Railways are becoming increasingly strategic. They are more energy efficient and pollute less than private vehicles, and they are 15 to 20 times safer than cars.
Compared with private vehicles, they do not entail any fixed cost for travellers. No wonder governments around the world are making huge investments in rail. For instance, 21 out of 27 EU member state national recovery plans have allocated billions to invest in electrification and modernisation of rail infrastructure. President Biden’s Bipartisan Infrastructure Law has nearly tripled funding for rail infrastructure — to $1 billion a year for the next five years.
Airlines struggled to survive when COVID reduced traffic to unprecedented levels. Fuel price increases and labour shortages compounded the effect of COVID by creating the urgency to profoundly rethink business and operating models, while regulators and passengers demand accelerated investment in environmental sustainability, such as more fuel-efficient traffic management, more sustainable fuels and, in the future, zero-emission aviation.
Both industries have reached an inflection point. Hiring more people and growing the size of fleets and number of routes will not be enough to increase capacity utilisation and offer more competitive and personalised services, while maintaining high safety standards and improving environmental sustainability. Achieving those strategic goals will require railway and airline executives to invest in technology innovation.
Bold Ambition for the Future Will Depend on Realising the Value of Technology Innovation
Railways and airlines have invested in technology for many years to deploy digital customer experience capabilities, such as loyalty programmes, self-service booking and mobile payments, intelligent asset and fleet management capabilities to enhance operational excellence, and scheduling of routes and dispatch to bring together high-capacity utilisation and safety.
However, our recent studies show that they are not standing still. They are now looking at the next generation of technologies, such as 5G, artificial intelligence and machine learning, IoT and edge computing, augmented and virtual reality, even quantum computing for traffic optimisation. They are not doing so for the sake of technology, but to achieve four interdependent strategic business goals:
- Increase operational efficiency, while targeting net-zero impact
- Increase capacity utilisation by combining intelligent scheduling, dispatch and traffic control systems to increase frequency of travel and smart predictive operations to help prevent delays and disruptions
- Ensure that efficiency goes hand in hand with safety and security, even with higher utilisation rates thanks to digitally enabled physical security systems, regulatory compliance of operations and cybersecurity
- Increase revenue growth through innovative service offerings, often by making their services and hubs — stations and airports — the anchors of a mobility-as-a-service ecosystem
To empower railway and airline executives to make strategic choices about next-generation technology investments, implement new organisational competencies and capacities that accelerate technology investment benefit realisation, and select tech partners that understand the technical and business evolution of their industry, IDC has launched new research on railways and airlines and transportation hubs.
Stay tuned for upcoming research on topics such as ticketing and revenue management, digital twins for intelligent operations, 5G and cybersecurity.