Tunnel `ahead' of ferries as duty-free sales rise

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Channel tunnel operator Eurotunnel claimed yesterday to be winning the war with the ferry companies after reporting that passenger figures in March rose 31 per cent.

The debt-laden company said its duty-free price cuts were behind the rise, though ferry operator P&O hit back with its own figures also showing a big rise in passengers.

The rare piece of good news for Eurotunnel helped lift the shares 3p to 66p, after the price had hit several new lows in the past weeks. P&O fell 5p to 516p.

Analysts said that Eurotunnel's commercial success was no longer in doubt and that operating revenues would continue to grow.

However, the cash being generated was insignificant against the pounds 8bn of debts, currently the subject of refinancing talks with Eurotunnel's 225 banks.

Eurotunnel said the increase in passengers on its Le Shuttle was due in part to its duty-free price cuts, which the company estimates has brought in 20 per cent additional traffic.

Sir Alastair Morton, Eurotunnel co-chairman, has been incensed by what he claims is the ferry companies' ability to use on-board duty-free sales as a subsidy.

Eurotunnel's price cuts were an attempt to stop the attraction of ferry companies' booze cruises, a strategy the Channel tunnel operator says is working. The company is forecasting that it will carry up to 150,000 passengers in the four days over the crucial Easter holiday.

P&O rejected Eurotunnel's claims, producing figures for last weekend that showed vehicles numbers up 26 per cent and passengers up 10 per cent on its Dover-Calais route. "These figures speak for themselves," a spokeswoman said. "We are increasing our business as well."

First-quarter Le Shuttle tourist traffic figures were up 117 per cent compared with the first quarter of 1995, as Eurotunnel increased capacity. An increase of 121 per cent was achieved over the same period for Le Shuttle Freight. Eurotunnel said the record figures for March were proof of the growing strength of Le Shuttle.