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IN FOCUS ANALYSIS: Eurostar-Thalys rail merger proceeds, challenges European air routes

With all the problems the air transport industry has at present, and those it will face again from the environmental lobby, it does not need any more. But a merger between two of the leading high-speed rail companies in northern Europe – Eurostar and Thalys, which was first mooted last year but considered unlikely to come to fruition soon, is pressing ahead.

What it will do is to present the aviation business with a genuine threat to its revival prospects across six very highly populated areas – Southeast England, Ile de France, Hauts de France, Belgium, the Dutch Randstad, and Germany’s Ruhr. And even further, if other operators join as associates to form a regulatory area of their own and exiting experiments between France and Spain are continued.

But rail does not have it all its own way. Services have been decimated just as they have in the air, and there are some technical difficulties to overcome.

Nevertheless we are shaping up for an almighty war for business in some of Europe’s most important regions.

Click on headline for more on the topic.


  • Rail operators Eurostar and Thalys to merge and create super high-speed network in northern Europe
  • May be able to link in existing national high-speed rail services and experiments for much wider coverage of primary commercial regions
  • The environment is at the forefront of strategy
  • London-Paris-Brussels-Amsterdam set to become an unparalleled high-speed rail corridor
  • But the UK north of London not involved until HS2 is built
  • It will happen because the EU is driving it, especially in Northern France and Benelux

Eurostar and Thalys confirm 2021 merger in Green Speed project

International rail operators Eurostar and Thalys intend to proceed with merger plans in 2021, according to Thalys’ CEO Bertrand Gosselin.

Eurostar is a majority (55%)-French owned firm (SNCF, the state rail operator) but headquartered in London, while Thalys is a Franco-Belgian high-speed train operator which is 60% owned by SNCF and 40% by SNCB (Belgium).

This is not a new development. The project, entitled 'Green Speed', was proposed in 2019 to combine Eurostar and Thalys to create the foundations of a sustainable European high-speed rail (HSR) travel company linking London, Paris, Brussels, Amsterdam, Rotterdam, Cologne, Duesseldorf and Dortmund as well as connecting services to Marseille and Bordeaux in France.

The Green Speed project was announced in Sep-2019 and would combine the resources of the two companies that serve Belgium, France, Germany, Netherlands and the United Kingdom; all members of the EU apart from the UK. In combination they run 112 trains daily and carry more than 18.5 million passengers per year. That could rise to 30 million under the merger plans.

There is a degree of rolling stock synergy between the two operators but this, and other factors, meant that that an announcement was initially postponed until Mar- or Apr-2020 and then boxed on again in the light of the pandemic.

Seamless rail travel throughout Europe is the goal

The combined Green Speed organisation would seek to offer seamless travel for passengers with one ticket covering any journey across the network, and better connections between trains, according to a statement issued by both operators.

The degree of one-ticket seamlessness would be of concern to airline operators hoping to get back on their feet as it would offer the prospect of multiple journeys on one ticket, possibly on a mileage basis similar to the IATA system of air fare calculation and with the opportunity to make amendments, possibly without charge depending on the fare level.

Such conditions are highly attractive to business travellers, who are benefitting at least temporarily from such largesse from airlines at the present moment.

Over the last decade at least the air transport industry has been moving in the opposite direction, with the emphasis continuously switching towards point-to-point journeys on single, unbundled tickets with tight conditions.

In terms of individual routes, one that was under consideration was direct service between London and Amsterdam by Eurostar, one that requires changing trains at Brussels. That has since been introduced but currently operates only once daily. Thalys trains would not be able to use the Channel Tunnel due to its strict safety and operating standards.

Environmental issues paramount, as the project name suggests

As the project title suggests, environmental issues were also at the forefront of the Green Speed proposal, which would recognise "the challenge of climate change and Europe’s growing demand for eco-responsible and sustainable travel," according to Guillaume Pepy, CEO of French National Railways (SNCF), which holds a majority stake in both Eurostar and Thalys.

That is another area of concern to the airlines; that the railways could position themselves ahead of the airlines as the ‘green alternative’ for mid to long-distance travel if and when the pandemic abates.

M. Pepy said, “Bringing together the strengths of Eurostar and Thalys would be a powerful response to this challenge. The creation of a combined European high-speed rail company would deliver a compelling alternative to road and air travel for our 18.5 million passengers and would herald a new era in the development of European high-speed rail services."

He was supported by Thalys Chairman Sophie Dutordoir who said that combining Eurostar and Thalys "would be based on the strong conviction that, now more than ever, the train is the safest, most sustainable, fastest and most efficient solution for travelling inside Europe."

Economically, the merger would reduce operating costs by combining the two operators’ information and distribution systems, and the management of their train fleets.

The Green Speed project

Source: Executive Traveller

Extends services into Germany

What the project does is to extend the route network as it stands into the industrial heartland of Germany, the Ruhr, via Cologne. 

This merger may well lead to the development of direct services between London St Pancras International and Cologne and Düsseldorf or even to Frankfurt-am-Main, thereby avoiding a change of train in Brussels.

The existing Eurostar service route map

Source: By Rcsprinter123 - Own work, CC BY 3.0

Moreover, the network extends it to mirror the parameters of the ‘European Blue Banana’ the bulbous critical area of commercial activity that stretches from southeast England as far as Munich in the east, Marseille in the south and, in its extended format, Madrid in the west.

The Bordeaux extension does not fall within the banana but one would assume that other cities on the route between Paris and Bordeaux will be included as stops.

The European Blue Banana

Source: www.researchgate.net

In the same way there are opportunities to extend the service by way of connection agreements to other parts of Spain and into Italy.

Existing experiments could be merged into it

An experiment is already underway in Spain and France, outside of the Eurostar/Thalys networks, to enhance existing services to provide a direct fast connection between Paris and Barcelona using same-gauge track and hence not requiring a change at the border.

In Sep-2020, Swiss Federal Railways (SBB) and Austrian Federal Railways (ÖBB) signed an LoI to expand night train services from six to 10 lines, with the launch of new night services from Switzerland to Amsterdam, Rome and Barcelona. Under the agreement, the two railway operators will look to extend the Nightjet network from Switzerland by incorporating a total of 10 lines and 25 destinations out to 2024.

Taking all this into account it is easy to envisage how, once this Green Project is up and running, external operators like these might want to be a part of it, in the same way a regional commuter airline would wish to partake in aerial hub and spoke operations as an associated interline carrier to an airline alliance, providing feeder services.

UK not involved beyond London, until HS2, when it arrives

The only real exception is the UK, where Eurostar trains languished in sheds outside Manchester for years gathering rust (“‘Le Eurostar’ est ici”, a huge promotional banner outside read) until some or other executive decided there was no economic case for such trains beyond London. Then one day they were no longer “ici”.

There is no political will in the UK for such trains. In any case the main Eurostar station, St Pancras, is served by domestic services from parts of the UK while the other two London stations serving the Midlands and North of England are literally next door (Kings Cross) or 400 metres away (Euston) and served by the London Underground.

There is little consumer will either although that is expected to grow, but High-Speed 2 (HS2) will arrive at sometime in the 2030s (work has commenced on it in the last two weeks), with lines to Birmingham, Manchester, Leeds and Glasgow and perhaps its owners might want to be part of this European network.

The EU has been the driving force

Let us not pull punches here. The European Union wants this to happen. The then European Union (EU) Commissioner for Transport, Violeta Bulc confirmed her aspirations to expand EU high speed rail networks at a quicker pace, two years ago. Ms Bulc said rail traffic would relieve congestion for aviation and roads.

The European Commission’s (EC) position on rail has been formulated over the last 25 years in which it has been very active in proposing restructuring the European rail transport market and in order to strengthen the position of railways vis-à-vis other transport modes.

The Green Speed project was put to the boards of the owners of Eurostar and Thalys to seek their approval, which it now has, but it still needs the green light (pardon the pun) from EU competition officials.

Project go-ahead comes despite Eurostar and Thalys both suffering from the virus

Thalys boss Bertrand Gosselin confirmed in an interview with the French newspaper La Tribune that the project will go ahead next year despite the difficulties faced by both operators resulting from the coronavirus pandemic.

Eurostar is suffering from the UK's travel quarantine policies, which are currently in effect for all of its destinations from London St Pancras, and the operator has scaled back services on all routes. Fewer than 20% of its usual London-Europe services are running and it says it has “almost no passengers”. Pre-epidemic, there were around 20 Paris-London services each day, and 12 between Brussels and Amsterdam.

It recently announced it will not serve Ashford or Ebbsfleet in the UK or destinations in the south of France until 2022 at the earliest. Both those stations serve as connecting points for other rail services outside of the UK’s capital area and for airports such as London Gatwick. Indeed, a connection to Ebbsfleet was proposed by Manston Airport as part of its submission to the Airports Commission to be an alternative airport for London.

Those quarantine policies are on the ‘red list’ for the UK, and many such policies are reciprocated, meaning that travel on these lines, just as in the air, is heavily restricted by the need to self-isolate for 14 days on return to the home country. In the UK’s case fines of up to GBP10,000 may now be applied to anyone breaking that isolation rule, arriving by Eurostar (or air) from France, Belgium or the Netherlands. If that doesn’t kill travel, nothing will.

Meanwhile, Thalys has been faced with restrictions in Paris. However, M. Gosselin said, “placing Paris in the red zone hurt us very badly,” but that an exemption for business travel has encouraged the company to consider special fares for business customers to stimulate demand, with details to be announced in due course. Therefore to encourage traffic Thalys intends to develop special fares for b2b clients.

Eurostar has been forced to restructure its debt in response to the pandemic, and had been unable to ask for financial support from the British government due to the majority of its shareholders not being based in the UK. The company was obliged to ask for help from banks, which have supported the company on the condition of a “reasonable” business plan predicted for 2021. The company expects to post no profit, or to post a loss, this year.

The cross-Channel lines have been the worst affected by the crisis and they were suffering even before the new quarantine rules were imposed. During the main lockdown period, from mid-March to mid-May, traffic was virtually zero, reduced to one return journey per day. Even when they rose to eight returns between Paris and London they were still hampered by the requirement to keep at least half of the seats empty to help comply with social distancing rules.

The epidemic crisis has shown exactly why it is better to not be dependent on one single connection and the project has already catered for a single passenger loyalty programme to reward frequent riders.

UK government abandonment of rail franchises suggests its expectations of how long the crisis will last

As this article is written, the UK government has ended its system of rail franchises (24 independent operators [TOCs] all under some form of franchise, concession or contract) with the introduction of 18-month Emergency Recovery Measures Agreements (ERMAs).

These replace the six-month Emergency Measures Agreements (EMAs) that expired on 20-Sep-2020, having been introduced in late March to protect train operating companies (TOCs) from the effects of lockdown. From their start until the end of Jun-2020, the EMAs cost some GBP3.5 billion.

“The model of privatisation adopted 25 years ago has seen significant rises in passenger numbers, but this pandemic has proven that it is no longer working,” said the Secretary of State for Transport Grant Shapps. The recommendations made to Mr Shapps are considered “fit for a post-COVID world.”

The fact that the UK government has effectively taken control of the rail network without renationalising it (which was a pledge from the main opposition party in the Dec-2019 General Election), and for such a long period of time – 18 months - following an initial six-month period) is an indication of how long it expects the current pandemic situation to last.

An almighty battle for supremacy between rail and air in northern Europe awaits

Both the air and rail industries will continue to suffer from the effects of the pandemic during that extended situation. Looking forward to when it concludes – which is continuing to seem more like the end of 2021, not 2020 - there is going to be an almighty battle for supremacy within Europe.

Rail has the upper hand at the moment; that is clear. It is backed as the answer to travel needs over short (but growing) distances by the European Union. It is in a better position to claim ‘green’ credentials than its rival. Where public safety is concerned there is no difference between taking the train and taking the plane.

Where cost and convenience is concerned, rail has gained ground on air travel with better, more modern stations, and increased frequencies. This merger, and the deals that will inevitably follow it, will allow for the introduction of new marketing strategies for the purchase and delivery of rail tickets, including fresh fare structures; an area in which rail has previously been unable to compete with aviation.

This analysis piece is written by CAPA - Centre for Aviation and brought to you by Centre for Rail and Informa Markets.

[original - article - CAPA Analysis]

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