The first full year of competition between the three companies that operate high-speed rail in Spain – Renfe, Ouigo and Iryo – has resulted in considerable losses of several million dollars, both for the Spanish railway operator and for those belonging to the French and Italian states. In total, the three companies have around 190 million euros in red figures. Losses that have been expected for months and that have been heavily criticized by the Minister of Transport and Sustainable Mobility, Óscar Puente, because Iryo and, above all, Ouigo, have lowered prices, scratched customers, and dragged Renfe, both with the AVE and with the Avlo ‘low cost’.
“The reality is that at present the high-speed rail ecosystem is a loss-making system,” Puente said in mid-August. He had previously announced that Renfe would appeal to the European Commission against unfair competition from Ouigo, considering that it sells its tickets at a loss.
“Railway liberalization has brought positive things, it has obviously increased supply, it has reduced prices, but it has brought them to an unsustainable level for the three competitors. Competition must be fair and allow the three companies to make profits or, at least, not suffer losses,” Puente said in a radio interview. This situation seems very far from being a reality.
The red numbers of each company
The data confirms the loss of profitability. Of the three companies, the one that lost the most money in 2023 was Iryo. It was the one that operated the shortest in Spain because it started at the end of 2022, so 2023 was its first full year. There were 79 million euros left, which assumes that they are in line with their expectations, due to the high cost of launching a service. The losses will also force its three shareholders to inject more funds. Iryo is 45% owned by the Italian public operator Trenitalia. Another 31% is in the hands of AirNostrum and 24% is in the hands of Globalvia.
The second railway company that lost the most money in 2023 was Renfe, under the umbrella of Renfe Viajeros and leaving aside other activities of the public operator, such as freight or activity outside Spain, such as the one it has just launched in France. This division of the public company lost 65 million euros last year, above the 51 million red figures of 2022, according to its latest report. It also explains that the competition from new operators is focused on lines that, in theory, can be profitable. On the other hand, in long-distance services – as is also the case with Cercanías – there is no competition “because it is a basic service for citizens without the primary objective of obtaining economic profitability, but rather of structuring the entire service.” territory”. That is to say, it will continue to be the only operator and these are routes that will hardly bring in any profit.
The third company in the running and the one that has pushed its competitors to compete on price is Ouigo. The subsidiary of the French public company SNCF lost 42.7 million euros in 2023. In the three years that it has been operating in Spain, the corridors that connect Madrid with Catalonia, the Valencian Community or Andalusia have accumulated red figures of more than 110 million euros, which he attributes to being in the launch phase. In fact, in his memory, he recognizes that companies are immersed in “a price war to attract customers.” But this year, it hopes to make a profit.
37% more high-speed passengers
All three companies are recording losses, but there are more people than ever traveling at high speed. Data published by the National Commission for Markets and Competition (CNMC) estimate the increase in the number of users in the last year at 37%. In total, 32.4 million people. Of these, about six million correspond to Iryo; another 4.6 million to Ouigo and the rest to AVE and Avlo. And, at the same time, incidents are multiplying, as we saw this summer, when delays and breakdowns multiplied throughout the territory.
As an example of the decline in punctuality of the Spanish public operator, the Renfe Viajeros report for 2023 already estimates that 25.7% of delays on AVE and long-distance trains exceed 60 minutes. In 2019, before the pandemic stopped travel, this percentage remained at 14%.
That was last year, but in 2024 incidents and delays have increased, leading Renfe to change its compensation policy if a train arrives later than scheduled, which now only happens if the delay exceeds an hour. This multiplication of problems has led Puente to make two appearances, both in the Congress of Deputies and in the Senate. In the latter, he stressed that the incidents are due, among other reasons, to infrastructure and rolling stock problems. For example, the repeated breakdowns of the Talgo Avril that began operating this year and which, according to Renfe, were going to be a solution to improve its business.
But if there is an “epicentre” of the problems, it is Madrid’s Chamartín station, where Ouigo, Iryo and Renfe trains run. The head of Transport pointed out in one of his speeches that a delay of just 10 minutes for a train from one of the three operators results in 2,000 people waiting at the station. He also pointed out that this year, the growth in the number of high-speed passengers is once again in double figures and that, in the case of Renfe, there are “20% of the trains that are not fit to provide the service”, due to the lack of investment inherited from previous legislatures.
Savings with liberalization
If on one side there are losses for the operators, on the other the savings that this price war has allowed consumers. According to the CNMC, travelers have saved 343 million euros thanks to the competition between the three companies, according to the latest report on the Balance Sheet of the Liberalization of Passenger Transport by Rail.
Adif, the rail infrastructure manager, is also doing well, as high-speed fees – which companies pay to use the tracks – have climbed by 52% compared to 2019.
The president of the CNMC, Cani Fernández, validated this Thursday during her appearance at the Congress of Deputies this competition between operators because it is “an effective lever to increase demand” and because it has contributed to “economic growth in the areas served by the runners.”
Fernández also announced that Competition is working on these fees, criticized by companies as being too high, so that they “are comparable to those of the countries around us.” “We have a balance of liberalization that speaks for itself, users are very satisfied, operators would like tighter rates and we are working on it,” he acknowledged.
