Pierre ZEMBRI Universitad de Cergy-Pontoise EA 4113 MRTE Pierre.zembri@u-cergy.fr

1. IV Jornada Europea sobre Alta velocidad y territorio, 10 de nov. de 2009 The new purposes of the French High-speed rail system in the framework of a centralized network : a substitute to the domestic Air Transport market ? Pierre ZEMBRI Universitad de Cergy-Pontoise EA 4113 MRTE Pierre.zembri@u-cergy.fr

2. Contents From a specialized towards an « universal » TGV network A growing competition with air transport A strong position of the SNCF in the intra-modal competition Some conclusions about rail-air relationship

3. 1. From line to network The high speed network represents now a large part of the rail services, 4 sub-networks being concerned from/to Paris. The interoperability between new high-speed trunk lines and the rest of the electrified network permits a large coverage of the French territory : the TGV services network is broader than the real high speed one. Cross-country services using successively two high-speed lines and passing through the Paris Region are constantly growing from year to year.

4. From line to network : the high-speed infrastructures in operation (418 km) (1107 km) (1802 km)

5. The TGV services network in 2009(combining high-speed and regular lines)

6. A realistic map of the high-speed infrastructure network in 2016 The centralization is reinforced.

7. A growing proportion of cross-country links They represent 10 % of the 550 daily TGVs, and 14 % of the receipts. Their number has significantly grown between 1992 and 2001. There are two categories of links : -« Diametral » links : they pass through the Ile-de-France region, using high-speed or regular tangential lines. There are 4 peripheral stations : Roissy CDG Airport, Chessy (Disneyland Paris), Massy-Palaiseau and Versailles-Chantiers. - « Transversal » links : They use part of the high-speed network but don’t pass through Ile-de-France. This is the most recent segment of market developed (since 2001).

8. The « transversal » links in 2007 1 line = 1 round-trip service per workday Workdays : tuesdays and thursdays

9. 2. A growing competition with air transport From the beginning of high-speed services in France, the main target of the TGV system has been business traffic using the domestic air transport network. The SNCF can be considered as an active player in the Air transport competition, offering low travel times, competitive prices and high capacities. The frequencies can be high between the largest towns : 16 round-trip services between Paris and Marseilles, 21 between Paris and Bordeaux. The development of the TGV network has created new opportunities of competition with Air France and other carriers. That is one of the reasons of the relative weakness of competition within the domestic Air Transport sector. Air France is now planning a progressive downsizing of its domestic services on the lines where the market share of the TGV is growing.

10. The TGV-Air competitionSome Origin-Destination pairs where TGV times are under 3.30 hours (1) (1) : Average travel time from city center to city center by air, integrating precaution Time (security checking) and deadline imposed for the check-in, is about 3 hrs 1/2.

11. The TGV-Air competition (SNCF vs. AF)Is there a correlation between the attractiveness of the TGV offer and the level of service of AF ? We have compared the level of service of the two carriers, according to the TGV average travel time (quite different from the real distance). Hypothesis : When AF considers that it has lost the competition, most of the remaining flights are oriented towards Roissy-CDG, which is the main hub of the carrier, in order to focus on the connections with long-haul flights. On the contrary, when AF considers that its market share can be consolidated, a majority of its flights are oriented towards Orly Airport, more convenient for the access to/from Paris. This is largely confirmed by our comparison, except some large towns like Lyon.

12. Is there a correlation between the attractiveness of the TGV offer and the level of service of AF ? (2) Area of intense competition Predominance of high-speed rail Predominance of Air Transport Logarithmic scale. Source : carriers.

13. Is there a correlation between the attractiveness of the TGV offer and the orientation of AF services to CDG ? Except for Lyon and Strasbourg, 100 % of AF flights connects the towns only with the CDG hub when the average TGV travel time is under 150 minutes. The proportion is under 50 % when TGV travel time is over 3 hours. Three towns are not connected to CDG : Toulon, Biarritz and Perpignan.

14. Air lines closures related to the competition with TGV Some TGV market shares : -Paris - Lyon : 97 % (2008) ; -Paris - Avignon : 95 % (2004) ; -Paris - Marseille : 83 % (2007) ; -Paris - Strasbourg : 70 % (2008) ; - Paris - Bordeaux : 68 % (2008) ; -Paris - Toulon : 65 % (2004) ; -Paris - Montpellier : 65 % (2006). From : Le Quotidien du Tourisme

15. TGV vs. Low Cost : competition is over In the French context, newcomers in the Air Transport market had to face a severe challenge : -the allocation of slots in the main airports dominated by Air France is not sufficient for a credible level of service, -and there is the TGV and its low prices… In 2009, there is only one one competitor in the face of Air France : Easyjet. But, the number of domestic lines is weak and the competition with high-speed rail is not a priority. Easyjet closed its Orly - Marseilles line in 2004, considering that it had lost the game. Domestic lines in operation in november 2009 : -Orly - Nice (5 round trips) and CDG - Nice (1 round trip), -Orly - Toulouse (5 rt), -CDG - Biarritz (2 rt), -CDG - Bastia and CDG - Ajaccio, -Lyon - Nantes, Lyon - Bordeaux, Lyon - Toulouse & Lyon - Biarritz.

16. SNCF has a low-cost subsidiary : iD TGV • This subsidiary runs high-speed trains from Paris to 6 main directions at a very low production cost : • -trainsets are always attached to regular TGVs : no track fee and no train driver to pay, • -ticket sales are only on the Internet, and the ticket must be printed by the user, • -the rolling stock belongs to SNCF. • Prices begin at 15 € one-way, and become higher following the classical Yield Management rules (the maximum price is the regular TGV one). • Lines in operation in 2009 : • Paris - Lyon, • Paris - Grenoble, • Paris - Marseille, Paris - Montpellier - Perpignan, • (Lille -) Paris - Toulon - Nice, • Paris - Strasbourg - Mulhouse, • Paris - Bordeaux - Toulouse or Hendaye.

18. 3. A strong position of the SNCF in the intra-modal competition In the next years, the liberalization of the Rail transport industry in Europe will go on with the opening of international services in december 2009, and then with the introduction of competition on domestic markets ten years later. High speed, whose market share is 81 %, may play a major role in the competition. But is there a real open access to the French market ? The SNCF has tried to transfer the largest part of its long-distance services to the TGV, in order to make the « entry fee » on its market as expensive as possible. For instance, a TGV trainset costs about 25 millions €. If a newcomer needs 30 units for a decent service level, the amount to pay before any ticket selling is : 750 millions € ! The track fees will also be very expensive in 2011 on high-speed lines.

19. What will happen in december 2009 ? Nothing, or nearly nothing ! All the neighboring carriers are involved in common subsidiaries with SNCF, with strong links difficult to get rid of : -Eurostar (Eurostar UK, SNCF, SNCB). Recently, SNCF had to face DBAG for the purchasing of its partner Eurostar UK. -Thalys (SNCF, SNCB, DBAG, NS). Thalys services replace planes between Paris and Brussels. DBAG operates its own trains between Brussels and Cologne. -Lyria (SNCF, CFF/SBB/FFS), -Artesia (SNCF, FS), -Elispsos (SNCF, RENFE), -Alleo (SNCF, DBAG). Only the Italian Railways FS have announced their intention to operate trains between Milan and Paris, via Turin and Lyon.

20. Some conclusions (1) The TGV services network covers the essential part of the French long-distance market. It constitutes a new standard characterized by a set of radial, diametral and transversal services using a centralized infrastructure network ; The development of the high-speed infrastructure network will accelerate existing services more than it will create new ones. Each acceleration phase will reduce de facto the market share of domestic aviation, handicapped by uncompressible security procedures, the growing weight of taxes and the perspective of new oil crisis ; That will provoke either a cooperation between air and rail carriers (SNCF being for instance a partner of Air France for feedering services to/from the CDG hub), or the entry of air carriers in the rail market (an attempt by the alliance Air France - Veolia Transport has aborted in 2009). There is no room for many other newcomers in the domestic and international short-haul Air Transport market, even low cost carriers.

21. Some conclusions (2) 4. If the substitution of planes by TGVs is a nearly certain evolution for most of the domestic and short-haul international lines (like Paris - London, Paris - Genève, Paris - Amsterdam, etc.), the developement of complementarities between the two modes is unsufficient. Two airports are directly serviced by high-speed trains : CDG and Lyon - St-Exupéry, but they are mainly on transversal or diametral routes, with lower frequencies than radial ones. They are not considered as intermodal nodes, but as « regular » stations where some connections between TGVs are possible from time to time. If the physical connection is of fair quality, the customer still has to build by its own the eventual connections between rail and air services. The Airport managers don’t promote rail connections. Baggage check-in is not possible in SNCF stations. The situation is really different from Zurich, Geneva or Francfort.

22. Thank you for your attention. Estacion Lyon St-Exupéry TGV