Eurotunnel won't cash in as ferry costs rise

Eurotunnel will not slash prices to win market share from its ferry rivals because it believes rising oil prices will force the Dover Strait operators to increase their prices. 

Jacques Gounon, Eurotunnel CEO, said the company had no plans to cut prices, a decision also influenced by Dover Harbour Board’s decision to increase harbour dues for ferry operators, which would make it difficult for them to reduce prices. 

Gounon felt Eurotunnel could win market share because ferry operators were reducing capacity and were likely to come under added pressure when the price of fuel started to increase in line with global economic recovery. 

“It’s clear that the ferries are facing major difficulties,” he said. 

“Firstly, the reduction of capacity -- SeaFrance is reducing capacity. And secondly, frequency -- we know that P&O will replace its smaller vessels with large ones this year without increasing overall capacity, so as they are using larger ferries, they will have to reduce frequency. 

“At the moment, we think they are offering the best price they can offer their haulier customers and we believe in the mid- or short-term, all these elements are an advantage to Eurotunnel. It’s the reason why we are not chasing volumes. 

“It is perhaps a bet, but we believe we will win this situation because each time the oil price increases it is good for us.” 

Gounon also said he did not expect to see volumes on the cross-Channel market increase in the first half of the year. 

“When I talk with the hauliers they all say they don’t see any significant change in the first half because of the weather conditions and the UK general election, which has the effect of companies freezing investment decisions. 

“We believe that if there is a recovery it will take place in the second half.”