In the News Teaching Activity – can Virgin trains compete with Eurostar? (Mar 2025)

Virgin Group’s plan to enter the cross-Channel rail market highlights the growing contestability of the sector.

If Virgin successfully launches its cross-Channel rail service, it could potentially end Eurostar’s decades-long monopoly and increase competition on routes between London, Paris, and Brussels. This may drive down Eurostar’s high fares and improve service frequency, benefiting passengers. The move would mark the first direct competition for Eurostar in 30 years, making the market more contestable. However, challenges remain, including securing depot space and navigating regulatory hurdles. Virgin’s entry could also prompt infrastructure improvements, as seen in the recent efforts to boost capacity at St Pancras and the Channel Tunnel. If investment is secured, this competition could transform cross-Channel travel by the end of the decade.

Virgin aims to raise £700m to rival Eurostar on cross-Channel trains | Rail industry | The Guardian

1. Explain what a contestable market is.

2. What are barriers to entry and which ones may Virgin face if it enters this market?

3. Discuss the potential benefits and costs to economic agents of Virgin’s plan to compete with Eurostar.