SPAIN’s National Markets and Competition Commission (CNMC) has approved plans by French National Railways (SNCF) low-cost subsidiary Ouigo to introduce four high-speed services a day on the Madrid - Segovia - Valladolid route.
After Ouigo notified CNMC of its intention to apply for paths in the 2023-24 timetable, the Ministry of Transport and Sustainable Mobility asked CNMC to conduct an economic equilibrium test.
Applying the test, CNMC found that the proposed Ouigo services would not affect the economic equilibrium of the PSO contract between the ministry and national passenger operator Renfe Viajeros.
Running from 2018 to 2027, the PSO contract provides financial support for the operation of medium-distance Avant high-speed services on the Madrid - Segovia - Valladolid route.
CNMC concluded that Renfe’s publicly-funded Avant services could be substituted with the new open-access services proposed by Ouigo, due to their similar speed and other technical characteristics.
However, the Avant services are more competitive, as they offer cheaper fares in the form of multi-journey tickets, operate more frequently and enable passengers to change their booking free of charge.
CNMC therefore found that only Avant services used by occasional travellers, running up to 35 minutes before or after Ouigo services, would affect the PSO contract. Analysis suggested that only six Avant services a day out of a total of 33 would be affected.
The Madrid - Segovia - Valladolid route has experienced a significant increase in demand, CNMC says. The average occupancy of Avant services is now over a 90% and a significant number of services are full, suggesting that there is unsatisfied demand at present.
CNMC says that by increasing the service frequency between Madrid and Valladolid, the new Ouigo trains will free up seats on Avant services, which can be taken up by frequent travellers using multi-journey tickets.
Also taking into account CNMC’s previous assessment of Iryo services competing with Renfe on the Barcelona - Camp de Tarragona and Madrid - Albacete routes, the equilibrium test shows a cumulative impact of 0.14% of the revenue of the PSO contract.
This is below the 1% threshold that would enable CNMC to conclude that the new services would have a substantial negative impact on the PSO contract held by Renfe Viajeros.
As was the case with Madrid - Albacete route, CNMC recommends reviewing the scope of PSO services between Madrid and Valladolid. This would apply only to the use of multi-journey tickets by frequent travellers, as CNMC says that commercial services are cheaper for occasional passengers and offer sufficient service frequency.
