It’s often said the private sector can run a business far more efficiently than governments can, and an Italian company is setting out to prove it: In about a week, Italy’s first privately owned high-speed trains will debut, putting some competitive heat on the state-owned rail company, Trenitalia.
The trains, operated by NTV, are primarily getting attention for their luxury stylings (details available here)—and having ridden the rather sparse French TGV high-speed trains several years ago, I imagine the leather seats, wide carriages and so-called cinema carriage will attract plenty of travelers. NTV is also making a play for foreign travelers, boasting that all employees speak English.
They’re competing on costs, too, though NTV has indicated their prices may not undercut Trenitalia’s—instead, NTV’s seeking an edge through price flexibility, similar to many airlines’ pricing model, which offers cheaper fares to those who book in advance or travel at off-peak times. Compare that to Trenitalia’s price scheme, which starts with a base fare and then applies surcharges for flexible tickets and discounts for group travel or other considerations.
On balance, it seems NTV is betting that offering an overall more pleasant experience—more comfortable travel and perhaps less booking headaches—will help them cut into Trenitalia’s market share. And make no mistake, a little healthy competition is a good thing. Until now, Trenitalia didn’t have much incentive to improve its services or pricing—it was the only option for anyone wanting to travel by train in Italy. If NTV gains significant market share, Trenitalia likely has to start competing—maybe they get newer trains, offer more legroom, cut prices, expand their service, or what have you. And as the two companies try to outdo each other (and if more service providers join the fray!), customers get more choice and perhaps better prices.
And now, the funny part: One of NTV’s principal investors, with a 20% share is none other than SNCF—France’s state-owned rail company! If that’s not capitalism and free trade at its finest, I don’t know what is. Heck, maybe if NTV’s successful, the French, too, learn the benefits of private ownership and market competition. A free-market rail revolution could be just the ticket for European travelers!