Virgin Group says it is close to placing a significant order for high-speed trains that is expected to shake up Eurostar’s 30-year monopoly on the Channel Tunnel.
Richard Branson’s Virgin Group is preparing to order 12 high-speed trains as a challenge to high-speed rail startup, Evolyn, which is also hoping to compete with Eurostar to offer rail services from London to mainland Europe. Currently, Eurostar has a monopoly on Channel Tunnel train travel.
The Virgin order is expected to be worth upwards of about £500m (€595.20m).
Two rail suppliers have been shortlisted so far, with Virgin Group currently considering offerings from companies like Hitachi, Alstom, Talgo and Siemens.
It is expected to finalise the contract for the order by the first quarter of the year.
Branson set to take major stake
The project is estimated to need launch funding worth almost £1bn (€1.19bn). Branson is expected to be the major stakeholder but other partners may also join the project, although more details regarding this have not yet been revealed.
A Virgin Group spokesperson said in an email note: “It’s a huge undertaking to establish a new cross-Channel operator but the route is ripe for change. We think Virgin is the right brand to signal a new era in cross-Channel travel given its award-winning experience in the train industry, and track-record for shaking-up industries.
“While Virgin is not committing to launching a service just yet, we are delighted with the progress made so far. It’s too early to confirm further details about the service at this stage. For now, our focus is on bringing competition to the route, which will benefit all passengers in the long-term.
“Applying for access to Temple Mills depot – the only facility in the UK currently connected to HS1 – is the logical next step in the process. We have been in conversation with Eurostar about access for some time and look forward to reaching an agreement in due course.”
HS1 is the Channel Tunnel operator, which operates the high-speed line connecting London and the tunnel.
Virgin Group also signalled it was hoping to secure a foothold in the high-speed train network in the UK, as well as introduce more competition in cross-Channel travel.
Competition for cross-Channel travel heats up
Eurostar has been the main player on the cross-Channel route for the past three decades. However, new competitors such as Evolyn, and Virgin Group are now likely to shake up the market.
Evolyn is supported by the Spanish Cosmen family, which is the main investor in National Express, now known as Mobico.
More competition in travel through the Channel Tunnel is likely to result in better prices for passengers, as well as a higher number of train services from which to choose.
Eurostar cites capacity issues for its opposition
Eurostar is opposed to both Evolyn and Virgin Group competing for Channel Tunnel travel, citing capacity issues at the Temple Mills depot.
A Eurostar spokesman was quoted by The Telegraph as saying: “The essential issue we face is not Eurostar trying to restrict access but the fact that there is already limited space available at St Pancras and Temple Mills to meet the combined growth ambitions of everyone.
“We have recently written to the new Government asking for its support in creating a framework that will enable all operators, including Eurostar, to invest on level terms in the further network expansion we all want to see.”
Although Virgin Group is optimistic that the depot is likely to announce that it can accept one more train company, it is unlikely to be able to cater for more than two companies in total. As such, the company who finalises a contract for new trains first is likely to get the spot, thereby increasing the need to hurry.
The UK Office of Rail and Road (ORR) is also expected to reveal whether the UK has the maintenance capacity required to extend Channel Tunnel operations.