This is a guest article by Andrew Bodman.
There are those that suggest we should build more high speed rail in the UK to keep up with other countries. Let us look at a few of them before returning to the UK.
The Portuguese government has decided to suspend construction of its €3.3bn Lisbon-Madrid high speed rail link. This was debated in their parliament on June 30th and July 1st, following their €78bn bailout by the International Monetary Fund and European Union. Suspending this project is not a requirement of the bailout, but the idea is to guard against possible external and internal risks. Portugal’s debt as a proportion of GDP was 93% at the end of 2010. In the UK the figure was 52% at the end of last year, and is now believed to have risen to 60%.
From July 1st, Spain will be axing the high speed train running between Toledo, Cuenca and Albacete. This high speed line, which cost €3.5bn, was opened last December; however only 9 passengers (on average) used this route per day. The failed route was costing €18,000 per day to operate. This is one of several austerity measures intended to drastically shrink public spending and reduce Spain’s borrowing costs.
Edited to add: Christian Wolmar points out on his website that
“The line to Albacete is a spur off the main high speed route to Valencia, and similarly, Toledo is a branch on the line down to Sevilla and Malaga. AVE, the high speed service, was running services between the two via Madrid but they proved little used, so the service was broken into two halves, cancelling one of the three trains per day between Albacete and Madrid.”
France’s plans for TGV expansion are running into financing problems because of the recession and the county’s high budget deficit. “We risk having longer and longer high-speed lines which are used less and less“; so said the president of the SNCF, Guillaume Pépy. He thinks that France is going too fast in its further construction of high speed lines. TGV fares have increased by 100% in the last decade compared to about 30% for car travel. Pépy went on to say: “The whole basis of the high-speed rail revolution – that the TGV should be the “normal” means of travel, not just something affordable by the business elite – is under threat”. The SNCF president also described the state railways as: “Decaying… facing a financial impasse… and heading for the wall”. He should know better than most.
Earlier this year Reuters reported: “The Dutch high-speed train operator could face eventual bankruptcy unless steps are taken to boost its viability, after little more than a year of full services”. However passenger numbers have increased, from a low of 15% occupancy on some trains, following the decision by the operator to reduce its price premium for high speed rail tickets.
Plans for a high speed line from Amsterdam to Germany (HSL-Oost) have been suspended. The scope of the project has been reduced, and the Dutch have no plans to run high speed trains on this route in the near future.
In 2009 it became necessary for the Taiwanese government to take over the running of the Taiwan High Speed Rail Corporation as it was almost bankrupt, two years after it first started running its high speed trains. One of the contributing factors to the financial problems was that passenger numbers were approximately one third of those that had been forecast.
China has incurred a vast amount of debt during the building of its high speed rail network. The debt was estimated to have reached 2 trillion yuan (US$304 billion) by the end of 2010. The Chinese Railways Ministry is required to pay interest of up to 120 billion yuan (US$ 18.26 billion) each year. Apparently the railway system is currently only able to pay interest on the debt, and is unable to repay any of debt itself.
One comment reported by Reuters may strike a chord: “Professor Zhao cited the line from eastern Henan province’s capital Zhengzhou to the Shaanxi city of Xi’an as the perfect example of a white elephant rail project.”It is basically empty,” he said. In the first six months after its launch in February 2010, the railway reported 1.98 million passengers. It was designed for 37 million a year.”
Following some safety concerns, the speed of the trains has been reduced from 380 kph to 300 kph.
In February this year, Florida’s governor Rick Scott turned down a $2bn government incentive to develop a high speed rail link from Tampa to Orlando. He believed passenger numbers to be overestimated, and that the state would have to pick up the bill for subsidies because the line would be unable to pay for itself. His decision follows very similar decisions made in Ohio and Winsconsin.
We only have the experience of HS1 to draw on. Some may remember that 18 Javelin carriages were taken out of service four months after the line was completed in 2009 due to low passenger usage. In April 2011 a Telegraph reporter noted there were more than 200 empty seats on a peak time train leaving St Pancras at 6:10pm. Off peak usage was described as 90% empty.
What can we learn from this? There is a tendency to overestimate demand for high speed rail lines. Aalborg University found that nine out of ten rail projects overestimated passenger demand, the average overestimation being 106%. Serious financial difficulties have been experienced on some of the more recently constructed high speed lines. A government with a high level of debt finds it prudent to suspend further investment in a high speed rail project.