Adrian Quine is a frustrated rail executive. The entrepreneur has spent two years trying to convince investors to back Gemini, a start-up looking to launch a rival to Eurostar, which has had no competition in its 30-year history.
Among the cross channel challengers, which include Italy’s state-owned railway giant FS Group and Sir Richard Branson’s Virgin Group, Gemini has pledged to run its first train from London to Paris in 2029.
The potential new entrants are all still years away from launching, underlining the challenge of opening an international rail service — with different track types and signalling systems — in a tightly regulated industry bound by strict safety controls.
Quine describes the process as “frustrating” but is resigned to the industry’s pace of working. “It is a complex [situation], but I suspect what will happen is that when we get a bit of clarity it will come together quite quickly,” he added.
Gemini, a start-up staffed by railway executives and chaired by Labour peer Lord Berkeley, is the smallest of the companies vying to take on Eurostar. On Wednesday, it announced a partnership with Uber, to use the ride-hailing app’s branding on its future trains.
Virgin Group, the Italian state railway FS Group and a consortium led by the biggest shareholder in Mobico, formerly National Express, have all also applied for regulatory permission to access the infrastructure needed to run trains on high-speed lines running from the UK to the continent.
Meanwhile, the Swiss national railway is exploring launching cross-channel services, after the Swiss and UK governments pledged to encourage direct trains between the two countries, and Eurostar itself has big growth plans.
“Demand for [high-speed train travel] is growing continuously,” said Stefano Donnarumma, chief executive of FS Group.
The biggest challenge facing companies looking to raise cash, such as Virgin Group and Gemini, is to convince investors there is a market for more than one operator on cross-Channel routes that come with high upfront costs, including specialised trains costing hundreds of millions of pounds.
Gemini has estimated it would need to spend £650mn to launch, including about £350mn on trains, while Virgin Group is looking to raise £700mn.
The long timescales have also complicated fundraising, people involved with the process said, although Virgin and Gemini have reported strong investor interest.
“Some investors would like a quicker return on this investment . . . it depends entirely on peoples’ appetite for risk,” Quine said.
Many of the biggest blockages to growth, either for Eurostar or a rival, are within stations, which require airport style security and border checks in cramped buildings.
“Sure the cities served are huge, but the passport control and security check requirements make it really hard,” said Jon Worth, a cross-border rail consultant.
Some of these problems are easing: St Pancras station in London plans to expand its passenger capacity, and Channel Tunnel owner Getlink has also worked with national regulators to streamline the process to certify train operators.
But launching a cross-border service is still immensely complex. Eurostar train drivers must be able to speak in four different languages, and new entrants would need trains that are certified to run through the Channel Tunnel, and on tracks in different countries, often with different signalling systems.
“It’s a complicated ecosystem and we know it takes a lot of skills to succeed in this market,” said Gwendoline Cazenave, Eurostar’s chief executive.
Even when an operator is ready to order trains, these would take several years to build as they must be at least 200 metres long, comply with the Channel Tunnel’s fire safety rules and be able to operate across borders and signalling systems.
Investors were also looking for trains that would maintain a residual value and could be redeployed on the continent if a new operator went bust, several people involved in the process said.
But the biggest blockage has emerged in an unlikely place: a railway depot tucked into the industrial sprawl in east London.
The Temple Mills depot, which is leased by Eurostar from the British government, is the only place on the high-speed line down to the Channel Tunnel where trains can be stored or maintained.
Eurostar insists the depot is nearly full, and there is no room for another operator. Several new operators said the delay in being granted access rights to the depot had created a blockage, and the UK’s rail regulator was assessing access applications from the prospective entrants.
The cross channel rail group last month said there was “not sufficient [space] to accommodate all potential operators, including Eurostar’s own future plans” and called for other operators to invest in new facilities.
Investors will only commit to finance a project once they are certain a new company will be able to get into the depot, according to people familiar with the matter, and without this financing, operators cannot order trains.
“The biggest problem for everybody is the issue at Temple Mills,” Quine said.
Space could also be an issue on the tracks. Eurostar has pledged to increase passenger numbers on its channel routes by about 50 per cent, and plans to order up to 50 new trains to deploy across its network, including intercity services within the EU. It announced plans to order its new trains a year ago, but has still not reached an agreement with a manufacturer.
“It’s coming soon. The finance is OK . . . We have some points still to be discussed with the manufacturer,” Cazenave said. “If I had a magic wand, I would have new train sets in the months to come . . . the demand is so strong that we need trains,” she added.
There will not be room for everyone: about 400 trains a day use the tunnel, which has capacity for 1,000, pitting all the companies involved against each other in a race to order trains and establish routes.
Italy’s FS Group, a late entrant into the race last month, thinks it is in a strong position, given the complexity facing start-ups.
The company operates a complex web of high-speed trains across Europe, and has teamed up on the cross-Channel routes with Evolyn, the consortium led by Mobico’s largest shareholder.
Donnarumma said he planned to add trains for the London routes to an existing order for high-speed trains with Hitachi, and noted that its Trenitalia brand was already certified to operate in France.
“We want to be fast, and we have the possibility to be . . . it’s not so easy to start from zero,” he said.
