France
“I think the French system has suffered from complexity, misalignment of interest,
and inefficiency.” Guillaume Pepy
TGV growth has stalled thanks to the economic downturn in France. Photo: SNCF Patrick Messina
has ground to a halt. Pepy says he is not worried in the medium term because the four new lines scheduled to open in 2017 will restore the TGV system to growth. “We generally get a 30% jump in traffic when we open a new line, half from air and half from the generation of new business,” says Pepy. In the meantime, the challenge is to weather the current crisis. This is part of the rational for launching Ouigo, SNCF’s low-price high-speed initiative to attractive new users to rail by appealing to people who still want to travel but find it increasingly difficult in the current economic climate. As the following article explains, SNCF is very pleased with the results so far. Pepy also sees Ouigo as an initiative which will help SNCF maintain its leadership in high-speed rail. TGV accounts for around half of all high- speed rail travel in Europe. “We want to retain our position in the high-speed market by giving Europeans a choice versus air,” he says. “Our ambition is not domestic - TGV is an opportunity for Europeans, and Europe is an opportunity for TGV.” But the real growth driver for SNCF is mass transit or what Pepy describes as daily mobility. “This now accounts for one third of our activity and this is where we are putting our money, intelligence and creativity,” says Pepy. However, he freely admits that SNCF been slow to develop and improve commuter services, and is now trying to make up for lost time with heavy investment underway in Paris. Railfreight has long been SNCF’s Achilles’ heel as it has continued to haemorrhage traffic despite numerous
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attempts over the years to revive the business. Pepy says SNCF is making some progress as it has managed to reduce the losses by one third during the last four years. “We will not give up with this business as we think it is absolutely vital,” Pepy affirms. “We conducted a very interesting study with Bain which showed that between 2007 and 2011 the seven major railfreight operators in Europe accumulated losses of more than ƒ5bn.” Pepy argues it is definitely a question of European transport policy. “What does it mean for fair competition when on one hand we have a completely deregulated system for road, and a hyper-regulated system for rail on the other?” he asks. Pepy is keen to point out that SNCF is now a mobility business rather than simply a national railway with rail
accounting for 60% of turnover and other modes 40%. SNCF is also focused on developing its international business either on its own or with French partners. International business accounted for 23% of SNCF’s annual turnover of ƒ33.8bn last year and Pepy wants to increase this to 30%. In addition to the potential offered by the so-called Brics countries, Pepy is very excited about Australia where SNCF already has a foothold through its Keolis subsidiary in a joint venture with Downer EDI which operates the huge Melbourne tram network and will run the Gold Coast light rail line when it opens next year. “Light rail is one of the most dynamic railway markets globally, and France is now number one in the world for light rail,” says Pepy. Finally, I asked Pepy where he sees SNCF in the next few years. “I have a dream that in two to three years from now door-to-door travel will no longer be the sole preserve of road transport because public transport will be in a position to provide a real alternative. The question is how to connect the different systems and personalise the service so that at any moment you can decide whether to use your car or public transport. It is a big, big challenge, but it is a very exciting prospect.” IRJ
Heavy investment is underway to modernise the Paris commuter rail network. Photo: SNCF Christophe Recoura
IRJ June 2013
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