Air France-KLM Announces Joint Venture With Veolia To Enter High-Speed Train Passenger Business

September 10, 2008 12:02 p.m. EST

Paris, France (AHN) - To make up for shrinking income on short-haul flights, Air France-KLM and Veolia are entering into a joint venture to go into high-speed train passenger business by 2010.

Among the routes that the joint venture would cover are the Paris-Amsterdam and Paris-London legs starting October 2010. State-owned SNCF and Deutsche Bahn dominate the high-speed rail service between Germany and France. But by Jan. 1, 2010, the EU's railway traffic laws will be eased for international traffic, although SNCF will keep its stranglehold on domestic rail passenger service in France until 2017.

Air carriers are losing business to speed rail services as EU passenger opt for trains over airplanes for short flights, bolstered by deals between certain airlines and trains for cross arrangements.

With the Wednesday announcement of the joint venture, Veolia, a transportation service provider in France, beat SNCF and Deutsche Bahn to the draw as the two transport firms had similar tie-up plans with Air France-KLM.

The coaches to be used by the joint venture would be rented or bought from Alstom, specifically new generation models such as the AGV which could ferry 900 passengers at a speed of 224 mph (360 kph). With such fast coaches, Charles de Gaulle airport in Paris and Schiphol airport near Amsterdam could be covered in just 90 minutes.

Aside from its rail venture, Air France-KLM said Tuesday it was interested to invest in a reorganized Alitalia if it is acceptable to Italian investors, according to Pierre-Hehn Gourgeon, deputy chief executive officer of Air France-KLM. Unions had previously stood in the way of the air carrier's offer to purchase 49.9 percent of Alitalia.