Impacts of the German interurban bus market deregulation on regional railway services

Abstract

Since 1 January 2013, the German interurban bus market is deregulated. As a consequence of deregulation, the number of interurban bus passengers has increased from 2.5 million in 2012 to 24 million in 2016. Today there is a dense interurban bus network covering the whole German territory. In parallel to the interurban bus network, which is operated mostly by private companies, there is a network of regional railway services that is subsidized by public funds. In order to prevent cannibalization of regional railway services, interurban bus companies are allowed to offer their services only where the distance between two cities is at least 50 kilometres and the regional train takes at least one hour. Despite these restrictions, there is still competition between the two modes of transportation. The present paper gives some insight into the intermodal competition between interurban buses and regional railways as well as into the financial impact of the new interurban bus market on the regional railway market. For this purpose, we have combined regional railway, geographical and interurban bus data. Our estimation shows that the financial impact of interurban bus competition on the entire regional railway system is relatively low.