October 28, 2014

French auditor calls for smaller TGV network

Written by 
  • Print
  • Email
French auditor calls for smaller TGV network SNCF

FRANCE will need to consider reducing the number of stations served by TGV services if the network is to stand any chance of being profitable, according to a report on the finances of TGV, which was published by the French Court of Auditors on October 23.

French National Railways (SNCF) currently operates nearly 5500 TGV services per week serving around 230 stations. Because of the huge range of destinations served, around 40% of travel time is on the conventional network.

While total long-distance ridership has increased over the last 30 years, TGV has seen a fall in passenger numbers since the economic crisis, with traffic falling 0.5% in 2013 to 53.8bn passenger-km. Operating margins fell from 29% in 2008 to just 12% in 2013.

The report argues that international experience proves the most financially successful high-speed networks around the world focus on high-density routes serving a limited number of destinations with good connections to regional services, maximising the journey time benefits between key cities. It notes that the Tokaido Shinkansen carries one-and-a-half times the traffic of the entire TGV network but serves just 17 stations.

On key TGV routes such as Paris – Lyon and Paris – Nantes, which are both served by 23 trains per day, revenues are described as "significant" and the auditor sees potential for developing services on such high-density corridors to maximise income. TGV has by far the largest market share on journeys of 1h 30min-3h and it is suggested that SNCF concentrates on targeting this segment of the market.

Profitability of new lines is lower than forecast, for example 5% on TGV Nord compared with an estimate of 20% and 8% on TGV Méditerranée compared with a forecast 12%. With lines being constructed in reverse order of forecast profitability, the report observes that the network has now expanded to a point at which further new lines are unlikely to generate revenues that justify their construction, at least in the short to medium-term.

"The French high-speed rail model is now in difficulty," says the report. "While TGV has been one of the brightest manifestations of French technological achievements, its balance sheet has been severely degraded in recent years. The French as a whole, from passengers to policymakers, want continued expansion of the network (beyond the four lines currently under construction) because they see high-speed rail promoting economic development of the regions and reducing the impact of transport on the environment. These assertions are justified, but it is no longer possible to pursue a policy of "all TGV," especially if we are going to speed up renovation of the conventional network, which has been neglected for 30 years."

The report warns that funding for TGV is likely to be squeezed in the future by the need to focus funding on the upgrading of the classic network and the emergence of competing modes, not least long-distance buses.

The task of making TGV profitable is therefore defined as a straightforward public policy choice. On the one hand, the construction of new lines could be cancelled or deferred until the very distant future. On the other, the report suggests a "difficult but necessary" restructuring of the TGV network, with enhanced regional services providing better connections for stations away from the high-speed network, which it says could be carried out gradually as part of a broader multimodal transport plan.

The auditors recommendations include:

  • Better integration of high-speed services with regional rail and other modes
  • Restricting the number of stops on high-speed lines and reducing the number of services operating over conventional lines
  • Ensuring transparency on traffic data for individual lines to monitor revenue performance, and
  • Focus financial resources on upgrading the conventional network

Get the latest rail news

IRJ Rail Brief newsletter covers global railway news