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Eurotunnel Holds Muted Birthday Celebrations

The Eurotunnel turns ten years old on Thursday although few would know it. The beleaguered company behind the channel tunnel are keeping celebrations low key in view of recent boardroom events.


Its business as usual as Eurotunnel celebrates its tenth anniversary.

It was a rather sombre celebration considering it was a birthday party for one of Europe's greatest engineering feats. The Eurotunnel turned ten years old on Thursday but staff at both ends of the 109.4 kilometer (68 miles) tunnel only marked the occasion with a quiet cake-cutting moment shared over a private video link.

There were no fanfares like those that greeted the cutting of the red ribbon by Queen Elizabeth II and French President Francois Mitterrand on May 6, 1994. Instead, the company behind the undersea link decided against any public celebrations, choosing to avoid any adverse publicity comparing excessive grandeur and back-slapping with the tunnel's mounting debts and problem-plagued history.

Unfortunately it seems that plans to keep a low profile on the 10th anniversary have been hijacked by media opportunities to recount the decade of financial difficulties, disappointing passenger figures and boardroom coups that have marked the ten years of the "Chunnel."

Passenger figures less than estimated

When first the idea of a permanent link between the U.K. and the European continent began to gather credibility, everyone in favour of the tunnel saw it as the futuristic way to cross the water. But instead of flocking in huge numbers to go underneath it, the advent of budget airfares and competitive ferry prices meant that passengers soon realised that it was cheaper to continue going over the channel. Eurostar trains were initially budgeted with estimates of 15 million passengers a year, but the best the trains have managed so far is just over seven million.

Afghanischer Füchtling am Eurotunnel in Sangatte

Afghan refugee crosses razor wire fence to illegally enter Britain via Channel Tunnel, Sangatte, France

Critics have argued that Eurostar’s initial fare structure put the price of tickets far too high and discouraged passengers. It seems ironic then that the tunnel turned out to be the favorite route from Europe to the U.K. for illegal immigrants escaping the refugee camp at Sangatte near Calais to Britain. About 800 illegal "passengers" a month have helped tarnish the tunnel's reputation.

Heavy losses

Now, as low-cost carriers rule the airways between Britain and Europe and cross-Channel ferries have become more competitive, Eurotunnel seems like an expensive white elephant capable of only one consistent success -- hemorrhaging cash. The company is in debt to the tune of €8.8 billion ($10.7bn, £6bn) and last year recorded a loss of €1.9 billion. Ominous news considering Eurotunnel must begin making capital repayments in 2006.

From the start of the project, both Britain and France were determined that financing had to come from the private sector. However, while Eurotunnel fought battles with contractor TML in the late 1980s and early 1990s, the cost of the project doubled to €14.7 billion, tapping the investors for more than they had bargained for. Now it looks as though the company will have to look for financial aid from both governments to keep afloat.

"The financial framework and operating conditions for the Channel Tunnel were flawed from the outset," said International Rail Journal editor-in-chief David Briginshaw in an interview with BBC Online. "There was an assumption that the Channel Tunnel would put the cross-Channel ferry operators out of business, which it has not."


A Eurostar train enters the Channel Tunnel in Calais.

"The dream of a fixed link between the UK and France has turned into a nightmare for builders, owners and funders," according to Andrew Roden of Rail Magazine. "Part of Eurotunnel’s problem is that so much of its costs are fixed. It costs very nearly the same to run whether it is empty or full. There is little scope for cost-cutting."

Irate shareholders ousted board

French shareholders got so fed up with seeing no return on their money that last month they staged a coup that ousted the entire board of Eurotunnel. This was followed by the resignation of chief financial officer Roger Burge. Also, it now appears likely that the new board could well adopt some of the old board’s Project Galaxie recovery plan which includes proposing governmental financial aid.

The Eurotunnel has faced problems from the very start. Despite its official opening date of March 6, 1994, the tunnel didn't start carrying freight until a month later and passengers had to wait until December of that year before heading to the Continent. Transit was further disrupted in 1996 when a fire to the suspension of freight traffic for months.

It was just the start of logistical and managerial upsets that have punctuated the tunnel's ten-year history. The promised high-speed train link between mainland Europe and the U.K. is still not entirely finished.

Link still not complete

The French had their end of the super fast line completed in 1993 and the Belgians were ready in 1997. The link would enable Eurostar trains to cut the journey times between London and Paris and Brussels by reaching a maximum speed of 229 kilometers per hour (186mph).

Eurotunnel von der englischen Seite

Aerial view of the UK Terminal

However, the €7.6 billion English link, from the mouth of the tunnel at Folkestone to Waterloo Station in London, will not be open in its entirety until 2007, with the first part - from Folkestone to northern Kent - having opened in September 2003. British Rail had come up with a perfectly feasible southern route for the 68-mile link as far back as 1990, but this was rejected in favor of a more easterly approach, adding further delays to construction.

Figures are slowly improving

However, there is some light at the end of the tunnel for shareholders. While recent weeks have been dominated by the Eurotunnel boardroom drama, Eurostar has at least been able to post improved passenger figures, boosted by the quicker journey times and a new range of low fares.

And Andrew Roden of Rail Magazine doubted whether the tunnel would shut, whatever the financial problems. "The trains are likely to keep running – it is the only way for the banks to make any kind of return on their investment."

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