The largest two ferry companies, P & O and Stena, immediately announced that they would be matching the cuts, even though their brochure prices are currently around double Eurotunnel's new fare.
Eurotunnel operates the Le Shuttle "turn up and go" service on its trains and is desperate to increase its current 40 per cent share of the market in order to stave off bankruptcy.
The peak-period daytime fare for people going abroad for more than five days which is the key revenue earner for all the cross-Channel companies has been reduced by Eurotunnel from pounds 266 to pounds 129, putting at risk the profitability of any of the operations. While the ferry companies will not be changing their brochures, any passenger who says when booking with a ferry that they can obtain a cheaper fare from Eurotunnel will be offered a matching price.
While simplifying its overall fares structure to give just nighttime and daytime rates, Eurotunnel has launched a new Apex fare of pounds 99 for people booking at least two weeks in advance travelling between 15 June and 15 July and a club fare aimed at business travellers who will get priority in the queues.
The ferry companies responded to the price cuts by accusing Eurotunnel of using its parlous financial state to its advantage.
Steve Lawrence, spokesman for Sea Containers which owns Hoverspeed, said: "Eurotunnel are effectively bankrupt and they are doing this just to maximise revenue. They are not paying interest on their massive debt and this gives them a completely unfair advantage."
The ferry operators' anger is heightened by the fact that Eurotunnel managers had long stressed that they would not enter into a price war.
They argued that it would be counter-productive but now a spokesman for the company said: "We've been operating for over a year and we've found out what our customers want. They want a simple fares structure." The company is also retaining its policy of very low prices for duty free goods, again squeezing the ferries' profits.
Amazingly, since the tunnel came into operation in December 1994, the ferry operators have increased the number of ships and sailings but yesterday's announcement by Eurotunnel makes it certain that this trend will now be reversed.
The Channel price wars
Fares for car and up to 5 people
Five-day return trip:
Le Shuttle pounds 69 (new) pounds 147 (old); pounds 49 nights
P&0 pounds 99
Hoverspeed pounds 109-pounds 164
Stena pounds 114 (Price pledge to match rivals' fares)Reuse content