Shares in online train ticketing platform Trainline (TRN) plunged 22.2% to 333p by mid-morning trading on Thursday after the Government launched a new state-owned body that it set to rival the firm, with experts warning it could pose an ‘existential threat’ to Trainline.

As part of sweeping reforms of the rail industry in a bid to boost train travel, the Government has announced the launch of Great British Railways, which will replace Network Rail and manage infrastructure as well as set timetables and prices, and – crucially for Trainline – will also sell tickets in England.

Unlike the National Rail website, Great British Railways will allow customers to book all trips from one site, meaning it could quickly grab market share from Trainline, particularly given the possible strength of its brad as an official, state-owned organization, which in turn could dent Trainline’s sales volumes and revenue.

However, Trainline does have some time on its side with the new organization unlikely to be set up before 2023.

‘EXISTENTIAL THREAT’

AJ Bell investment director Russ Mould said the threat to Trainline could be ‘existential’ considering its ‘potential competitor is the state’, and added sweeping changes to the UK railway network which have been announced contain ‘an important detail which is potentially devastating to Trainline’s business model’, with its plan to simplify the process of buying tickets once Great British Railways is set up.

Mould said: ‘This has two implications for Trainline – potentially a lot of people will buy tickets from this new centralised body and if the previous labyrinthine ticket pricing system is made easier to navigate, the company will have less of a role in helping passengers find the best available price.

‘Innovations like offering people predictive travel information and telling them how busy services are may make some difference at the margin in maintaining loyalty to Trainline’s site but it is hard to believe it will be enough.

‘The company now faces a two-year deadline to somehow preserve its relevance under the new set-up. It won’t be an easy task.’

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Issue Date: 20 May 2021