Iryo starts on the Spanish high-speed map. That’s good news for prices

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The platforms of some of the main train stations in Spain add a new color to their palette this week. Red, a bright red that identifies Iryo, the brand with which the ILSA consortium has wanted to identify itself in the Spanish railway market. Today he will star in his maiden voyagea launch in the Madrid-Valencia corridor, and in a matter of days, this Friday, it will start its commercial operations on the disputed line that connects Madrid with Zaragoza and Barcelona, ​​where copper will have to be fought with Ouigo and Renfe, operator to turn of AVE and Avlo.

Chromatic issues aside, the premiere is good news for competitiveness in a sector marked until practically the day before yesterday by the Renfe monopoly. The first indicators that the market leaves are hopeful. It remains now to check its long-term effect.

“Passenger on board”. Pulling railway cliché, that is what the Iryo operators will say this week to the passengers of some of the great railway connections in Spain. Today the company will star in a maiden voyage on the Madrid-Valencia route, a start on a line that, in reality, will not start operating until December 16. Before, this friday november 25 It will do so in the one that links the capital, Zaragoza and Barcelona. Already in March 2023, it plans to add a connection with the south of the peninsula to its offer —Seville, Malaga, Antequera and Córdoba— and from June it would add new destinations, incorporating Albacete and Alicante into its national grid.

New brand, old companies. Iryo is a new name that will have to be included in the national transport glossary. Some of the companies behind it, not so much. Behind the brand is ILSA, a consortium made up of Trenitalia, globalvia and Air Nostrum, an old acquaintance of regional air transport in Spain. The company starts with a fleet of about twenty ETR 1000 convoys, known as “Frecciarossa”, “red arrow”. Its goal is to reach eight million passengers on its routes during the first phase and gain 30% of the market share.

One more step in railway liberalization. The landing of Iryo is part of a much larger and interesting context, that of the liberalization of rail passenger transport in Spain, a process activated in December 2020. After being initially affected by the health crisis, the opening of the market has already favored the arrival in Spain of Ouigo, a brand operated by the SNCF gala and which began to operate on the route between Madrid and Barcelona in May 2021. To fight back, Renfe opted to create its own brand as an alternative to the AVE, already consolidated: Avlo, its high-speed low-cost service, also activated last year.

Since then the picture has become somewhat more complicated. In October Ouigo started operating also a Madrid-Valencia connection, a new service with which —details The country— Its global offer in Spain has increased to around 100,000 weekly spaces.

What are Ouigo, Iryo and Avlo looking for? Exploit the juicy melon of Spanish high-speed transport. in 2019 the INE registered that 34.5 million users had used Long Distance trains to move around the interior of Spain, 22.3 of them on AVE services, which represents an increase of 4.9%. The potential of the market is still high: that same year the INE noted that 42.8 million users had opted for planes —one of the main competitors of high-speed rail— to move around the country, which meant an increase of 6.4%.

Efforts to reduce pollution generated by the aeronautical sector, which already they have opened the debate of whether short-haul flights should be vetoed, it could also favor the train.

Liberalization, a “success”. The balance of liberalization, almost two years later and despite the effect of the pandemic, leaves a good taste in the mouth of the National Commission of Markets and Competition (CNMC). So I highlighted it ago Little by little its president, Cani Fernández, looking back: “It is a success story. There is no one in the world that has three operators. We have two and in November we will have the third, competing on high-speed lines”.

While waiting to be able to analyze the effects of competition in the longer term, from the outset there are signs that invite optimism. Adif registered an increase in traffic in the high-speed network in August, 3.8% higher than in the same month of 2019. In the Madrid-Barcelona corridor, in which AVE, Avlo and Ouigo copper are already being fought, the flow of passengers has markedly increased.

“High speed is in fashion”. “Users have jumped on the bandwagon en masse. I don’t know if it’s for convenience, price, environmental awareness. Maybe it’s a bit of everything. But high speed is in fashion.” celebrated ago little by the Secretary of State Isabel Pardo de Vera. One of the big unknowns is how this greater competitiveness affects prices, especially considering that Renfe’s response to the new scenario was to activate Avlo, a low cost service. And above all, knowing how the entry on the scene of a third company will influence the fight.

The Trainline platform left a first indicator not long ago: according to its calculations, the concurrence of various companies on the Madrid-Barcelona route generated a discount of 49% in prices if compared to those registered just before the pandemic. There is now the question of what will happen after the arrival of Iryo. ouigo brags of tickets between Barcelona and Madrid for 15 euros and 9 to Valencia and Iryo is already promoting for Black Friday 20% discounts for group tours.

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A challenging scenario. Not all are advantages and strengths, of course. If the liberalization of the sector was very marked, especially in its early stages, due to the effect of the pandemic on public transport, Iryo has to land in Spain in the midst of an energy crisis.

As detailed Expansion, the increase in prices has caused energy to go from representing between 7 and 8% of costs to 16%, a percentage that would be even higher in the case of the French operator due to its adjustment model. “The sector is born, let’s make it not die before it is born”, warns the CEO by Iryo, Victor Banares. Another notable handicap are the fees that the operators pay to Adif, which according to a KPMG reportaccount for a large part of the cost per ticket.

A process still in progress. The liberalization process still has steps to take as well. “Before January 1, 2026, the first contracts for the provision of services subject to public service obligations, which at the moment are provided only by Renfe, must have been awarded through a competitive procedure. An example of a service subject to public service obligations is the Cercanías, which facilitates mobility in urban environments”, They explained from the CNMC a year ago, when taking stock of the process of opening up the market. Among other challenges, they pointed to the need for “effective and intensive use of the network” or to encourage competition on more routes.

Cover image: iryo

The platforms of some of the main train stations in Spain add a new color to their palette this week.…

The platforms of some of the main train stations in Spain add a new color to their palette this week.…

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