2023-05-11 21:12:37
The competence reached the Spanish railways. He did it by the hand of Ouigo first and Iryo later. Before, Renfe had already begun to shield itself with AVLO. And with four competitors for the Spanish high-speed train, adding the AVE, prices fell and trips skyrocketed.
In fact, prices fell a lot. The CNMC points out that the most expensive prices to travel from Madrid to Barcelona are offered by Renfe, with an average of 78 euros for the AVE. Iryo offers the same route for an average of 37 euros. The Ouigo average is 42 euros.
On this line, with a stop in Zaragoza, the drop in prices has had an imminent impact on the number of journeys. The number of travelers grew by a 35,5% during the last quarter of 2022 compared to that registered in the last quarter of 2021.
The great winner of that quarter was Ouigo. The French achieved a market share of 29.1% in this line, very close to the figure that Iryo has been targeted, who aspires to open a gap in the Madrid-Barcelona route. A market share that, however, is not enough to give benefits. At least on the line with a stop in Zaragoza.
“It is not profitable”
“The Zaragoza line is not profitable today, but we will not raise prices,” Federico Pareja, commercial and marketing director of Ouigo in Spain, assured The Aragon Newspaper In an interview.
Pareja has made reference, specifically, to the Madrid-Barcelon line that stops in Zaragoza. The company currently offers five daily routes between the two large cities and three of them stop in Zaragoza as an intermediate point. From Ouigo they point out that the latest changes in schedules have increased the number of travelers, especially in the business sector, but that their growth does not compensate the costs.
Those responsible for Ouigo point out that the prices of electricity, skyrocketing during 2022, greatly complicated the situation for the company but, above all, they point to the canon that they have to pay Adif for the use of the railways as the main culprit of its high costs and the impossibility of being profitable. In addition to Pareja, Helene Valenzuela, general director of Ouigo Spain, has also targeted the canon mentioned as the main cause of the company’s losses.
Las pressures they are not new. Ouigo is also followed by Iryo. Together they have communicated on several occasions to Adif to lower the price to pay for the use of the infrastructure. They point out that the investment already made is more profitable if a greater number of passengers are transported and that this is achieved with a drop in the price which, according to Iryo, represents the 58% of your total costs.
The Adif fee represents a cost of about 3,000 euros per route for new operators but, with the latest changes applied by the Government in December, it can be revised by up to 20% depending on market circumstances. This is what Helene Valenzuela maintains as the main reason for reducing it, arguing that the market is still in a post-Covid-19 situation.
It is known that, in 2022, Adif earned more money than ever with this source of income. The entry of Iryo and Ouigo allowed those responsible for the infrastructure to collect up to €400 million last year. This toll includes the use of railways or stations, but it is also calculated based on the spaces offered by each operator. Ouigo loses out here because part of its low prices is achieved by moving twice as many people with double-decker trains.
Federico Pareja summed it up like this in the interview with The Aragon Newspaper:
We pay the same for taking the train full or empty and that is not usual. We have trains with two heights with which we inject more passenger volume without the passengers giving up space inside the train and with which we save costs. The agreement that we now have with ADIF is not sustainable for us and today we do not have profitability in the line despite the large investment that was made to enter
the doubt is even when Ouigo will be able to be maintained in this situation. At every opportunity they have had in front of the media, those responsible have assured that prices will not rise and that a reduction in the canon would also affect the price of tickets, for the benefit of passengers.
The photograph is reminiscent of the position that the VTCs have taken in our country. So far, Ouigo and Iryo have worked hard to achieve a very high market share in a very short time. With travelers accustomed to these prices and positioned on their part, they have greater power in their demands to Adif.
In Spain, companies like Uber or Cabify entered using a similar strategy. The idea was to offer much more attractive prices than those of the taxi and win over recurring customers. Although in this case they played with the law, something that does not happen with trains, they also they handled the prices at will and they soon said goodbye to land prices in order to make the investment profitable.
The problem is that, once the customer has gotten used to the low prices, re-educating him so that he pays much more money for the same route is very complicated. This is what has happened to companies like Raynair, in the aviation sector, and what some experts warn can happen with the electric car, a sector where China is also playing at a loss to defeat the rest of the players. .
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Photo | Phil Richards
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