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Eurostar bets on new trains and destinations to win passengers

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Eurostar is betting on new destinations and bigger, wifi-enabled trains to lure more passengers from aeroplanes to the undersea tunnel linking Britain and mainland Europe.

[LONDON] Eurostar is betting on new destinations and bigger, wifi-enabled trains to lure more passengers from aeroplanes to the undersea tunnel linking Britain and mainland Europe.

Twenty years after it first connected London and Paris by train, Eurostar will on Thursday showcase the first of a ten-strong fleet of sleek Siemens trains at its London base in St Pancras Station.

The number of passengers travelling on Eurostar's trains topped 10 million for the first time last year, giving it around an 80 per cent share of the travel market between London and Paris, and London and Brussels.

New trains with 20 per cent more seats present an opportunity for growth as do the addition of Marseille, in southern France, and Amsterdam, in the Netherlands, as new destinations over the next two years. "There's a greater commercial approach, a sense that their business is maturing," transport analyst Christian Wolmar said, of the company, 55 per cent owned by the French state-owned rail operator SNCF, 40 per cent by the British government and 5 per cent by Belgium.

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Market voices on:

Britain put its stake in Eurostar up for sale in October, one of a number of assets earmarked to be auctioned off to raise money for the public purse.

The opposition Labour party criticised the timing of the sale, saying it would mean the British taxpayer would lose out on any pick up in profits from Eurostar's expansion.

But the jury is out on whether the new trains and routes can deliver a significant boost to the company's growth. "I've been sceptical about longer routes because I don't believe the train can offer a sustainable price advantage, and fundamentally, the airlines are still materially faster on those routes," Liberum analyst Gerald Khoo said.

When a train journey goes over two and a half hours, which the Marseille and Amsterdam routes will, passengers usually favour air travel, say experts.

Plus the longer the route, the harder Eurostar will have to work to be competitive on price, partly because of how it pays its way. While airlines pay fees to two airports, Eurostar pays access charges according to the length of the journey.

Airlines are not the only challenge on the horizon. German rail group Deutsche Bahn is planning a rival service from Frankfurt to London via Brussels, though its launch is currently on ice.

REUTERS

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