Eurostar bets on new trains and destinations to grow

Eurostar bets on new trains and destinations to grow
Eurostar employees pose for a selfie next to their new Siemens e320 train at St Pancras station in central London, November 13, 2014.

LONDON - Eurostar is spending about 300 million pounds (S$610 million, US$473 million) on seven new trains to reach more distant destinations in an effort to lure more passengers from aeroplanes to the Channel tunnel.

Exactly 20 years after it first connected London and Paris and London and Brussels by rail, Eurostar on Thursday showcased the new-look train as part of a fleet expansion and refurbishment project costing 1 billion pounds.

The link has transformed transport between the three capitals and Eurostar now has around an 80 per cent share of the city-to-city market (including air travel) which it says has doubled in size since it launched. "I don't think we can go much higher than that. The growth for us is no longer on Paris or Brussels, it's to go beyond those destinations," Eurostar chief executive Nicolas Petrovic said in an interview.

Over the next two years, the distinctive flashes of Eurostar's yellow livery will be seen hurtling through countryside beyond northern France and Belgium, going as far as Marseille, in southern France, and Amsterdam in the Netherlands. "We need to convince passengers to try us and switch from air to rail. We have to create new markets that didn't exist before," Petrovic said.

Slimline seats on the new, bigger Siemens trains will offer passengers more leg room than before, and there will be wi-fi throughout.

Infrastructure funds and pension funds have the chance to buy into the growth story after Britain put up its 40 per cent stake in Eurostar for sale in October.

But the jury is out on whether the new trains and routes can deliver. "I've been sceptical about longer routes because I don't believe the train can offer a sustainable price advantage, and fundamentally, the airlines are still materially faster on those routes," Liberum analyst Gerald Khoo said.

When a train journey goes over two and a half hours, which the Marseille and Amsterdam routes will, passengers tend to favour air travel, analysts said.

Eurostar, whose other shareholders are French state-owned rail operator SNCF and Belgium, hopes the new trains can help it counter any future competition. Germany's Deutsche Bahn is planning a rival channel-tunnel service from Frankfurt to London via Brussels, though the launch is on ice.

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