beleben

die belebende Bedenkung

The cost and the distance

with 3 comments

The August 2007 edition of Transport Economist reported on the proceedings of a High Speed Rail Seminar held on 2 March of that year, attended by, inter alios, Richard Brown (chief executive of Eurostar), and Jim Steer (director of SDG and Greengauge 21).

In 2007 eurostar HS1 track access was £70 per train km

According to Mr Brown, at that time Eurostar’s track access on HS1 cost £70 per train-kilometre, as ‘charges were expected to cover all the capital costs’.

(The Eurostar operation was never able to cover the capital costs, which led to a massive bout of restructuring and UK state aid, which was deemed complete on 1 September 2010.)

HS2 was expected to cost about 15% more per kilometre, in real terms, than HS1. But to get some insight into HS2’s underlying costs, one could just use the £70-per-train-km HS1 figure from 2007.

Since the London Euston – Bickenhill – Manchester Piccadilly HS2 route is around 300 km, the unsubsidised track access for one train journey would be £21,000.

With a 400-metre train carrying 1,100 passengers (100% occupancy), the cost per traveller would be ~£19 for the track access.

In practice, occupancy would be much lower than 100%, and most trains outside the peak hour would be 200-metre (550-seat maximum). So the modal track access cost per traveller would be at least £38 each way.

HS2 is planned to operate as a high frequency, regular-interval service, which would make 60% occupancy a serious challenge. If 70% occupancy  were achieved, track access cost per traveller would be about £54.

What about the other costs? Mr Brown stated that track access accounted for just under a third of the cost of operating the TGV high speed service.

No wonder the Department for Transport has refused to discuss the opex and revenue projections for HS2.

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Written by beleben

April 6, 2016 at 10:56 am

Posted in High speed rail, HS2

3 Responses

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  1. There are two Eurostar services an hour normally, plus four Southeastern Highspeed commuter services. While the cost of maintaining the infrastructure will not be lower when there are more trains per hour running, the cost will not go up by the same factor. If maintenance costs doubled or even trebled, this would be more than covered by the number trains per hour that are planned to run. Therefore, the track access cost per seat would be a fraction of what you say it would be.

    [Comment by Beleben:] Where is your evidence that “if maintenance costs doubled or even trebled, this would be more than covered by the number trains per hour that are planned to run“? The answer, of course, is you don’t have any.

    CautiousObserver

    April 17, 2016 at 11:54 pm

    • Your assumption therefore is that by running twice as many trains an hour, the cost of maintaining the network will also approximately double.

      [Comment by Beleben:] Where in the blogpost is an “assumption that by running twice as many trains an hour, the cost of maintaining the network will also approximately double”?

      Therefore, how is Ouigo profitable?

      [Comment by Beleben:] Is Ouigo profitable? According to Le Figaro, it wasn’t, in December 2013. If it is now, post the evidence.
      It adds to the number of trains per hour running while charging extremely low fares, well below the supposed cost of track maintenance. Unless the French are deliberately subsidising their high speed rail lines, including the purely commercial operations designed to compete with coach services, even though that subsidy would then apply across the range of operators including those which could be profitable anyway, then it suggests that my point is not incorrect.

      The track access fees are a combination of the cost of paying back the construction price of the line, plus the cost of maintaining the infrastructure. The upfront cost of HS2 will be roughly the same regardless of whether there is 1tph or 18tph running on it. The variable cost will be the extra maintenance cost caused by running additional services per hour. Would this be so much that each extra service would lead to no efficiencies of scale? For every 1tph, would there really need to be another 1 distance unit of track replaced each night and another 1 maintenance crew working?

      CautiousObserver

      April 20, 2016 at 1:21 am

      • It’s pretty clear from your comments that your assumption is that as the number of trains per hour increase, so do the operational costs and so the track access fees. If that did not hold, then the cost of track access fees on HS1 would not indicate the cost on HS2, as HS2 will see many, many more services every hour.

        [Comment by Beleben:] But where in the blogpost is an “assumption that by running twice as many trains an hour, the cost of maintaining the network will also approximately double”?

        If the track access fees for Ouigo were several times the ticket revenue, Ouigo would be so unprofitable that it would never be started in the first place. If operational costs scale linearly with demand – as is implicit in your argument in your blog post – then there would be no justifiable reason to ever run services which could not pay back the additional maintenance costs. If, however, the maintenance costs are relatively fixed, then what matters more is the total revenue. If total revenue increases by more than the maintenance cost, then the services are not a complete and utter waste of time.

        [Comment by Beleben:] Ouigo was not profitable. Is it profitable now, or not?

        That’s the pile-them-high model which has made low-cost airlines so successful. For Ryanair, any extra ticket sold at a price higher than will cover the incremental cost of providing for that passenger (given that most of the costs are fixed regardless of passenger numbers on a specific route) is a ticket worth selling even if the flight itself will still make a loss as a result.

        [Comment by Beleben:] Ouigo and Ryanair are not the same thing at all. A key advantage of Ryanair is that it the ‘infrastructure’ its services use between origin and destination — the sky — is free.

        CautiousObserver

        April 20, 2016 at 2:49 pm


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