On January 23, Loco2, a train travel agency start-up, became the first UK company to offer tickets online for the German state railway Deutsche Bahn.
Expanded European coverage provides access to thousands of routes and tickets in Germany, plus international connecting services in northern Europe. Britons can now book rail travel between London and Berlin with second-class saver fare, from €59 one way.
Launched in April 2012, Loco2 is one of a new wave of startups (such as France's Capitaine Train) that have sprouted up since January 1, 2010, when the EU kickstarted a slow-motion opening of international rail services to competition.
Loco2 already has a connection to the French national rail operator, SNCF, via its UK representative, Rail Europe. As Loco2 notes, it gives UK consumers a choice of train lines without the need to visit multiple websites, which is especially handy for trips crossing international borders and switching rail companies.
The startup has six members: Jamie Andrews and Kate Andrews (co-founders), plus Jon Leighton (technical Director/CTO), Eugene Bolshakov (software engineer), Anila Babla (digital marketing), and Nick Lee (designer).
The company is funded by undisclosed angel investment. The company declined to disclose its booking data, but it is understood to have made modest sales to date, as it attempts to capture the international segment of the large market for online rail.
Q&A with director Jamie Andrews:
How did your initial idea evolve?
Loco2 evolved out of the huge frustrations felt by the founders of the business when they were attempting to book rail travel in Europe.
However the original motivation for making it easy to book trains was out of a firm belief in the need to reduce carbon emissions and tackle climate change.
Kate conceived of the original idea for Loco2 when she was a student researching ideas for a gap year without flying. She was frustrated at the lack of resources online for the overland traveller.
She came up with the business idea and the name Loco2, a nod to locomotives and the ”low CO2” nature of rail travel.
She entered the idea for a multi-modal journey planner in a student social enterprise competition, and it reached the final.
On the strength of Kate’s early work, and frustrated by my own disappointing experience of planning and booking train journeys online, I got involved. (I'm her brother Jamie.)
One of my contributions was to refocus Loco2’s mission to make booking a train in Europe as easy as booking a flight.
When we first started the business, rail companies were reluctant to make APIs and data available, and so we used various techniques to prototype software before we secured our existing contracts with SNCF and Deutsche Bahn.
Now that there is clear momentum across the industry to improve the ease of booking for customers, it has become easier to focus on tackling the usability problems people face.
We are committed to making it easier for UK travellers and others find viable alternatives to short-haul flights. However there are various ways we can commercialise our technology than simply selling tickets via loco2.com.
Why should people or companies use your start-up?
We’re dedicated to delivering a simple and straightforward booking experience. (It’s possible to move from search to booking in as little as five clicks).
Print-at-home and collect-at-station tickets mean that customers around the world can book with ease, and with no need to worry whilst waiting for tickets to arrive in the post.
We also have a number of innovative technical features that our more advanced users are enjoying.
For example, it’s possible to grab and share any search results URL so that users can easily share results with their friends without having to run searches again.
Our site is integrated with multiple booking systems so that it’s not necessary to spend time manually comparing prices across different websites.
We don’t add any booking fee, and so the price on Loco2 is the same as booking direct (notwithstanding some exchange rate issues).
Finally, and most importantly, we are passionate about rail. We care deeply about helping our customers to easily book good value train tickets so that they can get as excited as us about train travel.
Where do you see yourselves in 3 years time, what specific challenges do you hope to have overcome?
In three years we hope to have comprehensive timetable search and booking for the whole of Europe, plus print at home tickets for all journeys… and a long list of satisfied customers!
Our biggest challenge will be capturing the “binge flying” segment of the market, and persuading vast numbers of people to ditch the train for the plane.
If we can do this on any meaningful scale, and say that we’ve made a real impact with people who previously wouldn’t have considered not flying, then we will be very happy.
What is wrong with the travel, tourism and hospitality industry that requires another start-up to help it out?
Two main problems:
1. The huge carbon footprint of the travel industry, and the fact that conventional “responsible travel” approaches overlook the environmental impact of transport.
2. The fact that booking travel online is currently a very fragmented and inelegant process.
Revenue model and strategy for profitability?
Loco2 earns commission on tickets sold on the site, which is paid by the rail operators. We sell print-at-home/collect-at-station tickets wherever possible so overheads are low.
Additional revenue streams to supplement rail products have also been identified.
We will consider selling packages (including accommodation and/or other products along with rail tickets) where it’s possible to earn higher margins than rail-only.
Other than going viral and receiving mountains of positive PR, what is the strategy for raising awareness and getting customers/users?
We have a number of high profile partnerships planned for later in 2013. Watch this space.
Tnooz view:
There's a huge opportunity for a Euro rail startup that can make booking a train as easy as booking a flight for pan-European itineraries.
Consider that about 125 million international passenger journeys take place within Europe each year but most of the ticket sales happen either in-person or through state-owned systems.
The challenge is partly technical, but it's also partly about negotiating savvy.
Loco2 and its competitors face an uphill fight against incumbent, nationally-owned rail operators and their overly-sympathetic counterparts in national legislatures and regulatory bodies. Since 2008, efforts by other players to create a pan-European solution have struggled.
While Loco2 seems to have the technical challenge under control with a solid booking interface. Of all the rail interfaces we've seen on rail-only and on general travel websites worldwide, Loco2's is the best, except for multi-modal schedule search site Rome2Rio.
Yet it's less clear if it's being sufficiently hard-nosed in its business development as it should.
There aren't any guidebooks to handling novel situations like this, and Loco2 may have been dealt a weak hand in some of its negotiations. But has it been playing its hands as strongly as it could? Is biz dev its Achilles heel?
Loco2's potential competitors include other start-ups as these rivals leave their local and regional markets and begin to overlap on Loco2's claimed turf of pan-European or pan-global train and multi-modal transport bookings.
Some of these bruisers could include established players in the rail booking market in the UK, such as TheTrainline, French site CapitaineTrain, and German site Waymate, plus in its way, Silverrail Technologies.
Google is another potential competitor, as it has been experimenting with DB data.
Loco2 will have to stand out from its rivals to get its share of the estimated €39 billion market in overall ticket sales.
All the little details can be tricky. Take currency as an example. The site prices its SNCF tickets in pounds only, but displays DB tickets with a pound estimate while pricing those tickets in euros.
That's an example of how the quirks of contract terms and databases can affect the user experience.
It also seems odd that full UK rail ticket offerings are missing from the London-headquartered site, though the company says it plans to plug this gap over time.
Spanish rail is also missing, and RENFE has been making moves of its own.
In its favor, Loco2 team members seem passionate about the environmental benefits of train travel, relative to air travel, and that passion may see them through many a dark night.
Snap poll:
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NB:TLabs Showcase is part of the wider TLabs project from Tnooz.