TGV in trouble – the French chicken comes home to roost

This is a guest post by Madeleine Wahlberg.

A recent full-page spread in a French newspaper Le Parisien¹ spelled out the crisis facing their high speed service (TGV). Cameron declares that we need HS2 ‘to catch up with Europe’. But we will be catching up with an overblown system in retreat.

The headline is that ‘TGV is losing speed’. The French railway service SNCF plans to cut 1,400 jobs in 2014 due to the falling profitability of their flagship service. They estimate that 1 in 2 of the TGV lines will be in deficit. The operational margin of the service has declined from 20% in 2008 down to a projected 10% for 2013. Amongst others, the rail unions in the UK might care to note this.

Many fear that TGV will cut back the network (as we have seen in Spain and Benelux), keeping only the most profitable routes, which include the international ones. As there has been so little investment in the rest of the network over the period of TGV investment, this will have a major impact on increasing regional inequalities.

As the newspaper says, the decline of TGV affects everyone but ‘politicians haven’t yet woken up from their dream’. We could say the same for HS2 – there is widespread, independent understanding that it is based on fallacious capacity and demand projections and a totally unrealistic political hoax that one rail line will eliminate the North South divide. But politicians haven’t woken up from their dream.

Le Parisien interviewed 5 citizens to ask if they are using the TGV less now. Four said yes because it is too expensive (even with a Young Persons discount card) and in some cases the plane is cheaper. Only 1 will continue at the same level of use because there is no effective choice.

SNCF has tried to introduce a ‘cut-price’ TGV service called OUIGO. It is like a cut-price plane – you can only buy tickets online; there is no food; you have to pay for a second suitcase; and be there 30 minutes before departure. The business case depended on 60% seat occupancy to break even but it has not reached those levels and at the same time, it has reduced the occupancy rates for the normal TGV on that same route (Paris to Montpellier). The business case for OUIGO assumed it would generate NEW passengers. Does that remind you of the HS2 business case that also assumes high levels of NEW business? Do pay attention Mr Cameron!

The Parisien article gave 4 main reasons for the decline in TGV profitability:

• A victim of the economic crisis with fewer travelling and business using 2^nd class

• Increasing competition with low cost air and car journeys

• Increasing charges from RFF (equivalent to Network Rail)

• Tickets are too expensive

The result is that over 5 years the number of unprofitable lines has gone from 10% to 50%. All this, they say, will become significantly worse with the loss of the TGV monopoly over the main network in 2019 when EU rules insist that happens.

So Mr Cameron, instead of replicating the mistakes made by France, wouldn’t it be a little more intelligent, a little smarter, if we learned from their delusions and their errors? After all it was the head of SNCF, M. Pepy – and he knows what he is talking about – who said that France had made a mistake with TGV and should have concentrated more on investment in regional and commuter services.² The ‘cheap’ model of long distance train services that he is now thinking about looks remarkably like the West Coast Mainline service that the UK already has!