The Structure of Transportation Networks and Deregulation

Special Report: Key Aspects of Networks
By Pierre Zembri


The reforms which currently affect the air and railway transport industries in Europe are far from being neutral for the structures of the networks concerned (“historical” operators and newcomers). Indeed, they were carried out without calling into question the rights of exploitation of the existing companies, nor increasing the capacities of routing while at the same time many bottlenecks already existed before the process of deregulation was launched.
One can thus wonder about the impact of these technical limits on the strategies of the players of the market as well as on the privileged forms of networks. In the field of air transport, the unsufficient capacity of the largest airports makes the preexistent players out of reach of any serious competition on their bases. In the railway sector, the congestion of the most important nodes of the network and some very attended corridors hinders the arrival of newcomers.
Financial limits must be added to those technical limits: the end of the public monopolies of service calls into question the equalization which the national companies could support between profitable and not-profitable routes. The maintenance of the most fragile connections is thus subordinated to an increase in the public subsidies, which goes against the guiding principle of the deregulation.
This situation results in substantial rents for the preexistent operators, who can freely reorganize their services. Newcomers must adopt strategies of niche, being based on flows of traffics or categories of customers that do not attrach incumbent operators. One can wonder whether these strategies constitute a first stage before a keener competition which would rest upon solid bases and an experiment of growth in a confined milieu, as shown by market trends in the United States, or if the particular configuration of the European market will prevent this type of evolution.
Go to the article on