Air competition slows Eurostar

EUROSTAR, THE operator of cross-Channel train services to Paris and Brussels, warned yesterday that fierce competition from airlines and lack of economic growth would slow up its drive this year to eliminate losses.

The group, the UK arm of which is 50 per cent owned by National Express and British Airways, intends to concentrate this summer on cheap fares aimed at the leisure market, which will mean a rise in passengers numbers but a fall in yields.

However, Eurostar expects to benefit from the opening of the Jubilee Line Tube extension in August which will bring in more business passengers.

Eurostar benefited last summer from the World Cup in France and the opening of a high speed line in Belgium. This helped raise yields per passenger to around pounds 50 and enabled Eurostar to increase revenues for the year by 29 per cent.

But Hamish Taylor, Eurostar's chief executive designate, said yields would probably drop below pounds 50 this summer. Although there would be a significant reduction in losses, it would not be on the scale of last year's improvement when losses fell to pounds 95m compared with pounds 135m in 1997.

He was speaking as Eurostar reported a 6 per cent rise in revenues for the first half of the year to pounds 198m and an increase in passenger numbers from 3.4 million to 3.5 million.