Dear Aaron Gowell and SilverRail team,

Aaron Gowell presents at PhoCusWright's Travel Innovation Summit

Thanks for focusing our attention to one of the big, disruptive trends of the next 5-10 years: the growth of high-speed rail.  Some of the framing statistics you provided are staggering:

• $300 billion global rail marketplace, with $100 billion in Europe and the US (mostly Europe though I would imagine)
• $60 billion of addressable market, 1 billion tickets
• US investment in high-speed rail of $18 billion in 2009
• China’s investment in high-speed rail of $88 billion in 2009, and $300 billion commitment in the next 5 years.
• 40,000 miles of new high-speed rail track laid in 2009.

In Europe, high-speed rail has proven to disrupt the short-haul air market.  London to Paris now has 80% market share, Madrid to Barcelona has 70% market share, and as routes get deregulated and there is more competition, there will be greater need for indirect distribution.

The pain point you are describing is the opportunity to increase advance purchase of tickets.  Currrently, 60% of tickets are sold in the ticket line, 10% by phone, and 30% via the supplier Website (is this correct?).  But travel agencies and travel management companies don’t have an efficient solution for selling rail bookings.  The stat you shared–4 rail bookings/hr vs 20 air bookings/hr–is a great illustration of the pain.  Your approach of providing tools for distribution partners (white label, API, agent booking tools) indicates that you seek to become a “GDS for rail”

One of the critic’s circle mentioned the challenges of selling to government-owned rail companies.  Will they really provide enough margin to drive indirect distribution?  Is there enough margin to make SilverRail a profitable company in the middle?  Why couldn’t OTAs direct connect into rail suppliers to get access to content?  Isn’t there huge concentration in Points of Origin currently even though deregulation is happening?  What other services do you have to provide to rail operators to get them to adopt your technologies?  Why isn’t Amadeus and other GDS working on this problem and why would they partner with you?

It seems that there is some kind of question about why Wandrian (which seems related to SilverRail founders in some way) failed and why SilverRail should succeed.  In any case, the timing of this deal seems exceptional.  High-speed rail and the rising cost of oil means SilverRail is positioned in a nice place for travel distribution going forward.

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