Advent of new high-speed rail links could spark price war

21st January 2008, Comments 0 comments

Renfe has slashed prices on new routes in an attempt to repeat the success of Spain's first high-speed rail line.

21 January 2008

MADRID - In an attempt to repeat the success of Spain's first high-speed rail line - the AVE link between Madrid and Seville inaugurated in 1992 - Spanish rail operator Renfe has slashed prices on new routes, bringing them below the cost of a plane ticket and making them an affordable alternative to buses. In doing so, the public-run company is starting a price war that will shake up the sector, almost certainly to the benefit of the consumer.

The new routes link Madrid with Málaga in the south, Valladolid in the north and Barcelona in the northeast, and form part of a government plan to connect most major Spanish cities by high-speed rail over the coming years.

Coinciding with their inauguration, Renfe has launched a new pricing structure, cutting the cost of tickets bought a week in advance by 40 percent and those bought on the internet 15 days in advance by up to 60 percent. That means that the AVE links can effectively compete with both air and road travel. Even so, airlines are not unduly worried, at least not for the time being.

"Although we're already noticing the impact of the new AVE routes, the situation today is nothing like it was in 1992 when the Madrid-Seville route was opened. There is already more competition," notes Manuel Panadero, a spokesman from Air Europa.

In a sign that travellers will continue to benefit from falling travel costs, Panadero notes that his airline and others have room to cut ticket prices on many routes to compete with the AVE.


Subject: Spanish news

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