Here's what high speed rail does for airfares

Discussion in 'General Discussion | Travel' started by Infinite1K, Jul 9, 2011.  |  Print Topic

  1. Infinite1K
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    Infinite1K Silver Member

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    Would love to see high speed rail "take off" in the US (and I'm not talking about the pseudo service that Amtrak runs between Boston-NYC-Philly-DC) and how it can help improve the service and prices that airlines charge.

    Here's what high speed rail does for airfares
     
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  2. gleff
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    gleff Co-founder

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    High speed rail potentially works between relatively short-haul (few hundred miles) densely populated markets. There are only a handful of those. It's a major capital investment that's also pretty fixed in place, cities may die out but the track remains, look at what's become of STL and DTW as origination/destination markets, check out the shuttered gates at STL and also PIT. And then imagine what guessing wrong about where to lay track would mean to wasted resources. Airports are one thing, the fixed track is far worse. At least planes can be redeployed to other routes. So it's not just a limited strategy, it's an expensive, high-risk one.

    China's rail projects aren't just about 'competition' but about 'overcapacity', there has been incredibly massive infrastructure investment the past few years as the government overheats the economy to keep folks working, there's lots of malinvestment going on there, prices may drop but that doesn't mean it's a good decision to build high speed rail.

    As far as the effect on airfares, I suspect the answer is 'it depends'. Acela hasn't really brought down airfares on the DCA-LGA routes. Flying to NYC 9 days ago (same-day in and out, purchasing two days prior) asking price on flights was > $700. A couple of tricks to drop that in half, but these weren't full flights and there was certainly a rail alternative.
     
  3. NYBanker
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    NYBanker Gold Member

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    HSR is a very frustrating topic.

    In the United States, there are a number of barriers that make HSR essentially impossible to implement.

    • Destination infrastructure. We have very few cities which have sufficient infrastructure to get around without a car. Most of our cities are really metropolitan areas. (There are about 50 metro areas with over 1mm people in the US.) Only in a very small number could you get by without a car. This is an advantage that many European countries have over us; that you could turn up in the CBD and have suitable bus/tram/train options to get to many/most business or social destinations. Being able to deliver the rail pax to a well connected city center is critical for rail to have an advantage.
    • Rights of way. HSR needs relatively straight track. The ability to buy new rights of way is challenged (though possible), but would require hundreds of millions, if not billions, of forced property acquisitions to create channels for the trains. Indeed, in the one market where semi-HSR works in the US (the Northeast Corridor), due to track issues, the trains operate at top speed for less than 10% of the journey. (Often I see the Acela sets traveling along side me at the same speed, or slower, than the 35 year old Metro North rolling stock that I ride in.)
    • Cost to operate. Very few railways in the world generate enough fare revenue to cover operations. Forget about return of capital (to repay the money it took to build), most don't generate enough revenue to cover day to day operations. Indeed, Metro North (my commuter train) has several hundred thousand passengers each day, and despite a one way-ticket to GCT from Stamford CT being $12.25 ($17 if bought on board the train), roughly 50% of all MTA bridge and tunnel revenue is transferred to the rail divisions (subway, metro north and lirr) to cover opex.

    I run an infrastructure private equity fund and we have looked at this every way possible. I'll go so far as to say in the next 50 years, HSR will not be feasible in the United States (commercially backed or government subsidized). What we do like, and do in fact do (in Europe), is own relatively high speed train sets and lease them to governments and other companies that take the operational risks. That has delivered some decent returns for our fund.

    As to China, remember that you are looking at what is at least a partially controlled economy. Most of the air carriers, and I believe all of the rail lines, are State Owned Enterprises (SOEs). So, before assessing any data, you need to recognize that you're looking at data from affiliated entities. A better study on air fares would be in France, where new HSR lines have opened periodically over the past 20 years. That would be a more market-based comparison.
     
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  4. Seacarl
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    Seacarl Gold Member

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    Gary, that's a very defeatist analysis. Look at most every country in Europe and certainly Japan and they clearly demonstrate that high speed rail can play an important role and can complement air travel. Your arguments against fixed infrastructure investments could be made to apply to airports and highways, too. Sure seems like the airport investments in places like CIN, PIT & STL with their shuttered concourses are a waste too. And we keep maintaining Detroit's highways. There are lots of corridors of 250-500 miles in the USA where high speed rail can play a role. Especially in areas where there are a string of cities that are served by commuter aircraft from a hub, a rail line connected to an airport can perform a connecting function. It certainly works in Zurich, Geneva, Frankfurt, and Paris, and to an extent even today at Newark.
     
  5. Seacarl
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    Seacarl Gold Member

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    There are definitely massive barriers to development of rail in USA, and it is unlikely that private enterprise will find a way to build and operate high speed rail without significant public subsidy. Of course air travel and road travel has all kinds of subsidy built into it today, too, and most roads and airports have been built by the government without private participation.
    There do seems to be some factors that make operation of trains in the USA much more expensive than other countries. I don't know if that is FRA regulations or union rules, but countries like France, Germany, Switzerland, and Japan are able to operate their trains much more cost-effectively, and have also shown a great deal of creativity in how they structure their services. Since you mention the NY area - it is nuts that there isn't better cooperation between NJ Transit and the LIRR, for example, which could make the effort to have run-through operations, including for example between Newark and Jamaica (to offer an air travel-related suggestion.) But no politician, union or administrator seems to care. And it seems to be not just operation that is more expensive in USA, but construction also.
    The other factors not mentioned are land use and building codes that have made the USA extremely car centric. Eventually rising energy costs are going to force some changes in our built environment. In addition to permitting a less energy intensive life, building our towns and cities to encourage more walking and biking has public health benefits. It will be a long evolution but over time the USA is likely to become more rail accessible as has been true of most other countries as they developed.
     
  6. spaced2
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    My wish list includes a maglev between new york and chicago. i think shanghai's goes to 250mph so travel time could be under 4 hours - definitely beats dealing with flying into ord and getting from there into the city...
     
  7. Seacarl
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    Seacarl Gold Member

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    NY - Chicago is probably beyond the range of the sweet spot for HSR. But whatever route would be used would create a dozen or more connecting pairs. E.g. NY-PHL-Harrisburg-PIT-CIN-IND-CHI would offer a lot of city pairs beyond just the end points.

    I tend to think maglev has proven not to be economically viable. The Pudong airport line was supposed to be maglev's demonstration project to then win some intercity routes in China. Instead China has chosen steel wheel, which is capable of 250 mph operation. Though I have read reports that due to cheating and poor quality control, substandard concrete was used extensively in the construction in China - but that's not a fundamental characteristic of rail, but rather how construction was supervised.
     
  8. Infinite1K
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    Infinite1K Silver Member

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    I agree with you that this is not an easy endeavor (otherwise there would be tracks and trains in place already or well under way).

    But I do think it is an investment that is worthwhile, specially in targeted areas like San Francisco - Los Angeles or Dallas-Houston, Miami-Orlando-Tampa, Minneapolis-Chicago-Detroit.

    And I don't count Acela as being a real HSR project and that is why it hasn't impacted competition/fares on the DCA-LGA-BOS routes.
     
  9. RichardInSF
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    The chart in the article shows Shanghai-Beijing economy class fares as $350 before the train started. Even if that's round trip, I've never paid that. It is a two hour flight. I think I typically paid about $100 each way max, although it's been a while since I've been on this route.

    I too think that maglev wouldn't be economic for longer distances. The cost of the short run from Pudong airport to (basically) nowhere was extremely high.
     

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