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Air France Looks to High Speed Rail for its Future—How About California?

By Robert Cruickshank
California High Speed Rail Blog

I've been meaning to get to this article for a few days now, and though our friends at Trains for America and The Overhead Wire have mentioned it, I hope you won't mind if I bring up the rear, so to speak. Air France is looking into entering the HSR business when the EU deregulates it in 2010:

“With the high price of fuel raising the cost of flying, Air France is looking into replacing some of its short-haul European flights with high-speed rail service in partnership with a French train operator, a move that analysts said could lead to significant savings.”

HSR would provide Air France with better service by bringing passengers to Charles de Gaulle from around the region for their long-haul flights; and would help their profit margin by lowering costs:

“The main advantage for the airlines would be improved profitability, Van den Brul said....

““Shifting passengers onto trains from planes would result in "significant" cost savings, a particular concern for airlines struggling to cope with record high oil prices.

“Energy accounts for about 40 percent of an airline's total costs, against only around 10-15 percent for rail.”

So it makes perfect sense for Air France to look into this model. SNCF has found a cash cow in their TGV system, which has generated so much operating surplus that the French national rail operator can use that to subsidize other services and even give some money to the French treasury. Air France recognizes that HSR is vital to a strong, reliable, and affordable transportation system - that it helps the airlines do their jobs better and more profitably.

Trains for America notes that this model would work well here in the US:

“New York-Los Angeles, Miami-Seattle, any overseas travel for obvious reasons… some routes are too far for even fast trains to really compete with air travel. But Minneapolis-Chicago, Boston-Washington, Los Angeles-San Francisco, these are the lengths where high-speed trains are eminently more practical than planes.”

And they're absolutely right on that point. Mineta-SJC's woes might be eased by HSR, allowing passengers easier access to it and allowing airlines to focus on the long-haul routes that trains aren't going to be able to displace. HSR can connect cities like LA to SF in roughly the same amount of time as it takes to fly, considering door-to-door time and time at the airport terminal. HSR also has a significant cost advantage as it isn't dependent on the constantly rising price of oil.

American carriers would find this especially valuable. Our dollars bring less purchasing power on the global market and already airlines like United and Delta are cutting service. Southwest hasn't yet been impacted, but that's not because they are magically immune. Instead Southwest, which dominates the intrastate air market in California, benefits from massive use of fuel hedges. They locked in much of their fuel costs at around $51/bbl - but those hedges expire between 2010 and 2013. By that time Southwest will no longer be able to offer cheap fares and will have to cut flights just as everyone else is doing.

HSR would be a boon to these airlines. And that explains why, in contrast to the shenanigans we saw in Texas in the early 1990s, the airlines haven't opposed HSR here. They recognize its value because it helps them make a profit. In turn HSR will help Californians afford to continue traveling within the state as well as connecting to airport hubs to take them around the continent and the globe.

Robert Cruickshank is a historian, activist, and teacher living in Monterey. He is a contributing editor at Calitics.com and works for the Courage Campaign, in addition to teaching political science at Monterey Peninsula College. Currently he is completing his Ph.D. dissertation in US history, on progressive politics in San Francisco in the 1960s and 1970s. A native Californian, he was raised in Orange County and educated at UC Berkeley. This article originally appeared on the California High Speed Rail Blog http://cahsr.blogspot.com/ which he publishes.

Posted on July 08, 2008

Comments

Comrade Cruickshank,

You fail to mention that Air France is a GOVERNMENT SPONSORED/SUBSIDISED AIRLINE with massive government subsidies and NOT one of private enterprise.

So it is "OK" for governments to risk TAXPAYER dollars where private enterprise refuses to go as in High Speed Rail?

If this isn't a contrast to socialism to capitalism I don't know what is...

Don't "blame" Southwest Airlines for being SMART BUSINESSPERSONS to justify your lame approach to business: Their use of fuel hedges was SMART and agressive capitalism for themselves, their employees, their shareholders, etc. If only other airlines would do the same perhaps they would also be profitable in "tough times".

You just use it as a lame approach to make your shallow socialist positions look viable.

Posted by: Jay Gould at July 11, 2008 09:20 PM

Mr. Gould,

You really should have looked further into the issue. The Texas High Speed Rail initiative in the 90's would have been fully funded by the private sector as Texas state law would not have allowed for the use of public money.

Southwests actions can thus be seen as anti-competitive.

Posted by: Chris at August 4, 2008 06:49 AM

Dear Mr. Gould,

AirFrance-KLM is the worlds largest airline. 82.5% of it's shares are floated freely. Additionally, European Union laws ban subsidies for functioning markets, with strong competition (like the airline sector).
They reported a net profit of €748 million last year, so with other words, they are making a HUGE profit!

Oh, and if the government take over of Fannie May and Freddie Mac isn't socialist, then what is...?
A government buying a private bank!? hahaha

Posted by: Philip at September 8, 2008 05:13 AM

Sorry, comments are temporarily disabled. We're doing a bit of server maintenance on the commenting area. We'll be back up and running shortly. Thank you for your patience.

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