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Sir Richard Branson’s Virgin Group is looking to raise £700mn to fund its bid to launch new cross-channel rail services to compete with Eurostar.
Virgin Group told the Financial Times that it intends to raise £300mn in equity and £400mn in debt, and that it plans to be a cornerstone equity investor in the project.
Its plans are for a high frequency service that would be the first direct rival to Eurostar’s 30-year old network and could launch as soon as 2029.
The company, which used to run intercity train services in the UK, plans to launch services connecting London with Paris and Brussels, and then to extend to Amsterdam in the future.
Virgin is one of several operators looking at starting a cross-Channel service, following the rapid growth of intercity high-speed train travel on the continent.
London St Pancras High Speed, which owns St Pancras station, Eurostar’s London base, has set out plans to more than double passenger capacity at the UK’s only international train terminal. “Our high speed line has 50 per cent spare capacity . . . There’s a significant opportunity that is sitting there waiting underutilised,” Robert Sinclair, CEO of London St Pancras High Speed, told the FT in December.
Getlink, the owner of the Channel Tunnel, has simplified safety rules and offered €50mn of subsidies to encourage companies to open cross-Channel rail services.
But any new entrant would face formidable challenges, including buying trains that are compatible with the Channel Tunnel’s safety rules, and finding space in congested stations.
Phil Whittingham, rail project lead at Virgin Group, admitted setting up a cross-Channel service would be a “huge undertaking”.
“But we think Virgin is the right brand to signal a new era in cross-Channel travel,” he said.
Industry executives said that Evolyn, a Spanish-led project, is Virgin Group’s most serious rival to set up a new service.
But both bids are being held up by a dispute over access to the east London train depot where Eurostar maintains its trains. The depot is the only place where high-speed cross-Channel trains can be parked and maintained in the UK and under rail regulations, any operator should be granted access if there is space.
Eurostar, which last year announced plans for up to 50 new trains, said the depot is in effect full. Virgin and Evolyn have both appealed to the rail regulator to intervene to allow them access.
Without access to the depot, both Virgin and Evolyn have previously said they will struggle to secure funding or order trains for a new service.
This week, UK regulator the Office of Rail and Road published a letter to Eurostar saying an independent study of capacity at the depot that it had previously commissioned “is ongoing and has not yet concluded”.
Eurostar told the FT it welcomed the development of rail services in Europe, adding that “competition in the high-speed rail sector is another example of the growing demand for rail transport in Europe”.
