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Question About European Trains

Tue Sep 12, 2006 5:17 am

Are they a profitable service? By that I mean that they make money on their own without government subsidies. Specifically:

Are the high speed ones profitable or no?
The 'regular' trains (if there are any)?
The Le Shuttle service?

And does it depend on the country or is the Euro Rail services under a bigger administrator? Thank you for any info on this!
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RE: Question About European Trains

Tue Sep 12, 2006 5:57 am

Let's answer this question first, before proceeding to the others:

Quoting Derico (Thread starter):
And does it depend on the country or is the Euro Rail services under a bigger administrator? Thank you for any info on this!

It most certainly does depend per country. Domestic services, be it local regional or national, are arranged domestically.

There is no large all-encompassing organisation that decide where international trains go. Instead, the local train companies co-operate. For instance, the Thalys service (NL-BE-FR, BE-UK, FR-UK) is a joint operation of Belgian, Dutch, English and French railway companies. They all operate the same rolling stock in the same livery so you would not be able to tell if you where in a Dutch or Belgian carriage. In fact, often seperate companies are set up with ownership split between the national companies.

In some cases the routes are given by the state, to the state run companies (e.g. France, belgium). In other cases companies have to tender (e.g. UK, Netherlands). That is why for instance the Dutch part of the Thalys service is a joint operation of the Dutch national railways and KLM.

Quoting Derico (Thread starter):
By that I mean that they make money on their own without government subsidies.

That's a tough question to answer. In many cases the railroads are state companies or state owned companies (I'll explain that distinction later). So we do not really get to know if they made a profit, and if the profit comes from local or HST trains.

First you got state companies. Companies that are actually run by the state, to serve the good of the state. France being a prime example. Another option is state-owned companies. They are seperate companies, but the state own 100% (or at least 50% +1) of the shares. So while the state may have limited influence over day to day operations, they can still nudge the train company in the direction that is politically expedient. Those companies would have to give out financial details same as any other listed company would.

So, profits. The profits can realistically only be measured from seperate companies. State run companies either do not give profit numbers, or will taint the numbers to fit the politician in charge.

Most rail companies are actually profitable. Perhaps not a gold mine, but profitable nonetheless. (Note: I am best informed about Dutch companies and some of the larger UK companies). But the state does sponsor them.

It is not uncommon for the state to give a number of cents per passenger same as what the state does with other forms of public transport. On top of that the state will buy tickets/seasoncards in very large quantities. In NL for instance students get free use of trains during the week or weekends (student gets to choose), the elderly get the reduction card etc.

Of course the trucking companies do not like to see that the (freight) train is subsidiced. But on the other hand, the train companies do have to pay for the right to use the track. A trucking company in NL does not have to pay for the road it uses, except through the regular road taxes. In NL at least there are no toll roads (though congestion charging "london style" will be introduced on motorways in a few years).

Quoting Derico (Thread starter):
Are the high speed ones profitable or no?

The operational use is profitable, very profitable actually. So much so that on a few routes the plane is easily beat. For instance, on the BRU-AMS route SNBA has given up and KLM downgraded to a F50/F70 just to cater to connecting passengers. On the AMS-ANR route the plane has been replaced by the train, and is listed as such on the KLM website and timetables. The Paris-London route has taken a massive beating as well from the tunnel. Domestic services in France and Germany is rather low compared to other European nations due to the TGV/ICE networks. That is one of the reason why France does not have a large prospering low cost airline while the UK has several (the UK's rail network is outdated, slow and very expensive).

But the likelyhood of repaying the costs of the track is small. A normal investment company would not consider it worthwhile since the ROI is very long term. Having said that, the same of course also depends for the motorways that the state builds.

Quoting Derico (Thread starter):
The 'regular' trains (if there are any)?

Depends on the route. Some of the regular trains are commuter trains that are packed. When I was a student I have been in plenty of trains that where packed Japanese style. In one case the driver even refused to depart the station unless 20 people would leave the train since it would be too dangerous. In the more rural areas the train can be highly unprofitable though. The government solves this by giving out route-packages that include a few profitable with a few less profitable routes so that train companies are forced to give at least basic (hourly) services.

Quoting Derico (Thread starter):
The Le Shuttle service?

The shuttle is highly profitable. Bare in mind again though, that the shuttle is just the train, not the tunnel. The Eurotunnel company is deeply indebted even though they have already been through full bankruptcy once.

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