Thank you for your reply.
How is the profit margin? Are they making money?
Yes, Eurostar high-speed rail services are profitable.
In 2012, the operating profit was GBP52.3 million, up from GBP25 million for 2011.
See here:
Eurostar Profit Boosted By More Foreigners
March 25,# 2013
http://news.sky.com/story/1069375/eurostar-profit-boosted-by-more-foreigners
Then for 2013, profits went up again to GBP54 million, while for the first time, the service had more than 10 million passengers.
See here:
Eurostar passenger figures topped 10 million in 2013
March 5, 2014
http://www.bbc.com/news/business-26444689
In the last years, Eurostar also made an GBP700 million investment in a new fleet of trains (see above), thus without these investments to grow the business in the future, the profits posted would be even larger.
An important step towards profitability was that on 1 September 2010, Eurostar became a single, unified corporate entity owned by three shareholders: SNCF (French national state railroad), SNCB (Belgian national state railroad) and LCR (London and Continental Railways, shares held by the British state).
While high-speed rail operations are usually profitable, Eurostar's profits are especially remarkable because of the extraordinarily high track usage fees it has to pay in order to be able to offer its high-speed rail services: 19 GBP (approx. 24 Euro, approx. US$30) per passenger go towards the EuroTunnel for every one-way trip. So whenever Eurostar sells one of those 69GBP round-trip tickets from London to Paris, 38GBP - more than half of the ticket cost - go right to EuroTunnel.
Generally, track usage fees have to be paid by rail operating companies to companies owning the infrastructure. In many cases, many might think that some rail infrastructure access fees are too high. But in this case, the charges collected here are extremely high and completely out of any relation, so even the European Commission looked into this matter - without any success, as this press report from last year states:
Last week, France and Britain rejected the European Commission’s request to lower charges for passengers and freight trains using the Channel Tunnel.
The Commission said excessive track-access charges had resulted in higher ticket prices for the service that links London with Paris and Brussels.
The tunnel operator charges a one-way reservation fee of €4,320 (£3,614) for Eurostar trains and €16.60 (£13.90) per passenger.
The Commission had argued that 43 per cent of the tunnel's capacity was not used partly as a result of these charges and that they should be halved to double the amount of daily freight trains and make up the difference.
Rail companies are allowed to charges fees according to the amount of wear and tear caused by a train journey, But an investigation by the Commission found that the Channel Tunnel’s operators were charging more than necessary and using the income to subsidise the operator's car shuttle service, which does not pay such charges.
source:
Eurostar continues expansion with bid to run East Coast line
September 30, 2013
http://www.dailymail.co.uk/travel/article-2438632/Eurostar-continues-expansion-bid-run-London-Edinburgh-route.html
Just as in so many other cases, it is amazing how high-speed rail is such an efficient method of transportation, that it is profitable even when having to put up with arbitrarily created competitive disadvantages when compared with airlines, that receive billions in "state aid" towards their operations year after year, while only making very moderate payments towards all the externalities caused by air travel.
Some examples for the arbitrary competitive disadvantages:
- Within France, tickets of the profitable TGV high-speed trains have to include 7% VAT (value added tax, similar to a sales tax). In comparison, tickets for air travel within France include 0% sales tax.
- For travel from Germany to other countries, profitable German rail company Deutsche Bahn has to charge 19% VAT (German sales tax). Tickets for international air travel out of Germany include 0% sales tax. This means f.e., that out of a 50 Euro train ticket Deutsche Bahn actually receives only about 42 Euro, and roughly 8 Euro go straight into the state treasury. While if some legacy flag carrier or low-fare airline charges 50 Euro for the same route, they get to keep the full 50 Euro for themselves.
In addition, in some European countries like Germany passenger rail is exposed to a form of competition increasingly popular again: long-distance buses. But while passenger rail has to pay access fees for every station entered, and track usage fees for every mile of track used, long-distance buses neither have to pay any per-mile toll (like trucks have to on German highways) nor - with very few exceptions - any fee for any curbside or bus stations that they stop at.
Just two weeks ago, this arbitrarily set competitive disadvantage for rail caused private German passenger rail service InterConnex to announce that it will stop operating as on December 13 of this year. Since 2002, Veolia's InterConnex was Germany's first privately operated long-distance passenger rail service, but on its roughly 250mi/400km long route, it has to pay 1700 Euro (approx. US$2160) in rail infrastructure fees (stations access fees, track usage fees), while long-distance bus operators get a free ride on the "Autobahn" highways. And a 5,50 Euro per bus fee (approx. US$7) like at Hamburg's central bus station is very low in comparison, while most of the bus stops of course can be used absolutely for free. Here is a link to the news about rail service being discontinued due to a arbitrarily set competitive disadvantage:
Veolia to close InterConnex open access service
October 14, 2014
http://www.railwaygazette.com/news/passenger/single-view/view/veolia-to-close-interconnex-open-access-service.html
There are many more examples of the arbitrary competitive disadvantage put in place against rail, also different from country to county. One issue is airlines not paying any energy tax, f.e. no fuel tax on their kerosene, while rail has to pay fuel tax on their diesel, or electricity tax on electricity.
The same dynamic can be seen in the area of freight, where inland water transportation is exempted from fuel tax.
And while f.e. a recent survey in Germany indicated that 78% of respondents were against airlines receiving kerosene tax-free, for many European countries it is difficult to move away from tax incentives and competitive advantages once granted, because in most cases any change in policies would make the own nation's industries less competitive against the ones of other European countries, or even on a worldwide scale, so many countries in Europe shy away from changes in this field, in order to keep up with the Joneses in the European or global race to the bottom.
Here are some recent news reports on the operating subsidies airlines receive:
European Commission makes state aid rulings
July 24, 2014
http://www.airport-world.com/news/general-news/4214-european-commission-makes-state-aid-airports-rulings.html
EU orders Ryanair to repay aid to German airport
October 15, 2014 (updated October 17, 2014)
By Shawn Pogatchnik
http://www.sltrib.com/sltrib/money/58524182-79/ryanair-airport-altenburg-german.html.csp
The European Union’s executive Commission has ordered Ryanair to repay more than $400,000 provided by a German airport to sustain the Irish airline’s business, ruling it amounted to illegal state aid.
Ryanair says it plans to appeal Wednesday’s judgment that the airline exploited tiny Leipzig-Altenburg Airport in eastern Germany with a 2010 marketing contract that benefited Ryanair, not the airport.
The judgment concluded that the deal to promote the airport on Ryanair’s websites offered no prospect of returning a profit to the airport "even in the long term."
Ryanair operated from the airstrip south of Leipzig from 2003 to 2011. During that period, the Dublin-based carrier rapidly expanded its route network across Europe by negotiating hardball contracts with small regional airports.
How these marketing contracts work was also shown in the case of regional airport "Dusseldorf" Weeze, where surrounding communities and counties paid Ryanair 450,000 Euro (about US$570,000) for a "marketing contract" to promote the region of the "lower rhine". Ryanair's part of the contract was one single button on the ryanair.com website leading to niederrhein-tourismus.de, and to mention the region and its "possibilities" in its newsletter. It seems like in the above case, Ryanair was supposed to promote Altenburg airport on its website, and the final judgment was that it was nothing but a very thinly veiled direct public subsidy for operating air travel. While some agreements between regions/airports and airlines were finally invalidated, some of them also end up being approved after being reviewed, as the following report mentions:
EU rules low cost carriers, airports given illegal state aid
October 1, 2014
https://uk.finance.yahoo.com/news/eu-investigates-belgian-national-airport-115843460.html
It is astonishing how Eurostar high-speed rail and other high-speed rail services in Europe remain profitable, although they are having to deal with these massive arbitrarily set competitive disadvantages towards both air and land travel. But they are.
I want them to design the paint for the California train. Very handsome!
Yes, many might think that the design of Eurostar's new rolling stock is attractive.
While some might think it's unlikely that Pininfarina will be involved in California High-Speed Rail, still to many it might be important that the California High-Speed Rail authority better make sure that their trainsets will be displaying an outstanding design - after all, it might be the first time in North America that there will be some 200+mph high-speed rail thus a revolution in transportation within the region and it might be helpful if it became clear visually that this is a new age of transportation unlike anything before in North America with an exterior that is attractive and the interior comfortable and inviting. So some might think it could be beneficial if it definitely wasn't like any economy aircraft cabin or like Acela's current seats that look to some like they are from the world of air travel of the 90s, but ridership and success of the new service would receive a boost if it was modern and aesthetically pleasing.
BTW, there is a whole
thread about attractive design and high-speed rail...