Squeeze on City travel derails target at Eurostar

Robert Lea
15 Jul 2009

Eurostar is going to miss its much-vaunted target of carrying 10 million passengers a year by 2010.

The fortunes of the chronically-lossmaking, state-subsidised Eurostar were supposed to be transformed by its controversial move from Waterloo to St Pancras station.

However, 15 years after the first Eurostar train ran to the continent from London through the Channel Tunnel, the latest slump in passenger numbers means it will not hit its goal of 10 million passengers next year.

The high-speed, continental rail service today reported that despite slashing many of its fares, it carried 4.6 million passengers in the first six months of the year, a fall of 6% year on year.

Eurostar chief executive Richard Brown conceded the company will miss its “10 by 10” target.

“It's highly unlikely that we will be able to make up so much ground in one year,” he admitted.

Eurostar said half-year revenues have fallen on average by around £4 million a month to £344 million, and the type of passengers using its trains are hurting finances even more.

The number of business passengers riding the Eurostar — the train's most lucrative and highest-margin source of income — has crashed 20%.

However, the number of leisure passengers has increased 4% year-on-year, but that has been fuelled by an influx of European visitors taking advantage of the weak pound and by Eurostar's decision to expand by almost half as much again the amount of tickets it sells at its cheapest price of £59.

“There is no point in hiding it and there is no shame in it — some of our biggest business clients are from the financial and banking sectors, and as they tighten their travel budgets we feel the effects,” Brown admitted.

He said Eurostar had considered cutting its lowest fares.

“Consumers are worried about their finances and price is as important as it has ever been. But we have had the £59 fixed for the last six years and after all we still have to pay our bills.”

Brown previously indicated he believed the opportunities to connect the rail network north of London to the Eurostar at St Pancras would enable it ride out the worst of the financial crisis and see passenger numbers increase. Only three months ago he was still upbeat about hitting the 2010 target.

Eurostar has never reported detailed financial information and so the extent of its losses have never been in the public domain.

That should change next year as the company, an informal partnership of entities controlled by the French, British and Belgian governments, becomes a formalised joint venture.