New York Times, August 12, 2001

Airlines Feel Pressure of Europe's Fast Trains
By John Tagliabue

PARIS -- Even Bernard Chaffange freely owns up. "Whenever I go to Paris," he
said recently in a telephone interview, "I take the TGV." That might not
seem a surprise, since Mr. Chaffange lives in Lyon, which has been connected
to Paris by high-speed train since 1981, when the French national railway
introduced the 185-mile-an-hour Trains à Grande Vitesse.

Except that Mr. Chaffange is director of Lyon-Saint-Exupéry Airport, which
lost 85 percent of its traffic with Paris in the first years after 1981.
This year, he said, 730,000 passengers will fly between Lyon and Paris, half
the number that did so before the arrival of the TGV.

Mr. Chaffange's attitude is similar to that of a growing number of
Europeans. As the network of high-speed trains grows, airlines find
themselves under pressure from the fast and comfortable rail system.

In some cases, the airlines are seeking to compete. When the French national
railway inaugurated a three-hour train service on the 490-mile route from
Paris to Marseille in May, Air France cut round-trip fares on the route to
as little as $70, versus $84 for a second-class round-trip ticket on the
TGV. Elsewhere the airlines have thrown in the towel. When Germany
introduced its high-speed ICE trains in 1991, Lufthansa shut down its
Hanover-to-Frankfurt route. Earlier this year, Air France discontinued
flights from Paris to Brussels, crushed by competition from the new Thalys
train.

Increasingly, the airlines are exploring ways to cooperate with the trains.
British Airways, for instance, has an equity stake in Eurostar, the company
that runs trains through the Channel Tunnel. Lufthansa is experimenting with
ways to mesh its schedules with those of trains, and in a licensing
agreement with the German railways, the Deutsche Bahn, has launched a
high-speed train that makes the trip from the Stuttgart rail terminal to
Frankfurt Airport in about an hour and a half. Passengers can check their
bags in Stuttgart and connect with flights at Frankfurt, Germany's biggest
hub. Airports in France, including Paris and Lyon, have built stations for
high-speed trains into their infrastructure.

The reasoning is simple: for journeys of up to three hours, the airlines
find it difficult to compete with trains. The advantages of incorporating
trains into the airlines' hub-and-spoke systems means increased passenger
volumes for the railways. For the airlines, the arrangement enables them to
focus more on high-yield international routes that can be comfortably fed by
the trains, while freeing up valuable slots at crowded hubs by shifting
feeder traffic to the rails.

"Competition? In principle, yes," said Wolfgang Weinert, project manager for
intermodal transport at Lufthansa. Lufthansa pioneered the use of trains to
feed its hubs in the 1980's, after it introduced the Airport Express, a
train that linked Düsseldorf and Cologne with the Frankfurt airport.
Passengers could check their bags on the train through to their final
destinations, and the train schedules dovetailed with Lufthansa departure
times. But the trains were low-speed and were later discontinued. Now the
airline is test-marketing the concept with the high-speed
Stuttgart-Frankfurt train.

Transportation experts say the airlines distinguish increasingly between
point-to-point travel, when passengers begin a trip in, say, Paris, and end
it in Lyon, and feeder-to-hub travel, when passengers set out, for example,
in Lyon to travel via Paris to a third city like Los Angeles or Tokyo.

On point-to-point trips, Mr. Chaffange said, "the cutoff point is usually
between two and three hours." Under that time, passengers will choose the
train; for longer trips, they take the plane. Of course leisure passengers
often prefer the train while business travelers choose the plane. The
high-speed train trip from Lyon to Lille, Mr. Chaffange said, takes three
hours, versus 50 minutes for the flight, but the airlines have maintained a
90 percent lock on the route because most passengers are business travelers.
Air France estimates it will lose about 20 percent of its traffic to the TGV
on the Paris-Marseille route.

Other factors complicate the choice. Business travelers often prefer
high-speed trains because it enables them to work along the way. "We try to
take Eurostar," said Christopher Logan, an analyst with Goldman, Sachs's
transportation team in London. A flight to Paris involves a trip to Heathrow
Airport in London, a wait for the plane, a brief 50-minute flight and
another trip from the airport into town. On the train, that time can be
spent working.

Airline experts say the competition between train and plane to feed airline
hubs is decided by a different yardstick, which they refer to as "total
elapsed travel time." Mr. Weinert of Lufthansa said that if the time between
a passenger's departure from, say, Stuttgart to travel via Frankfurt to Los
Angeles were lengthened by taking the Stuttgart-to-Frankfurt train,
passengers would probably choose a feeder flight. To reduce the total
elapsed time, passengers must be able to check their luggage at the train
station through to their final destination, and trains must be scheduled to
fit departures at the hub airport.

From Lyon to Paris, where the train time is 2 hours 10 minutes, Air France
continues to operate 10 flights a day, mainly to feed its hub at Charles de
Gaulle Airport; on the Brussels-to-Paris route, which takes 80 minutes by
train, it canceled the last of its connecting flights in April.


Copyright 2001 The New York Times Company
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