Unsustainable price war at high speed

Unsustainable price war at high speed

“We want to be the mobility leaders in Spain. That's why we aspire to enter the rail market in Spain, including high-speed lines.” Carlos Buesa, General Manager of Strategy and Diversification of the Asturian transport group Alsa, analyzes every imaginable corridor for autonomous vehicles, with 65 billion euros invested to create the first network in Europe and the second in the world after China. Alsa, controlled by the British group National Express and the British… Cosmen, along with the Cordoban family company Magtel, of the Magdaleno family, to be new operators in a liberalized market mired in a bloody price war.


The liberalization of the passenger transportation market for autonomous vehicles led to the end of Renfe's monopoly in May 2021 with the arrival of Ouigo, a subsidiary of the French public company SNCF; And November 2022 with Erio. This company is controlled by the Italian public company Trenitalia with a 45% interest, Air Nostrum (Carlos Bertomeo) and other partners with a 31% interest, and Globalia (which in turn is controlled by three international pension funds) with a 24% interest. As a counterattack, Renfe launched its Avlo brand to compete on price. Public benefits must be added for those under 30 years of age.

In the two main autonomous vehicle corridors, Madrid-Barcelona and Madrid-Valencia, the combination of Iryo and Ouigo achieves a market share of 42.1% and 50.4% respectively until September 2023 according to the National Commission for Markets and Competition (CNMC). Since its introduction, average prices across all lines have fallen by up to 25%. The average quarterly price ranges from €39.95 for Ouigo to €62 for Ave on the Madrid-Barcelona flight, although tickets are on sale for €9. In 2022, Ouigo lost 36 million and Iryo 25 million. Is the system sustainable?

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“The numbers are not coming with these current numbers,” explains Fernando Vizoso, partner at infrastructure and transportation consultancy KPMG. “This model will not continue indefinitely.” This consultancy estimates that the fees paid by operators to Adif – the state manager of the railway sector – represent 22 euros per ticket, to which energy costs must be added. Both Ouigo and Iryo have requested a reduction in fees. From Adif expresses that he has been frozen for four years. KPMG estimates that 2023 ended with 31.8 million autonomous vehicle passengers, compared to 23.6 in 2022. For CNMC, the increases in routes are due to the entry of new competitors: “If demand triples, this could become a profitable business,” says Vizoso. . Carlos Buesa could not be clearer: “The price war must end. It is not sustainable.”


Expansion of stations

KPMG believes there is sufficient capacity on the existing lines to increase frequencies. There are bottlenecks at the stations, as they are now unable to accommodate more passengers. This is why, according to Adev, the works in Chamartín and Atocha and those planned in Sorolla, Valencia and Sant. In addition to the construction of Sagrera in Barcelona. Added to this is the gradual development of the corridors in the north – the opening in the port of Pajares has made it possible to shorten the journey from Oviedo to Madrid to three and a half hours – and the north-west and the long wait for the connection between Barcelona and Valencia that should unite the AV with Andalusia.

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Ouigo aims to increase its offer in 2024 to include the Murcia/Elche, Valladolid/Segovia and Cordoba/Seville/Málaga corridors. Erio also wants to expand other lanes and “access as many stations as possible.” Pending review – Adif has not set a date – A second wave of tenders is “still work in progress”, and existing lines allow any approved operator who wants to be able to submit their trains on their own · Request a “groove”, as the process is called in railway colloquialism Iron.

In Alsa they believe that in 2025 a new scenario will open for choosing it, and at the latest, in 2027-2028 they will be able to start working with trains. Other potential operators of the new corridors are expected. However, of sector is considered very complex as there can be more than four in each line. “Markets must be shared,” they say. It is only guaranteed that Renfe follows all lanes and stations. Sources from the Spanish public company indicate, “We are waiting for the new train lines manufactured by Talgo to continue betting on improving the offer, with more destinations, more frequencies and more punctuality.”

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