TICKET TECHNOLOGY An Uber for the Train Business?

The American private equity firm KKR has pushed through a merger of two rail travel portals and has set its sights on the extensive European market.
The European train market is increasingly cross border.

The train portal Captain Train is not shy about singing its own praises. “At last, a high-speed website for trains,” is how it sells itself, promising nothing less than “a revolution in how we buy train tickets.”

Now the American investment company KKR, or Kohlberg Kravis Roberts, is getting on board. The private equity firm, once seen as a “barbarian” specializing in leveraged buyouts, is still highly aggressive. But in this case, it plans to build up a company, rather than taking it apart. KKR has invested over €100 million ($112 million) in the Captain Train project.

Captain Train will sell you any ticket on any European rail network, except in Spain and the Benelux countries. Negotiations are ongoing to bring these networks on board. The portal currently specializes in selling international train journeys on the networks of more than one country. The company charges a commission to train operators, but not to its customers.

The company sees other startups as its main competitors, rather than the classic booking platforms of the national rail companies, like Deutsche Bahn in Germany or the SNCF in France. One such competitor is Go Euro, a site which allows combined booking of journeys by rail, bus and air.

At last, a high-speed website for trains... a revolution in how we buy train tickets. Marketing material, Captain Train

Captain Train’s advantage lies in its provision of information on cross-border rail connections. All too often with these bookings, national rail portals can only tell the customer that “price information is unavailable” for part of the journey.

This is where KKR sees a niche for Captain Train. “We foresee a substantial internationalization of train travel in the coming years. We want to profit from that,” Philipp Freise, head of KKR’s European digital investment team, told Handelsblatt. “The rail market is lagging 10 years behind air travel. Who buys a plane ticket at the airport nowadays? That’s how things will go with trains.”

Among German travelers, demand for Captain Train’s high-speed booking is still limited. But numbers are growing strongly, said Daniel Beutler, chief operations officer of Captain Train. The company has 100,000 registered users in Germany and 1.5 million in Europe. It sold 450,000 tickets last year, he said.

However, the site remains dwarfed by established ticket platforms like that of Deutsche Bahn, which last year sold 38 million tickets online and via its DB Navigator smartphone app.

But KKR believes in the Captain Train business model, in spite of the big platforms’ current advantage. The American company raised over €100 million in financing for its takeover of the company. Crucially, the takeover involves a simultaneous merger with the British ticket portal Trainline, which KKR bought last year. The bulk of the new money will be spent on marketing.

By the terms of the merger, Trainline will be taking over the smaller Captain Train, which was founded in France in 2009. The British company reports an annual turnover of €2 billion, considerably larger than Captain Train’s €72 million annual revenues. The merger will create Europe’s largest independent digital supplier of train tickets. And the American investors have their eyes on big prizes: Mr. Freise said the merged company is on its way to being “the global leader in digital mobility.”

He said the gradual liberalization of European rail markets was opening up a huge opportunity: “In Europe, there are €57 billion of train tickets sold every year. If we can capture just 5 percent of that, we can double Trainline’s turnover.” Captain Train can offer Trainline both excellent in-house itinerary technology and, crucially, an existing presence in European markets. For some time, Trainline has tried and failed to break into the mainland European business.

The merger of the French and British businesses has gone largely unnoticed in Germany. Trainline is the product of British rail privatization, which created 22 independent rail companies in the U.K. This led to the founding of Trainline in 1997: the company allowed passengers to book tickets involving more than one rail operator. By contrast, state rail companies are still dominant on the European mainland – they are determined to keep control of ticket purchases for as long as possible. Mr. Freise said the U.K. was the key model: “In 10 years time, the European market will look like the British one does now. We want to be the Uber of rail travel.”

Captain Train was founded in 2009 by 3 French engineers, who felt Voyages-SNCF, the booking platform of the state-owned railway company, was too complicated and difficult to use.

In 10 years time, the European market will look like the British one does now. We want to be the Uber of rail travel. Philipp Freise,, head of European digital investment, KKR

The company took off when it hired a top-class marketing team, including Mr. Beutler, who previously spent 8 years with Deutsche Bahn, including a stint as head of Western European sales.

Captain Train’s founders include Jean-Daniel Guyot, who will remain as CEO of the merged company. They foresee rapid expansion. KKR, now the majority shareholder, will do what financiers do with startups: pump in money and crank up the business, so imitators won’t have a chance to compete.

For now, said Mr. Freise, the newly-merged company has no plans to expand to include other means of transport. It will stick to rail travel, although there may be add-ons like hotel bookings or taxi reservations.

Some warn this specialization may backfire. Torsten Kirstges, an academic expert on tourism at the Jade University of Applied Sciences, is convinced that businesses – like Go Euro – which “can bring together the whole travel chain” will enjoy more success in future. Above all  travelers want to know how they can: “get from A to B, independent of any one means of transport.”


Dieter Fockenbrock is Handelsblatt's chief correspondent for the companies and markets desk, focusing on corporate governance, opinion and rail transport. To contact the author: [email protected].