Just over a year after its arrival in France on the Paris-Lyon line, Italian operator Trenitalia is planning to link the French capital with other European capitals.
Opening up the rail network to competition is taking time, but things are gradually starting to fall into place. But it’s not all plain sailing: COVID initially put the brakes on all projects. Then there are questions of infrastructure and rolling stock availability, sometimes compounded by protectionist reflexes that don’t make things any easier.
In France, Trenitalia led the way.
Trenitalia leads the way, followed by Renfe
So it’s been over a year since Trenitalia arrived on the Paris-Lyon route, with a clearly premium positioning that immediately appealed to us. While the SNCF reflex is well established among the French, especially as Trenitalia’s product is not distributed on the SNCF Connect platform, the Italian carrier seems to be gradually finding its clientele, helped by the repeated strikes of its French competitor. Some passengers may have discovered Freccia Rossa by accident, but they were immediately seduced.
With a cheaper, more premium service and 3 baggage classes, Trenitalia would achieve a load factor of 83% on France’s busiest line, at prices 30-40% lower than SNCF, despite certain handicaps (visibility, distribution, etc.).
Recently, Spain’s Renfe launched services to Barcelona from Lyon and Madrid from Marseille via Barcelona, with a view to Paris-Madrid in 2024, before the Paris Olympics.
Here too, success seems to be on the cards, thanks in particular to a very aggressive pricing policy. As for quality of service, we’ll wait until we’ve tried it before telling you about it.
Trenitalia’s European ambitions
But the Italian operator has no intention of stopping there either, and is reportedly planning to serve Brussels, Amsterdam and Berlin from Paris. On these first two destinations there is currently only competition from Eurostar (formerly Thalys), while SNCF and Deutsche Bahn have announced a direct Paris-Berlin service for the end of 2023. It is also said to have its sights set on a Paris-Barcelona-Madrid route by the end of 2024.
Paris’s central position in Europe, its high-speed network and a certain appetite (or at least habit) among the French for high-speed travel make it an obvious choice as a base for building a European high-speed network.
With better service, more attractive prices and a wider range of quality and quantity products, the consumer should be the logical beneficiary.
Logically. Because if the picture looks idyllic and promising, it may not remain so for long.
Will opening up to competition bring down train fares in the long term?
Opening a high-speed line requires substantial investment in equipment, and the SNCF bears the lasting stigma of this investment, which is fortunately sponged off by the taxpayer.
So, to promote competition – and, let’s repeat, to benefit the consumer – new entrants to the French market benefit from reductions in the tolls that all operators (including SNCF) pay to run trains which correspond to 30 to 40% of the ticket price: 37% in 2022, 16% in 2023 and 8% in 2024 for Trenitalia, and we see no reason why RENFE should not benefit from the same advantages.
But once this advantage has disappeared, new entrants will have only two choices: pass on the full cost of the toll to the ticket price, or reduce their profitability, which will put them on a par with the national operator in this respect. All they’ll have left are their own competitive advantages (labor costs, etc.), a more attractive product and perhaps better management, so as not to see the difference fade away with SNCF, which, while remaining faithful to a disappointing two-class product, will soon be receiving a new generation of brand-new trains.
Trenitalia’s triclass product may well enable it to continue to stand out from the crowd, apart from any price advantage. Not so sure about RENFE.
In any case, we don’t expect the opening up of the market to competition to bring about a significant and lasting drop in prices, especially as it is being done piecemeal.
What’s more, and we’ll have to talk about this at greater length in the near future, we mustn’t delude ourselves. For structural reasons, mainly linked to the very nature of this activity, inexpensive railways do not exist, and will exist even less as their development will soon require substantial investment on the part of both operators and infrastructure managers. Unless it’s to subsidize it to a large extent, creating an imbalance in competition and undue advantages for players in the sector.
Bottom line
Trenitalia wants to accelerate its entry into the French market and link Paris with Amsterdam, Brussels and Barcelona, giving a little more reality to the opening up of rail transport to competition.
But even if the customer initially finds it attractive in terms of price, it’s not certain that this will last over time, and that foreign operators will take advantage of it.
What about you? What do you think about opening up the French railways to competition? Have you ever travelled with a competitor to SNCF? What did you think of it? And do you think that competition will continue to drive prices down once the advantages granted to new entrants disappear?
Tell us in the comments.
