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SNCF buys into Italian rail plan

October 10, 2008

By Guy Dinmore in Rome

Published: October 10 2008

France’s state railway, SNCF, is pushing ahead with its cross-border expansion by taking a 20 per cent stake in NTV, an Italian consortium that plans to launch Europe’s first privately operated high-speed train service in 2011.

Guillaume Pepy, SNCF president, and Luca Cordero di Montezemolo, NTV chairman, on Thursday told a Rome news conference that the exclusive deal ensured SNCF would not enter into any other high-speed train operations in Italy. It would also provide a platform for joint expansion elsewhere in Europe.

The tie-up is the latest empire-building move among major state-owned railways taking advantage of Europe’s deregulation and challenging airlines on some of their most profitable domestic routes.

NTV is the first customer for Alstom’s AGV model, which has the same traction system that set a world rail speed record of 574km/hour last year. Twenty-five trains are on order at a cost of €650m ($887m).

Among its planned routes – from Bari and Salerno in southern Italy as far north as Venice and Turin – NTV aims to run 16 services a day between Rome and Milan, cutting about 60 minutes off the four-hour journey.

This would take it into direct competition with Alitalia, Italy’s lossmaking flag carrier, which is in the process of being rescued by Cai, an Italian consortium, and merged with Air One, its smaller Italian rival. Cai, which includes the bank and NTV shareholder Intesa San Paulo, is holding talks this week with Air France-KLM, Lufthansa and British Airways, with the aim of selling a minority stake.

Mr Pepy declined to say how much SNCF was paying for its stake in NTV. It will have two members on the 14-seat board.

Mr Montezemolo, who is also president of Ferrari and is having the trains painted the famous shade of red associated with the sports car maker, said NTV’s target was to take 20 per cent of the Italian high-speed market, carrying 30,000 passengers a day. His most immediate competitor is Italy’s state-owned Trenitalia, which plans to open its first high-speed connection, from Milan to Bologna, this year.

Carlo Toto, owner of Air One and a member of the consortium bidding for Alitalia, also plans a high-speed train service but has not yet ordered his trains.

SNCF, Europe’s largest high-speed train operator, intends to expand its partnerships across Europe with what Mr Pepy called “flag carriers” and “newcomers” such as NTV. He identified Germany and Austria as potentially interesting markets.

SNCF’s strategy of forming partnerships is aimed at matching Germany’s Deutsche Bahn, which has grown aggressively by buying the freight arms of state railways in the Netherlands and Denmark and buying or taking stakes in operators elsewhere.

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