Channel price war looms

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The Independent Online

Transport Correspondent

Sir Alastair Morton, Eurotunnel's co-chairman, said that the company was being unwillingly "towed along into a price war" by the "suicidal'' action of the ferries.

Eurotunnel is to issue its brochure for the new season "shortly" and while the company's executives refused to be drawn on its contents, there were hints that frequent travellers would be rewarded with discounts.

Given that the ferries are adding, rather than as expected withdrawing, capacity, there is no scope for any price increases and reductions on most journeys, apart from those at peak holiday times, seem inevitable.

Already the tail-off in leisure traffic from the summer was quite marked in September. The number of cars using the tunnel fell from the August peak of 145,861 cars to 105,914 in September.

Faced with that amount of spare capacity, Eurotunnel earlier this month announced price cuts of one- third on their duty-free shops, making them far cheaper than the ferries.

Sir Alastair said this would put the ferry companies on the spot as either they would have to respond by cutting prices on duty free, their main source of profit, or lose market share of traffic to Eurotunnel. Sir Alastair claimed that the ferries' profit on duty frees exceeded their total profit.

On freight, Eurotunnel appears to have been very successful in attracting traffic away from the slower ferries. The company claims a 50 per cent market share in accompanied lorries on the Dover/Folkestone - Calais route.