Spain fears: our train will become too cheap (and it is the French’s fault)

Spain is one of the few countries in Europe that gives ample scope to market forces on its own track, a hobbyhorse of the European Commission. Since 2021, Renfe, the Spanish NS, has faced formidable competition on two important routes: from Madrid to Barcelona and Valencia respectively.

The challengers, Iryo and Ouigo, are certainly not cute start-ups. Iryo has Italy’s national railway company as its largest shareholder. Ouigo is a subsidiary of SNCF, the French train operator and fully owned by France.

Since their arrival, ticket prices have fallen dramatically. By booking months in advance you can travel from Madrid to Barcelona with Ouigo from 9 euros, a distance of 500 kilometers as the crow flies. For comparison: for the same amount, the NS will take you on the 35 kilometers between Utrecht and Amsterdam.

If you really want to party, you can take the luxury package from Iryo to Valencia (300 kilometers) for as little as 20 euros. Along the way you will be stuffed with bread, salmon, avocado, a quail egg, cava, white wine, coffee and chocolates.

These are the absolute bottom prices. But even those who book later usually don’t spend more than a few tens of euros on a single ride. That was very different when Renfe still had the empire to himself. Since the arrival of the newcomers, prices on the two routes have fallen by around 40 percent, the Spanish competition watchdog CNMC calculated.

‘Trying to take over the market’

No matter how nice the price war is for the traveler, there is mainly concern from Madrid. Óscar Puente, the Minister of Transport, warns that the French in particular are ruining the Spanish railways: “Ouigo is busy with dumping, with asking prices that are lower than the costs,” he said in a radio program last Thursday. Hora 25.

There is a fear that its own train operator will be unfairly squeezed out of the market. Despite a peak in passenger transport, Renfe wrote red figures last year (how red is still unknown), according to the management of the government company, a result of the fierce competition.

In 2022, the year in which the corona crisis came to an end and the electricity price rose explosively, Renfe already suffered a loss of 109 million euros.

The challengers are also losing “an incredible amount of money”, according to Puente, with the designated culprit Ouigo facing a loss in 2022 of 36 million euros. ‘They are lowering prices, and with the French public company SNCF behind them, they can keep that up for a long time. (…) It is a clear strategy to take over the market in the medium term.’

Many more people take the train

Ouigo’s response was one of disbelief. “This is the first time that we have been accused of being too low,” the company’s management responded to the Europa Press news agency, among others.

According to general manager Hélène Valenzuela, the start-up costs are normal and Ouigo hopes to make a profit between Madrid and Barcelona from May. Her company is said to have finally made the high-speed train attractive to those people ‘who could not afford an elite product for this’.

Transport figures support this. In 2022, 10.2 million travelers took the train between Madrid and Barcelona, ​​roughly 2 million more than in the years before the corona crisis. The percentage of travelers who chose the train over the plane between the two largest cities in the country was 78 percent, compared to 63 percent in 2019. That is a big win for the climate.

Criminal proceedings against the Netherlands

Market forces on the railways are also a sensitive issue in the Netherlands. Both the NS and the House of Representatives are against more competition, which would only lead to fragmentation of the network.

Last year, the cabinet therefore decided to ignore the European rules and extend the NS monopoly on the most important lines until 2033. This was much to the dissatisfaction of the European Commission, which has initiated criminal proceedings against the Netherlands.