RAIL IN COMPARISON

Peru 2015 | TRANSPORT | VIP INTERVIEW

TBY talks to Alberto Valdez, General Manager of Perurail, on the role of the company and the cargo/tourism split.

How did Perurail become part of Belmond Group?

Previously, the railway was government-owned, but because of economic loss, the government decided to concession it. In 1999, after an international bidding process, we obtained the concession of the railways for the south and southeast. The concession was granted to a part of what is now called the Belmond Group. We have been with the business for 16 years now.

What is the role of Perurail in the areas of the country where you are present today?

The role of Perurail can be divided into two main businesses: passenger and cargo. The passenger business is from Cusco to Machu Picchu, which serves one of the country's most popular tourism attractions, and from Cusco to Lake Titicaca. We move about 2 million passengers on the track on a yearly basis. On the cargo side, we mainly move cargo from the mines to the ports. From the port, incoming items will go to places like Arequipa, Puno and Cusco. We mainly move fuel and diesel to the bigger cities in the southern part of Peru.

What is the balance in the business between cargo and tourism?

Our tourism business is larger than our cargo, but that difference will disappear as we recently signed a transportation contract with MMG, a mining company. We estimate that by the end of next year, we will be moving about four million tons of cargo.

On the Machu Picchu route, Perurail had a monopoly, but now there is competition. How did that change the way that Perurail had to approach that business?

We never had a complete monopoly; we were just the only ones in business, even though it was open access. Starting in 2008, other companies started entering the business, and now we are working alongside them because the line has plenty of capacity for more trains.

What would you say distinguishes your services from their services on that line?

The biggest difference is that we have a luxury line offering services that our competitors do not. All of our train services have the international certification of quality ISO 9001. We offer our passengers not just a journey, but an experience aboard the trains with the view, food, entertainment, music, dance, and of course our service. We take care of our customers and their needs. Also, we provide different social train services for the community located in our influence area, supporting their daily social, cultural, and commercial activities.

What is involved in attracting customers who are looking for the luxury train?

There is a big market for the luxury sector, and our model is based on reaching that demographic. Belmond as a group has luxury hotels, trains, and resorts all over the world.

What are the biggest challenges of operating mineral transport in Peru?

The biggest challenge we have is ensuring the safety of our operations, and because of that, our railway is maintained to international standards. We also comply with the American standards of the Federal Railroad Administration (FRA), for all classes of our railways. Both the safety of the people and the safety of the minerals are covered. We have developed a new way of implementing service containers to move the mineral from the mine to the port. We transfer from roads to trains without ever touching the copper concentrate, keeping the minerals and the workers safe. This mechanism reduces the impact on the environment with clean technology.

What would you say are the biggest challenges for growth in the tourism sector for Peru and Perurail?

Having a single railway line between Cusco and Machu Picchu is a major challenge. That means that the capacity of the trains is limited, and in order to increase to meet growing tourism numbers, we will need to invest in more signage for trains to pass. We have to improve the quantity of trains per day, and we will need to invest in more areas to park trains. We will have to continue working with the Ministry of Transportation to accomplish these things, and to have a plan for growth for years to come.

How do you feel about the concession and PPP infrastructure here in Peru?

I agree that the concessions that were promoted by the government helped with the development of the country. We are receiving capital that will help the country grow in a proper way with high-quality companies that are efficient and have lots of experience in different sectors.

What are your expectations for Perurail in the coming years?

In the next five years, we will continue growing at a rate of 10% per year. We will continue to invest in Machu Picchu on a yearly basis in track capacity and services.