The French government has confirmed it favours financial incentives and cross-subsidies to keep high speed passenger trains running on routes that are socially desirable but not commercially viable. The move follows a review commissioned in February by Transport Minister Philippe Tabarot, who asked for an assessment of the future of the so-called TGV d’aménagement du territoire.

These services are typically provided to meet wider social objectives, including regional connectivity and stimulating economic activity. The review was undertaken by former Transport Minister Dominique Bussereau, transport economist Alain Sauvant, and Olivier Taillardat, an official from the Ministry of Finance. Their report on ‘high speed rail services for regional development’ was submitted to the government in July, with an initial response issued on July 25.

According to the review, TGVs operated by SNCF Voyageurs provide around 180 connections throughout France. About half are direct links between Paris and major stations in large cities, generally regarded as profitable. The other half serve small and medium-sized municipalities or provide inter-regional services that bypass Paris, and are considered unprofitable by the operator.

To date, SNCF Voyageurs has maintained a widespread TGV network through what it calls ‘internal equalisation’. This is a form of cross-subsidy, using profits from lucrative routes to cover losses on less viable services. However, the incumbent has warned for several years that liberalisation of passenger rail services in line with European Union policy, and the arrival of new operators, is starting to undermine this equation.

SNCF Voyageurs believes newcomers will focus on the most profitable routes and ignore unprofitable ones, leading to a sharp reduction in its operating surplus. This would mean it could no longer absorb losses and would have to withdraw from socially desirable routes unless measures are put in place.

Some steps have already been taken to support less profitable TGV services. Infrastructure manager SNCF Réseau earlier this year reduced track access charges on certain routes, helping to cut costs and improve viability. The régions of Bretagne and Hauts-de-France have contracted SNCF Voyageurs to continue providing TGV services in their territories. This means services that would otherwise have been cut back to terminate at Rennes or Lille will continue through to Brest, Quimper, Saint-Malo, Boulogne, Calais and Dunkerque.

Through these contracts, the two regional authorities aim to guarantee connections between Paris and key towns while ensuring a co-ordinated offer with regional trains. Supported TGV services can be used by TER season ticket holders from the respective regions, and occasional travellers can buy regional tickets at a special price.

In their report, the three authors note that all TGV services are profitable for the SNCF Group as a whole, even though some individual services may be unprofitable for SNCF Voyageurs as the passenger operator. The report proposes several ways to solve the problem of commercially unviable services, starting with a comprehensive evaluation of existing provision. This analysis needs to take into account the importance of each service for local economic life, as well as seasonality factors. ‘No service should be taken for granted’, they emphasise.

As an example, the report cites Tourcoing, in the northern suburbs of Lille, where average usage amounts to just eight passengers per train. Given the intensive Lille metro Line 2 service connecting Tourcoing with the city’s main station, the reviewers consider the through TGV service could be withdrawn. Other trains might be limited to certain days of the week or times of year when they are busier.

To encourage retention of marginal services, the report suggests the government might consider further reductions in access charges paid by train operators. However, the authors insist such reductions must have no consequences on SNCF Réseau’s revenues. If charges are reduced to support unprofitable routes, increases would have to be made on lines ‘where they are sustainable by the market’. The support agreement with the two régions is also highlighted as an option.

The reviewers also expect SNCF Voyageurs to improve its productivity, in line with any newcomers operating high speed trains. They question the adequacy of rolling stock provided for less viable services, warning that detailed analyses will be needed for future provision. This is especially important for the post-2035 period, when the remaining single-deck TGV Atlantique and TGV Réseau trainsets, which are more suitable for less busy routes, are due to be withdrawn.

The final suggestion is the creation of a ‘high speed solidarity fund’, which would provide a contractually overt way of supporting unprofitable services. All high speed operators, including new entrants, would be expected to contribute ‘0.9% of their sales revenue’ into this fund. Exemptions could be granted for up to three years, giving entrants time to achieve operating profitability.

Thanking Bussereau and his colleagues for their work, the government said it ‘proposes a balanced approach mobilising all stakeholders. It takes note of the need to initiate a phase of stabilisation of the system in the short term for the next three to five years and to continue the reflection on the financing of TGV services for regional development by the 2030s.’ The official response also indicated that the government favoured ‘financial incentives and ways to optimise the productivity’ of train operators as the best way forward.