SPORTING a distinctive blue and pink livery, French National Railways’ (SNCF) Ouigo double-deck TGVs have become an increasingly common sight on the French network over the past year or so.
Ouigo was introduced in 2013 and was initially conceived to connect outlying Paris stations such as Charles de Gaulle Airport and Marne la Vallée-Chessy with destinations across France, offering passengers a low-cost alternative to conventional TGV services as well as other modes.
However, Ouigo is now a fixture of the capital’s major hubs. From Paris Montparnasse, Ouigo began offering passengers two low-cost no-frills return journeys to Nantes via Le Mans, and Bordeaux per day and a single return service to Rennes in December 2017, which was expanded to two return services in December 2018. In July 2018, Paris Est was added to the network with two trains a day in each direction now available to Nancy, Metz, and Strasbourg, with one Strasbourg service continuing to Colmar. And in December, Ouigo began operating from Paris Gare de Lyon. Three trains per day now run to Marseilles with two in each direction per day to and from Nice, which is served by Ouigo for the first time.
In total, Ouigo now operates 48 trains per day serving 32 destinations throughout France. It carried 12.7 million passengers in 2018, a substantial jump from the 7.5 million passengers in 2017 and 6.2 million in 2016. In addition, more than 20 million individual passengers have used the service since it began in 2013.
While it is beginning to mimic long-established TGV routes and even replace some of these trains - InOui TGV services to west and southwest France were scaled back from eight to six train pairs per day in December 2018, while many former TGV services from Lille to Marseille via Marne la Vallée-Chessy and Charles de Gaulle are now Ouigo (see panel) - Ouigo is very much its own offer.
This is apparent from the moment you begin the booking process. Ouigo tickets are sold solely online: alongside conventional InOui TGV, which underwent a major revamp in 2017, via the OuiSNCF website and app, or the dedicated ouigo.com website where only Ouigo tickets are sold. Fares start at €10 up to a maximum of €115 depending on popularity. Children’s tickets are available for €5-8, which has translated into a greater proportion of families using the service.
The no-frills offer is reflected in additional charges for extra bags (€5); an onboard power socket (€2); seating in a dedicated quiet area (€5); journey information via SMS (€2); and a 72-hour freeze on the ticket price before purchase (€2 per journey and reservation). Onboard, the trains are designed to maximise capacity. The bar and first-class seating have been ripped out, increasing the number of available seats from 1000 on a conventional Duplex to 1268 on a Ouigo with no onboard catering provision.
Speaking to IRJ in Paris, Mr Stéphane Rapebach, Ouigo director general, says Ouigo was developed to address the situation in the French market where SNCF found itself in increasingly tough competition with both the private car and buses and coaches. The goal of the service is to increase SNCF and rail’s overall share of the long-distance travel market, which currently stands at 10%.
“By offering them a new low-cost offer just like they do in the airline industry, the aim is to produce travel that is cheaper in order to win back these customers,” Rapebach says. “The production model is designed to maximise and amplify the duration when the Ouigo trains run [for 12 hours per day] compared with seven hours on conventional TGV trains. They also have 25% more seats than onboard a TGV train, and are similar to Ryanair or Easyjet aircraft with large volumes. We can achieve large savings through Ouigo without any compromise in terms of safety and security for passengers.”
Break even
Despite Ouigo’s efforts to reduce operational costs, French media reported in September 2018 that while the original services are breaking even, Ouigo as a whole is losing money. Rapebach responded by stating that it will take 18 months to two years for the expanded service to mature and the goal is to break even overall by 2021.
With low fares the cornerstone of the business model, Rapebach says Ouigo is taking inspiration from the budget airline industry, where 40% of revenue comes from selling add-on products and services.
In addition, to the existing extras, Ouigo plans to introduce the option to select a seat for an additional fee “soon.” It is also exploring the possibility of selling food onboard its trains and is starting to work with its customer-facing staff to develop this offer, reflecting the company’s approach to innovation and problem solving. An announcement on concrete plans is expected by the end of the year.
Further savings are expected according to Rapebach through running more trains. This is enabling the operator to improve the coordination of its services and overall TGV fleet utilisation, an area where SNCF has often drawn criticism. “When we run a Ouigo train operators and onboard staff work seven-hour shifts but because the trains keep running, the interfaces are easier and simpler to manage: the train leaves the depot in the morning, does all of its rotations and goes back in the evening,” Rapebach says. “All of this reduces the production cost and the cost in general, boosting our margin and profitability. However, our aim is not profit for profit’s sake, it is to have the most consistent offer so people can travel easily in France.”
Getting more passengers on its trains remains the core of SNCF Mobility’s strategy for Ouigo. Indeed, the operator was encouraged to bet on expanding the service by its strong performance figures: the trains are reporting an 80-90% load factor while 80-90% of passengers are satisfied with the level of service on offer. Critically, 60% of passengers using Ouigo state that they would not have used the train otherwise and are in effect new SNCF customers.
The profile of Ouigo passengers is also different from those who use conventional InOui. Due to the low-fare offer, Rapebach says Ouigo is attractive to students and young people with limited budgets as well as passengers who might only travel once or twice per year. He says Ouigo identifies where it might introduce a new service through customer surveys as well as SNCF’s long experience of operating rail services in France and understanding the customer make-up of specific cities and regions. Beyond this, it is no more sophisticated than introducing a service, seeing if it works, and then introducing another.
“What we see is that a lot of people are willing to travel, but they don’t want to spend the majority of their budget on their trip,” Rapebach says. “Ouigo customers look for the best possible price and that is the triggering factor for the trip. In the past they might have travelled by car or bus, or they might not have travelled at all. Ouigo is a means to address competition from buses because it is a way to travel from Paris to Bordeaux in two hours in an affordable way and not eight on a bus.”
Quantum leap
Rapebach says the 2017-18 expansion plans were in the works for two years and the goal now is for Ouigo to account for 25% of all high-speed trips by 2021, or 26 million passengers - a “quantum leap” from just 5% of traffic four years ago. The operator is also planning to increase the number of daily services from 48 to 65 in December 2019, which will require an expansion of the fleet from 24 to 34 trains.
“We started with station departures on the outskirts of Paris because we didn’t really know how it would turn out, but right from the start it was very successful,” Rapebach says. “The first four Ouigos were packed. However, the offer was tiny in comparison with TGV so we decided to scale this up to meet one-third of high-speed routes by 2020. We realised we had to retain departures from outside of Paris because there are 10 million people living here, but we also wanted to serve the people living in Paris, so we have both, not one against the other.
“The strategy is to try and boost traffic considerably because we carry more passengers,” Rapebach continues. “Our strategy is not to scale back. What we want to do is to make it possible for our customers to make a choice between Ouigo or InOui. In 2018 we increased high-speed traffic by 6% and quite a substantial share of this came through Ouigo.”
Ouigo will introduce a single Paris - Toulouse service from July, although there are no plans to add other new destinations in 2019. Rapebach also ruled out expanding Ouigo to cross-border services, questioning how such services would fit within the rolling stock’s strict 12-hour operation pattern. He added that contending with different signalling and electrification systems along with languages and operating rules would similarly hinder the potential for profitability.
With the focus very much on its domestic market, SNCF Mobility is emphasising reaching as many potential customers as possible by participating in engaging but economical marketing strategies.
Rapebach says the first step to build the Ouigo brand was to make sure that the trains themselves look different so people would recognise them easily. The operator has also harnessed digital technology to target prospective passengers.
“We haven’t embarked on TV ads and TV campaigns as they are very costly and mainstream,” Rapebach says. “We try to target our potential customers specifically. This is partly through social media, that certainly contributes to brand awareness but maybe less so to purchasing per se. Other e-commerce platforms are more effective at closing the sale.”
With liberalisation of the French passenger rail market planned for 2020-22, SNCF’s monopoly on domestic train travel in France is coming to an end. As well as boosting overall traffic, Rapebach says possessing InOui and Ouigo as two contrasting but complimentary offers, SNCF will be stronger and in a better position to withstand competition.
Such statements are certain to irk AllRail, the European alliance of new rail entrants, which said in October that the existence of low-cost state-owned operators is preventing fair and sustainable competition, to the detriment of passengers.
Certainly, with InOui and Ouigo growing their market share, any new entrant will have a fight on its hands to develop a compelling offer to win slots on the prized high-speed network.
For SNCF, this will entirely justify its strategy to present a more compelling offer while cutting costs.
“It is two success stories for SNCF because we managed to provide a new offer, but within SNCF,” Rapebach says. “We haven’t recruited people from outside of SNCF with a different status in order to reduce our costs. We have managed to reduce our costs by being more efficient.”
Comment: More Ouigo, less connectivity
UNTIL recently, Ouigo low-fare services have gradually been expanded in addition to French National Railways’ (SNCF) well-established TGV network, but with the start of the 2019 timetable on December 9 2018, the strategy has changed with Ouigo starting to replace TGVs on key corridors.
Two routes are particularly affected. Three of the five daily high-speed services between Lille and Marseille are now Ouigo trains with TGVs providing the first and last services of the day. On the Paris Gare de Lyon - Nice route, the opposite happens with Ouigo providing the first and last daily services at 07.07 and 17.12, and TGVs operating the four services in between. However, SNCF has diverted three of the daily TGVs via Marseille which has increased Paris - Nice journey times by around 10 minutes.
SNCF is reducing the attractiveness of its full-service TGV offering by replacing TGVs with Ouigos says Mr Mark Smith, who runs The Man in Seat 61 website. “When Ouigo trains were additional, overlaid on top of the normal TGV timetable, that was fine. But now they’re replacing ‘real’ TGVs, taking a useful timetable with a good spread of departures and knocking holes in it. Will SNCF’s TGV service recover?
“The disadvantage is that they have applied all the things people dislike about budget airlines to their trains: a 30-minute check-in, stringent baggage limits (one item of hand luggage and one bigger bag not exceeding 55x35x25cm) with a €5 extra fee for additional or oversize bags (€20 on board the train if not paid in advance), and no catering.”
These restrictions make it very difficult for passengers to switch between TGV and Ouigo if their travel plans change. There is no through ticketing or first class, and if a connecting service is late, passengers will have to buy a new ticket if they miss the Ouigo service they were originally booked on. The long check-in times for Ouigo effectively extend journey times for connecting passengers, thereby dissipating some of the benefits of high-speed rail.
SNCF has been trying to improve connectivity between all forms of public transport, but Ouigo goes against this policy as it is a standalone operation.
