What are the per-mile operating costs of a high-speed rail line? And how high do fares need to be to cover those costs?
Those seem like simple metrics to answer. But as the California High-Speed Rail Authority releases its revised 2012 Business Plan, the agency has come under criticism from CC-HSR, a group of
NIMBYs Peninsula residents, who accuse the agency of underestimating the operating costs:
The California High Speed Rail Authority’s claim that its future system would generate hundreds of millions of dollars in surpluses is based on unrealistic assumptions about what it will cost to operate the network, according to the study group, which included former World Bank official William Grindley and Stanford University management professor Alain C. Enthoven.
The rail authority claims it can operate the 510-mile system at a cost of about 10 cents per passenger mile, less than one-fourth of the 40 cents to 50 cents it costs high speed rail operators in other countries, the analysis found.
While there is much to criticize in the plan regarding the phasing and blending, the CC-HSR argument is not valid.
First, let’s review their methodology. CC-HSR extrapolated a 10-cent operating cost per passenger mile based on the the published $81 LA-SF premium fare, and assuming 50% profit. They compared this 10-cents number to a study done in 2007 that reports a per-mile operating cost of around 30-50 cents per mile for European high-speed rail operators.
So according to the CC-HSR, the LA-SF fares are too low, and would have to be at least triple the $81 fare just to break even. Does this argument make sense? Well, let’s look at SNCF fares for Paris-Avignon, which is exactly same distance as LA-SF. This image is a screenshot taken for a random reservation on the SNCF web site:
You are welcome to try your own trip reservations, and do the Euros to Dollars conversion — but the SNCF fares don’t seem all the far off from CHSRA fares. And if it really cost SNCF more than 30 cents/passenger mile, then the Sud-Est wouldn’t be profitable, which even CC-HSR admits is not the case.