MISC | Yield Management in Railways

[Suburbanist]

I have a deep knowledge of Brazilian economy. Railways, which were in the brink of collapse, were privatized in 1996 (90% of trackage). New private owners revamped the tracks and freight traffic increased 10-fold in a national basis.

As for passenger rail, the government vision (and money) is most geared toward express, high-speed links. There is an ongoing project (70% already secured, enviromental assessment on its way) to build a 540 km pure high-speed rail linking Rio de janeiro, São Paulo and Campinas (and their international airports), with some intermediate (3/4 additional cities in the way) stations.

It will be a private concession for 40 years, meant for passenger service only. It will receive a special loand of € 9 bln. from the central government (at lower interest rates), but otherwise will operate by itself under few guidelines like maximum fares allowed and minimum service frequency.

Apart form that, there is no reliable study plan to run any long-distance passenger rail.

Remember, Brazil is not India: 8,5 million sq. kilometers area, 194 miln. population only, very sparsely populated in general, with low land costs and an ongoing enrichment process of its middle class (car ownership rate jumped ~120% between 1994 and 2008).

[thun]

Still, you can't compare a single high speed line with a decent network of passenger rail services covering a large part and providing mobility for more or less everyone.

You're right when you say that cars aren't trains (the first being a device of individual mobility and the second providing services one can choose to buy).
But I can't agree with you on letting run everything on a free-market ideology. The purpose of the rail network in Europe is to provide transport for those who want to use it (or are forced to do so because they can't afford a car or don't have a driving licence). So one has to ensure that there is a minimum level of service on the whole network. If you want to let run the train operators on free-market base, you can be certain that a large part of the lines won't have as good services as they have now and numberous lines even have no service at all! That's not exactly the point of public transport, is it?

I guess the current organization of the German regional rail is quite ok: The state governments contract rail operators (not necessarily DB) to run trains and writing frequencies, etc. in the contract. Another advantage is that every operator has to integrate in a common price system which makes travelling much more comfortable for passengers (because you have good connections, a single fare system which doesn't force you to buy another ticket when changing trains, etc.).

Running a European rail network on a free market base would pretty sure have fatal results. The privatisation of British Rail is a good example, I'd say.

[aab7772003]

Originally Posted by Suburbanist

I do not dispute that. Mortality rates for car transportation are 1.200 times higher per km-travelled than air. However, the car is far more than a mean of transportation: it is a freedom-enabling "device", one that gave members of more advanced countries mobility and brought down the sick cramped industrial city paradigma of the late 18th Century with its epidemics, riots and excessive density. Car increases people mobility, allows them to expand the notion of "surrodings" from one they can walk to (2 km if you are healthy?) to one they can easily drive to (40/50 km), dramatically increases your privacy (no need to deal with strangers while moving from point A to point B, dealing with other drivers is far less privacy-disrespectful than having a fetid follow citizen exhalating his odors in your subway car), etc.

Sure we should word to reduce reasonably car death rates (and they have never been so low as now), but the "mortality" argument shall not prevail. If it would, what about, per analogy, fast-food? Shoudl we "ban" fast food because unwise comsumption of it makes you unhealthy?

What a boatload of...
People can choose anything between fast food and food made from scratch.
A well integrated transport system that includes high speed trains, regular trains, subways, buses and even taxies in the rural areas and/or during late night hours, with rail at the core it, like the German one, can deliver the freedeom/mobility described above.
People should be able to choose between a well integrated transport system and cars.
If you want mobility on demand with your car, you should pay for the full social cost of it.

[Suburbanist]

Originally Posted by thun

But I can't agree with you on letting run everything on a free-market ideology. The purpose of the rail network in Europe is to provide transport for those who want to use it (or are forced to do so because they can't afford a car or don't have a driving licence). So one has to ensure that there is a minimum level of service on the whole network. If you want to let run the train operators on free-market base, you can be certain that a large part of the lines won't have as good services as they have now and numberous lines even have no service at all! That's not exactly the point of public transport, is it?

Well, things are a little mixed-up here. I separate the functions of having a track network (and stations, roundhouses, sidings, energy convert transformers etc.) as something worth on its own, like having a freeway network where cars and trucks might drive, but are not exaclty tied to them (think of car as the most interoperable transportation vehicle in the world after the airplane - apart from LHS or RHS-driving and auto or manual shift, everything else is pretty much the same everywhere).

So, the point of having a track network would be to allow private operators to run services they want. As I said before, I make a huge distinction between metropolitan, commuter-like traffic (which can, to a certain extent, justify transit projects with coordinated schedules etc.) and medium and long-distance travel. Why travelling accross Europe would be an entitlement? I know some leftist student organizations want a "EU-scheme" to allow university students under 26 free travel on ALL train networks so they can "enhance" their cultural formation and their international experiences...

I do not see the point of having subsidized long-distance transit in peacetime (and giving Ryanair some airports to operate would be of less cost too). Again, let the governmnents provide the tracks, but the privates to run trains if and when they want.

Imagine if we were in the bad days when government regulated every aspect of airlines operation, including imposition of "coordinated schedules"... Fares would cost the triple and Ryanair would never come into existence.

[mozatellac]

Originally Posted by Suburbanist

I do not see the point of having subsidized long-distance transit in peacetime (and giving Ryanair some airports to operate would be of less cost too). Again, let the governmnents provide the tracks, but the privates to run trains if and when they want.

That's probably why modern long-distance train services (TGV, ICE, AVE...) are generally not subsidized in western Europe. That's also why over there, gas taxes are much higher than in the US and many highways have tolls.

[aab7772003]

Originally Posted by Suburbanist

So, the point of having a track network would be to allow private operators to run services they want. As I said before, I make a huge distinction between metropolitan, commuter-like traffic (which can, to a certain extent, justify transit projects with coordinated schedules etc.) and medium and long-distance travel...

No you certainly did not.

[thun]

In fact, one of the most successful rail operator is SBB (although fares are quite high and it is a monopolist). The perfectly coordinated schedule between short, medium and long-distance services is one of the main reasons.

[Suburbanist]

Most monopolies should be able to make a profit! Let some private operator skim out the most lucratives routes in Switzerland, forcing prices down, for instance, with fair access policies and slot auctions where there is excessive demand for traffic.

Underlying all this questions we could ask: which is ultimatelly better - having efficient markets determining the true price of providing non-profitable services, and having private competitors fight each other to provide lower fares where they can be achieved, or have a mammoth-size public authority filled with bureaucrats trying to "coordinate" schedules and services?

A private, for-profit COMPETITIVE system can still provide service to remote locations etc., provided the government subidize, directly, unprofitable routes. What it bring is greater fairness in the sense that people travelling between major centers could be served by faster (few if any calls) and cheper service.

Economic theory has long demonstrated that true competitive (which is different than what UK did in the 1990's, just "slicing" different regions and dictating terms of service) service markets, even when comprehensive coverage is requires with subsidiation for unporofitable sections of those markets, will deliver overall less costly services, at expense of convenience or "equal access" (because subsides would have to be high, mountain location or isolated places might get no more than 3 or 4 daily public transit services instead of 14, for instance).

Then, again, I point out: the backbone transportation industry of every decent country are the roads. A paved surface, not a track, is what ultimatelly allow people and goods to reach end-point destinations, e.g., houses or offices. Trains are a necessity, but no to the extent of roads.

[K_]

Originally Posted by thun

Running a European rail network on a free market base would pretty sure have fatal results. The privatisation of British Rail is a good example, I'd say.

I wouldn't say that the privatisation of British Rail is a good example of running a rail network on a free market base (nor did it have "fatal" results, btw...)

[K_]

Originally Posted by Suburbanist

Most monopolies should be able to make a profit! Let some private operator skim out the most lucratives routes in Switzerland, forcing prices down, for instance, with fair access policies and slot auctions where there is excessive demand for traffic.

The Swiss people won't let this happen though.

Underlying all this questions we could ask: which is ultimatelly better - having efficient markets determining the true price of providing non-profitable services, and having private competitors fight each other to provide lower fares where they can be achieved, or have a mammoth-size public authority filled with bureaucrats trying to "coordinate" schedules and services?

The truth is somewhere in the middle. Have a governement authority set service levels, and schedules, and contract out the provision of the provision of the service to private contractors.

The big issue with public transportation is that integration and coordination have a high positive externality, which companies can't or won't internalize on their own. There the governement has a role.

[K_]

Originally Posted by thun

In fact, one of the most successful rail operator is SBB (although fares are quite high and it is a monopolist). The perfectly coordinated schedule between short, medium and long-distance services is one of the main reasons.

Interestingly the SBB fares are not as high as they are reputed to be, especially if you travel a lot. The Swiss GeneralAbo for example is quite cheap if you compare it to similar offers in the Netherlands or Belgium.

Single tickets for people who don't travel on the trains a lot are expensive, but that's more a tax on tourists...

[goschio]

Originally Posted by 2co2co

I travelled from Osaka to Nagoya on Shinkansen by just turning up, buying ticket (at regular price) - seats were full, so I stood (with yummy Takoyaki in hand :-P)

Apparently, this is unthinkable for Europeans... (especially the standing bit)
Is there any particular reason why high-speed rails cannot operate like a commuter train? The travel times of low-speed short distance and high-speed long distance are roughly the same.

Why? That is what I encounter when I travel with german ICE trains. Often enough peopel have to stand in the aisle or sit on the ground next to their bags.

High speed rail is often enough used as commuter rail.

[k.k.jetcar]

Quite the case. I once rode the TGV from Paris to Besancon in the rear baggage space, having a ticket but no seat reservation. No one ever checked my ticket.

[thun]

Originally Posted by Suburbanist

Most monopolies should be able to make a profit!

The point is that it's NOT about profit alone. Much more important is to provide affordable transport for those who don't use the road for some reason (jams, costs, comfort, etc.) as a backbone of public transport. And that only works with integrated schedules and fares. The administration is needed to ensure that remoted areas have enough and regular services, too. And keep in mind that most travellers don't travel necessarily between the large cities, a very large piece is travelling from one rural area to another.
If you would let run everything on a free market base, it'll be pretty much end up like in the US, where passenger rail service is pretty much non-existent in most of the country (and where long-distance services exist, they only do because of the subsidiated Amtrak). And the result being: People using the car more (at least those who can afford one and are old enough - the others are pretty much fu**d up) which means higher (public!) investions in roads, more land use for new roads (a HSL needs much less land than a motorway) and more exhausts. Not really a mayor improvement, I'd say.

[NCT]

Some people need to understand the nature of railways and indeed public transport before they try to preech their 'economic' views. Competition in public transport is a whole different kettle of fish to that in your average retail products.

You can go to a supermarket and choose between your Hovis, Kingsmill, Warberton and Tesco's value and get what you want when you want it. 20 Warburtons or 5 or each kind makes no difference to the convenience of someone wanting a loaf of Warburtons.

Unlike a loaf of bread which is THE product a consumer purchases, a single train journey is only part of an overall product. A regular frequency and simple fare structure are also core parts of the product. 9 SteamAhead trains per hour is fundamentally different to 3 of each of SteamAhead, ElectricLoco and DieseLine. If companies operated independently you sacrifice convenience (aka to a lower quality product); if integrated tickets were to exist you don't have 'free-market'; left to the market you have natural monopoly. None of these situations give you maximum production at minimum prices. You HAVE to have state intervention, at the very least a state-engineered franchising system where service levels and prices are regulated.

Isn't it ironic how somebody who worships the 'freedom' of private transport wants to squeeze every ounce of it out of public transport in the name of 'future'?

[aab7772003]

Originally Posted by NCT

Isn't it ironic how somebody who worships the 'freedom' of private transport wants to squeeze every ounce of it out of public transport in the name of 'future'?

Exactly. Right on! Even many Americans do not describe the automobile transport as the transport of the "future."

Originally Posted by Suburbanist

Then, again, I point out: the backbone transportation industry of every decent country are the roads. A paved surface, not a track, is what ultimatelly allow people and goods to reach end-point destinations, e.g., houses or offices. Trains are a necessity, but no to the extent of roads.

Sure... try to move the "goods" across the USA and across the Alps alone and see what happens A "decent" country cannot even survive mostly on roads.

[Svartmetall]

It's always very interesting to note that roads are never expected to yield a profit.

[Suburbanist]

Guys, I've written this a dozen times.

FAIR COMPETITION

Air - government provides airport, security, traffic control; private airlines buy/lease planes, hire crews, buy untasty food etc.

Road - government provides highway infrastructure and maybe charge tolls/gas taxes. Private companies and drivers buy or rent vehicles, insure them, fuel them and drive them.

Rail - government provides tracks with completely open access. Private companies buy trainsets, engines and run services according to their will.

Highways are not expected to make a profit, but bus companies, truck companies, rental car companies, automakers etc. are usually expected to do so.

UNFAIR COMPETITION

Air - charging airlines for CO2 emissions, obligating them to serve, without compensation, remote routes as a precondition to operate "crown jewels" ones.

Road - using toll, congestion charges or gas taxes to any other purpose but build, maintain and expand roads.

Rail - communist inspired governments taking over direct operation of trains, imposing schedules etc.


So, I don't expect that rail and station tack ownership, maintenance and operation to be profitable, but I DO expect trains can pay their marginal costs comprising train crews, depreciation, capital costs etc. Track should form a comprehensive physical networks, but trains should be operated over them only by private companies on a fair basis.

As for minors, one of the reasons it is so difficult to advance lower driving age in Europe is because comprehensive transit networks provide an excuse (I'm part of a small but European-wide articulated groups trying to, someday, lower the driving age for cars with less than 1400cc to 15 years over EU as a human derived right to mobility and against youth prejudice that they "can't operate a car").

[MarcVD]

Originally Posted by Suburbanist

Road - using toll, congestion charges or gas taxes to any other purpose but build, maintain and expand roads.

And why would that be unfair ? If competition between different modes of
transport must be fair, then road transport must pay for all the societal
cost they generate, i.e. need for police, medical infrastructure, solutions to
pollution problems, etc. Road transport today is partly paid by taxes that
do not come from road transport itself, that must be corrected...

Originally Posted by Suburbanist

Rail - communist inspired governments taking over direct operation of trains, imposing schedules etc.

And again, why is this unfair ? It is just another model, not one that you like,
but the fact that you do not like it does not give you the right to make it
"unfair" !

Originally Posted by Suburbanist

trains should be operated over them only by private companies on a fair basis.

This again may be your model of preference but I do not see any intrinsic
reason why it should be enforced.

Originally Posted by Suburbanist

lower the driving age for cars with less than 1400cc to 15 years over EU.

God forbids that this ever happens. We have already enough people dying
on the roads without that. I'd rather see it elevated to 21.

[Stainless]

Originally Posted by Suburbanist

As for minors, one of the reasons it is so difficult to advance lower driving age in Europe is because comprehensive transit networks provide an excuse (I'm part of a small but European-wide articulated groups trying to, someday, lower the driving age for cars with less than 1400cc to 15 years over EU as a human derived right to mobility and against youth prejudice that they "can't operate a car").

I can assure you that the reason 15 year olds are not allowed to drive in the EU has nothing to do with public transport. Most of the people I knew at that age would have been lethal in a car (even under 1400cc) moreso than when they were 17 (the legal driving age in the UK unless disabled, then a special concession is allowed to 16) I cannot see how this or anything else you are proposing would be progress. There is no human right to a car and there are many reasons people can't have them, like age, disability, parking, initial cost of ownership, fear of driving, driving bans, etc therefore 'human right to mobility' is an arguement for a comprehensive public transport system which is heavily subsidised.