INTRO: After a false start last year, France’s rail network is being restructured. A new national agency will own the infrastructure, with French National Railways managing and operating the network and providing the transport service. Louis Gallois, appointed as President of SNCF last July, reveals his strategy to Murray Hughes

Hughes: You arrived at SNCF during a period of crisis when commentators were saying that the railway was suffering from a fundamental malaise. Is this perception true, and how do you see the future for the rail business in France?

Gallois: It is true that the railway here is in a difficult situation, as in other countries. Many of the problems stem from an excessive debt burden, allied to the fact that, in contrast to other public transport infrastructure - and roads in particular - the rail network has until now been funded entirely by the railway companies. Reform was certainly essential, and other European countries are already advancing along this path. France is now taking its turn in its own way, emphasising the continuing importance of public service.

You ask about my view of the future. I am quite sure that the railway in France has considerable advantages over other modes - modern technology, and an extremely high safety standard; witness the performance of our TGVs. Punctuality and reliability levels are unmatched by other modes, with few adverse effects on the environment. The staff are strongly attached to their business, and also to their public service role. Public opinion shows that there is considerable ’affection’ for the railway - we must not disappoint our customers. Nevertheless, we have to improve by responding better to customers’ expectations - which are more and more demanding, and rightly so. Our structures and management methods must be updated to the modern world. Given these conditions, I am convinced that a bright future lies ahead for France’s railways, and for SNCF itself.

Hughes: The government’s reform leaves the special status enjoyed by railway staff unaltered. Given that staff productivity must improve so that costs can be reduced in the face of fierce competition from road transport, what measures can be taken to increase productivity?

Gallois: The reform drawn up by the government does not change the status of personnel or the labour agreements, and the arrangements for retirement remain intact. These are all part of the characteristics of the railway in France.

We are starting discussions with staff and the trades unions about the need to improve our overall efficiency. Enhancing quality and reducing costs are not achieved simply by cutting the number of people employed. We should increase staff presence where we are in contact with customers, partly for commercial reasons, and partly to improve the perception of security. In 1996 and during 1997 the overall number of staff in contact with customers will stay the same or even increase.

Hughes: Assuming that the reform is introduced in the first few months of this year, what improvements in SNCF’s finances will be possible over the next five years?

Gallois: The reform has three main tenets. First is a financial

restructuring that sees SNCF relieved of at least Fr134bn in historic debts related to infrastructure. Second is a clarification of responsibility through the creation of a publicly-owned organisation charged with financing investment in rail infrastructure. SNCF will manage and maintain the network on behalf of the new organisation, as well as operating the services. The third part of the reform is an experimental transfer to the regions of the responsibility for providing local passenger services.

So you can see that SNCF’s financial position will improve substantially, as we shall only be carrying the debts relating specifically to our role as a carrier. We anticipate that this will allow us to balance our books in 1999.

Hughes: During the last few years SNCF has lost a significant share of freight traffic. Projects like the Commutor automated handling terminal were put forward to try and beat the competition, but this does not seem to be the answer. Do you think that SNCF can improve its market share and increase revenue by winning high value traffic now moving by lorry?

Gallois: Rail still carries about 25% of all freight in France. Given the intrinsic advantages of the rail mode such as safety, environmental protection and relieving congestion on main roads, this share must be maintained or if possible increased. It is true that rail’s loss of freight market share has been the result of road’s competitiveness and its ability to offer door-to-door transport, but I have to say that in many cases there has been unfair competition. Tougher competition has brought about a deterioration in the finances of many road hauliers, leading to difficult working conditions - the lorry drivers’ strike at the end of last year was a real eye-opener for the public.

While SNCF has abandoned the Commutor project because it is too expensive, less ambitious schemes for reshaping the freight business - which are designed to ensure that we maintain our market share - are being put in place for 2000.

In the future, rail and road will have to work together more closely, with each mode respecting the advantages of the other. With this in mind we are seeking to develop the intermodal business, which clearly has a great future in Europe. At the same time we want to boost the quality of wagonload and trainload service, and our company plan includes priority programmes intended to improve our commercial service very substantially.

Hughes: Many attempts have been made to improve SNCF’s passenger sales and marketing strategy. What do you plan for this year, and what results do you expect to achieve?

Gallois: In February 1996 SNCF carried out a major survey of 200000 customers, and in June we responded by making various national, regional and local commitments. We have now had our first review, and I am pleased to report that the measures have largely been successful. For example, since September 16, around 55000 customers have ordered and paid for their tickets by telephone and had their tickets delivered to their home address free of charge.

From December 1 we introduced 200 daily ’green trains’. Passengers choosing these trains benefit from a 15% reduction on the basic fare, while no reservations are needed. We have also launched a campaign to improve punctuality. Between September 1 and November 30 we sent travel vouchers to 55000 passengers who were delayed by more than 30min on main line services.

We have made other commitments to provide information on board the trains, to improve station service and to offer better connections. These are all in hand and will be carefully monitored; similar commitments have been given to our freight customers.

These commitments will soon be expanded with the introduction of further measures that are currently being agreed. In particular, we will provide better information when things go wrong, and simplify the fare structure. We especially want to respond to the expectations of customers who made their views clear during the spell of cold weather at the start of the year (RG 2.97 p82).

Hughes: At the end of last year SNCF was alone in failing to endorse the Community of European Railways’ response to the European Commissioner for Transport’s white paper. Why does SNCF not agree with the other European railways, and what is your view of the EU’s railway policy requiring separation of operations and infrastructure with open access?

Gallois: SNCF is not seeking to deny the evidence - for many years it has recognised and suffered from competition from other modes. And we are already preparing to conform with the requirements of Directive 91/440 on limited intramodal competition.

However, we cannot do anything but oppose the opening up of the French rail network to companies that would cream off our traffic without supporting the public service objectives and constraints by which we are bound. We would also object to competition from other operators who benefit from massive subsidies from their own governments. This would be dishonest competition, which we could not accept.

I must add that co-operation between railway companies very often permits real improvements in overall efficiency and in customer service. This could be a strong alternative to those forms of competition which are poorly suited to rail transport and public service.

Hughes: Railway privatisation is generating major interest in many countries, but so far the French government has not put forward plans to privatise SNCF. Will it happen one day?

Gallois: In contrast to other countries, France has never envisaged privatisation of its rail network. Article 222 of the Treaty of Rome explicitly says that ownership of companies is not a matter for the European Community. I must emphasise that the French view of public service is strongly linked to the public character of the utilities or companies involved. o

CAPTION: Construction of TGV Méditerranée along the Rh