How lockdowns impacted fares in the French travel industry

Arthur Prager

16 December 2020

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It does not come as a surprise that the pandemic led to an unprecedented situation for the transportation sector. Demand patterns and customer behaviors suddenly became utterly unpredictable and rapidly changing. In such a context, competition analysis is no longer an input that is nice to have, and becomes one of the few essential assets that operators have to make informed decisions, and gather intelligence on their market position. Hence, those that did have strong competition monitoring systems & processes in place during the first lockdown, were able to muster data that turned out to be extremely valuable as soon as the second lockdown was announced.

The immediate response to each lockdown announcement was completely different from one carrier to another:

• Rail : It seems likely that railway operators have focused on preserving a flexible price strategy for French domestic travels in March, raising fares by only 20% but with a substantial drop of the number of seats offered (up to -85% of the announcement day figure).
  However, with the second lockdown beginning at the end of the autumn holidays, rail operators seem to have changed their strategy by keeping fares stable for both ways after the 28th October announcement. This observation can be explained by a limited impact of lockdown on the capacity, compared to spring.
• Air : Both in March and October, airlines opted for moderate price discounts to attract customers. Nevertheless, flight prices soared up to +10% one week after the second lockdown began, operators having possibly bet on travelers’ low sensibility to prices due to necessary journeys. The price increases were mostly applied to Economy cabins, especially in the fall season.
• Carpooling : After both lockdown announcements, and mainly in the spring, a slight increase in fares has been noticed. However, the number of seats offered dwindled more rapidly for flows to Paris than the ones from Paris, showing significant travelling from people leaving the capital.
  Some may be surprised that we already observed a plunge in capacity in the 4 days preceding the first lockdown announcement. One possible explanation is that people anticipated this lockdown and started to reduce their travelling early.
• Bus : Finally, long-distance bus carriers offered a non-flexible price strategy with very high prices for days after both announcements, reaching a peak at +40% for first lockdown and +80% for the second one compared to announcements days. Yet this figure is mitigated by taking into account the strong decrease in capacity (-85%). Besides, it is important to mention the service break for Blablabus during autumn lockdown.

Figure – Percentage evolution of fares averages and capacity for the next 30 departure dates, built from the offer/prices 8 days before the announcements.

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* Analysis performed on the basis of six routes : Paris<>Bordeaux/Lyon/Montpellier/Marseille/Nantes/Toulouse

* Data from Cayzn Fare-Tracking solution.

*  1st national lockdown from 18th March to 11th May 2020
*  2nd national lockdown from 30th October to 15th December 2020