The prices we have seen so far in high speed have been a mirage. At least that is what Álvaro Fernández Heredia, president of Renfe, predicts, who in an interview with Chain Being has come to ensure that Ouigo and Iryo will end up leaving our country.
Prices, costs and unprofitable high speed.
More expensive. There are many headlines left by the interview that Álvaro Fernández Heredia, president of Renfe, left in an interview with Chain Being. To begin with, because he has indicated that high speed prices will rise:
“If our competitors raise prices, which is something they have begun to do, we will follow that trend, because we are competing with them in those corridors, and this is the scheme that we have given ourselves as a society”
What Fernández Heredia is talking about is the rising prices that high-speed trains are experiencing. The matter has made headlines with the departure of the AVLO of the Madrid-Barcelona corridor that has caused an immediate increase in the price of trains.
With a weaker Renfe when it comes to lowering prices, on average the price of the ticket is already above 80 euros and the cheapest one does not go below 50 euros. The service has been getting more expensive for some time but without AVLO, prices are even higher.
public service. In his statements, the president of Renfe comes to say that they will do what their rivals do. If they lower prices they will fight with them but if they raise prices they will not resist to seek market share at a low price.
What Renfe defends is that they have the obligation to provide service where it is not profitable. This shows them the way to raise prices in the corridors where they do have competition.
“We have a pricing policy that does not seek profit or does not seek to have a distribution of dividends. Our distribution of dividends is to stop where the others do not stop or what is not High Speed, which is the Long Distance: Almería, Algeciras or Tolosa. We are a public company and we are here to compete with other companies, but we are also there to support the rest of the railway system. Our High Speed, of the only three operators there are, is the only one that is economically sustainable, but we also have to sustain those stops that other operators do not want to make and that could, but do not do them because they only seek profitability”
That message is the same one that Óscar Puente sentMinister of Transport, a year ago when he complained that Renfe had to compete in the same market as Ouigo and Iryo but with the burden of having to go where the company loses money. Some losses that have also focused the debate in recent months.
Private, but not much. This is what the president of Renfe maintains. For Fernández Heredia, Ouigo and Iryo “are public companies from other countries. I understand that they will have to give an explanation as to why they come to Spain to lose money, I don’t think they will come to that, because it would be very difficult to understand.”
In this message sent to Chain Being the complaint is implicit (and the threat of denunciation) that The Government launched Ouigo at the time. It was then pointed out that this French company I was pushing the prices to gain market share knowing that it has its back covered by the French State. From Ouigo they have rejected this, ensuring that Your pricing strategy is the usual one among those who enter to play in a new market.
Losing money. At the moment what we have is a war in which Renfe, Ouigo and Iryo are losing money. Without knowing whether prices will continue to rise, what is certain is that the three companies are spending tens of millions of euros. Specifically, almost 100 million euros in 2024.
Of those hundred million euros lost, the majority belong to Ouigo, which according to the CNMC left 40.5 million. The figure is far from the 31.5 million euros that Iryo left, but Renfe also lost money, specifically 27 million. Of course, the CNMC also assures that, since competition was opened in high speed, consumers have saved about 500 million euros.
Until when? Although prices rise little by little, what is certain is that competition has lowered the cost for the customerespecially in those corridors where the flow of movement is not as constant or dense as in Madrid-Barcelona.
In the latter, in addition to the high demand, the departure of AVLO has confirmed that if the high speed competition low cost one of the three competitors leaves, the immediate result is that prices rise. So, yes, we have most likely hit a bottom in high-speed prices but they are more likely to rise more slowly the more competition there is.
Photo | Alan Grant
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