Where are all those bankrupt High Speed Rail Countries?   May 9th, 2011

Opinion by Noel T. Braymer

There is nothing new about participants in a debate being selective in the “facts” they use to make their points. Much of the hysteria about High Speed Rail is based on the claim that around the world there are only 2 High Speed Rail routes that have made any money. The basis for this can be traced to a study by the Cato Institute (a libertarian think tank largely funded by Oil interests). The original Tokyo-Osaka Shinkansan line and the Paris-Lyon TGV line are the only 2 so far that have paid off all of their capital costs. That is because it takes time to pay off an investment, these are the oldest HSR lines, and most High Speed Rail services are new. If we used the criteria that a business need pay off all capital costs before being considered “profitable” then we would have few profitable businesses. Lenders are more than happy to lend money as long as an enterprise has the revenue to service the debt. All business depends on credit to function.

So what is the real story? The new Spanish High Speed Rail service (RENFE AVE) despite the economic problems in that county (20% unemployment) posted a PROFIT for 2010. The new Russian High Speed Rail service between Moscow and St. Petersburg is the only profitable passenger rail service in Russia, averaging over 80% occupancy and is expected to pay off all capital cost in 16 years. In Britain all of the rail passenger services are operated by private companies who only stay in business if they make a profit. High Speed in Britain is “only 140 miles per hour tops” in most cases, but these operators are competing to run trains and make money. In Italy there is a privately owned railroad that is building a national high speed rail network which is starting service this year.  It plans to make money competing with the Italian National Railroad. Both the French National Railroad (SNCF) and German National Railroad (DB) make money. Their most profitable services are their high speed rail passenger services. In fact both railroads are competing against each other. DB is pushing very hard to expand their High Speed Rail service to Paris and London from Germany. In Japan the old National JR railroad was split up years ago into 6 regional privately owned railroads each with their segments of  High Speed Rail. All six companies are profitable and making money with High Speed Rail passenger service.
Is any country losing money on High Speed Rail? There is Taiwan. They have a new beautiful national system that is very fast. It gets high ridership and there has been a noticeable decline in local air travel. But it is losing money at least for now. The problem for Taiwan is the politicians did go a bit overboard in construction particularly for some very beautiful new stations. Also there are legal limits to how much the trains can charge passengers. The losses are shrinking but it will be some time if ever before the Taiwan service makes an operating profit. But the point is despite the hysteria that our nation will become destitute subsidizing High Speed Rail service, this hasn’t been the experience of other counties. China has the largest High Speed Rail Program in the world. The former chief of China’s railroads was a con man who sought bragging rights by running the world’s fastest trains. He was recently fired, accused of fraud and accepting bribes while embezzling funds to pay for his many girlfriends. China is now lowering some of the speeds of their trains to save money, and lowering fares which many passengers felt were too high. Construction will go on for more High Speed Rail and even in Communist China the railroad is expected to at least break even.
This entry was posted on Monday, May 9th, 2011 at 1:47 PM and is filed under Editorials.