What problem did the Channel Tunnel solve?

The tunnel extends beneath the English Channel at the Strait of Dover. It is the only fixed link between the island of Great Britain and the European mainland. It allows the city of London to be directly connected by train to Paris, Lille, Brussels, Amsterdam and Cologne – thanks to the Eurostar and Thalys train lines.



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The Channel Tunnel has cut travel times between the UK and mainland Europe dramatically. Before the tunnel it took around 6 or 7 hours by rail and ferry from London to Paris. Trains can now do the same journey in 2.5 hours.

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From the customers' point of view, however, the project has been a great success in that the Tunnel effectively broke the ferry operators' cartel that had been operating for decades on the cross-Channel routes and led to significant price reductions. For investors, the project has been disastrous.

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Soon after the start of operations, Eurotunnel reached a delicate financial situation which resulted from the escalation of construction costs, a large overestimation of the cross-Channel market and the underestimation of the cross-Channel ferry operators' competitive response which led to a very damaging price war.

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Eurotunnel is now highly profitable, after a difficult start when it was held down by massive debts from the tunnel construction. Debt restructuring in 2007 reversed the company's fortunes — at the expense of thousands of small shareholders who saw their holdings slashed in value.

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It is not possible to drive through the Channel Tunnel or Eurotunnel. You must drive onto the Eurotunnel Le Shuttle train, which boards at the Channel Tunnel terminals in Folkestone and Calais in order to use the service.

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The project was financed entirely by private sector capital, including five banks who were part of the TransManche Link consortium. Financing originated partly from investment by shareholders and partly from GBP8 billion of debt (about USD12. 2 billion, 1994 prices).

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While the aviation industry remains in chaos with airports and airlines racking up billions of pounds of losses, the Channel Tunnel has returned to profit. Eurotunnel operates the sub-sea link between England and France, running Le Shuttle trains for cars and lorries.

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The tunnel does leak, but it is designed to. Seawater from the rocks above the tunnel drips through and is then pumped away.

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Underground structures last a significantly longer life time than above-ground structures. Approximately about 50 years for above-ground, over 100 years for tunnels.

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