France’s Once-Vaunted Trains Are Macron’s Biggest Challenge Yet
France’s Once-Vaunted Trains Are Macron’s Biggest Challenge Yet
(Bloomberg) -- The long, empty platform of the TGV station in eastern France offers a vista of rapeseed fields stretching out as far as the eye can see. Not a sound troubles the pastoral scene on a cold, gray February morning. Then a train from Paris pulls in with a whoosh. About 30 people disembark and head to the parking lot. In five minutes, the platform is empty again.
This happens 13 times a day at most, meaning that this stop in the Meuse region is used barely 90 minutes a day. Most passengers take the high-speed trains on to Strasbourg in Alsace, and beyond. Fewer passengers get on and off at these platforms each year than the Paris Metro carries in an hour.
Underused stations on expensive tracks are one of the many reasons France’s vaunted rail system is insolvent, subsisting on life support from the state. Rail operator SNCF runs an annual deficit of 3 billion euros despite receiving 14 billion euros of public subsidies annually—just under half the defense budget. Its debt, at 45 billion euros, equals the national debt of New Zealand.
Worse, long-term traffic numbers suggest that trains are losing market share to airlines and buses, while major rail-service disruptions are riling passengers with increasing frequency.
“For 30 years we have shied away from making the necessary transformation of SNCF and for 30 years we’ve seen the service deteriorate,” Finance Minister Bruno Le Maire said last month. “We can’t go on like this. We’re going into the wall.”
Fixing SNCF, created in 1938 and called by the French initials for national rail company, has bedeviled France’s leaders for decades. President Emmanuel Macron has vowed to succeed where others have failed. Since taking office 10 months ago, he’s pushed through a landmark labor reform, slashed taxes on business and investment and initiated overhauls of policies in areas ranging from education to immigration. With the rail system, the 40-year-old president may face his biggest challenge yet—one that will set the tone for whether he can accomplish the rest of his agenda as well.
SNCF’s problems span people, places and politics. Its strike-prone workers have a special status, including being able to retire at as young as 52, and they have jobs for life barring gross misconduct. For decades, politicians have shied away from taking privileges away from those public-sector employees, represented by unions that forced much of France to grind to a halt for three weeks in November 1995.
Unions are trying to present a similar show of force this time as trains and planes were canceled across France on April 3 to protest against Macron’s plans to overhaul the status of rail workers and open the sector to competition. The protest turned into a catch-all demonstration against the president’s reforms when staff from national carrier Air France, employees of the energy sector, garbage collection companies, as well as students at state-backed universities voiced their wide-ranging grievances on the same day.
Opposition lawmakers and local officials, who say they won’t stand for line or station closings, are weighing in. Politicians have been hesitant to tackle a point of national pride. When then-President Jacques Chirac inaugurated the TGV line connecting Paris and Mediterranean cities in 2001, he put it this way: “For all the French people, and for rail workers, it’s a matter of pride and an instrument for our national cohesion.”
“The TGV is a beautiful symbol,” said Francois Ecalle, head of the Fipeco public finances institute. “It’s shop-window politics and every mayor wants his own high-speed train stop. But these trains are not made to stop every 30 kilometers. That actually defeats the purpose.”
Following the publication of a sweeping report that he commissioned, Prime Minister Edouard Philippe said that he intends to scrap the special status for all rail workers hired from now on, though SNCF’s existing employees wouldn’t be stripped of those rights. That and other proposed reforms were presented to the cabinet last month.
The changes, which won’t guarantee future hires job security, early retirement and special pensions, triggered the ire of unions that plan 36 days of strikes over the months of April, May and June. The government aims to ask for parliamentary approval to make the changes by executive order by midyear, after talks with unions and passenger groups.
Finance Minister Le Maire previously said that if losses are eliminated and performance restored, the state would be ready to assume part of SNCF’s debt some time before the next election in 2022. Taking on all SNCF borrowings would lift French government debt to almost 100 percent of economic output, from about 97 percent currently.
Philippe Martinez, head of the CGT union, vows to defend the special privileges for rail workers and denounced the government’s “campaign of lies.” Thousands demonstrated in the streets of Paris at the end of March.
“Rail workers are badly paid,” Martinez said last month. “I challenge anyone to say that the problems of SNCF—trains that are late, or canceled, lines that are badly maintained—are the result of the status of the rail workers.”
Still, with low-cost airlines and buses offering fresh alternatives, the number of passenger miles traveled on France’s long-distance trains fell 3.8 percent between 2008 and 2016. The equivalent measure for buses rose 31 percent and the number of airline passengers rose 19 percent, according to Yves Crozet, a professor at the University of Lyon who studies transportation.
Traffic rebounded slightly in 2017, helped by the opening of four new high-speed lines that added 700 kilometers of fast track.
Even so, both the long-term decline and the recent recovery were produced as SNCF enjoyed the benefits of being a monopoly—a situation that is set to end under European Union rules. Starting in 2020, the company will have to face competition domestically from other train operators.
Is it ready? Crozet, the Lyon professor, estimates that while SNCF employees were more productive than their Swiss and German counterparts in 1996, today they are far behind. Every German rail worker contributes 25 percent more in terms of passengers and freight moved, and every Swiss worker a third more. It will take between five and 10 years to make up the difference, he says.
Former Air France Chief Executive Jean-Cyril Spinetta, author of the report for the government, also highlighted the under-used regional train lines. He points out that roughly 90 percent of passengers travel on a third of the network. Meanwhile, 10,000 kilometers of the least-used lines carry 2 percent of the passengers.
Local politicians have objected to potential line closings, saying that such infrastructure represents a valuable public service, helps economic development and is worth paying for. Philippe, sensing a politically explosive issue, has ruled out a major round of route closures.
“We know that you won’t attract industries just by putting a train station in the middle of the countryside, but it helps in slowing down the demographic decline in small towns,” said Bertrand Pancher, a lawmaker in the Meuse. “The station made the Meuse more attractive and stabilized the real estate market.” It cost 5 million euros to build in 2007; local officials say it’s attracted an airplane-parts plant and lured more tourists to visit the World War I battlefield in nearby Verdun.
Local residents and Parisian professionals with business to do in the region love it. The passengers leaving the 500-seat train that stopped there on its way to Nancy, further east, said they couldn’t live without the service.
“The station is perfectly placed,” said Ekaterina Stefanova, a 45-year old architect. The train is “fast and convenient” and “makes our commute so much easier.”
To contact the editor responsible for this story: Anne Swardson at aswardson@bloomberg.net.
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