The Channel price war seems to be paying off for Eurotunnel with sharp increases in traffic in the build-up to the crucial summer months.

The company, which in May slashed its main return fare from pounds 266 to pounds 129, had a record month in June with 177,825 cars and motorcycles and 5,927 coaches going through the tunnel. Over the first six months of the year, Eurotunnel has increased its tourist traffic by 89 per cent compared with the first six months of last year when the tunnel was still suffering from teething problems and was not fully operational.

The best day ever was on Saturday 29 June, when its trains carried 8,834 vehicles, including 350 coaches. Although Eurotunnel declined to comment on its market share on the cross-Channel route, ferry operators accept privately the tunnel had increased its share of the holiday car market thanks to the cut in prices and the associated publicity.

While Stena and P&O, the main ferry operators, have not suffered a downturn in business, all the increase in traffic has gone to the tunnel and the ferries' revenue has fallen sharply because of the price war. Although their notional rates are much higher than those of Eurotunnel, the ferry operators will match Eurotunnel's prices when people, phoning up to book, point them out.

A ferry source said: "Rates are pretty lousy, and without volume growth it puts the ferries under pressure."

In its other main cash-generating business, freight shuttles, Eurotunnel said these services had carried 48,028 trucks in June. This compared with 42,457 trucks carried in May and 32,657 in June 1995 when the service was still starting up.

The high-speed London to Paris and Brussels Eurostar trains showed a 55 per cent passenger increase in June 1996 compared with June 1995, while rail freight tonnage was up 48 per cent.

The record-breaking figures, however, do nothing to tackle Eurotunnel's debt crisis. Eurotunnel units closed a penny lower at 95p.