Why was the Channel Tunnel a failure?

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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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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There have been several fires in vehicles being transported through the Channel Tunnel since its opening in 1994. As of 2022 all were caused by lorries carried on the heavy goods vehicle shuttle trains.

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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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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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On 11 September 2008, a France-bound Eurotunnel Shuttle train carrying heavy goods vehicles (HGVs) and their drivers caught fire while travelling through the Channel Tunnel.

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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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Engineers used two systems of tunnel linings – cast iron segments bolted together and precast concrete rings. The TBMs excavated a huge amount of chalk. On the French side, the chalk was crushed, mixed with water, and pumped inland behind a specially built dam 37m high.

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At €1.049 billion, Eurotunnel revenue saw an increase of 63% at a constant exchange rate, a level never before seen for this business. Revenue from the Shuttle business increased by 53% to €732 million compared to 2021, in a context marked by the return of tourist traffic, thus confirming people's appetite for travel.

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What does the Eurotunnel look like underwater? This may be a disappointing answer, but you can't actually see the sea from the Eurostar. When you go through the tunnel and look out of the window, all you can see is your reflection in the glass because it's quite dark outside.

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A rail tunnel was chosen over proposals for a very long suspension bridge, a bridge-and-tunnel link, and a combined rail-and-road link, and the project was privately financed by a consortium of British and French corporations and banks; the Anglo-French company operating the tunnel is called Eurotunnel.

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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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