Without additional funding from government there is a real risk to the survival of Eurostar

[daodao]

There are a lot of French people living in the South East of England; Eurostar is useful for them.

There were only 149,872 people born in France (and 29,142 born in Belgium) living in the UK in 2015; that is a relatively small number, given how close these countries are. Of the major continental European countries, there are far more Poles or people ultimately originating from Poland or former Polish territories living in the UK than people from any other single European country.

 

[MotCO]

There were only 149,872 people born in France (and 29,142 born in Belgium) living in the UK in 2015; that is a relatively small number, given how close these countries are.

I thought London was something like the 5th or 6th largest 'French' city.

 

[StephenHunter]

It's 2021 now. Also, they still travel to visit their family.

 

[daodao]

The diversion of the Copenhagen-Hamburg trains via Jutland is because a fixed link is being built across the Femern Belt and the work would be likely to seriously disrupt services if they continued to run over the traditional route. By diverting the services they are able to maintain a consistent and predictable timetable throughout the construction period, albeit with a small time penalty. If they didn’t consider the international service worthwhile, would they be planning a high-speed line between the two cities?

For clarification, I was also referring to the Gedser-Rostock/Warnemunde train ferry, which ceased some years ago but used to provide a direct train service between the capital cities of Denmark and Germany.

 

[Gloster]

I was referring also to the Gedser-Rostock/Warnemunde train ferry, which used to provide a direct train service between the capital cities of Denmark and Germany.

There you had a fairly lengthy sea crossing and then a slow trip down to Berlin. Much better to dog-leg via Hamburg. The route never really recovered from the penalties of being in the old East Germany and the later policies of uniting the two halves of the country.

 

[Ianno87]

Agreed. But if Eurostar were to fall, a new company could come in and take over.

What is the advantage of that compared to simply supporting the incumbent operator through the rocky patch?

I thought London was something like the 5th or 6th largest 'French' city.

There's "born in France" and "entitled to French citizenship" (e.g. offspring of somebody born in France) which make the number much higher. Or those with some other personal connection to France.

 

[MotCO]

What is the advantage of that compared to simply supporting the incumbent operator through the rocky patch?

No need for government support. A private company could take over what was, pre-Covid, a profitable company. There may be short term loses, but it should be able to cover this through working capital and future profits.

 

[Ianno87]

No need for government support. A private company could take over what was, pre-Covid, a profitable company. There may be short term loses, but it should be able to cover this through working capital and future profits.

The big down side would be closing down the service until a replacement is prepared to take the commercial risk.

You could argue that Eurostar would equally be able to cover short term losses with private or public investment, without the hassle of losing existing qualified staff.

 

[MotCO]

The big down side would be closing down the service until a replacement is prepared to take the commercial risk.

You could argue that Eurostar would equally be able to cover short term losses with private or public investment, without the hassle of losing existing qualified staff.

Wouldn't Eurostar go into administration, and another company buy it for peanuts, keeping the staff and retaining the assets? There may be a hiatus whilst licences are sorted out, but it would be during a period of few trains running anyway.

 

[SamYeager]

What is the advantage of that compared to simply supporting the incumbent operator through the rocky patch?

As has been pointed quite a few times already the UK is perfectly willing to provide support though its existing schemes. Eurostar is either unwilling or unable to take advantage of those schemes since it appears that what it really wants is a bailout. Politically there's no way that's going to happen so its up to its shareholders & banks to keep providing support. If the French government wishes to contribute/bailout Eurostar then that's up to them.

 

[Ianno87]

Wouldn't Eurostar go into administration, and another company buy it for peanuts, keeping the staff and retaining the assets?

Not necessarily. Who is going to buy a company that has low certainty of revenue returning within reasonable timescales, which taking on its full cost of operation and assets?

As has been pointed quite a few times already the UK is perfectly willing to provide support though its existing schemes. Eurostar is either unwilling or unable to take advantage of those schemes since it appears that what it really wants is a bailout.

Depends what is meant by "bailout" (which is used as a catch-all term for lots of possibilities)? The respective governments basically covering its operating deficit whilst Covid restrictions apply (with some strings attached) wouldn't be deemed (by some) a "bailout".

 

[Chester1]

Wouldn't Eurostar go into administration, and another company buy it for peanuts, keeping the staff and retaining the assets? There may be a hiatus whilst licences are sorted out, but it would be during a period of few trains running anyway.

Exactly. Even if the company was liquidated rather than put into administration, the 374s are specialist stock. They are not likely to be sold to other EU operators. While they could be used, who would want 400m stock tailored for Eurostar?

As has been pointed quite a few times already the UK is perfectly willing to provide support though its existing schemes. Eurostar is either unwilling or unable to take advantage of those schemes since it appears that what it really wants is a bailout. Politically there's no way that's going to happen so its up to its shareholders & banks to keep providing support. If the French government wishes to contribute/bailout Eurostar then that's up to them.

It does look like the Govermment is prepared to go further than the existing support schemes but only on commercial terms. Its interests are served by retaining the services not the company in its current form or its shareholders.

Not necessarily. Who is going to buy a company that has low certainty of revenue returning within reasonable timescales, which taking on its full cost of operation and assets?



Depends what is meant by "bailout" (which is used as a catch-all term for lots of possibilities)? The respective governments basically covering its operating deficit whilst Covid restrictions apply (with some strings attached) wouldn't be deemed (by some) a "bailout".

The UK government would be the obvious bidder. It has abolished franchises for domestic subsidies. Eurostar wants free cash or unsecured loans and for everything to carry on as normal. Why would the Govermment agree to that when there are other ways of retaining the services that provide better value for the taxpayer?

 

[Bletchleyite]

It does look like the Govermment is prepared to go further than the existing support schemes but only on commercial terms. Its interests are served by retaining the services not the company in its current form or its shareholders.

I think this is realistically the answer. That is the money can go in, but as an investment, not a bailout. This is how it worked with the bank "bailouts" - the money went in, but in exchange for shares, diluting the existing share capital.

 

[Chester1]

I think this is realistically the answer. That is the money can go in, but as an investment, not a bailout. This is how it worked with the bank "bailouts" - the money went in, but in exchange for shares, diluting the existing share capital.

There are plenty of idiots who think the banks bailouts involved free cash and are unaware that the Treasury still owns a majority of RBS/NatWest group and only this week sold the last of B&B and Northern Rock's mortgage books. Barclays found an alternative investor (Qatari oil fund) and got secured loans from UK government. RBS and Lloyds sold shares to the Government for the cash they needed. Northern Rock was insolvent and got nationalised for £0. RBS investment has turned out to be a significant loss for taxpayers but the treasury made profit on Lloyds bailout and Northern Rock nationalisation.

Eurostar (and airlines providing important routes) should be offered the same options but not free cash courtesy of taxes on our hard earned income. If they have run out of trains without charges on them then their options are the existing shareholders stump up the money, new investors such as UK treasury take a stake, their creditors (French banks) swap debt for equity or Eurostar goes into administration.

 

[LNW-GW Joint]

Exactly. Even if the company was liquidated rather than put into administration, the 374s are specialist stock. They are not likely to be sold to other EU operators. While they could be used, who would want 400m stock tailored for Eurostar?

Well, HS2 is looking for some high-speed stock for the new line.
Might be a bargain when the Treasury is short of funds.

Airlines like Delta stay in business by buying used fleets at knock-down prices and running them for another 20 years or so.

 

[Chester1]

Well, HS2 is looking for some high-speed stock for the new line.
Might be a bargain when the Treasury is short of funds.

Airlines like Delta stay in business by buying used fleets at knock-down prices and running them for another 20 years or so.

I think one thing that easily gets missed with HS trains is that their value is based on their millage not their age. You don't get many 30 year old HS sets in service! If the 374s were kept in warm storage they would lose little of their value (but would still have storage and maintenance costs). They are bespoke stock, the routes are profitable and the brand has value. The fight is over who picks up pandemic debt and it should be the shareholders not the UK taxpayer.

 

[StephenHunter]

Some of the TGV PSEs lasted nearly 40 years, mind.

 

[LNW-GW Joint]

The people who think Eurostar should/will reduce fares to recover its business might like to note this item about Heathrow Airport: all fares from LHR to rise by £8.90.
This is to recover losses over the last year from the reduced passenger flow.
UK coronavirus live: Air fares from Heathrow Airport to rise thanks to ‘pandemic tax’ (msn.com)

The stealth tax, which must be passed by airlines to Heathrow, is an attempt to recover from the airport’s financial loss last year when a decrease in travel and passenger numbers left the airport with losses of £2 billion.

 

[SamYeager]

The people who think Eurostar should/will reduce fares to recover its business might like to note this item about Heathrow Airport: all fares from LHR to rise by £8.90.
This is to recover losses over the last year from the reduced passenger flow.

It'll be interesting to see what the likes of Gatwick etc. do in response as well as how quickly Heathrow's traffic bounces back, or not, as coumtries open up. Business travel will almost certainly be much slower in returning as well as subject to much tighter restrictions by companies. Long haul in cattle class is rather less appealing than business class.

At any rate, it'll be a fascinating to contrast and compare. Eurostar can charge as much as they like but the point is to have a viable business and I'm not convinced that travelling by train to the continent has quite as much pulling power as flying to the continent.

 

[StephenHunter]

Depends where you are going on the continent.

 

[FQTV]

The people who think Eurostar should/will reduce fares to recover its business might like to note this item about Heathrow Airport: all fares from LHR to rise by £8.90.
This is to recover losses over the last year from the reduced passenger flow.
UK coronavirus live: Air fares from Heathrow Airport to rise thanks to ‘pandemic tax’ (msn.com)

The situation there is that an infrastructure provider has utilised a system available to it to add an additional usage charge to operations. The charge is billed to the operator, which may or may not pass it on to their customer. The network airline fares systems permit the charge to be shown in the fare calculation. Although it transparently shows in the calculation, there is absolutely nothing to stop the operator from simply reducing the base fare component to compensate. Or not.

The only relevance to this thread would be if St.Pancras, or HS1, or Getlink, or SNCF or some other infrastructure provider utilised by Eurostar were to increase their charges.

Eurostar does not break down the component costs of their tickets in the way that network airlines do, but it still retains complete commercial flexibility to set its retail and contract pricing to take into account its assessment of its business needs and aims.

Heathrow increasing its charges is in itself a fairly unique response (probably more for political reasons and because it can) and therefore not really relevant to Eurostar's situation.

 

[45669]

I'm not sure why the British taxpayer should pour money into a privately owned service that exists pretty much only to help comparatively rich people go on city breaks abroad.

If it goes bust, so be it. If the HS1 concessionaire goes bust, so be it.
We already have the tools to keep the infrastructure operational without significant disruption. The concession can be terminated if the concessionaire goes into administration

Eurostar's wellbeing ceased to be my problem when the government sold its share

I can assure you that it isn't only rich people that use the Eurostar trains. They also bring lots and lots of people, both business and tourist travellers, INTO this country don't forget. And so what if they are on city breaks; the London tourism sector is suffering badly at the moment so needs all the visitors it can get.

 

[alex397]

I can assure you that it isn't only rich people that use the Eurostar trains.

I keep hearing the argument that Eurostar is mostly for rich people. Like you say, it isn’t just for rich people.
Well, really any foreign travel whether by plane or Eurostar, is for relatively rich people.
I haven’t noticed a big difference in price when travelling by plane. Sure, you can get some cheap flights, but I’ve very rarely ever used one due to the awkward flight times.
And personally, travelling to a Eurostar station is usually a lot cheaper than travelling to an airport. Of course, it is different if you live outside of London and the South East.

 

[duesselmartin]

Talking to Belgians, I do get the impression that for Belgium to London passengers, Eurostar is the preferred option over air.
So tourists and esp day tourists from Benelux, Eurostar is very important for the London economy.
Dont have any figures to back that up though.

 

[StephenHunter]

It covered over 70% of London to Paris traffic pre-pandemic, IIRC.

 

[Ianno87]

Very good article in the FT:

Subscribe to read | Financial Times

News, analysis and comment from the Financial Times, the worldʼs leading global business publication

www.ft.com

In an office near St Pancras station, Jacques Damas is holding a train magazine and preparing for a train journey. The 63-year-old chief executive of Eurostar has worked in railways for his entire career. But if you suggest that he might be passionate about trains, he seems almost affronted. “I do not have a private [toy train] network in my house! I’m not in this category. For me, you must not have a personal passion, which becomes an obstacle to reality.” When Eurostar recruits staff, it is wary of applicants who are train enthusiasts. “A good railwayman is someone who evolves,” says Damas, an angular, grey-haired and sometimes theatrical Frenchman. “Those who are absolutely passionate about the last century — no, we are no longer in steam trains.” This tension between passion and practicality — dream and reality — lies at the heart of Eurostar. It is summed up by the 20-metre-long Tracey Emin neon artwork that hangs at St Pancras, its London terminus: the message, “I Want My Time with You”, is both romantic and demanding. When Eurostar opened in 1994, the French newspaper Le Figaro declared “the end of British insularity”. For couples who got engaged by the Eiffel Tower, MEPs who shuttled to Brussels, or bankers who came the other way, the service reshaped their idea of Europe.

Continues....

 

[alex397]

“the end of British insularity”. That quote hasn’t aged well....

 

[Ianno87]

“the end of British insularity”. That quote hasn’t aged well....

Number of UK visits to the EU 2022 | Statista

The number of visits made by residents of the United Kingdom to the European Union rose significantly in 2022 over the previous year, after shrinking with the onset of the coronavirus (COVID-19) pandemic.

www.statista.com

Can't find any very old figures, but the number of tourist visits from the UK to the EU increased from 47.4m (2011) to 67m (2019). Hardly "insular".

 

[duesselmartin]

As a frequent visitor to the UK, i find the country is very European.
Where the tunnel has failed is in connection regions beyond of London to the continent.
Neither North of London Eurostar nor Nightstar never happened.

 

[Ianno87]

As a frequent visitor to the UK, i find the country is very European.

We have more culturally in common with Europe than many appreciate. The only significant difference really is language.

Where the tunnel has failed is in connection regions beyond of London to the continent.
Neither North of London Eurostar nor Nightstar never happened.

I'd argue that the move from Waterloo to St Pancras was a big step in making Eurostar more relevant to "The North".