Transferring low-cost marketing practices from air to rail services: The Ouigo case

More and more airlines have adopted a low-cost business model and many scholars have studied the characteristics of such marketing strategy. While other transport modes have decided to copy and adopt this strategy, we investigate how they replicate this business model. To do so, we in-depth study the operational and marketing characteristics of Ouigo, the new low-cost offer launched by the French rail operator SNCF in 2013. Based on interviews and secondary data (press articles, reports, etc.), we analyze how the rail operator has adapted the low-cost model used by airlines to the high-speed rail industry. We first begin by explaining why rail operators need to implement low-cost strategies and we analyze the characteristics of these low-cost strategies in the air industry. Then, we examine how the key success factors of low-cost carriers have been replicated and adjusted to the rail setting: simplified price policy, increased number of seats per train, use of secondary train stations, exclusive online distribution, e-ticketing, development of ancillary revenues, etc. Finally, a deeper analysis shows that commercial features (e.g. pricing policy) tend to be adapted more easily than technical ones (e.g. network structure) which are more constrained by the industry characteristics. We conclude by giving directions for future improvements for low-cost rail business models.