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Without additional funding from government there is a real risk to the survival of Eurostar

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BRX

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I read that Getlink (the tunnel operator) charges Eurostar per passenger as well as per train.

That may explain why its pricing doesn't work quite as the airlines do. The airlines will fill up seats that they reckon would otherwise go empty, with very cheap tickets on which they make a very small amount, but it doesn't really cost them anything to fill them up.

That'll not be the case for Eurostar and will explain why you never see prices below about £30 each way (which I guess is their break even point). If they sell any tickets below that price then they will make a loss, so it's better just to have them empty.
 
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matt_world2004

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Didn't Eurostar take advantage of the Coronavirus Corporate Financing Facility? This is how many airlines secured suitable credit.


Indeed, although I've seen it reported elsewhere that their trains are now all spoken for as collateral on borrowing. Some were owned by SNCF.


Aside the joke, I'm totally confused as to how being francophone is relevant here.


Eurostar International Limited is indeed registered with Companies House.

The Telegraph reported Sunday night that the UK Government are on the hook for a large bill if Eurostar does collapse [paywalled].
Anyone know what is the rationale for the government having to pay southeastern if Eurostar collapses. Does southeastern s track access fees go up if there are less services using HS1
 

LeeLivery

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Anyone know what is the rationale for the government having to pay southeastern if Eurostar collapses. Does southeastern s track access fees go up if there are less services using HS1

HS1 access costs will rise without income from Eurostar? If SNCF/Paris didn't know this before, it's certainly a gift.

Telegraph: And the little-known legal framework between the owner of the line, HS1, and its operators could weaken Britain's negotiating power, leaving ministers with little choice but to step in

Now, if HS1 was publically owned like the LGVs, this probably wouldn't be an issue...
 

k-c-p

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I read that Getlink (the tunnel operator) charges Eurostar per passenger as well as per train.

An EU commission document from 2013 cites some fees Eurotunnel charges train operators: There is a per train fee and per passenger fees:
The current track access charges for use of the Channel Tunnel infrastructure do not appear to be based on direct costs or the long term investment costs of building the Tunnel. The Commission has been contacted by numerous stakeholders who complain that the charges for use of the Channel Tunnel are far too high. The charging structure is complex, but as an example, charges are: for passenger trains (depending on the time of day): 16.6 € per passenger plus at least a reservation fee of 4320 € (one way); for freight trains (depending on time of day): at least 3645 € per train (one way). The Commission considers that these should be considerably lower.

I do not think that the numbers have gone down in the last 7 years :).
 

Ianno87

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Now, if HS1 was publically owned like the LGVs, this probably wouldn't be an issue...

It still would be an issue. Even if in public ownership, track access charges need to be paid. Non-receipt of those access charges means something else has to 'give' from the public budget to balance the books.
 

Starmill

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Ah, but you cant put aside the joke, as it is entirely the point! Its not relevant amd that is what we were joking about!
Oh very good :lol:

See I think if you book in advance (like you would to get a cheap airline deal) Eurostar are actually very good value, even more so if you add the fact that you can take your own food/drink and there are essentially no baggage charges, plus it seems to be a much nicer atmosphere than a plane (although in my life I have only been on one return plane journey to Venice).
I know when we went to Paris in 2015 it was less than £60 per person both ways, not exactly what I would call expensive.

Of course the environmental factors should also be seen as a real benefit, especially in France where most of the power is from clean energy (of which is mainly nuclear).
Eurostar have increased their cheapest round-trip rate to £78 now. This is also of relatively limited availability i.e. you probably won't get it for Friday and Sunday no matter how far in advance you book. Of course, it's theoretically possible that cheaper rates or other bargain offers such as Eurostar Snap will return, but seems unlikely.
 

biko

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This article https://www.railtechnologymagazine....l-receive-support-according-french-government may be of interest. It says that the French government intends to support Eurostar but, it appears, only if the other partners do so likewise in fair proportion.
That sounds sensible. All countries profit from the services and should pay for it together. Ownership shouldn’t matter. The TOCs in the UK are also supported by the government regardless of the ownership. The same should apply here, so the countries Eurostar runs through can support it together.
 

MotCO

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That sounds sensible. All countries profit from the services and should pay for it together. Ownership shouldn’t matter. The TOCs in the UK are also supported by the government regardless of the ownership. The same should apply here, so the countries Eurostar runs through can support it together.

The only thing I object to is that the owners (mostly SNCF / French Government) have also benefitted from receiving dividends on their investment, so somehow these sums received since 2015(? when the UK sold their stake) should also be played into the equation. Otherwise the French will have their cake and eat it. (I also refer to my previous rhetorical question, would the French voluntarily pay any excess profits to the UK Government if passenger numbers unexpectedly increased?)
 

LNW-GW Joint

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I think the typical Getlink toll for Eurostar passengers has been quoted as £43 for a return trip, mostly per passenger with an extra amount per train.
Like all cross-channel operators Eurostar has to pay terminal charges and also immigration, customs and security fees per passenger.

The finances of Eurostar, Eurotunnel (Getlink) and HS1 (with its domestic services) are interrelated and I'm not surprised the government stands behind these contracts as the guarantor, as they are the ultimate owner of the rail infrastructure (except the tunnel itself).
The same will apply to SNCF for LGV Nord, at least in terms of the Lille-Frethun infrastructure which is dominated by Eurostar traffic.
Belgium also has a small interest (5%) in the Eurostar operation.
There will also be rolling stock leases to consider, and things like route operation and maintenance (done by NR under contract in the UK).
It's an interlinked house of cards if the enterprise goes belly-up.
 

matacaster

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Are you saying the Belgians aren't french-like?! Id say 90%. The important statistic is its 100% outside Yorkshire, I can't see why anyone would even want to visit any of the destinations they serve. They wouldn't be in this mess if they served proper destinations, like Leeds, Bradford and Barnsley, the real three capitals!
I find much to commend in this post. It is of course pure coincidence that I am a born and bred Yorkshire man. :D
 
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MotCO

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It's an interlinked house of cards if the enterprise goes belly-up.

But that assumes no-one wants to step in, buy the bankrupt stock, and carry on the service. I would think it unlikely that a passenger train link under the Channel is not viable at the right price, so someone will buy it.
 

Bletchleyite

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But that assumes no-one wants to step in, buy the bankrupt stock, and carry on the service. I would think it unlikely that a passenger train link under the Channel is not viable at the right price, so someone will buy it.

I agree. If E* fails, I would say that there will be a period of no service, but once things start opening up again it's pretty certain an operator will come along and restart services in some form. Just like when an airline fails, if the routes were viable someone else comes along and does it in pretty short order, and I think it's clear that E*, absent COVID, definitely is viable.
 

Chester1

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It looks like the French and Belgian Governments want UK taxpayer money but don't want to give equity in return for it. Franchises aren't the same, they are now all short term management contracts with operators being paid to run services because the Govermment is prepared to fund them for now. If the railways run an operating profit after this it will the Governments. If Eurostar runs a profit after covid it will be its shareholders.

The obvious solution would be to put Eurostar into administration, creditors taking a "haircut" and new shares sold to UK government, reducing the existing shareholders equity. The Dutch government could join in too. The liability via HS1 is supposed to be £80m over 5 years and that assumes no new operator.
 

matt_world2004

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We have seen the government do this before. They nearly let tfl go bankrupt to show up Sadiq Khan . My guess is they are trying to demonstrate to their support base about how anti EU they are by deliberately making it look like they will let Eurostar go bankrupt.

They will step in at the last minute with some erogious conditions (Like forcing Eurostar to promote Brexit or something)
 

Gloster

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We have seen the government do this before. They nearly let tfl go bankrupt to show up Sadiq Khan . My guess is they are trying to demonstrate to their support base about how anti EU they are by deliberately making it look like they will let Eurostar go bankrupt.

They will step in at the last minute with some erogious conditions (Like forcing Eurostar to promote Brexit or something)
I agree that playing to their supporters, both within and outside the part, by showing how tough they can be with foreigners, particularly the French, is part of their ‘thinking’. The impression that it may make on other businesses with an international element that may be considering investing or are already here and are reviewing their plans is another thing altogether.
 

JonathanP

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Given that the "European Health Insurance Card" has been renamed the "Global Health Insurance Card" despite actually now being valid for a subset of the EU countries it was valid in before, I can almost believe it actually would help if they offerred to rename themselves "Great Britain International Railways" :lol:
 

Chester1

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I agree that playing to their supporters, both within and outside the part, by showing how tough they can be with foreigners, particularly the French, is part of their ‘thinking’. The impression that it may make on other businesses with an international element that may be considering investing or are already here and are reviewing their plans is another thing altogether.

Its more likely to be that they are holding out for an equity stake, which the existing shareholders won't want to give because it will be a profitable business after the pandemic. If the government are going to use taxpayers money (on top of furlough etc) then they need something tangible to show for it. Buying a 30% stake would be reasonable.

Given that the "European Health Insurance Card" has been renamed the "Global Health Insurance Card" despite actually now being valid for a subset of the EU countries it was valid in before, I can almost believe it actually would help if they offerred to rename themselves "Great Britain International Railways" :lol:

The EEA countries will be added, talks over healthcare couldn't begin until the EU deal had been concluded. You can use a British passport in Norway for healthcare and vice versa. GHIC will include the UKs existing reciprocal health agreements e.g. Balkans, Australia and New Zealand in time. Getting GHIC fully rolled out isn't a priority when non essential international travel is illegal!
 

biko

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The only thing I object to is that the owners (mostly SNCF / French Government) have also benefitted from receiving dividends on their investment, so somehow these sums received since 2015(? when the UK sold their stake) should also be played into the equation. Otherwise the French will have their cake and eat it. (I also refer to my previous rhetorical question, would the French voluntarily pay any excess profits to the UK Government if passenger numbers unexpectedly increased?)
Franchises aren't the same, they are now all short term management contracts with operators being paid to run services because the Govermment is prepared to fund them for now. If the railways run an operating profit after this it will the Governments. If Eurostar runs a profit after covid it will be its shareholders.
But franchises were quite different before the virus came along. Operators could make money but now they cannot make a loss anymore. But as an alternative, the governments could just lend money which should be paid back in full. Then you don’t have this problem.
 

Chester1

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But franchises were quite different before the virus came along. Operators could make money but now they cannot make a loss anymore. But as an alternative, the governments could just lend money which should be paid back in full. Then you don’t have this problem.

They can make a loss through non delivery of services and associated penalties, although they would have to be incredibly incompetent. The Government has collected the franchise bond money, so couldn't extract more from ToCs. It had a choice of management contracts or no services. If the government wanted to it could now replace all of them with a national operator very quickly. The Government has essentially nationalised domestic services by the back door.

Your assuming loans to Eurostar will be paid back. If it was purely a matter loans then the French government would lend them more money. Either the French government aren't confident additional money will be paid back or Eurostar is after grants (or both). The existing shareholders need to take the maximum hit before our government uses taxpayers money on Eurostar. Until they have taken that hit it is not necessary to spend public money to maintain services. Eurostar would go into administration not liquidation and our government could make an offer then.

I suspect the French government is keen to avoid the UK government taking an equity stake because it will almost certainly be at a lower price per share than they received in 2015. The UK profiting from selling up and then buying back at the bottom of the market will embarrass the French government. If Eurostar had remained profitable the French government would have received 55% of the profits so they should accept 55% of the losses.
 

StephenHunter

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Quebecer pensioners to be exact, which makes them French-like, which means that Eurostar is 85% French.

Well, American productions do commonly use people from Quebec to play French people.

It's also worth mentioning that the Eurostar fleet is registered in the UK and has GB UIC numbers.
 

Starmill

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There have been an awful lot of Telegraph articles recently on the subject! I'm afraid once again, behind the paywall:
Rail operators that have missed out on subsidies from UK taxpayers should be bailed out alongside Eurostar, according to a Brussels-based industry body.

I don't suppose anyone knows whom they're reporting on here, or has a Telegraph account? I could have a guess it may be Allrail? https://www.allrail.eu/about-page/
 

JamesT

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There have been an awful lot of Telegraph articles recently on the subject! I'm afraid once again, behind the paywall:


I don't suppose anyone knows whom they're reporting on here, or has a Telegraph account? I could have a guess it may be Allrail? https://www.allrail.eu/about-page/
Yes, the next paragraph is:
Allrail, whose members include the owner of the Channel Tunnel as well as bus company Stagecoach, said operators such as Hull Trains and Grand Central Rail should receive financial support if the Government steps in to rescue Eurostar.
 

Wolfie

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I agree that playing to their supporters, both within and outside the part, by showing how tough they can be with foreigners, particularly the French, is part of their ‘thinking’. The impression that it may make on other businesses with an international element that may be considering investing or are already here and are reviewing their plans is another thing altogether.
Not to mention that if our Govt shafts the French on this the French Govt will reciprocate massively in some way.... There may be a lot more small boats coming over the Channel for example.
 

biko

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Your assuming loans to Eurostar will be paid back. If it was purely a matter loans then the French government would lend them more money. Either the French government aren't confident additional money will be paid back or Eurostar is after grants (or both). The existing shareholders need to take the maximum hit before our government uses taxpayers money on Eurostar. Until they have taken that hit it is not necessary to spend public money to maintain services. Eurostar would go into administration not liquidation and our government could make an offer then

I expect Eurostar will be able to pay it back as it was a profitable company before and it will be after the restrictions are lifted. Especially given that more and more people are aware of Eurostar as the sustainable alternative to flying which in many cases is also quicker. Lots of people I know here in the Netherlands who normally wouldn’t dare to come near a train mentioned before the crisis that they wanted to try Eurostar, so I have confidence the new service to Amsterdam will be successful.

However, by having the shareholders to take the maximum hit first as you suggest means there is no wiggle room if any small thing goes wrong, so I think it’s smarter to lend money now before it’s too late and the probability of Eurostar paying everything back is greater. Also it is good that talks have started already, as I expect it might take long to discuss who will pay or lend which amount.

Not to mention that if our Govt shafts the French on this the French Govt will reciprocate massively in some way.... There may be a lot more small boats coming over the Channel for example
That’s certainly true. If the UK government wants the French to prop up a cross border service where both countries benefit from, why would the French continue doing something only the UK benefits from.
 

matt_world2004

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It would be better if the French and British governments own the infrastructure of the Eurotunnel than the trains . Charge lower track access fees and allow a lower priced rail option to Europe for passenger travel and freight. The only.way this could happen "easily "is by letting Eurostar go bankrupt resulting in the tunnel undertaking secondary bankruptcy. Which isn't really a feasible option

Doesn't railway bankruptcy in the UK usually require the government to step in to provide the service. Iirc this doesn't only apply to franchised operators but open access too
 

SHD

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It would be better if the French and British governments own the infrastructure of the Eurotunnel than the trains . Charge lower track access fees and allow a lower priced rail option to Europe for passenger travel and freight. The only.way this could happen "easily "is by letting Eurostar go bankrupt resulting in the tunnel undertaking secondary bankruptcy. Which isn't really a feasible option

Doesn't railway bankruptcy in the UK usually require the government to step in to provide the service. Iirc this doesn't only apply to franchised operators but open access too

Margaret Thatcher vehemently fought against public ownership of the tunnel infrastructure and against any kind of public financing, even through the form of state guarantees. Obviously she eventually succeeded. I very much doubt that a Conservative UK government will ever reconsider this position. Besides, Getlink is headquartered in France and has delisted from Euronext London in June 2020.
 
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Watershed

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I read that Getlink (the tunnel operator) charges Eurostar per passenger as well as per train.

That may explain why its pricing doesn't work quite as the airlines do. The airlines will fill up seats that they reckon would otherwise go empty, with very cheap tickets on which they make a very small amount, but it doesn't really cost them anything to fill them up.

That'll not be the case for Eurostar and will explain why you never see prices below about £30 each way (which I guess is their break even point). If they sell any tickets below that price then they will make a loss, so it's better just to have them empty.
Air Passenger Duty is £13 per passenger. Airports charge airlines various fees per passenger (typically on the order of £5-10 per person for the cheaper airports). So there are certainly parallels to be made.

I don't imagine the pre-Covid average fare paid is all that different when comparing Eurostar's key markets to its equivalent airline rivals. The biggest issue is simply that some airlines like Ryanair have loss-leading fares, which they make up for with all the extras they push. As Eurostar are a full-service operator they simply can't compete on the same basis.

The only thing I object to is that the owners (mostly SNCF / French Government) have also benefitted from receiving dividends on their investment, so somehow these sums received since 2015(? when the UK sold their stake) should also be played into the equation. Otherwise the French will have their cake and eat it. (I also refer to my previous rhetorical question, would the French voluntarily pay any excess profits to the UK Government if passenger numbers unexpectedly increased?)
The UK Government forfeited the right to any dividends when they sold their stake in Eurostar. Short term gain in exchange for long term loss as is so typical of the current system (see also PFI).

The bickering about who should pay up is almost boring at this point. There was no question of stepping in to save the long-distance operators when Covid started, or of refusing to support Avanti, LNER, TPE and XC until the Scottish or Welsh Governments agreed to pay up for their parts of the bill. But of course Eurostar is different.
 
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Starmill

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It's probably feasible for the French to bail it out unilaterally if there can be no agreement found, or to do so jointly with one or more other continental governments. It wouldn't be such a difficult thing to rebase the trains, move the HQ and make all UK-based staff redundant. There'd be no doubt that SNCF could profitability use the velaro trainsets if they were to secure access to them all e.g. they could work Paris - Amsterdam expresses.
 

MotCO

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The UK Government forfeited the right to any dividends when they sold their stake in Eurostar.

They also walked away from any future liabilities. When the French (or whoever) bought the UK stake, as in any business tranasction, they took a risk and until 2020, they were happy with taking the additional profits. They have to take the rough with the smooth - all investors are warned that their value may rise or fall - so why is this any different?
 
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