French rail company SNCF's strategy to split TGV services into no-frills and full-service are still not achieving targets, according to the company's annual report.
Revenues at Voyages SNCF, which includes the TGV business, increased by 8.6% to €7,373 million for the year to the end of December 2017. Gross profit was €1,178 million for the year.
Passenger traffic on TGV services are as shown in the chart below. This traffic is expected to increase by 4.7 million by 2020 and 7 million by 2025.
The figures are the first since the company announced a new strategy in May 2017 to attract an additional 15 million passengers by 2020. This split the high-speed service into two offerings: a low-cost, no-frills service called OUIgo which is expected to account for 25% of traffic by 2020.
A service called inOUI is aimed at business travellers with on-board Wi-Fi, more accessible train managers and new customer relationship tools.
On 26 September, Voyages SNCF launched two new TGV inOUI services: Business Première and Wifi. Business Première is a premium free services offering flexible ticketing, special and priority welcome in the Salons Grands Voyageurs lounges and seat selection on reservation.
However, the company said that the revenue and gross profit generated by TGV France and Europe (excluding Eurostar and Thalys) were "well below budget".
In February, a report commissioned by French Transport Secretary Elisabeth Borne by former Air France KLM CEO Jean-Cyril Spinetta was published (in French) and made a number of recommendations. One was to take funding from poorly used rural lines, possibly closing thousands of kilometres of track, and reallocate it to the key hubs and dense routes.
The Spinetta report says that TGV traffic has remained largely stagnant due to the economic landscape and also increased competition from low-cost carriers, car sharing operations and others.
Spinetta said that the network needs to prepare for competition by 2021.
He says competition will improve efficiency and the quality of service and will lead to the introduction of innovative technology and commercial propositions. However, he admits that the difficulties of opening up the rail market should not be underestimated. The question for corporate travel buyers is whether that competition will bring results for them — intercity rail has been slow to open to competition through Europe, despite European moves to open up rail to competition across the continent.
Even in the UK, where rail privatisation has been in place for a number of years competition has not emerged to provide corporate rail buyers with the opportunities to gain discounts.
It is unlikely to provide comfort for French rail buyers any time soon.