Proposed new Channel Tunnel services discussion

[Krokodil]

Well half the fares are definitely below the mean fare.

Don't you mean median?

Precisely, although I think £78 is unrealistic.

I only picked it as £39 is what Eurostar (at least used to) advertise as a starting single fare.

 

[AlastairFraser]

I can't think of the last time I spent less than £200...

I think that's quite typical of the demographics of this forum though - a lot of forum users will be middle aged or older professionals or pensioners with not inconsiderable disposable cash.
There are millions of people who do not fit in this bracket, who would find the idea of a sub £150 day out in the Continent as an occasional treat every few months - especially given that buying a house is now unachievable until your late 30s or 40s for a lot of people and things that would have been perceived as everyday activities are now expensive enough that they have to be budgeted in.

Eurostar is a lot more convenient and faster than the previous train-ferry-train combination but there is something to be said for being able to travel at no notice without having to pay an extortionate fare.

That's my point, and, as I said, it doesn't even have to be Paris. A day out in Lille or Antwerp at a reasonable price would be a good compromise.
This is why e.g. Ryanair and back to a city in Ireland at short notice is so popular, but it's not so easy to do that on the continent (and the low cost airports within 100 miles of London are often more difficult to get to than e.g. Liverpool for residents of Merseyside/Lancs, or Manchester for residents of Greater Manchester/Cheshire).

I only picked it as £39 is what Eurostar (at least used to) advertise as a starting single fare.

Oh yeah I remember that, although I would think that's virtually a loss leader with HS1/Eurotunnel fees and staff costs.
£45-£50 singles and £90-£95 returns being regularly available on a competitor still gives you a small profit margin, which can be duplicated at scale if you're a competent operator.

 

[AdamWW]

Don't you mean median?

Yes I do. I knew I shouldn't have had that glass of wine with dinner...

 

[Farigiraf]

Re: regional tourism, there are so many fantastic places that are so close but so far to the UK which are massively underperforming compared to cities in Poland, Spain or Italy which have cheap flights.

Lille, Amiens, Calais, Ghent, Antwerp etc. - they're currently just about possible with a (very long) day out by car or coach, but high-speed rail is a different thing altogether. These places aren't too touristed from the European side either, so traffic to/from GB would help them out a lot. In the UK end there's really just London (plus Canterbury/Brighton via Ashford if you're brave) but London's certainly full of stuff to do!
Wrong thread for 'Eurotunnel: what could've been' though

 

[AdamWW]

Oh yeah I remember that, although I would think that's virtually a loss leader with HS1/Eurotunnel fees and staff costs.

Some time ago I flew (for work) with Ryanair on what must have made them a loss as the ticket price was less than the air passenger duty.

Unfortunately (for them) I failed to pay for luggage, food and drink on board and I didn't even buy a scratch card.

 

[Transilien]

Despite this, in a rare moment of UK infrastructure progressivism, we went for the rail option. I won't act like we could have had a turn-up-and-go cross border railway by 2026 if privatisation, the 2008 crisis and Brexit hadn't happened, but the fact that Eurostar is seen as little more than a high-cost London-Paris/Brussels shuttle does definitely seem fairly regretful to those around when it was still being proposed. A £30 billion, once-in-a-lifetime crossing (comparable to e.g. the Messina or Øresund crossing), and this is all we do with it (plus an expensive car shuttle).

It is depressing, the Channel Tunnel is almost a white elephant apart from fairly specific uses. The UK should have joined Schengen as soon as it started in order to reep the true benefits of a fixed link to the rest of Europe.

 

[Snow1964]

There are nearly 20 million people in the London, South East, East and portions of the East Midlands/South West regions that are close enough to London to make international rail from London attractive.

I think 20m people is including an awful lot that couldn't get to St Pancras in an hour, all sorts of places like Guildford, Southampton, Oxford etc.

Some journeys might be just over an hour if very lucky with connections, but often will need 1.5 to 2.5 hours to get a service that arrives by start of check in time.

Add check in time and there it is closer to only 1m or 2m people that could get a train or tube to start their journey within an hour before the Eurostar departure time.

At one time Eurostar offered free add-ons to every station in Belgium to encourage passengers. There has never really been a British equivalent of say free add-on connection within say 40 miles of St Pancras.

I live about 100 miles from St Pancras (and less than 100metres from a station), but due to shoddy connections would need a train 3 hours to 3h15 before Eurostar departure time. As slow as getting to Bristol or Bournemouth airports.

 

[Trainbike46]

Don't you mean median?


I only picked it as £39 is what Eurostar (at least used to) advertise as a starting single fare.

These are still available, and I regularly book them - no way would I pay more than about £110 return. My next booking (in December) is £83 return, with a £39 leg and a £44 leg.

 

[BRX]

I live in London and have a friend who lives in Brussels, that I might well visit a couple of times a year if they lived somewhere at a similar distance but in the UK.

I don't want to book that kind of weekend trip 2 or 3 months in advance though (which generally is the only way you can get "cheap" fares on Eurostar now).

What if I fancied going, not this weekend but the weekend after? A quick look on the Eurostar website tells me that I could do it for £265 return. But actually that's only if I'm willing to get up at around 5am on the Saturday morning. If I wanted to get a more comfortable departure from St Pancras the price goes up to somewhere between £300 and £330.

I'm not going to spend that much money for a casual weekend trip. So, if I call on that friend it tends to be when I'm passing through Brussels on longer trips where I've had to book the Eurostar legs well in advance.

If the return fare was in the £100-150 region then it might feel a bit more doable. That's comparable to an off peak return to Liverpool, say. When people talk about latent demand, it's these kinds of trips. The fact that the trains currently run pretty full doesn't mean that the market is saturated at all. If the cost came down, it wouldn't just be people that currently fly that would start using the train through the tunnel. That's not the size of the potential market.

 

[AlastairFraser]

Some time ago I flew (for work) with Ryanair on what must have made them a loss as the ticket price was less than the air passenger duty.

Unfortunately (for them) I failed to pay for luggage, food and drink on board and I didn't even buy a scratch card.

Hahahaha, I suspect passengers like that is exactly why they try to make back the losses by scamming people at the gate for bags "that have to go in the hold".

I think 20m people is including an awful lot that couldn't get to St Pancras in an hour, all sorts of places like Guildford, Southampton, Oxford etc.

Some journeys might be just over an hour if very lucky with connections, but often will need 1.5 to 2.5 hours to get a service that arrives by start of check in time.

Add check in time and there it is closer to only 1m or 2m people that could get a train or tube to start their journey within an hour before the Eurostar departure time.

At one time Eurostar offered free add-ons to every station in Belgium to encourage passengers. There has never really been a British equivalent of say free add-on connection within say 40 miles of St Pancras.

I live about 100 miles from St Pancras (and less than 100metres from a station), but due to shoddy connections would need a train 3 hours to 3h15 before Eurostar departure time. As slow as getting to Bristol or Bournemouth airports.

Well, for a start, there are approximately 9.1 million people in Greater London. I don't think it's realistic to include check in time - given most airports ask for 90 mins, very few people would expect to leave their home town 1hr before departure including check in time for international travel.
99%+ of the population of Greater London is within an hour of St Pancras.

Now, let's have a look at the East region - half of Cambs is borderline doable, half of Essex borderline doable again (especially if on the GEML and using SE Highspeed from Stratford), pretty much all of Bedfordshire is, and virtually all of Herts is.

That's approximately 3.5 million people - I'll concede none of Norfolk and Suffolk is doable in 1hr.
Similar story for a few of the SE counties - most of Berks, most of Bucks incl. Milton Keynes but not Aylesbury Vale, 75% of Kent's population and most of Surrey.

Conceding that the rest can't be done in an hour bar some eastern parts of Hampshire and northern parts of Sussex, that's around 16.1 million people overall.

My point overall is that, while I may have slightly exaggerated at 20 million, a decent majority of the people within the South East/East/London regions can get to St Pancras within an hour. I wonder how many more would be within an hour of Ashford.

Re you point about Eurostar connections within the UK - maybe something building upon the CIV system could be introduced e.g. a flat fee for connections to Eurostar, based on zones like the Sail Rail system uses e.g. Zone A is within 100 miles of any of the Eurostar terminals = £40 single for adults, 33% off for Railcards + half for children, Zone B within 200 miles for £50 single etc.

 

[The Ham]

The market to Paris could be massive if the prices were slightly cheaper.

I disagree that it’s anywhere near saturated.

I agree.

I live in London and have a friend who lives in Brussels, that I might well visit a couple of times a year if they lived somewhere at a similar distance but in the UK.

I don't want to book that kind of weekend trip 2 or 3 months in advance though (which generally is the only way you can get "cheap" fares on Eurostar now).

What if I fancied going, not this weekend but the weekend after? A quick look on the Eurostar website tells me that I could do it for £265 return. But actually that's only if I'm willing to get up at around 5am on the Saturday morning. If I wanted to get a more comfortable departure from St Pancras the price goes up to somewhere between £300 and £330.

I'm not going to spend that much money for a casual weekend trip. So, if I call on that friend it tends to be when I'm passing through Brussels on longer trips where I've had to book the Eurostar legs well in advance.

If the return fare was in the £100-150 region then it might feel a bit more doable. That's comparable to an off peak return to Liverpool, say. When people talk about latent demand, it's these kinds of trips. The fact that the trains currently run pretty full doesn't mean that the market is saturated at all. If the cost came down, it wouldn't just be people that currently fly that would start using the train through the tunnel. That's not the size of the potential market.

Now imagine just the cost difference for a family of 4 (£140 to £260) or a family of 5 (£175 to £325), or £1,200/£1,500 for travel at £300 a ticket.

Even if those premium tickets were £180 that's a sightly more manageable £720/£900 and if that could be (say) £135 return then that's £540/£675.

That's still a lot but you're in to the realms of not stupid money.

As such, most definitely there's scope for growing the market.

 

[Trainbike46]

I live in London and have a friend who lives in Brussels, that I might well visit a couple of times a year if they lived somewhere at a similar distance but in the UK.

I don't want to book that kind of weekend trip 2 or 3 months in advance though (which generally is the only way you can get "cheap" fares on Eurostar now).

What if I fancied going, not this weekend but the weekend after? A quick look on the Eurostar website tells me that I could do it for £265 return. But actually that's only if I'm willing to get up at around 5am on the Saturday morning. If I wanted to get a more comfortable departure from St Pancras the price goes up to somewhere between £300 and £330.

I'm not going to spend that much money for a casual weekend trip. So, if I call on that friend it tends to be when I'm passing through Brussels on longer trips where I've had to book the Eurostar legs well in advance.

If the return fare was in the £100-150 region then it might feel a bit more doable. That's comparable to an off peak return to Liverpool, say. When people talk about latent demand, it's these kinds of trips. The fact that the trains currently run pretty full doesn't mean that the market is saturated at all. If the cost came down, it wouldn't just be people that currently fly that would start using the train through the tunnel. That's not the size of the potential market.

There is absolutely scope for prices to reduce by the cheaper bands being more available, and I suspect that will happen when Virgin or Trenitalia start.

If you live in London, Eurostar snap may be interesting for last minute trips, if you're not aware of it yet

 

[NCT]

You reckon that it wouldn't grow dramatically if it were flooded with £39 tickets all day (rather than just on the very early/late trains)?

Eurotunnel's cost structure will never allow for 'flooded with £39 tickets all day'.

Most of the infrastructure is privately owned (and SNCF Reseau is expected to generate a profit), and all train operations are commercial. There's no government subsidy or charity. The problem with 'build it and they will come' arguments is their advocates never consider cost sustainability.

In very general terms, if current Eurostar profit margin is in the region of 20% (probably an overestimate), all I expect competition to do is that 20% will be eroded to around 5%, and the reduction in average fares will broadly reflect that reduction.

 

[bspahh]

Some time ago I flew (for work) with Ryanair on what must have made them a loss as the ticket price was less than the air passenger duty.

Unfortunately (for them) I failed to pay for luggage, food and drink on board and I didn't even buy a scratch card.

Ryanair are a profitable company, and are happy to cancel flights which aren't going to make them money.

If some tickets are sold for less than it costs them, I think they are happy to take the hit and assign it to their marketing budget. It means their brand gets discussed on forums, where the message is what a bargain their fares are.

 

[Metrider]

If you live in London, Eurostar snap may be interesting for last minute trips, if you're not aware of it yet

My missus got a Eurostar snap ticket earlier this year. The problem with those is, if you select the morning slot going, you inevitably get put on the very first train of the day. That one departs so early that you can't even take the first tube to get it! She had to get an Uber to St Pancras in the end - pretty inconvenient. And this is someone who lives in London!

 

[NCT]

There is probably a sufficient catchment of those who are a night bus away from St Pancras to fill a 900-seat train.

 

[dorsetmagpie]

Eurotunnel's cost structure will never allow for 'flooded with £39 tickets all day'.

Most of the infrastructure is privately owned (and SNCF Reseau is expected to generate a profit), and all train operations are commercial. There's no government subsidy or charity. The problem with 'build it and they will come' arguments is their advocates never consider cost sustainability.

In very general terms, if current Eurostar profit margin is in the region of 20% (probably an overestimate), all I expect competition to do is that 20% will be eroded to around 5%, and the reduction in average fares will broadly reflect that reduction.

I can't remember where I heard it (Perhaps a GreenSignals episode?) but my understanding was that the way EuroTunnel's track access levy was structured there was a significant volume discount which could bring down prices across the board?

If I recall correctly, there is the Fixed Annual Usage Cost (of around €40m) which is currently footed solely by Eurostar, but in future will be split with Virgin & Trenitalia. But there is also a variable per-passenger cost element, which effectively were structured in tariff bands that got incrementally cheaper as passenger volumes increased. These also apply per the whole market, not operator, so would benefit every TOC as passenger numbers increase across the board.

It may not lead to £39 tickets to flood the market, but my impression was that the extra competition, and increase in passenger numbers would have a very positive impact on reducing the TA levy through sharing the burden, before we even start thinking about competition bringing efficiencies etc.

 

[Snow1964]

Eurotunnel's cost structure will never allow for 'flooded with £39 tickets all day'.

Ryanair are a profitable company, and are happy to cancel flights which aren't going to make them money.

Different approaches, Eurostar have tiny route choices, and operate it at both busy times or the day and quieter periods. Ryanair find all sorts of destinations to utilise the quieter hours as a marginal infill.

Eurostar don't work on basis of its quiet for say half a Paris-London circuit, so they chose to do an infill elsewhere, something like Paris-Luxembourg, rather than under-utilising the fleet, whereas Ryanair would happily do a one hour journey out and back to somewhere obscure and get bums on seats (and potentially lots of baggage or on board sales too).

If look at a Eurostar timetable from 25 years ago, will see something like London-Paris 15 times a day midweek, 18 times on Monday and 23 times a day on Fridays. Now they just price off the extra (due to lack of competition) rather than try and move the volume

 

[BRX]

My missus got a Eurostar snap ticket earlier this year. The problem with those is, if you select the morning slot going, you inevitably get put on the very first train of the day. That one departs so early that you can't even take the first tube to get it! She had to get an Uber to St Pancras in the end - pretty inconvenient. And this is someone who lives in London!

This is the exact reason I have never used it.

== Doublepost prevention - post automatically merged: Yesterday at 16:03 ==

The problem with 'build it and they will come' arguments is their advocates never consider cost sustainability.

That's not true.

In very general terms, if current Eurostar profit margin is in the region of 20% (probably an overestimate), all I expect competition to do is that 20% will be eroded to around 5%, and the reduction in average fares will broadly reflect that reduction.

Another (simplified and hypothetical) scenario is where Eurostar can make 20% by running 10 trains full of £200 tickets, or 15% profit by running 20 trains of £150 tickets. So they choose the former. This all changes once there's a competitor though, because neither company can decide to cap the number of trains per day.

 

[30907]

If look at a Eurostar timetable from 25 years ago, will see something like London-Paris 15 times a day midweek, 18 times on Monday and 23 times a day on Fridays. Now they just price off the extra (due to lack of competition) rather than try and move the volume

FYI 15 trains today Wednesday (most with 20% more seats), 17 on Monday and Friday.

 

[NCT]

Another (simplified and hypothetical) scenario is where Eurostar can make 20% by running 10 trains full of £200 tickets, or 15% profit by running 20 trains of £150 tickets. So they choose the former. This all changes once there's a competitor though, because neither company can decide to cap the number of trains per day.

A 25% unit revenue reduction leading to only a 5 percentage point profit margin reduction is highly improbable, even allowing for elements of access charges being spread over more trains.

 

[Krokodil]

Eurotunnel's cost structure will never allow for 'flooded with £39 tickets all day'.

It wasn't intended as a serious suggestion, just pointing out that the potential market is far larger than the number of people you could poach from air travel.

At the moment you won't find a single fare to Paris for less than £200 for anything closer than two weeks ahead. Saturday 24th has £300 fares across the board, probably because Eurostar are only running nine trains to Paris. Unsurprisingly four of those nine are sold out in all classes. Assuming no operational reason for such a sparse service (engineering work between Lille and Paris?), competition should help to bring those fares down to sensible levels.

 

[bspahh]

Saturday 24th has £300 fares across the board, probably because Eurostar are only running nine trains to Paris. Unsurprisingly four of those nine are sold out in all classes. Assuming no operational reason for such a sparse service (engineering work between Lille and Paris?), competition should help to bring those fares down to sensible levels.

https://www.eurostar.com/uk-en/travel-info/travel-updates/71398 says "There will be engineering works near Paris Gare du Nord over five weekends spread across October, November and December." including October 24-25th.

 

[martin2345uk]

Yes capacity is greatly reduced on the classic line on these weekends!

 

[Bald Rick]

I’ll respond more fully later. But:

You reckon that it wouldn't grow dramatically if it were flooded with £39 tickets all day (rather than just on the very early/late trains)?

Not dramatically, no. But it’s irrelevant as the market will not be flooded with £39 tickets all day. (Apart from perhaps an initial period when a new operator ’buys’ a customer database, not that Virgin need to do that, that’s one of their key competitive advantages). The average cost of getting a passenger to Paris / Brussels by rail is well over twice that price, so any operator doing that will be out of business sharpish.

It's not just the London-Paris etc. market, if people saw that they could easily get a weekend in Paris for £78 return they'd be abandoning their plans to go to Prague and getting a bargain trip to Paris instead.

No, they wouldn’t. As if they want to go to paris cheaply, they go the same way they would do to Prague.

Even £50-£75 each way would be enough to start turning the tide and operators would still make decent profits with a high load factor

Again, no they wouldn’t. At £75 each way they will be losing money.

 

[AlastairFraser]

Again, no they wouldn’t. At £75 each way they will be losing money.

Explain your working

 

[Class15]

Explain your working

I’m finding this hard to believe too!

 

[Bald Rick]

Explain your working

I’m finding this hard to believe too!

In their 2019 published numbers, Eurostar (‘blue’) average revenue per single trip passenger was £89.

Their profit margin was 6%, which means their average cost per single trip passenger was £83.60 (ish).

Add 7 years of inflation to that cost, plus the significant cost of the debt they took on to survive through COVID, and their costs per passenger will now be rather higher.

So you can see that selling tickets at £75 a go - even at an average of £75 a go, would be losing money.

 

[itfcfan]

When travelling with Eurostar I often wonder how different factors affect their cost base (and translate into a practical floor for their average fares). I realise the charges for using the terminals (St Pancras including security & immigration) and the lines (HS2, etc) are substantial (and equivalent charges will apply to any competitor).

But I wonder how significant their staffing charges are. I'd guess they have the highest on-train staffing of any regular passenger railway in Europe? Having procedures that seem to insist on Eurostar staff being present to press the open button on each door of a 16 coach train seems fairly extravagant.

I often travel in the middle class on Eurostar (with 2-1 seating and a cold snack) - the utilisation of the staff here seems pretty low - on a 2h30 journey to Paris they've typically wrapped up the service and complete collecting rubbish 60mins into the journey. I'm not complaining - I choose to pay for the less dense seating - but I'm curious to think whether something closer to what you get on 1st class TGV would reduce costs enough to offer better value for money. This is assuming the unusually onerous tunnel safety rules don't mandate this level of staffing and will force similar costs for other future operators too?

 

[Sorcerer]

Since the subject of price has come up, it's important to remember that while Eurostar's monopoly doesn't exactly encourage price reduction - and while there is real world evidence that open access on high-speed routes works really well throughout Europe like in France, Italy and Spain - Eurostar is a unique situation where the operator is paying for no less than five track access charges for their services and also have to deal with barriers not seen with the aforementioned networks where competition is on a mostly domestic level.

Optimistically I would think prices could be brought down to maybe sales level fares, ie. £70 return for standard, but I would definitely not expect Lumo level fares. It's also important to remember that Virgin's business model leans more towards a premium rail experience, hence why they only really bid for intercity franchises like west coast. I can see the standard fares being comparable while the premium products is where the real competition is at, but I wouldn't expect to see low-cost fares, just a reduction in the highest priced ones.