Two years of competition for the AVE: how liberalization changed traveling in Spain

In 2019, buying a ticket to travel between Madrid and Barcelona on a weekday one month in advance implied paying prices between 85 and 107 euros. Today, that same route can be purchased for 9 euros. This is the main consequence of the liberalization process of rail passenger transport, promoted by the European Union with a view to improving the competitiveness of a historically monopolistic sector. The Spanish railway also had cia. The theory was simple: by increasing the offer and competing with each other, travelers would probably increase.

The first figures show that this milestone has been met: The Madrid-Barcelona line had 43% more passengers than in 2019, the last year of normal mobility. Madrid-Valencia, for its part, had 11% more passengers. The Andalusian line, which at the end of the year had not yet received the competition, was still at 11% lower levels of traffic, as it had not recovered all its frequencies, although the entry into service of Iryo will reverse this trend.

As is logical, the competition has varied the distribution of a cake that was previously only in the hands of Renfe. On the Madrid-Barcelona route, the ‘goose that lays the golden eggs’, the public sector had 71% of the market share at the end of 2022, distributed 59% among its AVEs and 14% of its’ low cost ‘Avlo. The main competitor, Ouigo, grew up to 29%, with an Iryo that started its operations with low occupancy levels that little by little they have managed to reverse. In Madrid-Valencia it is more distributed: 45.3% of passengers opt for Renfe (24.4% AVE and 20.9% Avlo) while the remaining 36% were transported by French trains, with Iryo beginning his operation.

France, to the conquest of the Spanish market

On May 10, 2021, a Euroduplex train from the French operator Ouigo —a subsidiary of the French state-owned SNCF— broke a historic milestone in the Spanish railway by operating the first commercial service in competition with Renfe. The conditions of the service did not vary much with respect to the fundamental work that the old monopoly had carried out until then: uniting the two great cities of the country, Barcelona and Madrid, in about two and a half hours.

But Ouigo’s commercial proposal was different, offering tickets at low prices (from 15 euros) taking advantage of its double-decker trains with double the usual capacity. A year and a half later, on October 7, 2022, its Madrid-Valencia services would start, to which another four daily trains to and from Alicante have been added since April 27. The French will claim to have transported almost six million passengers in these two years, and they have already set their next goal in Andalusia, for which they are adapting their trains to the current signaling system (LZB), a milestone that will delay their, as soon, until the year 2024.

Iryo seeks to consolidate its growth

On November 25, 2022, it was the turn of Iryo, the second operator willing to embark on the adventure of liberalization. The ‘red arrows’ reach the tracks in the same corridor with the support of the Italian public company Trenitalia, which owns most of the company, also divided between Air Nostrum and Globalvía. The investment in trains of the Italian-Spanish firm increased to 800 million euros and its implementation has been much faster: on December 16, 2022 it began operations in Madrid-Valencia and on March 31 it was launched in the company in charge of break the monopoly of renfe in andalucia.

On June 15 it will complete its next offer, beginning to make a stop at the Camp de Tarragona, waiting to receive its entire fleet of trains and put it into operation. To try to position themselves, they launched an initial offer of one million tickets at 18 euros for all their destinations, which is expected to be their minimum price from now on. But it will not enter the ‘low cost’ war: its commercial proposal is focused on the regular and business traveler, aspiring to compete directly with Renfe’s AVE.

Renfe: Reinvent or die

To defend against the arrival of competition and try to win over the traveler looking for low prices, Renfe created its subsidiary Avlo dedicated to providing the same routes in which its rivals operate, but with tickets at much lower prices than usual, from 7 euros. . The plan to consolidate its brand before its rivals broke down due to the pandemic, time that it took advantage of to reform and expand with a few seats plus several trains that previously provided AVE services.

In June 2021, he launched them on the Madrid-Barcelona line, shortly after Ouigo began to compete. In the following corridors he did not wait for his rivals and launched them earlier: he arrived at Madrid-Valencia in February 2022, moving almost one million passengers in a year in this corridor. From March 27 they arrive to Alicante and from June 1 they will do so to Malaga and Seville with a daily train in each direction. Meanwhile, Renfe tries to experiment with a new commercial policy with which it intends to promote the AVE brand in the main corridors, and allowing the Avlo to stop at all intermediate stations.

Everyone wins…or not

With this liberalization “everyone wins,” said the then Secretary of State for Transport, Pedro Saura. “Consumers will see how prices fall; society will amortize this investment; the sector as a whole will live in competition and boost its innovation; and the environment will win, because as more people use the train and less by plane or road, fewer tons of carbon dioxide will be emitted into the atmosphere,” he assured before being transferred to the management of Paradores.

Although many of these statements have been proven true two years later, the railway sector is facing a conflict that will determine the next steps in the liberalization process: comparing the competitive war with the conditions of its employees.

The high rates of unionism and the idiosyncrasy of a traditionally monopolistic sector has meant that the job of machinist has its armored working conditions, with good salaries and established maximum hours. But this trend began to reverse with the liberalization of merchandise: companies began to offer lower wages, working conditions have not been respected, all that has weakened, and the trade has inevitably become more precarious.

But the drivers are not prepared to see how their living conditions worsen. In recent weeks, the driving staff of the new operators have begun to demand a collective agreement that guarantees and improves their working conditions, even accusing Ouigo and Iryo of not complying with the maximum working hours set by law. Merchandise partners have also joined the petition and there is even a company that is in favor of establishing this agreement, as confirmed by sources in the sector to La Información.

Nor is there peace in Renfe, whose staff is facing the privatization of its merchandise subsidiary in what will be a test before the outsourcing of public employees that will occur with the liberalization of the Cercanías and regional trains. As of 2028, several of the services currently provided by the public could be transferred to the autonomous communities, who could auction them in a public tender.

In this way, services such as the Rodalies of Catalonia or the Cercanías of the Basque Country could end up in the hands of their regional companies, FGC and Euskotren, and with them the personnel who currently work for Renfe. This scenario, which still seems far away, is beginning to take shape today.

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