Europe Rail Tunnel

The airlines should evaluate the following factors -

I. Service Differentiation

Along with looking at the journey duration, the carriers should also evaluate passenger's comfort in both means of transportation and the frequency of trains/airplanes to have.

II. Customer Convenience

Factors such as ease of reaching station/airport, boarding should be considered. The airlines should also analyze how much would different customer segments be affected by this new rail tunnel.

III. Price &Cost

It is important to analyze the price sensitivity of different customer segments and the price advantage of one form of transport over another.

Implications of a price war should also be analyzed.

IV. Operations efficiency

The airlines should also focus on the efficiency of their operations. (Example - Would the firm be able to shift to a smaller airplane in case the market share decreases?)

A great answer would also include the following factors:

• Relationship marketing or customer loyalty
• Europe regulatory structure
• Effects of change in fuel prices