Who Takes the Eurostar? Virtually No One, because the Pandemic Fuels a Rail Disaster

PARIS – Earlier this month, David-Alexander Leduc rolled his suitcase across an almost empty platform at Gare du Nord station and scanned his ticket at the turnstile to board the only Eurostar going to London that day.

Mr Leduc regularly commuted on business on one of at least 17 Eurostar high-speed trains that ran daily from morning to evening through the underwater canal tunnel between Great Britain and France.

He was lucky that there was a train.

“It’s limiting,” said Mr Leduc, who lives in London and has traveled less to France to meet customers, as Eurostar is forced to cut services due to the fall in national quarantines. “But you have to adapt.”

On Monday, a bad year for Eurostar suddenly got worse. All connections from London to Paris, Brussels and Amsterdam were suspended for at least 48 hours because the governments on the continent had banned travelers from Great Britain. This is a precautionary measure as health officials are trying to control a new variant of the coronavirus that is spreading across parts of England. The trains will continue to run from Paris to London, the company said.

Eurostar, the elegant and fast way of traveling that connects London, Paris, Brussels, Amsterdam and other cities, is a shadow of itself crippled by the pandemic. His driving force has all but disappeared and his finances are under threat. More than 90 percent of the employees were on leave, said a union.

His suffering reflects a struggle for survival that is unfolding across the European train industry as the pandemic continues to revitalize the transportation business. Like European airlines, the rail sector is facing the worst crisis in modern history.

According to CER, a Brussels-based trade group that represents passengers and air passengers, the number of drivers has fallen by 70 to 90 percent due to lockdowns and social distancing requirements, causing the industry a staggering 22 billion losses this year Euro drives freight train operators. Thousands of trains have been mothballed and tens of thousands of workers are on government subsidized vacations.

“It’s a completely extraordinary situation,” said Libor Lochman, Executive Director of CER. “There is no comparison, and it can and will bankrupt a number of companies unless there is political will to prevent it,” he said.

With more than nine billion passengers and 1.6 billion tonnes of freight on the tracks from Spain to Sweden, Europe’s trains are just as important as airplanes for moving people and goods across the continent.

But even after the pandemic, analysts say work-from-home practices, online socializing and the advent of internet shopping will have a lasting impact on all kinds of rail travel, leaving privately owned companies like Eurostar and state railways, including Germans, to be Rail in Germany and the SNCF, lagging behind France, the largest shareholder in Eurostar, who is struggling to survive.

The European Union needs industry to remain viable: it has made rail transport a core part of the European Green Deal, a pioneering environmental policy that aims to make Europe the first climate-neutral continent by 2050. The plan provides for the doubling of the high-speed line before freight traffic and the expansion of electrically powered trains and tracks to reduce CO2 emissions.

Eurostar, which has 3,000 employees and is headquartered in London, has appealed to the UK and French governments citing its role as a low-carbon means of travel after receiving billions in financial support to the aviation industry and public railways.

“There is a risk that this iconic service will fail,” wrote Jacques Damas, CEO of Eurostar, in an article.

Economy & Economy

Updated

Apr. 21, 2020, 4:47 am ET

As an independent train operator, the company is not eligible for direct assistance in the UK but is pushing on other fronts. Eurostar is trying to get an exemption from UK business taxes and especially from the high tolls for using train tracks in Great Britain, which Lochman says can sometimes cost several hundred euros per mile.

The state railways receive billions in support. SNCF, which has recorded losses of up to 5 billion euros on only a fraction of its high-speed TGV trains currently in service, received a capital injection of 4 billion euros from the French government last Tuesday. The expected losses of the Deutsche Bahn in the amount of 5.6 billion euros this year will be offset by the rail support of the German government of up to 4 billion euros.

Private operators who are dependent on shareholders and customer receipts face higher hurdles. Start-up low-cost train companies, including Flixtrain in Germany, have reduced the service and are facing financial burdens. Leo Express, a competitor in the Czech Republic, filed for bankruptcy in October.

Eurostar is the largest and best known of the group. The consortium, which includes a consortium to which SNCF has a 55 percent stake, as well as investment firms and the Belgian National Railway Company, are already preparing for a possible business loss from the UK’s decision to leave the European Union, the officially comes into force on January 1st.

Pandemic restrictions have dealt it a faster blow. After a record profit in 2019 when 11 million people crowded its trains, Eurostar said it was now “struggling to survive” after a “total drop in demand” for international rail travel.

Passenger numbers have fallen by 95 percent since March. Sales fell in the first half of the year by 340 million euros, a decrease of 61 percent compared to the previous year. From a peak of more than 60 trains a day, Eurostar has reduced the service to a daily return trip between London and Paris and a return trip on the London-Brussels and Amsterdam routes.

Up until this week, Eurostar temporarily added more daily trains before the Christmas holidays and planned to return to a reduced schedule in January.

The cessation of the service outside London is subject to the approval of European governments to accept British travelers. “We are awaiting further details from governments on restrictions beyond this initial 48-hour period,” the company said on Monday.

Eurostar recently funded more than £ 200m from its shareholders, but the money is limited. A spokeswoman said the outlook for 2021 “continues to be significantly lower passenger numbers and lost revenue than our business can support.”

Unions, typically fighting management, join Eurostar executives to push for government aid.

“Until Covid went broke, we had a business that was on the upswing,” said Mick Lynch, a representative for the National Union of Rail, Maritime and Transport Workers, which represents Eurostar employees in the UK. “Now we’re looking at 5 percent of past revenue and passengers on a good day,” he said. “No company can handle it,” he said.

Even after the introduction of a vaccine, the major European railway companies face a precarious transition period. A complete turnaround for passenger rail operators is unlikely before 2023 or 2024, and even that depends on government support, said Maria Leenen, founder of SCI Verkehr, a Hamburg-based rail industry consultancy.

As the industry plans a post-pandemic recovery, analysts say it needs to instill new loyalty among drivers, including by promoting trains as a green way of traveling on Europe’s path to a greener future.

Companies are also exploring pricing models that worked well when executives and selfie tourists flocked to European capitals, but are less profitable as a pandemic-induced recession is limiting consumer spending power.

With fewer trains, ticket prices have soared to sometimes astronomical levels, leading even environmentally conscious commuters to look for airplane flights that are up to 75 percent cheaper.

Mr Leduc, an industry consultant for British and French start-ups, paid around € 400 for his round-trip ticket, roughly double the normal fare. He said he paid for it because the trip was on business. However, since he is planning a vacation trip to France with his wife and daughter, he considers taking easyJet, a low-cost airline, after realizing that train tickets for his family could cost nearly 1,000 euros.

“If Eurostar prices stay in the stratosphere, I will start flying without hesitation, even if it is more strenuous, longer and more polluting,” he said.

Even if the quarantines are lifted, people may not use trains as often, including lucrative business travelers who haven’t thought of taking the Eurostar to Paris for a meeting and then dining in Soho again that evening. Some drivers will have dumped the train for cars. In metropolitan areas, commuters may increasingly turn to bicycles for short distance travel.

Still, the pandemic is unlikely to wipe out Europe’s love affair with trains. People are likely to revert to their old mobility habits once the pandemic subsides, said Ms. Leenen of SCI Verkehr.

“But the trains will just be a little less crowded,” she said.

Antonella Francini contributed to reporting from Paris.

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