Jean-Pierre Farandou, CEO of SNCF: “On salaries, the laissez-faire today, we will pay it tomorrow”

The CEO of SNCF, Jean-Pierre Farandou, looks back on the arrival of competition in France, in a period of health crisis and social unrest. He also details the needs of the French rail system, which, according to him, are necessary to double the share of the train in transport.

The Christmas holidays will begin for you with a strike on the South-East lines, when the competition arrives, Gare de Lyon, with an Italian TGV on the Paris-Lyon-Milan line. Isn’t that the worst timing for you?

This strike comes at a very bad time, with a feeling of general weariness, against the backdrop of the fifth wave of Covid-19 and the arrival of competition on high speed. This strike is local, since it is a movement of TGV drivers from the South-East. When I look at the number of railway workers concerned, it is not even 1% of SNCF staff. And I wouldn’t want this 1% to damage the image of all the other railway workers… But, of course, this is noticeable, since millions of French people wanted to take these trains. Since the start of the school year, the SNCF had left to rebound. We have sold over 3 million tickets for the holiday season. There is a kind of paradox for unions to be against competition and then to favor it.

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What is blocking?

On the South-East axis, the strike is linked to subjects of remuneration, wage increases. I remind you that the SNCF is in loss because of the pandemic: 3 billion euros in 2020. This year, it will still be between 1.5 billion and 2 billion losses. In these conditions, considering a salary increase is not easy. We cannot be hypergenerous at the SNCF at the moment. You have to understand that I am borrowing money on the financial markets to pay the salaries for the month of December. However, competition will also be played out on prices and costs. There has to be some form of wage adjustment if we want to remain competitive, otherwise, the laissez-faire of today, we will pay for it tomorrow with massive market losses, and therefore with job losses. .

How are you going to fight back against this competition?

The stake is market share. I think Trenitalia comes in with two round trips, to start with. As a result, we are forced, it’s mechanical, to abandon furrows [créneaux horaires], since the TGV line between Paris and Lyon is saturated. It will be a formidable competitor. SNCF Voyageurs organized its response, with a very strong and attractive service proposition to business customers. The match will be played in a few weeks. We’ll see what happens. Our advantage is also that, if the Trenitalia customer misses his train, he will have to wait long enough for the next one. We have a train every hour, even every half hour. This is an element that will intervene in the choice of business customers to travel between Lyon and Paris.

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Some competitors say that you are not making it easy for them …

There are rules of the game to follow. You have to request the train paths early enough, buy rolling stock. On the technical side, it is first and foremost for the foreign operator to adapt to French signaling rules. This is what we do in Spain. We spent a lot of money to adapt French trains to Spanish safety standards. The Italians did it with us, they didn’t ask us for anything. It is not for SNCF Réseau, which does not deal with equipment, to intervene on the equipment, and it is not for SNCF Voyageurs to come and help its competitor to develop its equipment.

Your real competitor, you say it all the time, is the road. But how to do it ?

Today, the road is 85% of the market. I want to take 10 points of that 85%. It seems accessible to me. I’m not saying it’s easy; we need quality of service, innovation, supply policies, but, if we succeed, this will give shape to our project of transporting twice as many people within ten years, despite the competetion.

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To achieve this, I have two references. The first is Switzerland, often presented as a railway El Dorado. It’s a wonderful network that works very well because it has a lot of money. This comes from the vision of a president of the confederation, who decided, a few years ago, that, in the general interest of Switzerland, trucks should no longer cross it. He said to himself: “For the well-being of the Swiss, we must put the trucks in trains, and that the trains take them through Switzerland in tunnels.” He had the political courage to offer his citizens direct tax supplements to supply a fund to finance the boring of these tunnels. The Swiss have made their two tunnels. The beauty of it is that this railway fund is still there.

My Swiss colleague has concerns, but not financial ones. The average age of the French network is 33 years old, with rails that are 60 to 70 years old, that of the Swiss network is 15 years old, because all Swiss rails are changed every 30 years. It is a fact. Obviously, when the network is also new, it is more efficient, more reliable, and the regularity is better.

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The second idea, which is closer to home, is the Société du Grand Paris.
When the executive of the time converged on a project to drill 100 kilometers of automatic metro in the basements of Ile-de-France, they passed a law in Parliament which created the fiscal instruments for finance the 35 billion euros of the project. Why would we not find the money in this way to make the French rail network one of the best in Europe? It is up to the politicians to seize the subject and find the instruments to manage to finance in the long term an in-depth renovation of the French rail network.

How much would it cost?

To carry out centralized control, which will replace the 2,000 switches with 15 centers, you need around 6 billion euros. On the freight side, it takes around ten billion to get back to standard. In total, with an additional twenty billion over the ten years, we would not be far from having a very modern, high-capacity network, up to the challenges of ecological transition.

Which would be added to the 30 billion of regeneration, that makes 50 billion …

You have to know what you want. Our Swiss friends do it every thirty years, whereas we have not put enough money into the traditional network because of the TGV, which has absorbed all the financial capacity. I remind you that it was the SNCF which paid almost alone the 100 billion euros for the TGV. That would be the only solution if we want to stop opposing the TGV to the RER and the passenger to freight, because we need everything.

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