Société Nationale des Chemins de Fer Français History

Company Perspectives:

SNCF is comprised of partner companies, which express the effectiveness of the Group through their ability to capitalize on the complementary nature of their services. A major travel and logistics player in Europe, SNCF Group is now able to fulfill increasingly global transport service requests: intermodality, transport related services, logistics. Each Group company is active in one or more of the operating divisions making up the Group's activities: passenger transport and services; freight; infrastructure and leveraging of SNCF's assets and know-how.

Key Dates:

1827:

The first railway line is opened in France.

1878:

French Minister of Public Works Charles de Freycinet creates the first state-owned rail network.

1880:

Orient Express begins operations.

1923:

Express train service between Paris and Brussels is launched.

1938:

Société Nationale des Chemins de Fer Français (SNCF) is formed.

1972:

SNCF inaugurates a trial of its prototype gas turbine train.

1981:

SNCF's Train à Grande Vitesse (TGV) begins commercial service.

1982:

The French government assumes permanent ownership of SNCF.

1994:

The Channel Tunnel establishes rail travel between the United Kingdom and France.

1997:

Reseau Ferre de France is formed.

Company History:

The Société Nationale des Chemins de Fer Français (SNCF) is the state-owned railroad of France. With a total rail network of 31,385 kilometers, SNCF provided long-distance passenger rail service to 315 million customers in 2001, in addition to hauling more than 125 million tons of freight. Also in 2001, SNCF's RATP and RER trains carried 560 million commuter passengers in Paris and throughout surrounding areas. The company manages the bulk of its operations through its principal subsidiary, SNCF Participations, which hold shares in 599 different companies involved in various aspects of the transportation, tourism, and shipping industries. SNCF incurred substantial debt throughout the 1990s, prompting French lawmakers to consider radical ways to restructure the beleaguered railroad, including privatization of some of its key operations. A significant government debt reduction, however, along with the creation in 1997 of the Reseau Ferre de France, a new company that assumed ownership and management of the country's railway infrastructure, have helped put SNCF back on the fast track at the beginning of the 21st century.

The Emergence of Rail Travel in 19th-Century France

From the earliest days of steam to the modern era of the superspeed passenger train, France has played a leading role in the development of rail transportation, and the Société Nationale des Chemins de Fer Français (SNCF) occupies an enduring place at the heart of the country's economic and social life.

The first railway line in France opened in 1827, carrying coal from Saint-Etienne to Andrezieux, a small port on the Loire. The primitive carriages were drawn by horses, but in 1831 the first steam locomotives and the first passenger service came into operation between Saint-Etienne and Lyon, initially using the former coal trucks as passenger compartments. The value of effective rail links was quickly apparent; within ten years, coal output in Saint-Etienne more than doubled, and industry boomed across the region.

Railways arrived in the capital on August 26, 1837, with a new passenger service from Paris to Le Pecq, near Saint-Germain-en-Laye. The line was inaugurated by Queen Marie-Amélie--King Louise Philippe was advised against boarding the new-fangled "steel monster"--and was an immediate success with Parisians; some 400,000 traveled the line within the first few weeks, at the then wondrous speed of 60 kilometers per hour (kmh). In 1841 a major rail link was built from Strasbourg to Basel, and by 1846 three more important routes had been laid between Paris and the provincial centers of Orléans, Rouen, and Lille.

Unlike roads or canals, the early railways were not state-owned, but built and operated by private speculators. The government, however, kept ultimate control over the expanding network by requiring each new line to seek an official license or concession, and it also assumed the right to veto or amend fares and tariffs. In 1839, for example, the fares on the Paris to Versailles line were set by the prefect of police.

Successive governments took an even closer interest in the railways. Napoleon III saw railway building as the mainspring of an ambitious program of economic and industrial expansion. His Second Empire of 1852 to 1870 encouraged a host of new lines; efficient rail links stretched from Paris to all important towns and cities, which simultaneously galvanized the regional economies and tightened the capital's hold on national life. The length of the network grew from 3,000 kilometers to 17,430 kilometers, and by the time of Napoleon III's downfall in 1870 all of the major routes that existed a century later had been laid.

Napoleon III's work was enthusiastically continued by the new republic. In 1878 the minister of public works, Charles de Freycinet, set up the first state-owned network by buying several ailing small lines in the west of the country. A year later he implemented the Freycinet Plan, which established a further 9,000 kilometers of track.

There followed a period of further expansion--between 1870 and 1914 the national network grew to a total length of 39,400 kilometers--and of increasing public and commercial popularity. The era of international prestige trains arrived in 1880, with the launch of the Orient Express, and France took its place at the center of a European rail network. Travel times improved; through the 1880s, the highly competitive Orléans line offered a Paris to Saint-Pierre-des-Corps service at slightly more than three-and-a-half hours. During this period there were further developments in the relationship between the state and the railways. Another Freycinet Plan, agreed upon between the government and railway companies in 1883, reversed the system under which the state financed new rail services. Hitherto, public funds had been used to cover estimated costs of fresh projects, with any surpluses being met by the private backers. Under the revised plan, the government would only meet the surpluses, handing responsibility for the main costs back to individual companies. The prestige of the railways was reflected in magnificent new stations across the country, including the remarkable terminus at the Quai d'Orsay in Paris, built around 1900, like a sunken cathedral at the end of a 3,100-meter tunnel beneath the left bank of the Seine. From the outset, the station used exclusively electric traction to ferry about 200 trains a day through a tunnel from the nearby Austerlitz station. In 1909 the state-owned network was considerably increased by the acquisition of a collection of lines in Normandy and Brittany previously run by the Compagnie de l'Quest. Between 1910 and 1914 the first electrified rail services in France were introduced by the Midi network, on the mountainous secondary lines of the Pyrenees.

The Move Toward State Ownership: 1900-45

Rail development was disrupted by World War I, although the French network played a major role in the conflict. As well as ferrying troops and supplies to the front and keeping the civilian population mobile, the railways proved vital to defense industries. Those in the northern and eastern sections of the country, however, suffered extensive damage, particularly in German-occupied territory. After the armistice, the railways faced a crippling backlog of repairs and improvements, made virtually impossible by spiraling costs and inflation. In 1920 all networks showed considerable losses; a 1921 agreement between individual lines to pool technology and resources was fatally undermined by world recession and mounting road competition. Against the odds there were some advances, notably in international traffic. The first nonstop express from Paris to Brussels started in 1923, traveling at 100 kmh on rebuilt track through the devastated battlefields of the recent war, and in 1932 a direct service was launched between Paris and Liège. The first 239-kilometer stretch of the Liège line, as far as Jeumont, carried trains traveling at an average speed of 106.3 kmh, much the fastest sustained run in Europe. These achievements were scored against a background of seemingly inexorable decline, however. By 1936 the railways' total deficit stood at FFr 37 billion. The network was in crisis, and turned to the state for rescue.

On August 31, 1937, the state reached an agreement with the five largest railway companies to establish a unified French railway system, the Société Nationale des Chemins de Fer Français, or SNCF. The deal was given a lifespan of 45 years, and came into effect on January 1, 1938. The SNCF embraced all of the big five rail systems--Compagnie du Nord, Compagnie de l'Est, Compagnie du Paris-Lyon-Mediterranée, Compagnie du Paris-Orléans, and Compagnie du Midi--and the two existing state services. The agreement specified that the newly integrated network be managed on a commercial basis, in that it was to increase fares and operate efficiently so as to cover its costs. The company was required, however, to recognize its public service responsibilities and undertake to uphold standards and services. These sometimes irreconcilable requirements, to operate both profitably and in the public interest, were to dog the company for four decades. The state reserved the right to block fare increases, on the understanding that it would compensate for the lost revenue. The new SNCF was under the ultimate control of the state, which owned 51 percent of capital; the remainder was held by the big five, newly formed into financial companies.

The onset of World War II predictably threw rail services into chaos. Despite German occupation from May 1940, however, some development was possible; for instance, seven large express locomotives were built to a new design and successfully introduced to the northern region. The railways in occupied France played a pivotal role in the logistics of the Nazi war effort and were put to use as a vital channel of troops, armaments, fortifications, and supplies. They quickly became priority war targets, particularly after the Normandy landings of 1944 when practically every main route in France was severely damaged by Allied bombers--and French resistance fighters--intent on disrupting enemy lines of communication.

Postwar Recovery: 1945-70

After the war France set about rebuilding its railways for the second time in 30 years. Reconstruction was carried out with the full backing of the newly liberated state. As well as replacing and renovating damaged facilities, engineers used the opportunity to improve the network; in particular, major junctions such as those at Laroche and Melun were skillfully realigned so that trains could run through them without any loss of speed. Unfettered by government interference, the SNCF was left to embark on an aggressive period of promotion and improvement. Passenger services were improved by new rolling stock, modernized stations, and yet more new lines; the freight sector benefited from upgraded services and forceful marketing. The postwar reconstruction workforce reached a peak of 500,000 in 1947 and 1948.

Although there were detailed plans for a new generation of steam locomotives, an early decision was made to electrify the entire mainline network as soon as possible. Beginning in 1950 the SNCF made a series of technological advances in electric traction, which were subsequently exported around the globe. Instead of the 1,500-volt direct-current traction system, in use around the world and in France itself, French engineers developed a system using 20,000 volts of alternating current at the commercial frequency, adopted by all commercial Swiss traffic, of 50 cycles per second. This reduced the need for trackside substations, allowed for much lighter ancillary equipment, and brought installation costs down by a third. The scheme was successfully introduced in the French Alps, and then extended to the northern region and beyond. Furthermore, new French locomotives were designed so they could switch smoothly to differing power systems as they crossed international borders. Other innovations involved widespread automation, including luminous blocks for track spacing, and automated signal boxes and level crossings. The electrification program continued at such a pace that by 1964 France had 7,600 kilometers of powered mainline track, compared with 2,700 kilometers in Britain and 2,900 kilometers in the United States. By 1983 more than 80 percent of SNCF traffic was powered by domestically produced electricity, thus allowing the railways to claim the environmental high ground with "almost zero-level atmospheric pollution."

In 1955 two French electric engines traveled at a world record 331 kmh on the Landes line, which led to a wave of lucrative export orders and confirmed the company's resolve to remain at the forefront of high-speed technology. Railway systems throughout the developed world were suffering from the preeminence of the bus and the automobile as a means of transport over short journeys. From the 1950s the airplane posed a new threat to the railway's supremacy in the business of long-distance travel. Squeezed in this way between road and air rivals, the SNCF committed itself to meeting the dual challenge by means of speed, combined with comfort, reliability, and unrivaled safety standards. To this end French engineers studied every detail of railway design, from the locomotives to the track and signaling, to find ways of improving performance. Their achievements in this field would earn French railways a worldwide reputation for speed and efficiency.

Technological Advances, Financial Peril: 1970-90

In the 1960s the SNCF developed an aeronautical-type gas turbine to power a railway engine, thus paving the way for Europe's first turbotrains. In 1972 a prototype gas turbine train achieved speeds of 318 kmh in time trials. Turbotrains were scheduled for use on the new Paris to Lyon service, approved in 1974, but the government canceled the plan following the oil crisis.

By the late 1960s it was clear that the 1937 formation agreement had placed the SNCF in permanent financial difficulties, preventing it from responding effectively to the competition from road and air transport and new oil pipelines; the railway had to operate under the public service obligations imposed by the original agreement, while its rivals enjoyed commercial and technical freedom. To even the odds, the government revised the 1937 agreement in the codicil of January 27, 1971, which allowed a fundamental overhaul of the SNCF. In return for its new freedom, however, the railway took responsibility for balancing its books, leaving the state to make contributions to specified areas only, such as public service charges and social insurance contributions.

The SNCF entered a new period of steady development. In the early 1970s France established some 25 regional councils, with significant powers delegated by central government. The SNCF set up close dialogue with the new councils, to discuss detailed ways of improving local rail services. Although central government retained responsibility for basic transport support, the regions were given the right and resources to make local improvements. Some councils funded new rolling stock; others secured improvements or extensions to the local network, or reached agreement on fares policy. The relationship between the regions and SNCF blossomed through the 1980s and into the 1990s, and the railway company furnished the councils with regular computer bulletins on trends and developments.

By the end of the 1970s, however, the national railway company's progress was again undermined by financial imbalance. In particular, the network complained bitterly of its constant reliance on debt; since its inception, the SNCF had capital of just .03 percent of its operating budget, meaning that all investment had to be raised through loans. This placed a massive financial burden on the company. Furthermore, despite the codicil of 1971, the company still felt that it was being forced to compete on unequal terms with other haulers. These problems were tackled in another overhaul of the SNCF, introduced from December 31, 1982, the expiration date of the 1937 agreement that established the company. All assets of the SNCF passed over to the state, in accordance with the original 45-year deal, and the company became a permanently state-owned concern. The SNCF also was brought into a national program aimed at improving and integrating the various transport systems, and placing them under corporate legislative control. The new law also clarified and reconciled the SNCF's dual role as both public servant and competitive commercial enterprise. Of more immediate importance, the reorganization helped resolve the company's financial difficulties; the state reaffirmed its commitment to its national railways, the largest in Western Europe with double the traffic of, for instance, British Rail. It stepped up contributions to pension and infrastructure costs, and innovatively made capital grants toward railway projects of national value. It also continued to subsidize fares and less profitable regional services. The SNCF diversified, through a range of subsidiaries, into a wide range of transport-related fields, from hotel management to haulage and tourism.

The changes in the SNCF coincided with spectacular success in the development of the Train à Grande Vitesse (TGV), the world's fastest train. The French described the TGV, run on electric traction, as a synthesis of technological progress, combining an aerodynamic profile, stability, and cabin signaling. On February 26, 1981, the TGV set a track speed world record, clocking 380 kmh on the Paris to Lyon line. The train entered commercial service in September of the same year, with a normal operating speed limit of 270 kmh. The first TGV service followed a southeast route embracing Lyon, Saint-Etienne, Dijon, Besançon, and Geneva in Switzerland. In 1982 the service was extended to the population centers of the Rhône Valley and the south of France, and other important routes were added at the rate of more than one a year: to Lausanne and Toulon in 1984; to Lille, Lyon, and Grenoble that winter; to Rouen in 1986; and to Nice, Neuchatel, and Bern in 1987. By that time 43 cities were connected to Paris by TGV, with a further nine destinations during the winter sports season. The 300 kmh Atlantic TGV was opened in two phases during 1989 and 1990; the west branch served Le Mans, Rennes, Britanny, and Nantes, and the southwest branch took in the Bordeaux region up to the Spanish border, and Toulouse. In 1989 the pioneering Southeast service carried its 100 millionth passenger, and the line recorded a 15 percent return on its investment, 3 percent more than planned. The TGV reduced travel times dramatically, bringing Marseilles, for example, to within five hours of Paris; over medium intercity distances the railway suddenly rivaled aircraft as the fastest travel option. Moreover, the railways were cheaper and claimed clear advantages in comfort, reliability, and convenience. Trains were able to arrive in the heart of cities, rather than remote, isolated airports.

The French saw the TGV as the future of high-speed travel within a uniting Europe; in the early 1990s some airlines were investing in rail links rather than in short-haul air trips. The shift from air to rail travel for medium distances also has the backing of the European Community, which in the late 1980s commissioned an exhaustive study into the potential of a high speed, pan-European network. The SNCF was anxious for the system to use French trains and was confident its TGV would beat off fierce competition from Japan, Germany, and Scandinavia. The government was backing a FFr 210 billion scheme to more than double the size of the TGV network over 20 years. The north European TGV system was planned for 1993, to coincide with the opening of the Channel Tunnel; it would cover northern France--Paris to Lille in one hour--and extend to Brussels, Cologne, and Amsterdam. The proposed TGV East would serve the eastern edge of France and southern Germany. A TGV hub was planned for Roissy, near Paris, creating the first high-speed rail network in the world. There were domestic plans for a direct TGV link from Paris to Marseilles, to bring the travel time down from four hours and 40 minutes to just three hours. Meanwhile, the TGV continued to break records, reaching speeds of 500 kmh during 1990.

By recognizing before any of its competitors the possibility of a second rail revolution based on speed, the SNCF bucked an international trend and reversed falling passenger figures. It also adopted a leading role in transport technology that, it was hoped, had laid the foundations of a prosperous future. In the late 1980s the network focused its efforts on improving its freight business, having witnessed a 30 percent drop in goods volume over the previous 15 years. The decline was further hastened at the end of 1986 by a bitter rail strike, the longest in French history. At the end of the decade the SNCF relaunched its freight sector under the brand name Fret, and promoted it aggressively. The service claimed sweeping improvements in performance, based on the use of computers to improve customer communications and to process consignments more quickly and effectively. It also entered into partnership with road companies for intermodal traffic, using giant containers adapted for both railway and lorry haulage. The SNCF hoped that intermodal traffic would account for at least 30 percent of its goods business. Meanwhile, electrification continued apace, with many new schemes such as those on the Paris-Massif Central main line, and in Brittany.

In 1990 the SNCF announced a major reorganization of its top management structure, after consultants found the development of divisive "empires" within the company. The new structure strengthened the top-level directorate and regrouped the company into five separate businesses, each with its own budget, covering passenger, freight, Ile-de-France region, regional, and Sernam, the intermodal subsidiary.

Profit and Loss in the Era of European Unification: 1990-2003

SNCF entered the last decade of the 20th century with an aggressive growth strategy, one designed not only to increase its overall passenger transport capacity, but also to implement the technological advances the company needed to remain at the forefront of modern rail travel in Europe. To this end, the company staked the bulk of its future on the continued expansion of its high-speed train network.

In 1990 SNCF unfolded a plan to build an additional 3,400 kilometers of high-speed track for its celebrated Train à Grande Vitesse (TGV). The new system would establish links between more major French cities, thereby considerably expanding the company's domestic transportation revenues. More important, the expanded network would also forge critical connections to high-speed rail lines in neighboring countries throughout Europe, notably Germany, Belgium, and Italy. In all, SNCF planned to build 13 additional TGV lines, a notable improvement on the two TGV lines in operation in 1990. Although the TGV accounted for only 15 percent of SNCF's long distance passenger service in 1990, the company hoped that expanding the high-speed network to a total of 5,800 kilometers by 1994 would give the TGV trains closer to 50 percent of its noncommuter passenger business. During this period SNCF also saw enormous growth potential in the completion of the long-awaited Channel Tunnel, which would establish a direct rail link between Paris and London.

A series of setbacks in the early 1990s, however, soon put a damper on SNCF's ambitious growth program. The delayed opening of the Channel Tunnel, combined with a protracted legal dispute with Eurotunnel and British Rail over the issue of tariffs, took a significant bite out of SNCF's projected revenues during this period. The company's earnings were hit even harder by the dismal economic recession of the early 1990s, which caused passenger traffic between major cities to drop more than 9 percent in 1993. At the same time, a series of failed customer service initiatives, most notably an ill-conceived computerized ticketing system, undermined consumer confidence in rail travel, further reducing passenger volume. In all, the company suffered losses of FFr 7.7 billion in 1993, and FFr 7.68 billion in 1994.

Perhaps the most momentous challenge to the company's future as a state-owned enterprise came from the French government itself. In 1993, after the conservatives defeated the incumbent socialist party in the French general elections, the government's attitude toward the public sector changed considerably. By 1995, SNCF's total debt had surpassed FFr 175 billion. Although the government was willing to provide the beleaguered company with a sizable debt reduction, the latest subsidy would not come without some cost to the company's autonomy. One area where the government hoped to streamline SNCF's operations was in the separation of its railway infrastructure, which included tracks and switching stations, from the business of running trains. At the same time, France was facing pressure to privatize from the European Union, which had mandated the deregulation of Europe's national railroads in 1991. In order to comply with the EU directive, while also increasing the efficiency of SNCF service, the French government created a new entity, the Reseau Ferre de France. Formed in 1997, Reseau Ferre de France was charged with taking responsibility for managing the country's railway infrastructure. But in fact, the new company merely leased the rail system back to SNCF, who continued to take responsibility for track upkeep and maintenance, a practice that would eventually raise the ire of many of the company's rivals in other European nations.

During this period, the government also urged SNCF to make drastic cuts to its workforce. Layoffs were not a new concept for the rail company, which had watched its total number of employees drop from 246,000 in the mid-1980s to 180,000 by the end of 1995. It was the latest round of job reductions, however, that finally incurred the wrath of the nation's powerful trade unions, and in 1995 the first of a series of crippling railroad strikes hit SNCF. The strained relations between the company and the unions were exacerbated in July 1996, when newly appointed SNCF Chairman Loik Le Floch-Prigent, who was popular with labor leaders, was indicted on charges of fraud, in connection with his earlier years as chair of Elf-Aquitaine. His successor, Louis Gallois, was able to stabilize relations with the unions to some extent, although the company was still hit by several large-scale work stoppages over the next several years. The slashing of SNCF's debt from FFr 200 billion to FFr 50 billion, however, coupled with the increase in passenger traffic that accompanied the robust economy of the late 1990s, actually enabled the company to claim a profit in 2000. Although the trend toward privatization among other state-run rail carriers of Europe still threatened to introduce train competition into the French market, the company entered the new century firmly committed to its identity as a public company, with an eye toward more consistent profitability in the future.

Principal Subsidiaries: Seafrance; SCS Sernam; Sté Française de Construction Immobilière (S.F.C.I.); SNCF Participations (99.83%); Sté Hydro-Electrique du Midi (S.H.E.M.); Télécom Développement.

Principal Competitors: ARRIVA plc (U.K.); National Express Group plc (U.K.); Vivendi Environnement SA.

Further Reading:

• Harrison, Michael, "High-Speed Rail Plans Put France on Fast Track," Independent (London), April 23, 1990, p. 21.
• Nock, O.S., Railways of Western Europe, London: Adam & Charles Black, 1977.
• Owen, David, "A Fine Way to Run a Railway--and Turn a Profit: Interview with Louis Gallois, Chairman of SNCF," Financial Times (London), January 8, 2001, p. 12.
• Rawsthorn, Alice, "State Ultimatum for Air France and SNCF," Financial Times (London), May 14, 1993, p. 2.
• Ridding, John, "Paris Move on SNCF Fails to Derail Strike," Financial Times (London), November 29, 1995, p. 2.
• ------, "SNCF's Finances Start to Run Off the Rails," Financial Times (London), November 20, 1995, p. 2.
• "The SNCF, Historical Background, Status, Recent Developments," Paris: SNCF, 1984.

Source: International Directory of Company Histories, Vol. 57. St. James Press, 2004.

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