Guillaume Pepy: His trains are on the tails of the airlines

Today is election day in France, but Guillaume Pepy will be lucky to find a spare moment to cast his vote. It's not that the chief executive of SNCF isn't civic-minded - his rail company is one of France's largest state-owned enterprises, with more than 220,000 employees. But he has a busy day ahead of him.

At 7.34 this morning, the fastest train in Europe was due to glide out of the refurbished station in Strasbourg towards Paris's Gare de l'Est - the first of more than 100 journeys on the opening day for the new TGV high-speed line linking the French capital to the country's eastern reaches. Today, the service will send an estimated 30,000 passengers hurtling through the countryside at 320 kilometres per hour, a record speed for commercial train travel in Europe. It is the culmination of over a decade of planning and €5.5bn (£3.7bn) of investment.

And it is down to Pepy, 47, to make sure everything runs smoothly. "It's like presenting a theatre play on the stage with the public for the first time. We are very excited but also a little afraid," he says. "The big challenge is making sure the trains are on time. A lot of people will be getting out at stations, taking photos. That's always difficult."

The line will reduce the travel time between Paris and Strasbourg from four hours to two hours and 20 minutes. Given the large section of high-speed track, the journey times from Germany and Luxembourg will also be cut drastically. "We are shrinking Western Europe with this investment," Pepy explains.

It is a highly anticipated event. For months, against the backdrop of a digital clock counting down the days and hours to the first train's departure, major refurbishment works were carried out at the station in Strasbourg. An ornate waiting room built for Kaiser Wilhelm, complete with marble fireplace and wood panelling, was restored to its original glory. Meanwhile, the interiors of the new Alstom-built trains were designed by Christian Lacroix, with sleek lighting and a lime green and grey colour scheme.

The contrast with Britain's Network Rail-operated lines could not be more stark. On the UK network, notorious for overcrowding and high prices, the fastest trains reach just 125mph. Earlier this year, a Virgin Pendolino train derailed, killing one passenger and injuring 20 others. SNCF has a spotless 26-year record of high- speed train operation without a single passenger fatality.

Yet for all the potential of such continent-shrinking investments, they are not the easiest to justify financially. "This project will be very good from a technical point of view," says Pepy. "It will be very good from a customer point of view. From an economic point of view it is more difficult. The commercial results are the big challenge."

The service will lose €100m this year but Pepy, who is hoping to break even in three to five years, argues that is it is wrong to get caught up in short-term profitability. Instead, he says, the line will prove its worth over several decades. "We calculate the return based on a 40-year period for the trains and 50 years for the tracks."

There are ancillary perks as well, such as the revitalising effects on the communities along the route. It is certainly an argument bought by the 22 local councils, which put up more than €1bn of the upfront investment for the line. The rest of the €5.5bn outlay came from the French state, loans and SNCF itself.

The new service is also a big step forward in Pepy's vision of the future of European travel. By 2020, he expects Europe's high-speed rail network to have more than doubled in size, so creating the first practical alternative to air travel. Within France, SNCF's TGV (trains à grande vitesse) services "are a low-cost airline". And although the green debate has not reached the pitch that it has in the UK, Mr Pepy says it has become an increasingly important factor in France. Because the TGV line is powered almost exclusively by nuclear power, it is basically emission free.

The next challenge, though, is to extend the French vision beyond its own boundaries. Today, there is no co-operation between the different national rail services in Europe, making cross-border train travel a nightmare.

Pepy has spearheaded the formation of RailTeam, a group of eight services that have come together in a partnership not unlike the OneWorld alliance of airlines. The objective is to harmonise basic functions such as ticketing and schedules and to extend loyalty programmes for frequent travellers across borders - something that does not exist now. Next Sunday RailTeam will announce the launch date of its first batch of initiatives; they are likely to be rolled out later this summer or in the autumn.

There is, of course, a very long way to go before a truly European network emerges that is a credible alternative to cheap flights. And for SNCF, the next few years present an array of challenges. In 2010, it will be shorn of its long-held monopoly by the EU and foreign and private companies will be able to offer services on lines throughout the country. "We are preparing very hard for this by trying to offer the best fares for the best services. It's the core of our business future," says Pepy.

Even in less demanding times, SNCF has repeatedly been battered by industrial action, but here the company could have some help. When the voters cast their votes in the parliamentary elections today, President Nicolas Sarkozy's UMP party is excepted to win a majority that will allow him to move ahead with promised reforms - one of which is a bill to guarantee minimum service during public transport strikes. Pepy is certainly hoping so: "I haven't spoken with [Sarkozy] about it but I would love to. It's an absolutely legitimate target because of the public needs. This is a very interesting period."