators try to understand passenger preferences holistically—especially their willingness to pay, and their value of time. This includes understanding what alternatives are available, as passengers evaluate ticket prices against these alternatives.
Given these findings, train operators could adopt or enhance a value-based pricing strategy that goes beyond setting prices on distance traveled, and takes passenger’s alternatives into consideration. By doing this, they could achieve higher earnings on trips where people have a high willingness to pay as trains are seen to be more attractive than other modes of transport. Operators could also fill empty trains by offering attractive prices, thus limiting the need for state subsidies, as train’s fixed costs are relatively high.
Operators could also use these survey insights to develop even more targeted offerings for different customer segments. This may increase the customer base while keeping costs under control.
As a competitive offer in terms of travel time drives demand, significant infrastructure investments may be needed to improve high-speed rail travel in combination with the overall network’s density. For Europe, the challenges in doing so include realizing the projects already envisaged in the context of the Trans-European-Network (TEN), and further developing a uniform cross-continental plan to coordinate infrastructure expansions while accelerating the refurbishing and upgrading of current infrastructure.
Regulators, meanwhile, could build on the observation that relative price differences matter, especially in the trade-off of train versus car. An increase in rail’s modal share cannot only be achieved by cutting rail ticket prices, but also by increasing or making transparent the cost of other modes of transport, especially the car. Helping travelers to understand the true cost of car rides could compel people to shift to rail.