Lumo’s low-cost rail launch meets budget and environmental concerns

Lumo’s launch of low-cost rail services could disrupt current rail and air services between London and Edinburgh. Its low-cost model alongside a focus on minimizing environmental impact will bode well for shifting traveler trends as the sector recovers from the pandemic, says GlobalData, a leading data and analytics company.

Gus Gardner, Associate Travel and Tourism Analyst at GlobalData, comments: “Lumo’s low-cost rail service could become popular. British travelers have become accustomed to high fares and low-quality services that, pre-COVID, were often overcrowded. The launch of the new budget operator’s route between Edinburgh and London is set to be a disruptive force due to a lack of competition amongst rail operators in the UK.. Even though it is low-cost, free Wi-Fi, and on-demand entertainment will be available to all. With journey times only 10 minutes longer than the existing incumbent LNER, Lumo is well-positioned to make gains in the competitive marketplace.”

A live GlobalData poll* has revealed that 11% of global respondents now have a holiday budget lower than pre-COVID, and 37% cannot afford to go on holiday in the near future so the new low-cost service will be welcomed.

Gardner continues: “With budgets stretched, the introduction of a low-cost rail service will play well with cash-strapped travelers while domestic demand soars in the UK. Low fares will be vital to respond to the increased price sensitivity of travelers. Many have felt the financial bite from the pandemic resulting in tightening household and travel budgets. Similarly, the findings of GlobalData’s Q2 2021 Consumer Survey** revealed that 62% of UK respondents were ‘extremely’, ‘slightly’, or ‘quite’ concerned about their personal financial situation, further reinforcing the need for lower cost rail services.”

Lumo’s competitive £15 (US$20.78) one-way lowest fare option could stimulate travel demand between London and Edinburgh. The low fares are set to be cheaper than a low-cost flight and could place competitive pressure on easyJet and, to some extent, British Airways. Price is key to attracting custom during the COVID-19 recovery stage, and Lumo has the right business model for success.

Travelers are increasingly likely to be influenced by how environmentally friendly a product or service is. GlobalData’s Q1 2021 consumer survey*** revealed that 70% of UK respondents are ‘always’, ‘often’, or ‘sometimes’ influenced by this factor.

Gardner adds: “Lumo’s heavy focus on being an environmentally friendly operation, future proofs its business model. Travelers who would often fly between the two cities are likely to be swayed towards a more environmentally friendly and cheaper option. Opting to travel on Lumo’s fully electric trains over flying will reduce the carbon emissions of the trip to one-sixth of flying, according to the operator. Further reaffirming its environmental focus, the operator will offer 50% plant-based food onboard and is 100% digital to avoid paper waste. With environmental concerns set to grow, the move could see Lumo becoming a leading environmentally conscious rail operator.”

* Live GlobalData poll, 210 respondents, live since May 2021

** GlobalData’s Q2 2021 consumer survey, 515 UK respondents

*** GlobalData’s Q1 consumer survey, 545 UK respondents

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