According to Ouigo, we should be able to purchase the first low-cost train tickets to Valencia, on the Valencia-Madrid and Alicante-Madrid lines by the end of the year. And prices will drop even further in 2022…
The latest news about the French transport company Ouigo confirms that competition is usually very good for prices. In Spanish domestic railway transport, Ouigo is the only competitor to Renfe, but even one competitor was enough to destroy Renfe’s monopoly and completely change the pricing policy, significantly lowering the prices of the services.
It’s been a month since Ouigo began offering cheap tickets on the Madrid-Barcelona route, and according to early reports, the occupancy rate is currently at 75%, making even tickets starting at 9 euros one way profitable. Ouigo was granted a licence to compete in December of last year, but due to a pandemic, it was unable to begin operations before May.
At the moment, the company provides five daily trips on the Madrid-Barcelona line, which is one of the busiest in Spain. But, more importantly, if everything goes as planned, we should soon have low-cost train tickets to Valencia on the menu – Ouigo promised them by the end of this year. The Valencia route has always been one of the most profitable for Renfe, so it is only natural that it would be the next one on Ouigo’s list. The company also intends to launch services to Cordoba, Seville, and Malaga in 2022.
Ouigo operates its own train fleet, which consists of 14 double-decker Alstom Euroduplex trains with 509 seats and a bar on board. So far, Ouigo has invested 600 million euros in its Spanish market venture, creating over 1,300 direct and indirect jobs. The company predicts that their prices will be 50% lower on average than Renfe’s, but the prices of the tickets will vary (same as the RyanAir concept). The later you buy them, the more expensive they will be.
The French company’s goal is not to “take over” the Spanish public operator’s market, but rather to popularise train travel and bring people into the market who previously did not use these services due to high prices. In fact, between 70% and 80% of Ouigo passengers in France are people who had never used high-speed trains before, and this is the model that the company is attempting to replicate in Spain.
Renfe, on the other hand, is not yet ready to give up. Faced with competition, the Spanish transporter established its own low-cost company, AVLO, which is already offering significantly better deals than the parent company. This was apparently also planned for last year, but was postponed due to the CoronaVirus, so the timing is purely “coincidental”. It is a concept that has already been seen in the airline industry, where the parent company keeps the most profitable routes where there is already a monopoly and uses the low-cost company for the other routes where competition is fiercest.
However, this may not be enough, as other operators are looking to enter the Spanish market.
The ILSA Consortium, a joint venture between the Valencian company Air Nostrum and the Italian Trenitalia, will be starting in spring 2022. Since Valencia is a transport and business hub for Air Nostrum, there will be even better deals on offer. Although the third entrant into the market, ILSA will have the highest number of frequencies as awarded in the ADIF tender. To be able to service all these routes, ILSA has commissioned the production of 23 brand new trains worth 800 million euros.
ILSA and Ouigo will add approximately 15 additional trains per day on the Madrid-Valencia route, resulting in significant price reductions. And most likely so much that air travel between two cities will soon be obsolete.
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