Eurostar gets set for rivals

[John Ashworth]

Eurostar gets set for rivals as business travel declines

From The Times
April 17, 2009

Carl Mortished, World Business Editor

Eurostar is bracing itself for competition from rival high-speed train operators by cutting costs and refitting trains as it copes with a sharp downturn in business travel on its services from London to Paris and Brussels.

Revenue from premium passengers fell by a fifth in this year’s first quarter, compared with 2008’s first quarter, because of Channel Tunnel repair work in January, which restricted Eurostar’s timetable, and the recession.

Richard Brown, Eurostar’s chairman, said that it was still taking customers from airlines on routes to Paris and Brussels. “This is not a market-share decline, we are still increasing our share of the market,” he said.

Mr Brown said that the downturn was boosting the leisure market, with more people taking weekend breaks, but at the top end customers were trading down to economy tickets as business travel budgets are cut. “There is a limit to what you can do to stimulate demand as business passengers don’t travel for fun,” he said. “Like other businesses, we must reduce our costs to meet the new economic realities.”

Eurostar revenues fell 6 per cent to £168 million in the quarter. Passengers decreased by 11 per cent to 1.9 million.

Comparisons of Eurostar and airline traffic are not yet available, but Mr Brown said he felt that the train was still taking business from the plane. He said: “Our recently commissioned research shows travellers want transparent pricing and good-value fares when they are researching leisure breaks.”

Rival carriers are threatening Eurostar’s monopoly on the high-speed rail link to the Continent and Mr Brown said that Eurostar was bracing itself for on-rail competition from January 2010.

Air France and Deutsche Bahn have both signalled interest in developing cross-Channel rail services. The French airline is in talks with Veolia, the freight train operator, to develop a high-speed train service. In response, Eurostar is refitting its carriages and has hired Pininfarina, the Italian firm that designs Ferrari cars, to devise a new coach to face the competition.