SPAINS'S DOMESTIC RAILWAY MARKET SIZE

• Forecast Market size for 2019 was €4.22bn.
•  Domestic market size equal to forecast market divided by total passengers = 592,284/ €4.22bn= €1.40bn

Domestic Railway Use

• Passenger use in 2016 was 568,756.
• The passenger use in 2017 was 592,284.
• The percentage increase was 4.1%

Research Strategy:

By Company

• Renfe is the national railroad of Spain and currently has almost 90% of the market share in the country (See previous Wonder research)
• In 2020 the national government in Spain liberalized the rail market, effectively opening Renfe up to competition.
• Renfe is optimistic about retaining their market share and has a plan which projects revenue of "€4.6bn in 2023 and €5.3bn in 2028, a 30% increase compared with 2018".
• Renfe also projects that international passengers will produce 5% of their revenue in 2023 and 10% of their revenue in 2028 which they expect "will offset the impact of competition in the domestic market."

By Country

• Spain's economy is on an upward trend. It grew by 2.6% in 2018, which exceeded the European average.
• The GDP growth forecast is 2.1 percent and 1.9 percent for 2019 and 2020 respectively.

By Region

• Current average annual trips per urban adult in Europe is approximately 100. 
• The TransEuropean Transportation Network, in their planning for the implementation of a connected Traffic Management system by 2030, is forecasting growths per year of 2.5% per year for high speed rail from 2010 to 2050 and 1.4% annually for non-urban passenger rail.

Globally

• Globally, the railway system market is expected to reach a CAGR of 5.2% between 2019 and 2025.
• The International Energy Agency, in a report called the future of rail, projects that annual European rail passenger trips will grow from 90 billion in 2017 to 125 billion by 2030 and 175 billion by 2050. 

Yearly Passenger Growth

• 2017 634,484,149 
• 2018 646,920,038 
• 2019 659,599,671 
• 2020 672,527,825 
• 2021 685,709,370 
• 2022 699,149,274 
• 2023 712,852,599 
• 2024  

• 2025

• 2026 755,595,248 
• 2027 770,404,915 

Overview of factors driving growth

• In cities with large populations, urban rail (metro and light rail) will continue to play a crucial role in large-scale passenger movements.
• As the population of an area increases, rail becomes an imperative to a modern lifestyle.
• For that reason, countries across the world are planning on growing their rail infrastructure.
• The EU, as a region, is investing heavily in expanding a connected Traffic Management system, and 67% of the Spanish people are supportive of the EU.
• Rail travel also reduces local air pollution, lessens traffic congestion and improves overall productivity for commuters.

Calculations

• In order to calculate a year by year passenger growth in Spain, we averaged the 2.5% projected increase in high-speed rail and the 1.4% projected increase in domestic rail, which gave us an annual growth rate of 1.95%.
• We then calculated 1.95% of the previous year's total and then added the two together.
• For example, the annual ridership in Spain in 2017 was 634,484,149.
• 1.95% of that number is 12,372,441
• When those two numbers are added together, the total is 646,856,590.
• That same formula was used for each year. The attached spreadsheet shows the calculations.

Domestic Passenger Railway Market Share (Spain)

• According to multiple sources, Renfe has a monopoly on the domestic passenger railway in Spain. In other words, Renfe has 100% of the market share. 
• Renfe's monopoly is coming to an end on December 2020.
• The Spanish government approved the Fourth Railway Package at the end of 2018. The law positions a timeline to end Renfe's monopoly.
• The domestic passenger railway market will be open to new competitors. Renfe has recently worked on improving its service in order to better compete with the new oncoming competition.
• In June 2018, the Spanish government approved the private AVE train to compete with Renfe.
• Renfe intends to renew trains and modernize its fleet in anticipation of the new competition. A high-frequency track is planned between Madrid and Valencia.