Ferrari-red trains to shake up Italian railways

Passengers boarding the new bullet trains ready to whiz across Italy early next year might be forgiven for thinking of Ferrari cars at the sight of the low nose, the deep-red livery and the sleek interiors.

The chairman of the legendary marque, Luca Cordero di Montezemolo, happens to be among the shareholders of Europe's first private operator of high-speed trains, Nuovo Trasporto Viaggiatori (NTV.L: Quote, Profile,Research, Stock Buzz), along with his friend Diego Della Valle, owner of luxury goods company Tod's (TOD.MI: Quote, Profile, Research,Stock Buzz).

Founded in 2006 as the European Union moved to open up rail transport to market competition, NTV has invested 1 billion euros to shake up train travel in Italy with the promise of fast journeys and deluxe service under the brand name Italo by March 2012.

Having copied the tiered pricing system of airlines, where passengers can travel at rock-bottom prices if they book early and choose off-peak times, NTV reckons its train service with an edge will be affordable to crisis-hit Italians.

The train interiors, styled by celebrated design house Italdesign Giugiaro, will offer three different classes of travel, with passengers offered the option to connect to tunnel-proof wireless Internet, watch TV or have meals served at their seat by staff trained in hospitality services.

A special cinema coach will be attached at one end of the convoy while Italo lounges will provide separate waiting areas and ticket offices in every station.

Such attention to passenger comfort is expected to help NTV snatch a 20 to 25 percent share of the train passenger market from state-owned operator Trenitalia and achieve breakeven within three years.

We are in a tough economic environment, with the risk of a recession that could hit demand for transport, NTV Chief Executive Giuseppe Sciarrone told Reuters by telephone. We will carefully monitor demand levels, but if they stay normal these are the numbers.

TIERED PRICING

If the high-speed service proves successful, NTV could consider competing against Trenitalia on regional routes, where the state-owned firm is often accused of not trying hard enough.

Lucia Casarin, a 44-year-old graphic designer from Venice, said she would welcome a service that promises above-average standards of comfort on her frequent train trips.

You have to keep in mind that Italo will compete against a rather disappointing train service here in Italy, she said. But the ticket prices, given the dire economic situation we are in, will be the real challenge for Italo.

Despite the on-board luxury, Sciarrone reckons Italo will remain affordable. Prices will vary depending on the time of the day and the day of the week, as well as the season, but everyone will be able to afford to travel with us, he said.

NTV plans to run up to 50 services a day as the first operator to use the AGV high-speed trains built by French transport and power engineering group Alstom (ALSO.PA: Quote, Profile,Research, Stock Buzz).

A fleet of 25 trains will link Turin in the north with Salerno in southern Italy, via Milan, Rome and Naples, as well as Venice with Rome, at a speed of 300 kilometres per hour -- the maximum allowed speed on the Italian rail network.

NEW BREED

AGV won't be the first train that will run at this speed in Italy, but it will be the most modern, said Bruno Sol-Rolland, vice president for rolling stock mainlines at Alstom Transport.

For Alstom, Italo will be a chance to showcase its next-generation bullet trains after being snubbed by Channel Tunnel train operator Eurostar, which last year opted to replace its fleet with trains made by German arch-rival Siemens (SIEGn.DE: Quote, Profile, Research, Stock Buzz).

NTV is so far the only customer for the French company's AGV high-speed train, the successor to the successful TGV. More silent and cheaper to run than its predecessor, the AGV is also more spacious because its motors are placed under each car, instead of in power cars attached at both ends of the train.

Alstom developed the new design, which helped free up 20 percent more passenger space, in 2003 with an eye on the looming liberalisation of the train market in Europe and the new breed of private train operators that it promised to spawn.

These companies -- like NTV and Britain's Virgin Trains, both Alstom customers -- cannot rely on government backing, the support of a large infrastructure network or sizable maintenance operations, unlike state-owned railway companies.

The difference is that these new customers are not interested in technology. Their approach is 'I want to have trains for service every morning. How much does it cost?', said Sol-Rolland.

With the arrival of fresh competition on their home turf, national train operators have been looking for new opportunities, often stepping into neighbouring countries.

SNCF has taken a 20 percent share in NTV as a potential springboard into the Italian market, just as Trenitalia has joined forces with French group Veolia (VIE.PA: Quote, Profile, Research,Stock Buzz) to launch France's first privately owned train service.

Called Thello, this new entrant aims to bring customer-friendly service and low prices on overnight sleeper trains between Paris and Venice.

Prices start at 35 euros one way for a place in a six-berth compartment and can rise up to 275 euros for a single private cabin -- still cheaper than the average 200 euros SNCF charges for its day-time link to Italy.