It is increasingly likely that the California high-speed rail project will not cause much mode shift away from the automobile. In its revised 2009 Business Plan, the agency is proposing an airline pricing model:
High-speed train fares are a key factor in the level of ridership and the revenue forecast. Forecasts for the programmatic EIR/EIS work used fares based on an LA–SF fare at half (50 percent) of the 2005 air fare, and varied proportionally with distance for other trips. This “50 percent” fare level generates relatively large passenger flows without requiring operating subsidy, and creates large public benefits from the public investment.
[…]
Because of the importance of increasing the amount of private sector funding in the construction and procurement of the project, the 83 percent fare scenario was adopted for this business plan.
In other words, the CHSRA wants to generate maximum profits for the PPP private investors, at the expense of taxpayers (who happen to be the biggest investors in the project). The result is nearly 20 million fewer annual trips. A large fraction of these 20 million trips will be taken by automobile on congested highways. Other potential trips simply won’t occur at all, resulting in lower economic activity and mobility.
The Authority justifies this business decision by comparing to other high-speed services:
The 83 percent level is in the middle of a wide range of experience in similar-length markets outside of California, based on prices examined in 2007. At the top end, weekend Acela fares in the New York to Washington market were higher than air fares, and the Japanese Shinkansen fares were 108 percent of air fares for Tokyo-Osaka (322 miles) and 114 percent Tokyo-Hakata (722 miles). London – Paris Eurostar HST fares were 80 percent of air fares, both peak and off-peak. Madrid – Sevilla (333 miles) AVE fares were 71 percent of air, and Paris Lyon (244 miles) 71 percent of air.
It is interesting that the Business Plan mentions Paris-Lyon, because this same debate occurred in France, prior to the opening of Europe’s first high-speed line. SNCF faced a revolt from the public, who did not wish to see government subsidize construction of a premium rail service for the wealthy. As noted in the Wikipedia entry on TGV’s:
Contrary to its earlier fast services, SNCF intended the TGV service for all types of passengers, with the same ticket price as for trains running on the parallel conventional line. To counteract the popular misconception that the TGV would be another premium service for business travellers, SNCF started a major publicity campaign focusing on the speed, frequency, reservation policy, normal price, and broad accessibility of the service. This commitment to a democratised TGV service was further enhanced in the Mitterrand era with the promotional slogan Progress means nothing unless it is shared by all.
BTW, readers are encouraged to play around with rail and air fares on tgv.com and airfrance.com. Is there any evidence for this supposed 71% fare model on Paris-Lyon? Experimental evidence with online bookings indicates a ~20% fare model on the route.
Systemic Failure 