- Introduction: A Strategic Overview of the Train mode of Transport
- Main competitors of SNCF
- Threats posed by competitors
- Strategies that SNCF needs to adopt
- Challenges that SNCF will face
- Aviation industry in France
- Measures to be adopted by Air France
- Challenges that Air France will contend with in the next decade
- Water transport in France
- Strategies that France adopted
Introduction: A Strategic Overview of the Train mode of Transport
The most preferred mode of transport in France is by train since one can easily access all major towns and cities given that most of them are linked by rail. On top of this, railway network extends to other neighboring countries therefore one can travel abroad by rail. It is not for nothing that trains are the most preferred mode of transport in France, there are a lot of merits associated with trains comparative to other modes of transport that have over the years made trains popular with locals and foreigners alike.In only 3 hours we’ll deliver a custom The Popularity of Train in France essay written 100% from scratch Learn more
For starters, as indicated earlier, all major towns and cities are interlinked by rail, This massive network extends to other neighboring countries hence it has gone a long way in easing the hustle of accessing places that would have been inaccessible was it not for the railway network. In addition, trains are by far more comfortable than other modes of transport such as buses, to add on to the comfort, one is afforded a scenic view of the countryside while travelling by train because of the ground level view. (Kopp, 2005 360 -367)
When going for long journeys, trains are the preferred mode of transport due to their neck breaking speeds whereby France’s world famous TGV is touted as the fastest train in France and is said to have the capacity to travel at extremely high speeds, 198 miles per hour to be precise. Thus, it enables travelers to save on time while travelling thus giving trains an edge over other modes of transport. Reliability is also one among the many attributes that make railroad transport a favorite of many travelers. One can check on the time and fares of any journey with ease. This is vital because one can plan to base his plans on the travel schedule. For those who are not able to speak French, there is nothing to worry about when it comes to purchasing tickets since this does not involve any complications. For local journeys, reservations are not a prerequisite as one only needs to show up, purchase a ticket and he is good to go however, for long distance journeys one must book a ticket in advance since pre-booking has its advantages in that one ends up paying lower fares compared to when booking when one wants to travel (Jones 1984 96).
Convenience is another attribute of traveling by train. One can purchase tickets online so a traveler does not have to go to the booking offices to buy a ticket since he can do it from wherever he is so long as he is connected to the internet. In addition, overnight services that are offered by some operating companies are revolutionary in that a traveler can rest while on a journey and reach his destination fresh and ready to embark on the day’s businesses.
Main competitors of SNCF
The main train operator in France is SNCF which is run by the French government. Up to December 14, 2009, SNCF had monopolized France’s rail industry. In the above mentioned date the monopolistic nature of the rail industry in France changed with the entrance of new competitors in the French market since the European Union required all its member states to open their international rail services to competitors. This prompted Veolia environment, a French water, waste and transport group to partner with Trenitalia and express an interest in entering the previously monopolized French market (Banister, 2000 129).
This was interpreted as a retaliatory move in some quarters since SNCF had invested in Italy’s train market through a company known as NTV which was partly owned by SNCF. The French in a move to protect its market, went ahead and set rules and regulations that ensured that its competitors had a hard time competing against SNCF whereby, the alternative service providers would have to contend with picking up and dropping passengers at designated stops within France but the said passengers would have to be less than 50% percent of either volume or turnover.
The French Rail Association, a lobby group of SNCF’S potential competitors cried foul saying that the rules made it extremely hard for potential new entrants who were faced with the tall order of raising significant capital to gain entry into the lucrative French rail market. Nevertheless, the opening of international rail services to competition resulted to increased privatization of previously public services. Italy’s Trenitalia were not the only potential competitors who had shown an interest in France’s train tracks, there was speculation that Germany’s DB together with Veolia and Air France were thinking along those lines also but have not done anything beyond expressing an interest yet (Pierre-Philippe, 2011 np)Academic experts
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Threats posed by competitors
Threats posed by competitors to SNCF are wide-ranging. There are those posed on a technological level such as that Trenitalia posed to SNFC. Trenitalia is planning on launching three high-speed TGV trains by the end of 2012. TGV’S are said to be the epitome of technology when it comes to trains. They can travel at extremely high speeds and this is viewed as a threat by SNCF because passengers will prefer using a faster train (Yonghwa & Hun-Koo 2005 98)
New entrants in the rail market will eventually lead to crowding of the market place which will eventually drive fare prices down which is good news to passengers but rail operators will not be too happy about this turn of events. Some people are not in favor of allowing private operators to operate in a market that was previously public as they see private firms as greedy organizations that are only keen on registering obscene amounts of profit at the expense of public enterprises without addressing issues bedeviling domestic rail.
Strategies that SNCF needs to adopt
In the next decade, SNCF will have to be more innovative for them to stay afloat in the wake of increasing competition from new entrants into the market. This means that substantial amounts of money will be spent on the acquisition of trains that are more technologically advanced than those of their competitors if they are to have an extra edge over them. More money will also be spent in advertising its services to potential clients to market its services. The stakeholders will also have to think of expanding its rail network to destinations that have not yet been penetrated for SNCF to increase its market share and remain profitable. Also, radical measures such as reduction of fares comparative to their competitors will have to be considered if they are to retain their customers. In the long run they will have to rethink and configure their approach to the business (Tramway et al., 2010 63)
Challenges that SNCF will face
In the next decade, SNCF will be faced with a couple of challenges. One of the challenges that it will contend with is that of climate change. The trains that SNCF operates are powered by nuclear energy, although this kind of energy does less harm to the environment compared to other fuels, it still poses a great danger to the environment if things go awry. SNCF therefore has to try and develop alternative sources of fuel that are sustainable and have the least adverse effects on the environment. Fuel prices keep rising with every passing day and it automatically translates to increased cost of operation for SNCF. This is not good news to the operators of the rail industry since they will be forced to pass the cost on to their customers. This is counterproductive in the wake of ever increasing competition with some of their competitors offering their customers lower rates hence these price wars will eventually translate to loss of clients (Colvile & Hutchinson, et al., 2001 1537-1565).
As a result SNCF will have to constantly come up with innovative ideas in terms of the services they offer and trains that are technologically advanced than their competitors if they are to have an edge over their competitors. This will be a challenge in the sense that they will be forced to spend more in research and development for them to stay ahead of competition. In addition it will have to be done within the strict framework of cutting back on operational costs which is a delicate balancing act and will be taxing even to the sharpest of minds but it will have to be done all the same if the firm is to remain competitive. Therefore, cost reduction should be a priority to SNCF in the coming decade for them to remain competitive as this will prompt SNCF to find ways and means of cutting back on cost albeit providing excellent services to its clients (Gil, 2007 58)
Aviation industry in France
The aviation industry is very vibrant in France with Air France leading from the front as the bearer of the country’s flag. Air France operates in an extremely competitive market.
First of all they (Air France) have to deal with competition from TGV high speed trains over short distances. In this particular competition, the rules that have been set favor TGVS. Infrastructure of the TGVS is funded by RFF which is a national company so technically, it is the tax payer’s money that funds TVG’S infrastructure and not the operating company on the other hand, Air France customers pay for its infrastructure directly. This influences the fares that both companies are going to charge and it will translate to customers for Air France paying more fare than those of TGV. In the end, Air France will end up losing customers. To add on to that, Air France is taxed heavily and they also pay for their security measures while TGVS does not pay for security since this docket belongs to the government which pays for it. Despite all the setbacks experienced by Air France, it still has managed to secure a market share of about 19% compared to TGV (Thompson 2001 276).15% OFF Get your very first custom-written academic paper with 15% off Get discount
Low cost carriers are also competitors in the airline industry. In the 1990’s after air transport had been liberalized and the single European skyline emerged in 1993, low cost carriers came to the scene, two such carriers were Ryanair and Easyjet. These and other low cost carriers could be considered competitors at a certain point but their business model was not sustainable hence they closed shop.
Air France has had to configure its products to compete with low cost carriers by cutting back on its operating costs and meeting the changing needs of its customers. Nevertheless, there emerged other competitors in the form of gulf carriers. These are airlines from the gulf region where population is low and as a result, their market is limited. With the advent of the sixth freedom traffic, ability to carry passengers from one foreign market to another through the operators’ original market, these airlines tapped into Europe’s massive market. They enjoy a lenient tax environment, no corporate tax or social security charges are levied against them. This constitutes unfair competition since the playing field is not level as certain privileges are enjoyed by a select few. These gulf carriers have posted very impressive results overtime to a point where they are thinking of introducing massive A380S into their fleet of aircrafts.
Network carriers like Lufthansa-Swiss and British America have been leaders in this airline section for the past couple of years. Each of these airlines has got its tailor-made growth strategy based on fuel hedging and unit revenue Lufthansa, after embarking on a vigorous diversification strategy; it turned its attention on its core businesses which are passenger transport and aircraft maintenance where it went on to establish two robust hubs, one in Germany and the other in Switzerland.
Measures to be adopted by Air France
To cope with fierce competition, Air France is forced to constantly come up with innovative products that meet its customer’s needs whereby emphasis was placed on excellent customer service. The massive network on offer is established around two hubs that go a long way in keeping up with the competitors. All these are done within the limits of keeping costs at the barest minimum and taking care to conserve the environment.
Challenges that Air France will contend with in the next decade
There are quite a number of challenges that Air France will face in the coming decade. Some of the major ones include climate change. It is said that climate change accounts for about 2% of all the man-made carbon dioxide that is emitted in the atmosphere. With the continual growth in the air transport industry, the mentioned figure can only go up. Air France’s biggest challenge is to find ways of reducing the emissions of green house gases into the atmosphere. It has to think of mobilizing other airlines to cut back on the emission of carbon dioxide into the atmosphere therefore it should consider developing alternative fuels that are sustainable and less harmful to the environment such as bio-fuels. This will go a long way in reducing the carbon footprint and dependence on fossil fuels that are in short supply.
Another challenge that Air France will contend with in future is the high cost of fuel that is constantly on the rise. High cost of fuel has a significant impact on the fare that the airline will charge its customers. This is because the firm will have incurred high operational costs which will eventually have to be passed on to the customer if the airline is to register any profits.
Another mode of transit in France is by road. People mainly use buses as an alternative means of transport to travel short distances and the leading firm in the road sector is Veolia transport. Though travelling by bus may be considered as cliché by some, Veolia transport has continued to apply its knowhow to reinvent this mode of transport that is used by almost everyone. They have embarked on making it comfortable, faster and more accessible.Get your customised and 100% plagiarism-free paper on any subject done for only $16.00 $11/page Let us help you
A number of measures have been put in place to revive buses and the bus systems. The introduction of Bus Rapid Transit resulted to the emergence of efficient systems that have designated bus lanes which have helped passengers escape unforeseen traffic. The circulation is flawless and cheaper to establish while the ticketing system is efficient which is convenient for the passengers.
20-seater shuttles which take passengers on fixed routes offer comfort, more spacing in standing and seating positions. Veolia transport faces stiff competition from trains and metro shuttles. The main undoing for this form of transport is that they are slower and less comfortable than trains on top of being susceptible to traffic. These demerits give trains an extra edge over buses. Tickets for trains sell at a cheaper price than those for buses hence it is only natural for passengers to opt for the cheaper tickets (Thompson, 2001 278).
Veolia Transport has to contend with the issue of fuel prices as the higher fuel prices climb, the more expensive fares will be since operational costs are affected by fuel prices. The firm is required to seek for alternative sources of fuel that are cheaper for it to cut back on operational costs hence this will go a long way in making the company more competitive and be able to go toe to toe with its competitors in matters regarding price wars.
Nowadays almost everyone is gravitating towards environmental conservation. This trend will be more pronounced in future therefore, any company worth its salt should align every aspect about it with this trend. Clients will want to be associated by a firm that has got elaborate plans on what measures it will put in place to conserve the environment. Veolia therefore has to start thinking of sources of clean fuel to power its buses and shuttles.
Water transport in France
‘Navigable Waterways of France’ is the French Navigation authority that is charged with the responsibility of running most of France’s inland waterways. The French natural and man-made waterway network is the largest in Europe. It is over 8500 kilometers long and it consists of canals, dams, locks, tunnels, reservoirs and aqueducts. The waterway is ideal for commercial boats that weigh over 1000 tonnes.
Strategies that France adopted
The Navigable Waterways of France has embarked on a program of modernization and maintenance which seeks to increase the depth of waterways, increase the headroom under bridges and the width of locks. All of this is done in support of France’s strategy of encouraging freight to start using waterways as a mode of transport which forms part of her sustainable development program. This mode of transport is sustainable in the sense that one barge transporting cargo from one point to another has replaced several Lorries that would have otherwise been used to ferry the same quantity of cargo. This by extension results in less gases emitted into the atmosphere hence reducing the rate of environmental pollution. The waterways need less maintenance compared to the railway and road infrastructure (Balog et al 2007 143)
Price Waterhouse Coopers did a survey and found that 75% of companies expressed a willingness to switch to water transport. The reason is that most people are in support of going green initiatives and are in favor of reducing the emission of gases that are major contributors to issues addressed in green initiative.
The initiative by the France of trying to popularize waterways as a mode of transport has merits from a macro economic point of view. Fewer resources are going to be set aside for the purchase of fuels used to power the alternative modes of transport. The resources that have been saved as a result can be channeled elsewhere and as a result productivity will be enhanced and France’s economy will expand. Adoption of France’s strategy will reduce the number of automobiles from the road. This as a result shall ease congestion on the roads and busy streets of France resulting in the locals saving on time while traveling which they would have otherwise wasted while stuck in traffic. Decongestion shall also help in the saving of fuel that previously would have been burnt when people are stuck in traffic.
The issue of cutting back on the carbon foot print is in line with this strategy less vehicles on the roads will mean less emission of gases that are harmful to the environment and by extension the level of carbon foot print in the environment will be brought down. In addition, the operators of all modes of mass transit in France must find ways of operating in their respective areas of specialization by using strategies that allow for cutting back on operational cost while at the same time not diluting the quality of the services that they offer their clients. This could be achieved through the continuous development of fuel efficient engines whereby less fuel will be consumed as a result and they will save on money on top of attracting new customers as a result of affordable fares. The fuel efficient engines should be designed in such a way that the gases emitted into the atmosphere as a result of burning the fuel are as little as possible. This will go a long towards conserving our environment that is deteriorating at an alarming rate.
The different companies responsible for running the various modes of mass transit should consider hedging against the rise in prices of fuels that are used to power their various machines. By so doing, they will have mitigated their various companies against the risk of rising fuel prices. This will enable them to plan as they are certain no unforeseen eventualities will take them by surprise in matters regarding crude prices.
Operators should mobilize all in the transport sector to lobby for the leveling of the playing field by the regulatory authorities concerned. A level playing field will ensure that no single operator has undue advantage over the other by virtue of being in a different sector of the mass transit industry thus fair competition will foster the growth of the industry as many more private investors will be willing to join as result.
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