Virgin territory
SNFC and Virgin Trains’ offer to UK high speed rail.
It’s no surprise that SNCF is one of several international railway giants lining up for a shot at the flagship West Coast Partnership franchise. Starting in April 2019, it includes three to five years of operating Phase 1 of HS2 from its opening between London and Birmingham in 2026.
With the Department for Transport (DfT) looking for bids with ‘world class’ experience in developing and operating high-speed railways, it was inevitable that the French state operator would be involved. While there had been suggestions that Spanish company RENFE was the favourite to join Virgin/Stagecoach, a joint venture with SNCF brings a wealth of experience and high-speed knowledge to the table.
Apart from Japan, which launched its Shinkansen trains as far back as 1964, no other country in the world has more experience of building and operating dedicated high-speed railways than our neighbour across the Channel.
France has been pushing the boundaries of high-speed rail since the mid-1950s, when a series of test runs south of Bordeaux took two 1.5kV DC electric locomotives up to an astonishing 205mph (331kph) in March 1955. It was one of the first countries in the world to introduce regular, scheduled 200kph running in the late-1960s, but even then it was looking for more, and found the answer in the Train à Grand Vitesse (TGV). Starting with a gas-turbine powered prototype in the early 1970s, it quickly developed the technology, replacing thirsty jet engines with electric traction after the 1973 oil crisis, and took the far-sighted decision to supplement its busiest route - Paris-Lyon - with a new 254-mile (409km) line, dedicated to highspeed passenger trains. The Ligne à Grand Vitesse Paris-Sud-Est (LGV-PSE) opened in 1981-83 and slashed journey times in half, to just two hours. It was so successful that
SNCF’s experience in developing high-density high-speed trains, with compulsory seat reservation and an emphasis on internet booking, could prove irresistible.
several other radial routes have followed over the last 35 years and, significantly, TGV technology has become a successful export for France.
Almost 2,700km (1,674 miles) of LGV now reach out from Paris to Marseille, Montpellier, Strasbourg, Mulhouse, Bordeaux, Nantes and Rennes, not to mention international routes to London and Brussels. The 362 miles from the French capital to Bordeaux are now covered in just over two hours by the fastest TGV L’Océane trains on the new EUR9 billion LGV Sud Europe Atlantique (SEA), which opened in July.
In partnership with Alstom (and its previous incarnation Alsthom), SNCF has gradually evolved the TGV concept through several generations too. It now has around 430 sets in traffic, by some margin the largest fleet of high-speed trains in Europe. This includes some of the original PSE sets, still earning their keep despite having tens of millions of kilometres on the clock.
From the late 1990s, the focus has been on double-deck TGV Duplex sets, which have allowed SNCF to cope with increasing demand on the busiest routes without adding to growing congestion or lengthening trains – but still within the strict 17-tonne maximum axle loading of LGV lines. A pair of Duplex sets can carry more than 1,000 passengers.
A shortened and heavily modified TGV Duplex is the rail speed world record holder, having achieved 574.8kph (357mph) on the LGV Est line in 2007. Regular speeds have increased too, from the initial 280kph of the LGV-PSE to 300kph and, when required, 320kph on more recent lines. Perhaps the greatest demonstration of SNCF’s technical and engineering excellence though came in May 2001, when a standard Réseau set ran 1,067km (663 miles) from Calais to Marseille in three hours and 29 minutes – an average speed of 190mph.
TGVs and their derivatives now link Paris to London, Barcelona, Milan, Amsterdam, Munich, Frankfurt, Brussels, Geneva, Bern and Zürich, running for much of their route over LGVs built on French principles – often by French civil engineering companies. In fact, the TGV/LGV concept has been exported to the UK, Belgium, the Netherlands, Spain, Morocco, South Korea and Taiwan, making France a world leader in the field of high-speed railways.
Not including Thalys (a joint venture with Belgian and Netherlands Railways that runs Paris-Brussels-Amsterdam/Cologne services) or Eurostar, SNCF runs around 700 high-speed rail trains per day in France and internationally. SNCF’s high-speed division turned over EUR7.5 billion in 2016, of which 27% was from international operations, with 27 million passengers journeying on high-speed trains outside of France. It is, by any standards, a huge operation, key to the economy of France and its neighbours.
But - and there’s always a ‘but’ - SNCF’s flagship operation is not without its problems. After the roaring success of the early lines, higher costs and lower returns have become the norm for more recent LGVs, built to satisfy political demands as much as those from passengers. LGV SEA has been dogged by arguments about funding, which comes from numerous sources - European, national, local and regional - not to mention access charges levied by the Public Private Partnership concession LISEA, which built and part-funded the project, and their effect on SNCF’s proposed service levels, which have angered those contributing to the project.
More fundamentally, French President Emmanuel Macron chose the opening of the Bordeaux route to announce his intention to prioritise ‘everyday transport’ in France, rather than investing in more high-speed lines. This decision is likely to put paid to further LGV extensions to Toulouse, Limoges, a second Paris-Lyon route via Orleans and Clermont-Ferrand, and possibly even the controversial EUR25bn Lyon-Turin project.
The separation of the management of track and trains to meet European regulations has also created an issue, with SNCF blaming SNCF Réseau, the French equivalent of Network Rail, for reducing the profitability
of TGV services by imposing high track access charges.
For many years SNCF has also been accused of prioritising TGV to the detriment of its other operations, particularly inter-city and cross-country main lines not sponsored by regional government - which are in poor shape. Ageing rolling stock and decades of underinvestment in infrastructure have led to ‘maintenance holidays’, speed restrictions, longer journey times and even line closures, driving many into their cars, or onto less direct routes using TGV - deliberately if the critics are to be believed.
As if those in-house problems weren’t enough, increasing competition from low-cost airlines, long-distance buses and car-sharing websites have attracted many students and leisure passengers away from rail which has eaten into the revenue, and yield per passenger, of TGV services. SNCF Réseau’s argument is that those access charges are required to service the EUR45bn debt mountain built up to construct these multi-billion pound lines.
SNCF’s response has been to introduce more Duplex trains in place of single-deck PSE, Atlantique and Réseau sets, with lower operating costs per seat, cut back on loss-making services and reduce on-train catering on many routes. It has also copied low-cost airline practice by introducing dedicated no-frills TGV services between major cities. In 2013 it launched Ouigo, its low-cost high-speed service, using modified, high-density Duplex sets covering extraordinary daily mileages. Thalys followed suit in April 2016 with low-cost international TGV trains, branded Izy, on the Paris-Brussels route.
If the Department for Transport continues to insist on maximising seating capacity on new trains, such as the Thameslink Class 700s and Hitachi IEP sets, SNCF’s experience in developing high-density high-speed trains, with compulsory seat reservation and an emphasis on internet booking, could prove irresistible.
With a view to increasing line capacity by 25%, SNCF is working with Alstom to introduce semi-automatic train operation on the congested Paris-Lyon LGV by 2023. ATO is also likely to be deployed on HS2, which opens in 2026, so SNCF’s experience over the next few years could be key to its successful introduction here.
A struggling French economy, a drop in tourist numbers after recent terrorist attacks, industrial action and political pressure to support French industry (specifically Alstom, in which the government has a 20% stake) by placing orders for expensive new TGVs (even where they aren’t necessarily needed) makes this a difficult time for SNCF.
In 2016, the group’s operating margin dropped from 14.1% of turnover to 12.8%, with the passenger division, Voyages SNCF, suffering a 4.3% fall in revenue over the previous year, most notably outside the greater Paris region. However, TGV traffic grew by 1.9% as a result of various special offers and Ouigo reported a 76% increase in passenger numbers after new routes were added. After making economies of EUR825m, profit across the group was EUR567m, although after acquisitions are taken into account, overall revenue dropped by 1.5% to EUR32.3bn.
Even before conditions became difficult at home, SNCF was extremely active in the international sphere; it owns 70% of Keolis, one of the world’s largest urban and regional transport operators - and a partner in Govia, which runs Southeastern, TSGN and (until December) London Midland in the UK. Keolis bus, rail and metro services carry around three billion people in 16 countries.
SNCF also owns 55% of Eurostar, 60%
SNCF has exploited open access regulations to expand elsewhere in Europe.
of Thalys and 20% of NTV, the Italian operator of .italo open access high-speed trains. The latter run in competition with Trenitalia, which is working on a rival West Coast Partnership bid with FirstGroup. In response, Trenitalia expressed its intention to compete with SNCF on its lucrative Paris-Brussels route in 2015.
Although its domestic rail freight business is in perpetual crisis - French press reports a drop of 12-15% in 2016, with a 60% collapse in its operating margin - SNCF has exploited open access regulations to expand elsewhere in Europe. Its Captrain subsidiary has absorbed smaller freight companies in Germany, Italy, Belgium and Romania and operates across the continent. Other businesses include global logistics company Geodis, France’s third largest rail freight operator VFLI, automotive logistics specialist STVA, intermodal operator Naviland Cargo and locomotive leasing company Akiem.
However, despite SNCF’s enthusiasm for international acquisitions and open access, the situation in France is much less welcoming, with new rail operators finding it extremely difficult to obtain decent paths and gain authorisation for new locomotives. While freight operators such as Euro Cargo Rail, Colas and Europorte have made significant inroads into SNCF Fret’s business, there is currently just one open access passenger operation - Trenitalia/ Transdev joint venture Thello - which runs Paris-Venice overnight and Milan-Nice daytime trains.
SNCF’s grip on passenger operations could start to loosen over the next few years as the Macron administration looks to introduce competitive tendering for regional services. While the regional governments paying for those services are keen to end SNCF’s monopoly, any such moves are likely to meet formidable resistance from the state operator and trades unions.
Whatever the outcome of the West Coast Partnership contest, if they decided to launch a competitor to TGV it’s unlikely that Virgin or Stagecoach would find as warm a welcome in France as SNCF has in the UK.