Year 2025. That is the year in which Ouigo expects to see the green numbers. It is the response of the French train operator to the interest of the Minister of Transport and Sustainable Mobility, Óscar Puente, in knowing Ouigo's accounts, as he conveyed to public opinion during an event held a few weeks ago in Madrid.
Until then, losses will preside over the accounts for 2023 and somewhat less in 2024, as expected by the company, which, despite this, does not give up in maintaining a strong price war in the Spanish market that in turn dents the accounts of the two other operators, Renfe and Iryo.
Although Ouigo has in its DNA to be a “low cost operator” and has defined itself as such since its entry into Spain, the SNCF subsidiary is not immune to the effects of its strong commitment to low prices, which the minister has come to call of “dumping”. To maintain it, last October he announced a temporary reduction in the train frequencies of the Madrid-Barcelona corridor. This concentration of travelers on fewer trains at peak times, avoiding empty seats, was applied between Three Kings Day and the beginning of Holy Week. It represents an obvious saving. Ouigo avoided starting trains in the early morning and reduced maintenance and fee costs.
Added to this is a script twist to its original strategy. Given the delay in operating the Madrid-Andalusia corridor, in December it expanded frequencies in the Mediterranean, specifically, between Madrid and Valencia, and this spring it inaugurated inland destinations. On March 19, Madrid-Segovia-Valladolid premiered and in June it will arrive in Cuenca. These routes are far from the profitability that Madrid-Barcelona provides, in principle, but they allow the opening of a market with less competition and, above all, with cheaper fees and tolls per passenger that allow a greater margin for profit.
Ouigo is pending entry into Andalusia for the second half of the year. “Once the company begins to operate in all the lines contemplated in the business plan; That is, once it begins to operate between Madrid, Seville, Málaga and Córdoba, the conditions will be met for the company to reach financial balance (ebitda),” the high-speed operator confirms to La Vanguardia.
That is, as Minister Óscar Puente calculates, Ouigo's 2023 accounts will remain in the red, like Renfe's and also Iryo's. The operators attribute part of these losses to the high impact of the fees charged by the infrastructure manager Adif. The National Markets and Competition Commission (CNMC) agrees, in part, with them. According to their analysis, in the first quarter of 2023 the fees represented 91% of the total ticket between Madrid and Barcelona for Iryo, and 39% for Avlo (Renfe's low-cost company) and Ouigo. That amount dropped to 67% for Iryo in the second quarter, while it rose to 42% for Avlo, and 40% for Ouigo.
In the Mediterranean and Andalusian corridors the weight of the fees is much lower, 20% and 22% of the price respectively. This lower charge allows for a greater profit margin and reduction in the price of tickets. “2025 will therefore be the first complete year in which Ouigo will be operating all the planned lines. In this way, the accounts for that year will be the first representative of its operational performance,” explains the company with French capital.
Until then, Minister Óscar Puente will have a difficult time comparing the losses or profits of the three high-speed rail transport operators in Spain.
