TGV Lyria promises “supply shock” and reduced prices against Air France, Easyjet and Swiss

Two and a half years ago, the TGV Lyria announced a major offensive in the rail service between Paris and the main Swiss cities. But the health crisis has passed that way, and with a 30% increase in capacity, the French-Swiss company (a joint venture between SNCF and its Swiss counterpart CFF) saw a more than 50% drop in activity in 2020. and not a lot. better in 2021. But TGV Lyria now wants to move forward and re-examine its pre-crisis plans. Its CEO Fabien Soulet announces a “power shock” from the end of the month.

“We will resolutely resume the offensive in the market”, promises the leader. It announces a 30% capacity increase this year compared to the pre-crisis level and thus expects to reach, with a lag of two years, the target announced at the end of 2019. This represents an additional 4,000 to 5,000 seats per day, i.e. , the equivalent of 30 Airbus A220s.

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an aggressive offer

To achieve this, the rail operator will use several levers. As of March 28, TGV Lyria will resume operating all its trains, ie 15 Euroduplex trains with 510 seats. Gradually integrated from 2011, they definitively replaced the previous single-deck trains (TGV POS) at the end of 2019, thus offering a capacity gain of 30%. The rail operator will also play on frequencies, with 17 round trips per day during the week, that is about 3 more than in 2019. They are split between Paris and Geneva (8 round trips), Basel and Zurich (6) and Lausanne (6 including 3 via Geneva).

According to a principle widespread in Switzerland, they will depart according to regular schedules: Paris-Geneva will depart every two hours on the “18th minute”: 6:18, 8:18, etc. Fabien Soulet wants to simplify the offer and improve its readability for travelers.

Also according to the 2019 plan, this shock of offers is accompanied by an aggressive pricing policy with a round-trip price starting at 49 euros. Fabien Soulet states that this rate will be widely available, up to 15 days before departure. However, this delay period will only concern some of the trains.

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The plane in line of sight

“We are convinced that there will be a massive and rapid return of Franco-Swiss travelers to the train,” says Fabien Soulet. And, as is usual now, the obvious target is the plane: “We really have the opportunity to transfer significant market shares to the train and, in particular, to the plane. This is very much present in our connections, whether to Geneva, Basel-Mulhouse or Zurich.” Before the crisis, the TGV Lyria won 50% market share against Air France, Easyjet and Swiss, or up to 60% in Paris-Geneva. She now wants to go further and claim at least 5-10 additional points in a growing market.

Despite two very difficult years, the head of the Franco-Swiss operator believes that the train’s competitive forces will emerge stronger from the crisis. It would work like a “multiplier” for the emergence of environmental concerns and their deep integration into the company’s travel policies.

According to a detailed study carried out by the Swiss company Infras, which integrates operations but also all infrastructure, production and maintenance of equipment, a round trip from Paris to Geneva would thus emit 20 times less C02 per passenger on a train than on a plane . The other advantage would be the much longer time available by train than for other modes of transport.

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Business customers in the spotlight

TGV Lyria is therefore particularly targeting business customers, which accounted for a third of its traffic before the crisis. Contrary to the widely shared analysis in the air and rail sector of an enduring disappearance of 20-30% of business customers, Fabien Soulet believes this will continue with less frequent travelers but a wider clientele base regained in particular on the plane.

The return of leisure travelers started in the summer of last year, but the number of professionals also increased very strongly from September. The arrival of Omicron and new restrictions broke that momentum, but these trends confirm Fabien Soulet in his strategy, although he announces that this sudden increase in supply at the end of the crisis constitutes a gamble. In addition, this combination of increased capacity and reduced price will force the TGV Lyria to a high level of occupancy if it wants to monetize its activity.

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Ending several years of decline

We therefore need double-digit traffic growth for the rail operator, and perhaps even triple-digit growth given the results of recent years. Before the crisis, TGV Lyria experienced a change in its activity that made it go from around 6 million passengers in 2013 to 5 million in 2019, for a turnover that dropped to 320 million euros. With the Covid crisis, this decline turned into a slump with the numbers halved. For 2021, the turnover (in consolidation) should be around 170 million euros.

When the plan was presented for the first time, at the end of 2019, Fabien Soulet was therefore betting on a growth in the number of passengers in the order of 15% in the first year and more in the following years. This would have allowed a return to the levels of the beginning of the decade. To achieve the same result, it is now necessary to more than double traffic compared to 2021. The head of TGV Lyria recognizes that the task will be difficult, mainly because Omicron has returned to drag it a little. He still hopes to be able to approach economic equilibrium over the course of the year, or even switch to green as initially planned.