Rail operators look to make inroads to attract customers

Competition on the country's railway lines is set to increase as the third operator on the Prague-Ostrava line, LEO Express, adds more trains to a route also served by Czech Railways (ČD) and RegioJet.

After a launch in November, LEO Express has been hit by technical problems with trains but hopes to increase the number of services it offers per day on the flagship route to 16 soon.

As operators continue to try to lure in customers, there have been warnings the price falls that have accompanied the growth in services cannot last and that fares will have to increase.

Tickets between Prague and Ostrava now cost less than 150 Kč, although premium-class fares rise to as much as 599 Kč.

Both RegioJet and LEO Express are furious that ČD receives 4 billion Kč in annual subsidies and uses some of the money to subsidize prices on routes where there are also private operators.

LEO Express is now considering turning to the Anti-Monopoly Office (ÚOHS), while RegioJet's Radim Jančura says the antitrust office should force ČD to raise its fares or cancel its special offers.

Jančura also called for Transport Minister Zbyněk Stanjura (Civic Democrats, ODS) to remove Petr Žaluda as the CEO of ČD, saying he lied about the size of the train subsidies.

LEO Express, the route's third private operator, has faced problems with air conditioning and door opening since its launch.

Several senior managers have left the company recently, and the company is still offering just half its intended number of 16 services per day.

Company spokesman Petr Kopáček said LEO Express was planning to reach the full tally of departures "as soon as possible."

He added that passengers were "very satisfied" with features such as the stewardess service and played down delays in introducing the full tally of departures on the route, which includes stops in Pardubice and Olomouc.

"We want to provide maximum-quality services for our passengers, so firstly we have to finish preparations of our units with our supplier, Stadler, and then we can start operations," Kopáček said.

LEO Express has entered a market where the other two operators have traded words and initiatives as they battle to gain the upper hand.

The monopoly of state-owned ČD on the route ended when RegioJet, linked to bus operator Student Agency, launched its Prague-Ostrava service in September 2011 in an effort to set a new benchmark by offering Wi-Fi Internet access and free hot drinks.

Responding to the features offered on RegioJet's service, in July ČD also began offering Wi-Fi services on its Pendolino trains that ply the route.

Along with upgraded services, prices on the route have become more attractive, although Aleš Ondrůj, RegioJet's head of sales and customer service and communications director for parent company Student Agency, said the current situation was unsustainable.

"Prices on that line are not a natural market price. The prices have been driven down by Czech Railways," Ondrůj said.

Although LEO Express has been offering tickets for as little as 137 Kč, Ondrůj insisted the company "has not had any impact" on RegioJet's passenger numbers over the past two months.

"We are not very much focused on LEO Express, because we do not see it as competition that would be somehow threatening us," he said.

RegioJet had "very high" sales levels on its services, with the company announcing Jan. 2 that in 2012 it had an overall occupancy rate of 84.6 percent.

In total, 1.13 million passengers used the route, which involves 18 services per day between Prague and Ostrava, with some services making additional stops in the Czech Republic and two continuing on to Slovakia.

The company expects to reach a passenger total of 1.6 million this year, the increase partly because early last year full operations had not yet been reached.

"Every week, we are recording a growth in the number of passengers," Ondrůj said, adding the company was carrying 4,500 people per day between Prague and Ostrava.

It remains unclear whether three operators can survive on the route. There is not enough demand for all of them to run services on a commercial basis, according to Ondrůj.

"My guess is that one of the operators will be leaving that line," he said, adding that ČD was the most likely to pull out, because "they're losing money on that line."

"We're convinced the customers will like a quality service, which is delivered by us and will be delivered by LEO Express. As for Czech Railways in the long term, we see a potential for withdrawing trains," Ondrůj said.

While declining to respond when asked about the financial performance of the company's Prague-Ostrava service, ČD remains defiant about its position in the marketplace, insisting its services are the most sought-after by travelers. The company remains the dominant provider in terms of train numbers, running 38 services each day.

Petr Šťáhlavský, a ČD spokesman, said LEO Express and RegioJet were "not going to disturb" the company's operations.

"Our Pendolino trains are still the fastest and highest-quality trains on this line," he said.

Ondrůj says RegioJet hopes to take over the Prague, Dresden, Berlin and Hamburg line from ČD by December 2014 and operate it in conjunction with Deutsche Bahn.

"It's going to be a complete change on that service, which is one of the most important European long-haul train lines," he said.

ČD has also just been cleared by the antitrust office of any violation of the public-procurement law in the purchase of four RegioPanter trains from Škoda Transportation.

 Competitors had claimed that the tender called for unusually wide doors.

Daniel Bardsley can be reached at
business@praguepost.com