Eurostar feels strain as business drops train

Eurostar, the cross-Channel train operator, said yesterday that ticket sales to business customers had fallen by 20 per cent in the first six months of the year, as companies cut costs amid the recession.

The sharp drop in corporate travel more than offset a 4 per cent rise in leisure tickets, with overall sales for the group falling 7 per cent.

Richard Brown, its chief executive, said: “The fact is that some of our biggest business clients are from the financial and banking sectors - and it follows that as they tighten their travel budgets, we, like the airlines, feel the effects.”

Business travel has been severely hit by the recession. British Airways warned this week that the premium market may never fully recover.

Mr Brown said it was possible that there had been a permanent change in premium travel but that it was too early to say. He added that he had not known a time when the outlook was so uncertain.

However, he said that there were reasons to be optimistic. Eurostar was continuing to win market share from the airlines in both business and leisure travel, for example, and passengers increasingly were making longer journeys via train from outside London, and further afield in Europe, by taking connecting services.

Eurostar is also enjoying double-digit growth in the number of Europeans visiting London because of the strength of the euro, with particularly strong demand from the Netherlands and Germany. Mr Brown said that currency changes had not deterred Britons from visiting Paris, Brussels and other destinations. He also hailed Eurostar's record on punctuality since the Channel Tunnel fully reopened in February after a fire last year, with 95.7 per cent of trains arriving on time.

Overall, ticket sales between January and June were £342.2 million, down 7 per cent on the same period last year. Passenger numbers dropped by 6 per cent to 4.34 million, although this figure is 11 per cent above that for 2007, just before Eurostar's London base moved from Waterloo to St Pancras International.

The group said that demand for tickets from passengers outside London continued to rise. Mr Brown's comments come as the group - an informal partnership between Britain, SNCF, the French rail group, and SNCB, the Belgian rail operator - looks to formalise its corporate structure. There is still no formal legal agreement between the parties, even though Eurostar has been running for 15 years.

The reorganisation is required to make the business easier to operate, rather than as a precursor to any significant corporate activity. The move has become more pressing given that, under European Union rules, other passenger operators will be allowed to compete with Eurostar in using the Channel Tunnel link from January next year.

Several European train companies, eager to expand their operations in Britain's liberal rail market, are thought to have lodged interest in starting cross-Channel services, including Deutsche Bahn, Air France and NedRailways, a Dutch group.

Mr Brown said that he welcomed the challenge and increased competition would keep his team on its toes.