The liberalisation of high speed has brought to Spain a significant increase in the number of seats on this service and a surge in users. But the price war unleashed between operators to get passengers on trains has not brought any benefits to the companies so far: They all lose money. Together, the three operators, Renfe, Iryo and Ouigothey accumulated some losses of 187 million euros in 2023.
The last to report its results was the company owned 45% by the Italian public operator Trenitalia, 31% by AirNostrum and 24% by Globalvia. According to the accounts it has filed with the Commercial Registry, it recorded losses of 79 million euros last year, compared to 25 million in 2022, although in this year it barely operated in the last weeks of the year.
The company, which earned 212 million euros and transported six million passengers with an average occupancy of 65%, says that, despite its “red numbers”, the losses incurred last year are in line with expectationssince it is now in the process of starting up its operations, having to face a large investment at the beginning that will be amortized over the years.
Ouigo
Ouigothe low-cost subsidiary of the French public operator SNCF, also lost 43 million euros last year after recognizing that the market is “very demanding at a commercial level.” “The arrival at the end of 2022 of a third operator (Iryo) has meant the existence of a greater offer of seats in the market, generating a Price war to attract customersa very demanding competitive situation at a commercial level,” Ouigo states in its accounts.
Despite these losses, and as in the case of Iryo, Ouigo maintains that its losses are logical in a “ramp up” period such as the one they say they are going through at the moment. In fact, the firm has assured that its forecasts indicate that it will break even this year..
The Government does not believe, however, that it was the market dynamics that triggered a price war, but rather it points the finger at Ouigo as the culprit. And they do so by arguing, as stated on several occasions by the Minister of Transport, Oscar Puente, that the French company is practising “dumping” -selling below price- to take over the market with the financial backing of its parent company. A practice that, they say, has dragged Renfe into losses. The public operator recorded red figures of 65 million euros last year in 2023. Its income fell by 61.3 million euros in long-distance and high-speed services due to the pressure exerted by Iryo and Ouigo.
Renfe is preparing a report against Ouigo to send to Brussels for what it considers to be practices contrary to liberalisation
This situation has led Renfe, following Puente’s orders, to prepare a Report against Ouigo to be submitted to the European Commission for practices that it considers to be contrary to liberalisation, in order for Brussels to take a position.
Ouigo argues, as they have stated in their accounts, that their business plan is still in the launch phase, which is the reason for their losses, but that, in any case, it is sustainable. They argue that they do not receive support from France and that they have a model based on production without additional costs, economies of scale and supported by large volumes of passengers to be profitable. Moreover, they have already warned that low prices are part of their structural policy.