Rail takes flight

Imagine a rail network where physical assets—rolling stock, fixed infrastructure, and workforce—are optimally leveraged and deployed. Network planning, maintenance, and operations are all similarly streamlined. Rail operators have complete visibility, end to end. And every passenger travels safely, securely, and sustainably. Dream on, most rail operators would likely say.

The industry’s piecemeal approach to digital transformation has obscured the 360° view that could make this future scenario a reality. While some have taken steps to enhance the utilization of specific assets—condition-based maintenance and failure forecasting for trains and locomotives, for instance—holistic improvement has remained elusive. Until now.

Thanks to developments in the aviation sector, where advanced digital technologies are being harnessed to power a whole lifecycle approach to asset management, rail operators reeling from the impact of the pandemic finally have an opportunity to put their assets on track to peak performance.

COVID-19 has severely damaged the financial health of a mature industry whose assets are ageing rapidly.

With patronage plummeting and revenues slumping, Europe’s rail sector has lost an unprecedented €26 billion in value since the onset of the pandemic². For weaker players in particular, such heavy losses pose an existential threat.

Private railways commonly reinvest close to 20% of their operating revenues in infrastructure; freight operators’ revenues cover both operating costs and capital investment. Asset maintenance can eat up as much as 15% of operational costs⁴. And as older rolling stock is retired, the order backlog just gets bigger. Germany’s alone now amounts to €44.5 billion⁵.

Global demand for locomotives is set for compound annual growth of more than 10% between now and 2027⁶, while by 2025 the world’s rolling stock market will grow by more than US$12 billion (a CAGR of 4.4%)⁷. In the EU, the Commission aims to double high-speed rail by 2030 and to boost rail freight by 50% in the same timeframe⁸.

Meanwhile—partly because of the pandemic, but also due to growing environmental awareness—rail travel that’s significantly safer and more sustainable, as well as affordable, convenient, and reliable is top of mind for passengers.

Like rail, aviation has taken a huge financial hit from the pandemic. Global air passenger traffic dropped by 60% in 2020, leading to losses of US$370 billion⁹; a staggering sum.

Airlines, however, are already learning from the crisis. Aviation executives have recognized that synchronizing the management of each individual aircraft’s lifecycle across traditional organizational siloes is key to optimization. And maximizing ROI means creating, managing, and monitoring the profit & loss and balance sheet over its entire lifecycle.

At leading airlines, a central unit takes full responsibility for the transversal processes involved, managing costs and revenue generation over the entire lifecycle of the fleet, and optimizing asset availability and utilization.

Digital technologies are leveraged across a wide range of maintenance and supply chain processes: monitoring and challenging maintenance interventions; maximizing the yields of routine repair and inspection cycles; leveraging modification business cases for maximum value creation; and ensuring that the right aircraft type is operated on the right routes.

The track to peak performance should be carefully laid. Before undertaking the journey, ask yourself:

• Have you already undertaken digital optimization initiatives? Is your organization currently too siloed to synchronize them at scale?
• Could your business processes align easily with digital initiatives? Are your engineers prepared to work with technical reps from a broader ecosystem?
• How data savvy is your workforce? Will you need to retrain, upskill, or redefine established roles?

The aviation sector is showing a way forward. Now is the time for rail to take flight.