Eurostar raises prices as it struggles with Brexit border controls
Eurostar has been forced to raise prices and slash services to focus on its most profitable routes as it struggles with Brexit border controls and high interest rates on commercial loans agreed in the pandemic.
The company’s outgoing chief executive Jacques Damas said Eurostar “cannot currently pursue a strategy of volume and growth” because of the headwinds facing the business.
“We are having to focus . . . services on core routes which make the maximum contribution per train and to charge higher prices to our customers,” he wrote in a letter to the House of Commons transport select committee published on Tuesday.
Eurostar took on £500mn of commercial debt to help it survive the pandemic, as well as a £250mn bailout from shareholders, including the French government. The UK government, which does not hold a stake in the company, did not take part in the rescue.
Eurostar had been at risk of bankruptcy following a collapse in revenue after passenger numbers plunged because of the Covid-19 crisis.
Damas said the loans were underpinned by “demanding financial ratios”, and that the company was focused on “managing and reducing” its debt.
The company has been criticised in the UK for cutting some of its services, including trains from Kent and direct trains between London and Disneyland Paris.
But Damas told MPs in his letter to the select committee that the company had also been forced to prioritise because of lack of space at stations to handle new border checks now in place after Brexit.
Peak capacity at London St Pancras is 30 per cent lower than in 2019, at 1,500 passengers per hour, because it takes an average of 15 seconds per passenger longer to process people with a British passport.
“It is only the fact that Eurostar has capacity-limited trains and has significantly reduced its timetable from 2019 levels that we are not seeing daily queues in the centre of London similar to those experienced in the Channel ports,” he said.
Damas admitted that the problems had been exacerbated by a dearth of maintenance engineers at Eurostar, which has regularly led to train shortages.
As the economic outlook worsens, Eurostar faces questions over whether demand for travel will hold up.
Airlines have continued to report robust ticket sales this autumn, but there are concerns over consumer spending power in the event of a deep recession and cost of living crisis.
Eurostar also faced an extra £100mn in costs because of inflation pressures, Damas said. He said track access charges on HS1, the UK’s high-speed rail line that runs from London to the Channel Tunnel, were rising almost three times as fast as in France.
He warned that unless these charges could be lowered then “at best, the business will find itself indefinitely locked into the present position”. This means focusing on core routes where the group can charge higher prices.
HS1 did not respond to a request for comment at time of publication.
Huw Merriman, the Conservative MP who chairs the Commons transport select committee, said Eurostar was “a vital cog in our transport system” that needed support from ministers and rail regulators.
Damas will leave Eurostar at the end of this month and be replaced by Gwendoline Cazenave, a former executive at state-owned French railway SNCF.