Air France considers high-speed rail routes

4.7.2008     (Financial Times)

By Robert Wright in London

Air France is holding talks about a joint venture that could see some of its
short-haul routes operated by trains and considerably increase competition for
continental Europe’s mainly state-owned high-speed train operators.

The French flag-carrier, part of Air France-KLM, is speaking to Paris-based Veolia
Transport, part of the Veolia Environnement group, about the venture.

Veolia is continental Europe’s largest private rail freight operator and runs
passenger trains in several countries. It used to operate public transport services
worldwide under the now-defunct Connex brand and became the first private company
since 1938 to run a freight train in France.

Veolia could run trains under the Air France brand from the airline’s hub at
Paris’s Charles de Gaulle airport to destinations across Europe. The services
are likely to be solely international because European legislation is only set
to liberalise the international rail passenger market.   Private operators will
be able to compete on such services from January 2010.

The possibilities of operating such services are increasing as Europe’s network
of dedicated high-speed rail lines gradually becomes more international. Last
year saw France’s LGV Est open between Paris and near Strasbourg, on the German
border. A line linking Antwerp in Belgium and Amsterdam in the Netherlands should
open in the next year.

Although Air France and Lufthansa, its German rival, have previously bought seats
on existing high-speed train operators’ services, the new venture would mark the
first time an airline has commissioned its own high-speed trains.

The move comes as airlines around the world are struggling to cope with high
oil prices. Fuel now accounts for between 30 and 40% of most airlines total costs.  
Earlier this decade, that figure would have been closer to 15%.

Air France yesterday confirmed a report in the French magazine La Vie du Rail International , which said the airline had been exploring for four years the possibility of
using rail to complement its air services.   It was looking at commissioning its
own services because it had been unhappy with the quality of rail-air connections
when it had bought space on existing operators’ trains. Veolia confirmed it was
in talks with Air France.

Any venture would be only Europe’s second purely private high-speed train operator.  
An Italian private company, NTV, announced last year it planned to compete with
Italy’s state-owned railways’ high-speed trains between Rome and Milan from 2011.

FT article