High-speed train operator Ouigo celebrates two years in Spain. This means that two years have passed since train passenger transport is no longer a monopoly. The French brand came to an “elite” market at low prices, opening its first line. Five daily frequencies between Madrid and Barcelona with three stops in Zaragoza. The company has already carried six million passengers, as explained in this interview. Federico Couple, Ouigo’s director of commerce and marketing is a key figure they want to expand with the expansion into their south aisle.
With these two years’ experience, is it sustainable for Ouigo to maintain its low cost policy?
It can be sustained if the costs involved are normal and the electricity price is not skyrocketing like last year. something that surprises us all. We never included electricity in the ticket price, but our plans had a 10x electricity fee.
Was it part of your two-year plans or is the balance negative?
We met our expectations regarding the number of passengers and the reaction of the market. Until we arrived, we knew that Spanish high speed was a very elitist market because price was a limiting factor. Now the paradigm is broken and thousands of people who could not do this before have started to travel.
They have disagreements with ADIF over the cost of using the rail lines.
We are in trouble with the exorbitantly high fees we pay to Adif for the use of the line, which is not found in any fast line in Europe. To the extent that these fees are reduced, we can lower the prices. We never thought of stopping our flights because we saw the photo in the medium and long term, but one of our routes is not profitable: Madrid-Barcelona with a stop in Zaragoza.
Why isn’t it profitable?
In this line, we pay as much as the seat capacity we have, which is not standard in other services. We pay the same fare when we get on the train full or empty, and this is not normal. We have double-decker trains where we inject more passenger volume and save costs, without passengers taking up space inside the train. The current agreement with ADIF is not sustainable for us and we are not even profitable today despite the huge investment made to enter.
If not resolved, does it mean a price increase in the future?
We never offer to raise prices. We believe that what needs to be done is to reduce costs or at least change the payment method where capacity is penalized. We already pay the weight of the wagons we put on the rails. Paying more for the number of places that doesn’t make sense: it creates unnecessary stress on the market. We keep prices low to fight our real competitor, the automobile. We all have to transfer from road to train.
After Iryo’s landing, it won’t be with an offer…
Anything competitive is good for the market and an incentive for us, but the offer has skyrocketed in recent months with the arrival of the third operator. [la hispanoitaliana Iryo, que comenzó a transportar pasajeros en noviembre de 2022]. It did this all of a sudden, with many frequencies per day and no smooth ramp to meet demand. We did not observe a significant decrease in the number of passengers, we continue to keep our trains full with around 95% occupancy, but today the filling of the trains is much cheaper than a year ago. This, combined with the high costs we currently have, calls into question the usefulness of Ouigo. If costs go down, we can keep prices perfectly. If costs do not fall, the market reacts and prices rise: this is the law of supply and demand.
Is Ouigo’s persistence in the Spanish network at risk?
We can’t think of any other scenario than being here. I repeat: in the medium and long term you have to see the picture. There is ample market for all competitors.
How many passengers does it carry? ouigo compared to the total?
Ouigo carried around 6 million passengers in just two years, of which five million took place on the Madrid-Barcelona route. Along these lines, 25 to 30% of them originate or arrive in Zaragoza. There was always more demand for Madrid but now it’s almost on par with Zaragoza-Barcelona. Regarding the total, CNMC will publish data for the first quarter of 2023 in the coming days, which will be the first full period in which traffic undertaken by the third operator can be measured.
What happens to Ouigo and things?
I think it’s a very interesting campaign against new entrants. It definitely had something to do with it. We keep the same rate as other operators and Adif has the data it checks. Not that there were more or less incidents on the Ouigo trains, but shortly after we started working we had a serious incident that received much more media attention than it really deserved. A Ouigo was said to have knocked over the catenary. [el suceso del pasado verano a la altura de Calatayud, cuando la línea de alta velocidad permaneció cortada durante tres horas con 8.000 viajeros afectados] It has already been shown that this is not so. It was random because there are problems with the lines. He touched us as much as he could touch anyone.
Was the press bad?
There is a correlation between our ‘low fare’ model and airlines’ ‘low cost’, which is often disparaged as the user forgoes quality. We didn’t, although our low prices were associated with everything the common imagination believed was low cost. Time has proven that our travelers are returning and satisfied.
Would having a larger train fleet help speed up the resolution of incidents?
It doesn’t have to. We always stop trains to resolve any incident that may arise. Frequency is not as important as the number of trains. We have a train that runs every three hours, we don’t have a train that goes 30 or 40 minutes. from behind, which can assist passengers in an eventful convoy. But it would worry us if we had recurring events. This is not the case: we had three incidents in two years of operation.
What’s next?
The future of the company depends on the opening of waiting corridors. We have already opened the Valencia and Alicante line with a stop in Albacete. All our efforts are focused on going south as soon as possible. Regarding the Madrid and Barcelona lineThe framework agreement with Adif allows us only five round trips per day with three stops in Zaragoza. If Adif gave us more frequencies, we probably would. But it’s not up to us.
At the table where Ouigo has intermediate stops like Calatayud or Tarragona?
It’s not on the table because it has Public Service Obligations. We can’t stop at those stations because the officer can demand money from us by getting a share of the public service market. First of all, what we do in favor of Aragon is to adapt and develop the programs during the day to Madrid and Barcelona. We have some programs that work very well for Aragonians who have to go to meetings there today. The third operator has positioned itself very well in the business world, but Spain is the land of small and medium-sized companies. This profile is looking for a lot of prices, and the best answer that exists today is still Ouigo.
Presumably, Iryo has taken over this business sector by incorporating high-speed travel passes. Do they think in Ouigo?
There are several proposals from the central government to create subscriptions and price reductions. On our part, we have not yet taken this into account as our prices are low enough to compensate for a subscription.
What about connections to the south? When will they be real?
Due to a technical problem in the security systems, we have not put the lines into service yet. We won’t go south until 2024. Once you have it operational, Zaragoza will be able to connect with Andalusia after passing Madrid. Which Direct connection would be very complicated as there is no transit station in Madrid. and filling high-capacity trains like ours is very complex. It’s hard for me to fill those trains without stopping in Madrid.