Entry of Ouigo and Iryo in Spain made passenger numbers soar

The passenger numbers on the Madrid-València corridor doubled and surpassed one million users in the final quarter of 2022, compared to the same period the year before, shows the quarterly report of the rail market of Spanish competition authority CNMC. Ouigo started competing with national operator Renfe on October 7, and Iryo joined the route in December 16.

Each operator carried more passengers in the Spanish high-speed corridors where there was competition, according to the CNMC analysis. These include routes connecting the capital Madrid to Barcelona, València and Zaragoza, where Ouigo and the latest addition Iryo now run trains in addition to state-owned operator Renfe.

Ouigo, a subsidiary of the French SNCF, also has services to Tarragona and Albacete. On routes where Renfe is still the sole operator, the number of passenger has increased compared to last year, but is not yet always at the level of before the pandemic, such as on the route Madrid – Sevilla. Sevilla, Málaga and Córdoba are next one the list of Ouigo to arrive, so the same results might follow there.

Major increase

The increase in passenger volume was the highest for the route Madrid-València, with a 100.9 per cent increase compared to the last quartile of 2021. Back then, the number of passengers after the major decrease due to the Covid-19 pandemic had not yet completely bounced back, however. This means that compared to the pre-pandemic numbers, the difference is less, but the number of passengers is clearly still higher comparing it to the same period in 2019, as can be seen in the graphs below.

It is also clear to see that there is a significant increase in the number of available seats between the two cities between the third and fourth quartile of the year, with more than half a million of extra seats. Not all of them were filled with passengers, so there are more tickets to sell for the operators. Though Renfe also increased its numbers of seats by introducing the lower cost Avlo service to the route, the amount of passengers transport by Renfe saw a slight decrease on the route compared to the previous quartile.

This is not the case on the Madrid – Barcelona line, the first high-speed line with competition in the country. Ouigo made its entry on the line and in Spain in May of 2021, and Iryo started operations on November 25. Comparing the passenger numbers of the second half of 2022 to the years before, Renfe is back at about the same level of 2019, before the pandemic hit. This means that there is major increase of total train passengers on the route. There were about 3 million (2,892 million) passengers in the fourth quartile of this year, which is a 35.3 per cent increase over the same period last year, nearly 1 million more without Renfe losing passengers.

Dividing the pie

With two new operators entering the high-speed market, Renfe’s monopoly is thus over, but for now it remains the largest operator with the most passengers. On the Madrid-València corridor, Renfe’s original Ave service remained with a 42.4 per cent market share, followed by Ouigo with 36 per cent.

Avlo, Renfe’s new low-cost high-speed service has a 20.9 per cent market share, and Iryo – which operated only 15 days during the quarter – a 0.8 per cent share. The Avlo service currently runs between Madrid and Barcelona and València, and from March 27 also between Madrid and Alicante.

For the Madrid-Barcelona route, Renfe’s Ave held a 54 per cent share of the market, followed by Ouigo, which maintained the 29.1 per cent share from the previous quarter, Avlo with 12.7 per cent, and Iryo, which reached 4.2 per cent (having started operations at the end of November).

Renfe’s Ave had the highest average pricing for the quarter. For instance, the price of a ticket on the route to València was about 50 euros but it remained about 78 euros for Madrid to Barcelona. Iryo had the most affordable average fares; a ticket from the Spanish capital to Barcelona typically cost 37 euros, while a trip to València cost 19 euros.

Result of competition on prices

Since October 2022, the CNMC has been collecting the prices of the most important point-to-point journeys on the high-speed corridors from the websites of the different rail operators in order to analyse their evolution. It does so on a daily basis, and collects the prices of basic tickets for travel, from the day after the day of the search, every day, until 40 days later.

Analysis of the average prices calculated from the prices collected during the fourth quartile of 2022 shows that on routes with competition, tickets are found at better prices than on non-competitive routes. Between Madrid and Barcelona, alternative operators have offered average prices of 37 and 42 euros, much lower than the 67 or 68 euros for the Renfe AVE service between Madrid and Malaga or Seville.

On the Madrid-València service, the average prices offered by alternative operators were 50 per cent of the average price of the Madrid-Alicante service. Analysing the data month by month, it can be seen that the price is stable during October and November, to start a significant decrease in December, which is the time when operator Iryo started operations.

Ouigo is planning to start operations on the route Madrid-Alicante in the second quarter of 2023, Iryo plans to run to Alicante and Albacete in June, and since March 27, Renfe is already starting with the lower cost Avlo services. Many more expansions of Ouigo and Iryo are in the planning, and the CNMC will keep analysing the changes in passenger numbers and prices.

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