After cutting rates successfully in 2013, Renfe has decided to keep prices the same this year. The transportation company, led by Julio Gómez Pomar, saw a 14.8% increase in total passengers, but wants to ensure that its earnings per trip revenues do not fall too much.
Last year Renfe combined an aggressive price cutting policy with a significant increase in the fee it pays Adif for using the route to shave its annual losses. They fell from 39.5 million in 2012 to just 16 million in 2013. Overly-generous ticket prices would undermine profits, which a company operating at a loss cannot afford. This is not the only reason that Renfre chose to freeze prices. The most important reason was the company's success offering sale prices on tickets and the effect this had on competitor companies that offer other modes of transportation.
Many clients have chosen the AVE over airlines. But the high-speed train also attracted new passengers -- young people and the elderly especially -- that traditionally have used buses. Companies that operate both services are trying to keep Renfre from offering even more competitive prices on grounds that the company should not use taxpayer subsidies to lower prices while at the same time operating at a loss. Increased transparency for this public company, or any other for that matter, is the best medicine for eliminating suspicions and ensuring clean competition.