The Future of French Rail
posted in Transportation |Even as President Obama wants to build an American high-speed rail network to match the one in France, the French have begun to question the wisdom of their own high-speed rail system. French trains are operated by a government-owned corporation known as SNCF (short for the French translation of National Railway Company of France).

By 1997, building high-speed rail lines had put SNCF €28 billion — about $38 billion in today’s dollars — in debt. Although this debt was backed by the full faith and credit of the French government, it was pretty clear that rail fares would never repay it. Since the European Union requires that member countries not subsidize transport or other things that would give companies in those countries an unfair advantage over those in other members of the EU, in 1997 France separated SNCF into two companies: SNCF would continue to operate trains, while a new company named Réseau Ferré de France (RFF, which translates to French Rail Network) builds and maintains the tracks.
Though at least 20 percent of the TGVs lose money, SNCF is now a profitable operation overall. But RFF is not, so it has increased the fees it charges to SNCF to run trains on its tracks. Though rail proponents note that RFF earned a profit in 2009, the truth (Babelfish translation) is this was operating profit only, and did not pay down any of the debt.
Now the pesky EU has demanded that France turn both RFF and SNCF into what amounts to private companies (Babelfish translation). Over the next few years, RFF will need to increase its fees by about €1.2 billion, totally eliminating SNCF’s €1.1 billion in profits.
Unlike Japan, which operates its high-speed trains in competition with low-speed (and lower-fare) trains, France completely replaced its conventional trains with high-speed trains as it built high-speed lines. By offering tickets at reasonable fares, it has been able to attract riders of all incomes (though not very many of them — the average resident of France rides the TGV less than 400 miles per year). Now, SNCF faces a choice between dramatically raising fares or eliminating many of its high-speed trains.
Rail advocates often bill high-speed rail as “sustainable transportation.” But, with the exception of a few lines — Tokyo-Osaka and possibly Paris-Lyon — it is obviously not financially sustainable. Even if people agree to subsidize it, few governments can continue such subsidies forever. This is not a model the United States should follow.




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