SilverRail's strategy for European rail ticketing

Not profitable yet, but it will happen in the not too distant future.

Our biggest customers are Egencia, Orbitz for Business, and Rearden Commerce via their channels Deem Travel, American Express online (Axiom) and Carlson Wagonlit Travel Online in the US. Online corporate, self-booking tools are important revenue generators for us, obviously. We power Sabre's GetThere, in its new RailConnect product. GetThere is launching in 3 markets in its first phase" Germany, Canada and the USA. In phase 2, it's launching our other EU connected markets, such as the UK, Spain, Benelux, and Sweden. We expect KDS, i:FAO, and GetThere to be in this list of top customers as they launch over the coming months. We're also powering eBookers's retail offering for UK rail. As eBookers expands to add intra-European options, we'll be powering their systems behind the scenes.

SilverRail remains intent on providing the technology to let rail operators sell their tickets through online travel agencies and business travel management companies. Early on, we did experiment with a direct to consumer ticketing site called Quno. But we merely maintain it. We aren't pushing traffic to it, marketing it, or further investing in it.

No. For regulatory reasons, we needed to build Quno to become an accredited ticket issuing system with ATOC [the Association of Train Operating Companies]. They had never accredited an API provider before, so this was the way we could become registered, essentially. But the economics aren't overwhelmingly positive for margins for a retail offering based in the UK when it comes to ticketing. We realized we need to focus on our core product, which is B2B. That said, we still have customers coming to the site. We got good press from it. I think there's a market opportunity in direct to consumer for a startup to innovate. It just won't be us doing it. We're not a distribution company. We're different from, say, RailEurope. We're a tech suplier to rail carriers and distributors. We don't want to get in the supply chain.

It's roughly 70/30, North America to Europe. But we aim to reverse that soon. The potential market is much bigger in Europe. North America's rail ticketing is only about $2 billion a year, while Europe's is estimated at $80 billion a year. We're currently in rail markets in the UK, Spain, Germany, Belgium, and the Netherlands. We'll announce one more rail market in Q3 and we have two more in negotiation.

The answer to that is complicated, but the question touches on an interesting thing about rail relative to air. Think about airline ticket sales, for a minute. All of the air industry players have agreed to programming and coding standards, like APTCO, which operates the fare distribution database, IATA, which oversees airport codes and standards, ARC [Airline Reporting Corporation], whose standards helps companies charge, convert and settle in local currency. None of that is in place in European rail, essentially. The various national rail systems struggle to speak the same language. Here's a basic example: Deutsche Bahn may use one code to identify London St Pancras International station, but Thalys will have a different code. In the absence of industry standards, we've been focused on building out a global rail station database as part of our infrastructure. Let's use the St Pancras station example again. When a company like eBookers or Orbitz for Business plugs into us and makes a query, they only need to use our code for St Pancras. In other words, we've linked to that one station code with all the underlying ones. They'll be able to get access to all of the rail company fare content without having to know how each rail company identifies the station. Obviously, that's just a basic example. We're standardizing everything in the value chain for ticketing and rail content distribution. We're doing the legwork for industry standards that the GDSs [global distribution systems] did in the air space. The rail carriers that SilverRail works with are domestic focused, so we manage ARC-style BSP [Billing and Settlement], foreign conversion, bank integration, etc.

Yes, but those efforts are still in early stages. For example, there's the UIC Initiative. UIC [International Union of Railways] has been pushing for schedules for a long time. The added pressure of the European Union-level inter-governmental bodies, such as TAP-TSI [Telematics Applications for Passenger Services Technical Specifications for Interoperability], is causing more carriers to comply with the minimum requirements for providing data. This is an enhancement or improvement of the MERITS database, in which essentially every member rail company that supplies its schedule information can receive schedule information from others in a coherent format. TAP-TSI is the vehicle for making this available to the broader public, but the exact methodology hasn't been defined, i.e. who will distribute it; how much it'll cost for third-parties. DG Move [Directorate General for Transport], one of the Brussels authorities under the European Commission, is also looking into what's necessary for the industry to provide a Europe-wide journey planning online.

It's not secret we have spoken with SNCF and we're optimistic. Part of our sales pitch is providing value to the rail companies. Here's a hypothetical, which might apply to SNCF or to other major railways. We think, for example, that a major rail carrier would have an interest in accessing fare content from the reservation system of private Italian rail company Italo, NTV's [Nuovo Trasporto Viaggiatori's] profitable and popular routes on high-speed TGV lines. They could use us to connect to NTV rather than developing the technology and doing the negotiations internally. Any European rail company might want to access content from a carrier in a neighbouring country via our system, which can connect all the parts.

Ha. We know other companies are looking at rail. A key differentiator for SilverRail is that we are 100% rail. We eat, drink, and sleep 'rail'. We're not thinking about more profitable product lines. We also have a startup mentality. Many parts of our business are modeled in principle on agile software development methodologies. On the programming side, we add fresh functionality every four weeks or so, elevating all of our clients up to the latest high-water market in functionality. On the sales side, we add a new rail carrier to our system every four to five months. We are incredibly focused on how to help our vendors integrate with us. We provide incredibly high-touch service. Our APIs are backwards compatible, too. I can't speak to the competition, but SilverRail is well placed to lead in the European rail market.