Guillaume Pépy has a nose for truffles, especially the rare black truffles of
his home in Carpentras. There is a Friday street market in the town in the
department of Vaucluse, near Aix-en-Provence, where local farmers sell
truffles to merchants and epicureans — and the man who runs France’s
national railway feigns ecstasy as he describes the aroma that rises from a
basket of the precious fungi.
He is a good advertisement for France and, therefore, a good salesman for
SNCF. Better still, he is no anorak-wearing train buff. When Mr Pépy talks
about the joys of trains, it’s all about joining up markets, making things
work and, above all, dragging European travellers back to earth from their
unhealthy obsession with travel in the air.
After years working at the heart of SNCF, Mr Pépy is watching the business
accelerate and make big inroads into the air travel market with a
three-pronged attack: to the north, into Belgium and the Netherlands;
eastwards, into Germany; and beneath the Channel to Britain, where, until
now, the sleek Alstom TGV locomotives have been jammed up in Kent. On
November 14, HS-1, the first 200mph Eurostar service, will leave St Pancras
station in London for Gare du Nord in Paris.
The imminent launch of 2¼-hour train journeys to the French capital has
provoked panicky protests from budget airlines. Eurostar already has about
70 per cent of London-Paris traffic and more than a few people believe that
the faster service will force British Airways to abandon its flights to
Paris, just as Air France has quit flying to Brussels. The French carrier
still has a service to the Belgian capital, but it is operated on the ground
by Thalys, the Franco-Belgian joint venture, on high-speed TGV trains.
“The train is back,” Mr Pépy enthuses. “Thank you to HS-1, thank you to TGV
and thank you to the taxpayer. The taxpayer has done an enormous effort.”
The SNCF chief is unabashed about the massive public subsidy at a national and
local level. The TGV Est project, which opened this summer linking Paris to
Strasbourg and beyond to Frankfurt, cost the French State €5.5 billion (£3.8
billion). A fifth of that came from local taxpayers in Alsace and Lorraine.
In Britain the Government has guaranteed £3.75 billion of debt held by
London & Continental Railways, the private company that built the fast
rail link to the Channel Tunnel.
Mr Pépy is as lyrical about the rebuilt St Pancras station as he is about
Carpentras truffles. “It’s a wonderful building, an alliance of the 19th and
21st centuries.” But he finds British attitudes to railways baffling. “I am
astonished that you collectively mistrust the infrastructure of railways. I
hope that will be finally broken.”
It is what this investment is all about, a gamble that the St Pancras terminal
will draw not just the London traffic on to the Eurostar but a catchment
area that will extend to the Midlands, enabling Eurostar to raise
significantly its passenger flow from its present level of almost four
million. Speed easily wins the argument in London, but the French rail baron
is also pushing the idea that the electric train is also morally superior to
the kerosene-fuelled jet.
This truffle-hunter has a nose for the politics of the moment. “I can see in
2007 that the carbon footprint issue is being taken seriously by our
customers. People are more and more convinced they should take the trains.”
It’s all about making trains more sexy to travellers fed up with the
indignities of budget air travel. As SNCF and Deutsche Bahn jointly launched
the Paris-Frankfurt link last summer, they stole an airline idea and
announced Railteam, a joint marketing initiative that will enable travellers
to book high-speed rail tickets on any network across Europe on a single
website. For generations, Europe’s railways stopped at frontiers, where
different gauges, signalling networks, power systems and trade unions forced
tiresome changes of locomotives and staff. Finally, the barriers are
beginning to come down and Mr Pépy admits that it has taken too long.
“In a way, we are late. Everybody was focused on their own domestic
high-speed, a sign of technological prowess. Inter-operability was seen as a
political matter, not a marketing and sales issue.”
With Hartmut Mehdorn, the chief executive of Deutsche Bahn, Mr Pépy found
common cause, creating Alleo (Alliance Est Ouest), a joint venture to sell
tickets on the high-speed Franco-German line.
Yet the German rail giant is also a strong competitor. Where SNCF leads Europe
in high-speed passenger rail traffic, Deutsche Bahn poses a fierce challenge
in international rail freight, SNCF’s Achilles’ heel. While SNCF runs its
passenger business like a commercial airline with a passenger yield
management system that generates good profits, freight lost it €260 million
last year. Mr Pépy hints that radical solutions are needed to deal with
freight because the track is monopolised at the moment by
high-revenue-earning passenger trains. He says that prices need to go up and
dedicated freight rail lines need to be built: “It requires political
courage, otherwise the rail freight business will decline.”
Deutsche Bahn is on a different political path. It is to be privatised, with
an IPO of 30 per cent expected this year, yet Mr Pépy seems to be genuinely
bemused by suggestions that SNCF might follow DB’s stock market adventure:
“I can see in France no debate on that. It is not on the table.”
What is on the table is a confrontation between the new Government of
President Sarkozy and the rail unions over pension reform. Rail workers,
like those in Gaz de France and Electricité de France, benefit from early
retirement on generous terms — public sector privileges that the Government
has said it will end. The unions have called a strike for October 18 and Mr
Pépy has been trying to cool the atmosphere, asking that the rail workers
not be stigmatised.
The SNCF chief likes to refer to himself as a cheminot, a railwayman and an
ordinary guy, but beneath the bonhomie Mr Pépy has been schooled in the
mysteries of French politics and government. He is an énarque, a graduate of
École nationale d’administration, the civil service school for high-flyers.
He spent some time as a tax judge, a job that he says he hated and readily
escaped when offered a job in the railways.
Louis Gallois, Mr Pépy’s former boss, who now heads EADS, began to put French
railways on a commercial path, shedding debt. The process will gain further
momentum in 2010 when cross-border rail transport within the European Union
is opened to competition. This is a tremendous opportunity, Mr Pépy thinks:
he expects airlines such as Air France-KLM and British Airways to be running
high-speed trains on short-haul European journeys within six years.
There is a feeling within London & Continental Railways that Eurostar UK
will be sold when the new service has shown its worth in a year’s time. If
it is as popular as Mr Pépy hopes, a British share of Eurostar could be an
option for private equity or even an airline, which would demonstrate that
Britain has begun, once again, to believe in railways.
Curriculum vitae
Age: 47
Education: Sciences Po, the French political science academy, and École
nationale d'administration
Career: Worked in government departments and spent a period as a judge,
dealing with taxation cases. In 1995, had a brief interlude in the private
sector, working at Sofres, the opinion poll company. Joined SNCF for the
first time, aged 30, when he was a chief of staff for Jacques Fournier, then
the SNCF president. Subsequently held positions as strategy director and
passenger director. As chief executive, he is responsible for day-to-day operations
and is leading the management change programme, to prepare SNCF for full
competition on its networks. He is also chairman of Eurostar, chairman of
Voyages SNCF and non-executive director of Keolis
