After 30 Years, TGV Service Prospers Even as its Future is Questioned
Thursday, France celebrated the 30th anniversary of the opening of the high-speed link between Paris and Lyon by then-President François Mitterand, an occasion that redefined travel in Europe and encouraged countries around the world in invest in faster train service by offering train service at speeds above 150 mph for the first time. SNCF, the public national rail company, celebrated this evening at Paris’ Gare de Lyon, where services first originated.
The distinct orange and blue TGV trains that have rocketed through the French countryside at speeds of up to 320 km/h (200 mph) since 1981 have been extraordinarily successful in attracting travelers away from airlines and even the highways because of the quick journey times they offer between center-cities. And they’re supremely safe: More than 1.7 billion rides have been taken on TGVs, fatality-free. Because of France’s reliance on nuclear plants, the electric-powered service has provided the country a low-carbon travel alternative; when considering alternative routes people would have taken without high-speed service, new routes — including construction and operations — are carbon positive* in the long-term.
Because of a series of investments in new dedicated passenger lines, Paris is now three hours from the Mediterranean, two hours and twenty minutes from London and the German border, and one hour and twenty minutes from Brussels. 2,300 km of new lines already under construction or planned for opening within the next decade (see map at the end of the article) promise significant improvements that will bring Toulouse and the Spanish border within three hours of Paris.
The high cost of new rail lines, however, puts in question how much further expansion the French can afford.
Combined with relatively affordable fares, lower travel times have increased ridership on TGV trains in France to about 100 million passengers a year ( 141,000 a day), more than one and a half times the population of the country as a whole. Though SNCF’s one billion total annual riders is dwarfed by ridership on DB German rail (1.9 billion), France’s encouragement of the construction of new high-speed lines and SNCF policies that push all riders to fast trains, rather than segregating train speeds by the means of individual travelers, have allowed the company to control 50% of the European high-speed market, compared to 22% for DB, 11% for Spain’s Renfe (which has a longer high-speed rail network), and 10% for Italy’s FS.
83% of French people have ridden TGV trains, similar to the percentage of Americans who have flown and far higher than the percentage of Americans who have ridden Amtrak, high-speed or not ( less than a third of them).
From its TGV services, SNCF has made significant profits, which have reached €900 million annually in recent years, much of which has been used to cross-subsidize losses on slower Intercités trains serving smaller cities and TER operations offering regional rail.
But the demands by President Nicolas Sarkozy — who recently said “The TGV, it’s France” — on the national public rail infrastructure owner RFF to build more high-speed lines has changed the equation. Though new routes are usually partially funded by local, regional, and national governments, TGV offerings have been expected to pay back a portion of construction costs (and the much smaller cost of line maintenance) through fees on track usage. RFF covered 28% of the construction costs of the LGV Rhin-Rhône Branche Est, which will open for service later this year, for instance; those costs will be paid back through track fees eventually passed down to passengers on TGVs.
But debt accumulated to build the lines has reached €29 billion for RFF and €9 billion for SNCF; new lines, at a cost of €16-27 million per kilometer, will increase those sums substantially.
RFF has responded to this increase in debt by significantly increasing track fees, and it plans to do so by 40% between 2008 and 2012 — enough to wipe out SNCF’s margin of profitability on the TGV entirely (though the French government has said it would work to stabilize those charges after 2013). RFF will increase fees on the most popular TGV routes the most.
SNCF has responded by threatening to cancel routes with lower ridership (even though they are profitable if excluding the track fees devoted to construction) and it has said the loss of profitability will make it impossible for it to replace the original 1981 fleet of TGVs before 2020. Fares are increasing at 3.4% annually, twice the rate of inflation, and SNCF plans to charge users more on select routes even as it reduces customer service for others to a low-cost model over the next few years. Competition on international routes running through France, expected to begin later this year, will put another cog in the TGV’s future.
Other solutions, such as public-private partnerships for new routes, may reduce the burden on RFF, but they won’t help much for SNCF or riders because someone will have to pay for construction costs at some point. The new LGV Sud Europe Atlantique, to run from Tours to Bordeaux, will cover 55% of its construction costs through track fees, but the project’s PPP partner’s investment in the project will have to be paid back through higher track fees on trains through the corridor (the private investor will also get to keep all profits from the line). RFF’s 14% share of the costs of this project will have to be covered by riders on other lines paying track fees, since all track fees from this route will go to the investor, not RFF.
The irony of charging more track fees to pay for the construction of new lines is a lower degree of service on existing lines and less train travel, since SNCF must cover capital costs with operations profits and higher fares reduce demand.
Standing in the way is the inherent conflict between SNCF’s interests, which revolve around maximizing passenger revenue, and those of RFF, which are about minimizing debt from infrastructure construction and maintenance. These must be harmonized. SNCF’s President Guillaume Pépy has suggested that the current separation of operations from track ownership is a clunky, inefficient model that does not respond adequately to the needs of the railway. Other solutions, such as Germany’s or Spain’s, in which infrastructure is owned by a division of the national rail company, may be less amenable to future competition in services but may make for a less administratively complex system.
The fundamental question is whether France should continue to build new lines (and increase the debt of agencies like RFF), even if that means putting existing services out of the price range of some riders. The government has chosen to pursue that path, but it may not be a solution that is viable in the long term.
Nonetheless, the TGV remains a model for the rest of the world. SNCF has successfully demonstrated how to extend fast, safe, and environmentally friendly rail services to most of the country at prices that most of the population can afford.
Note: In the map above, which is just of high-speed lines, not all French rail lines, LGV refers to “ligne à grande vitesse,” or high-speed rail line.
* Carbon positive in this case means that the line will produce less carbon than would have status quo alternatives.
thetransportpolitic.com |
