Eurostar Loses Its Twinkle
Eurostar has a public relations disaster on its hands following the collapse of its cross-Channel rail services during this week’s cold snap.
In theory, it could be a commercial one too. International passenger rail travel was thrown open to competition in Europe from Dec. 13 under a new EU law requiring track owners to provide open access to alternative operators. Eurostar may not have much more than a year to lick itself in to shape before new rail operators are in a position to offer rival services.
Eurostar’s monopoly of the international passenger-only rail routes connecting London to Paris and Brussels is sure to be a tempting target. Eurostar carried 9.1 million passengers last year, 10% up on the year before despite September’s fire in the Channel Tunnel which disrupted services.
Eurostar, rather than airlines, is the preferred way to travel between London and Paris as the journey now takes just two hours and 15 minutes. It’s a phenomenon hitting airlines across Europe as proliferating high-speed links reduce rail journeys between major cities to less than three hours.
True, potential rivals are likely to face substantial obstacles. Applications to run a rival service need the time-consuming approval of the tracks owners in the U.K., France, Belgium and Eurotunnel. Making room for a new service at busy stations and on busy track in southeast England and northwest France could prove difficult.
Any competitor to France’s state-owned railroad company Societe Nationale des Chemins de Fer, a major shareholder in Eurostar, would face political opposition, not least from its unionized workforce which has long opposed liberalization. It took two years for utility group Veolia to start a rival freight service to SNCF after that market was opened in 2003.
Still, these obstacles are unlikely to deter competitors from having a go. Deutsche Bahn is interested. Last year Air France said it was toying with the idea of entering the train business with Veolia, partly to connect U.K. passengers to flights from Paris by train. That project has gone cold, partly because of the recession.
Eurostar traffic fell 1% in the first nine months of the year compared with the same period in 2008. As the economy picks up, rivals may dust down their plans. Eurostar needs to put its house in order.
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