Appraisal of Rail Projects.

This paper reviews the particular characteristics of rail investment projects, taking as a starting point four examples ranging from decisions on individual routes to national rail investment programmes. The motivation for rail investment, and the interdependence of projects are examined, before turning to the identification of base case and options and the measurement of costs and benefits. It is argued that the main problems in rail investment appraisal are not technical ones relating to measuring costs and benefits but are contextual ones relating to the interdependence between rail projects and with decisions in other sectors of the economy. For this reason it is essential that rail projects be appraised with an appropriate planning framework

Rail infrastructure charges in Europe

This paper reviews results of a survey of rail infrastructure charges in Europe, presenting evidence on the structure and level of charges across 23 countries, and on the rationale behind the charges. A wide variety of both structure and level of charges is found, and it appears there is a range of explanations for this, including differences in the nature and mix of rail traffic, differences in the willingness and ability of governments to provide subsidies, and continued lack of consensus on the measurement of the marginal cost of infrastructure use. Recommendations on a sensible structure for rail infrastructure charges are given, although the need for further research is also acknowledged. The diversity of approach poses problems particularly for international rail freight, and there is a strong argument for the development of a specific set of international rail freight tariffs

Rail Privatisation: Financial Implications

INTRODUCTION My aim in this brief paper is not to argue the case for or against privatisation, but rather to comment on the likely financial implications of some of the options. Nevertheless, it does not seem possible to do this without briefly reviewing the advantages and disadvantages that are claimed to flow hm privatisation. I will then consider the existing organisation and financial performance of British Rail. Following this, I will discuss alternative ways of achieving the necessary level of profitability for private investors to be interested in owning and operating the railway system

Rail Policy in the European Community.

This paper begins by considering the reasons why the rail sector has long been considered a problem in European transport policy. These concern both the degree of government intervention and subsidy, which conflicts with the aim of a free international market, and the loss of market share even in those sectors- especially international traffic - in which rail should in principle be able to compete. It explains how the economic structure of rail transport leads to a case for public monopoly provision, with regulation and subsidy, but poses the problem of reconciling this with the need for efficient operation. The history of regulation and control of the rail sector, and of past Community attempts to reform it is then briefly considered before attention is turned to latest Commission proposals on rail policy. These consist essentially of four measures. Two concern the specific need to provide a framework to encourage the development of an international network of high speed passenger and combined freight trains, and the only doubt about these rests on whether they go far enough to exploit the potential of these important and rapidly growing sectors of the rail market. A third comprises a further attempt to clarify the relationship between government and railway, with increased financial autonomy, realistic balance sheets and clearer contractual arrangements regarding subsidies and can be generally welcomed. But the greatest doubts must rest on the proposals concerning separation of the infrastructure from the operations. Whilst the rationale is superficially attractive, many reasons are cited to doubt whether it would be an efficient way of organising railway services in practice. As a way of promoting new entry in specific areas of operation, such as international freight, whilst leaving the bulk of operations in the hands of integrated companies, it has more to commend it, but even here there is reason to doubt whether the results would be better than a vigorous pursuit of joint venture operations

European Railway Comparisons – Company Profiles

This work was undertaken as part of a project sponsored by the British Railways Board entitled `European Railway Comparisons'. The aims of this project are as follows: (i)To compare the current efficiency of European railway operators and examine recent trends at both aggregate and disaggregate levels. (ii)To assess the effects of economies of scale and economies of density on European rail operations. (iii)To make an exploratory assessment of the potential for further disaggregation by market type (InterCity, Commuter, Freight) in order to make detailed comparisons of market shares. The main methods employed to carry out this study are as follows: (i)A review of the literature on railway cost and productivity analysis. Preliminary findings are given in Working Paper 354 and a paper presented to the World Conference on Transport Research (Nash, C.A. and Preston, J.M. (1992) "Assessing the Performance of European Railways"). (ii)Collation of published data for 13 European State Railway Operators. (iii)Face to face interviews with managers at the 13 State Railway companies in order to check our understanding of published data sources, gain more infomation at a disaggregate level (administered by a self completion questionnaire) and obtain an understanding of the institutional background. This report summarises some of the background information that was obtained from the interviews undertaken in the summer of 1992. A company profile is developed for each operator under four main headings: Objectives and Management, Finance, the Freight Market and the Passenger Market

Rail privatisation in Britain - lessons for the rail freight industry

Until 1994, the rail industry in Britain – as in most of Europe – was organised in the form of a single integrated state owned company providing passenger and freight services, and the infrastructure on which they ran, throughout the country. It is true that significant reforms did take place in the 1980s, grouping rail services into a number of sectors (Inter City, London and South East and regional passenger, and trainload, distribution and parcels for freight) with their own objectives, management and accounts (Nash, 1988). Also activities such as hotels and rolling stock manufacture were hived off and privatised. However, by the early 1990s the government was determined to go further and privatise the entire rail network. After much debate about options they determined on a pattern that had come to be seen as the norm for network industries – a regulated monopoly infrastructure provider with competitive operators using it. The infrastructure was placed in the hands of a new infrastructure company, Railtrack, which levied charges to cover its costs and was subsequently privatised. Operations were divided into a number of separate companies and also privatised. However, for a mixture of good and bad reasons they were not willing – at least initially – to leave the question of what passenger services would be provided at what charges up to the market. Thus passenger services were franchised out, with franchise requirements as to minimum levels of service and regulation of some fares. In the case of freight services, the approach of the government had long been that services should be run on commercial principles, with specific subsidies for flows of traffic which would otherwise use road and where this would impose sufficient social costs that the subsidy was justified. This was essentially the approach carried through into privatisation. Thus the policy for freight was to implement complete open access for any licensed train operating company, and to seek to create a number of competing freight operating companies by splitting up and privatising the former freight business of British Rail. This paper will proceed as follows. First, the history of rail freight privatisation in Britain will be charted, sector by sector. It will be seen that there has been relatively little entry into the industry, and the reasons for that will then be explored. The particular issues of the price and availability of track access, and of the availability of government grants will then be discussed. Prospects for the rail freight business in Great Britain are then considered. Finally we draw together some lessons which may be learned for other countries embarking on the privatisation and/or deregulation of rail freight. An appendix presents detailed estimates of trends in rail and road freight in Great Britain

Factors Influencing the Propensity to Make Long Distance Trips by Rail

This paper discusses sane of the major results of the inter-urban rail trip generation models developed during the studentship of J M Rickard under the supervision of Drs C A Nash and A S Fowkes. The trip rates of distinct groups in the population are exmined and possible explanations for the differences discussed. It is found that rail business trip rates are explained by SEG, age and location - other variables such as sex and car ownership do not have an independent effect. Location in a major urban area increases use of rail for business travel by 50-100%, largely at the expense of car. For non-business travel, SEG, age, household type and whether the district has a main-line rail station are the principal determinants of rail trip rates. The highest trip rates are found for students, members of the armed forces and professional employees, particularly those aged 18-24 and living in one person or many adult households. Amongst pensioners, it is those living in 2-pensioner households who travel most: pensioners living alone make few journeys by any mode. Accessibility to a main line rail station appears to raise the use of rail by high-usage SEGs at the expense of car, but for other groups, effect is ambiguous

Review of the Waterways Freight Facilities Grant Scheme

The main purpose of the study has been to review the workings of the Waterways Freight Facilities Grant Scheme (Section 36 Grant). Views of industry and institutions regarding the use of canals for the movement of freight were obtained in a series of interviews, together with information on the workings of the Grant Scheme. Case studies were used to test the effect of possible changes to the Grant Scheme. During the period of the study the ramifications of the progress of the Rail Privatisation Bill through Parliament meant that the situation regarding the Section 8 Grant (the equivalent grant for rail freight facilities) has become somewhat fluid. Major revisions, extending the scheme to cover lorry miles saved on motorways, have been announced; an additional grant to cover track costs is also proposed for rail, but the method of application or assessment is not yet clear. In order to encourage more traffic to switch to using waterway in the medium term, we recommend that: -Section 36 Grants should be extended to cover the high quality road network (including motorways), and that a higher valuation should be placed on the benefits than in the case of Section 8 grants, reflecting the higher benefits of water transport relative to rail. -That a new "waterways operating grant" should be available to operators of waterway craft, also at a higher rate per tonne kilometre than the proposed rail track costs grant. -That the reduction in road accidents and congestion be taken into account when valuing the benefits of inland waterway transport. Even with these revisions, however, we conclude the Section 36 grants will have a modest effect, in general only diverting traffic to water where this does not involve transhipment. Also, few waterway flows offer the sort of long run contracts necessary to justify a grant. As a result, we conclude that, Section 36 Grants will have limited success in satisfying the Department of Transport's overall objective of causing goods to be moved by inland waterway as opposed to road "where this would be in the interest of any locality or of some or all of its inhabitants". In our view a more successful method of achieving the Department's objective in the long term would be to encourage firms receiving or despatching commodities suitable for carriage by inland waterway to locate in premises alongside the canal network. This is even more important where the company is engaged in the import of raw materials. Such a method would require changes to the guidelines on planning and industrial development

Competition in Rail Transport: A New Opportunity for Railways?

Throughout Europe, and in many other parts of the world, railways are suffering from declining market share and deteriorating financial performance; consequently there is renewed interest in deregulation and the introduction of competition into rail transport as a way of improving performance. An EC Directive now provides for access to rail infrastructure for third parties to run their own international trains in some circumstances. After a long debate, the British Government in July 1992 published a White Paper (New Opportunities for the Railways) which aimed to go much further. It would both open access to the infrastructure for any licensed operator and franchise out existing passenger services via a competitive bidding process; all freight services would be privatised outright. Draft legislation to implement these proposals, as well as a string of consultation documents on details have also been published, and an Interim Report from the Select Committee of Members of Parliament examining the proposals has appeared. This paper review the debate that is currently raging over the British government proposals. It considers the potential for innovation and cost savings which they offer, as well as the problems of increased transactions costs, lack of competitive bidding and other potential inefficiencies of the new system. The key issue of the charging regime for access to the infrastructure is also addressed. It is concluded that competition in the provision of freight services is desirable, but that passenger services present many more problems, and that the proposals need modification if they are to meet their objectives

Some Guidelines for Evaluating New Local Rail Stations

This paper, based on vark undertaken as part of a Ph.D. studentship on new local rail staticms in West Yorkshire, seeks to offer guidelines for identifying and appraising new local rail station sites, and recommendations for further work on the subject. It outlines three methods of forecasting demand at such stations - a simple method based on mean trip rates at certain distance bands for similar existing new stations, an aggregate regression model, and a combination of a disaggregate mode split model for the journey to work with an aggregate non-work journey model. Whilst the latter models do provide greater accuracy, it is suggested that a simple trip-rate model may be adequate for one-off low-cost stations, although packages of stations and train service alterations need more thorough investigation. On this basis, it is suggested that for new stations with the characteristics of those in West Yorkshire (i.e. suburban stations in residential areas a few miles from major employment centres), sites which are free of significant engineering problems, with good road access, close to an existing bridge or crossing and with a population of at least 2,000 within 800 metres of the site, should be sought. On single track rural branch lines, new stations may be justified at much lower population levels