Wednesday, September 05, 2007

More Hype 

This is an interesting story for what it doesn't say. Namely, it avoids the issue that the primary link between England and France, the tunnel beneath the Channel, has been a money-loser since it was built. This paragraph from Wikipedia says it best.

At completion, it was estimated that the whole project cost around £10 billion, including a cost overrun of 80 percent. The tunnel has been operating at a significant loss, and shares of the stock that funded the project lost 90% of their value between 1989 and 1998. The company announced a loss of £1.33 billion in 2003 and £570 million in 2004, and has been in constant negotiations with its creditors. In its defence, Eurotunnel cites a lack of use of the infrastructure, an inability to attract business because of high access charges, too much debt which causes a heavy interest payment burden, and a low volume of both passenger and freight traffic 38% and 24%, respectively, of that which was forecast.

Eurostar operators are hyping speed while ignoring the obvious. No matter how much traffic they run through the tunnel, it is unlikely to turn a profit. From that perspective, this isn't good PR. It is a story about piling more debt on an already bad business.


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