Trains instead
June 3, 2011
Deutsche Bahn has abandoned plans to expand in Germany's long-distance bus market in the near term but doesn't rule out a move down the road.
As a result, the German national rail operator will not take advantage of new market opportunities arising when long-distance bus service opens to competition at the end of the year.
The state-owned company said it had "intensively examined the risks and opportunities" of a establishing a larger presence in the long-distance bus market but decided, at least for the time being, to focus on its core rail business instead.
Near monopoly
In addition to its huge regional bus activities, Deutsche Bahn operates a small long-distance fleet of more than 50 buses, taking advantage of a clause in the German Transportation Act of 1931 that allows long-distance bus service in limited cases, such as travel to and from Berlin.
That clause has given the German rail operator a near monopoly on long-distance intercity transportation for some 80 years.
Its announcement comes as a surprise.
In April, Deutsche Bahn passenger transport manager Ulrich Homburg said in an interview with Financial Times Deutschland that Deutsche Bahn feared a drop in profits with the opening of the long-distance bus market and therefore planned investments in this sector. He said the operator was taking steps to become a key player in the market.
In May, German Transportation Minister Peter Ramsauer said the German rail company would operate more buses following the liberalization of the country's long-distance market and play "an important role" in the market.
Cannibalization concerns
German newspaper Süddeutsche Zeitung reported on two warring factions within the Deutsche Bahn management board: one that sees opportunities to win more customers, such as students and seniors, with long-distance buses, according to the argument "If we don't offer the service, someone else will." The other side, meanwhile, worries that the company will be cannibalizing the Bahn's lucrative long-distance train service through lower-cost bus offerings.
"We will follow the market development and adjust our business activities accordingly," Homburg said, leaving a door open to chase the long-distance bus market in the future.
Author: John Blau
Editor: Ben Knight