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News Flash: Old Stuff Costs a Lot to Run

The owners of any heritage cars or buildings will tell you that it costs a lot to keep them operating in good condition. Well it’s not surprising that the same is true for our trains, some of which were actually museum pieces before Auckland bought them and put them back to work for another 20 years. Well its been about a year since we last heard about it so is time that we were reminded by the NZ Herald. In an article today they say:

Auckland trains are costing almost as much as the region’s buses to run, even though the buses carry almost five times as many passengers.

Council transport chairman Mike Lee is blaming a lack of competition, in which train operator Veolia had its management contract extended for more than two years in March without public notification.

Although the trains made a record of almost 11 million passenger trips in the year to June 30 – compared with 2.5 million when Britomart opened nine years ago – that cost ratepayers and the Government $105.7 million.

It was well up on $87 million for 9.9 million passengers the year before, after hefty increases in track access charges paid to KiwiRail and in Veolia’s management fee.

Buses cost $110.9 million, but made 54.7 million passenger trips.

Wellington, with a simpler operating system under which KiwiRail runs electric trains as well as maintaining the tracks, spent $73 million on 11.3 million trips.

Now first I agree that $105 million is a huge amount of money and a simple way to think about it would be to divide that by the 11 million trips a year to come up with a pretty high per passenger payment. Of course that amount ignores fares, which probably come to somewhere in the $30-40 million a year range – with that money going directly to Auckland Transport (rather than the situation with most bus contracts where the operator pockets the fares and gets topped up with a subsidy). It also ignores the fact that rail trips are, on average, much much longer than bus trips. This is noted in the article:

Average rail trips of about 16.5km are also longer than bus rides of 6.6km, and transport planners point to the far greater congestion relief given to motorists by trains, as buses share roads with cars and trucks.

The concerning bit is more in relation to where this $105 million goes and the rate of increase we’re seeing. This is best highlighted in the NZ Herald graphic that accompanies the article: 

The really big jumps are in the amount paid to Veolia, which more than doubles between 2010/2011 and 2012/2013. As the actual number of trains in operation hasn’t doubled over this period (in fact it’s hardly increased at all) this is difficult to understand. The other big area of increase relates to track access charges – basically a payment to KiwiRail for one public entity to utilise the network of another public entity. A big money-go-round.

I also presume the big jump in 2011/12 might have something to do with all the train services provided during the World Cup and perhaps the beginning of loan repayments for the new electric trains – even though the operating cost savings they bring are not yet being enjoyed.

And this is the critical thing here. At the moment our trains have a ticketing system from the 1950s that requires a huge number of staff members on each train. It also has trains from the 1960s and the huge maintenance bills that must come with them. But all this is due to change over the next few years: integrated ticketing should result in a far less labour-hungry operating model for the rail system while the new electric trains will be far far cheaper to operate and maintain compared to what we have now. Rail operating costs will look ugly for a couple of years yet, but the real focus should go on ensuring that these costs come down – even while rail services are further improved to become an integral part of the frequent transit network – as a result of electrification and integrated ticketing.

Hopefully we’ll also finally see the rail contract going out to tender and an operator come in that’s far better than Veolia.

19 comments to News Flash: Old Stuff Costs a Lot to Run

  • How on earth did you work out labour costs would go down. It would actually go the other way at even a higher speed.
    More drivers needed for the electrics – 57 EMUs starting with more to come on option
    Train Managers – more needed as the fleet moves from 38 Diesels to 57 EMUs + higher operating frequencies (applies to Drivers too)
    Your Passenger Operators get moved to various roles and might be finding more of them are needed especially in inspector roles
    Then you admin expands for the enlarged fleet, integrated ticketing regime and maybe the CRL if those stations are manned with ticket offices.

    So not expecting much savings in labour there

    As for ops, I say we move from the price of diesel to the price of electricity (go ask AT how much Britomart costs to run with all the jet fans running – it is not cheap) as the major ops cost there. And our current price for power sucks – not withstanding some heavy industry movement.

    So I say costs are not going to move that much as expected…

    • Why would we need train managers? The EMUs are designed for driver only operation.

      Right now every train has what, 2 to 5 staff members on board? Make that one and staffing costs will be much smaller.

      • baw

        If there are no staff members on board to check tickets then fraud will increase. This can be avoided by having ticket checks at all stations and then you can have train manager less trains. But in this case you need to set up fully built stations throughout the network (staff like having toilets and staff rooms for breaks). Add to that the cost of employing one staff member there for 16 hours a day every day.

        Otherwise you raise the statutory penalty for fare evasion on the trains, but until legislation is introduced to enforce this (the current penalty system is based on an honour system) there is no point. In addition you would need a large team of ticket inspectors on each train to enforce this.

        In Ireland the DART rail service has every station doing ticket checks, in Germany they do random ticket checks.

        • TimR

          Random checks work better I think. Tyneside Metro used them, very effective deterrent if they are mobile and unpredictable.

          • Ticket gates at five or six stations would capture one end of 90% of trips. A small team of six or eight ticket inspectors can randomly target suburban sections.

            That would be a lot cheaper than having over a hundred train managers on the payroll just for fare enforcement.

    • Peter M

      What about your drive for rates reductions Ben?

  • The really big jumps are in the amount paid to Veolia, which more than doubles between 2010/2011 and 2012/2013.

    You didn’t read the fine print. The asterisk for the 2010/11 year is only 8 months, for the period covered by the newly formed Auckland Transport. By extrapolation the amount paid to Veolia for the full year is roughly $48m, meaning the increase is 33%, same for the other figures.

    Even so, it isn’t clear what warrants the 33% increase.

  • Matt if I remember rightly the paper edition of the herald the * next to the 2010-2011 figure indicated it was for eight months only, ie only covering the life of Auckland Transport. This morning I was left wondering what the herald were doing using a table that on first glace could be considered to be rather misleading. Unfortunately the online version is even worse, as it omits any explanation at all.

  • Svartmetall

    Can I ask who you would suggest to tender out to if Veolia lost the contract? Would you want Kiwirail to take over completely? Veolia are a company that doesn’t mind their name being dragged through the mud as evidenced by their train franchise in the UK. Other operators would possibly be a bit wary about taking over the Auckland network post-electrification due to its infancy and the number of teething problems they are likely to encounter. A good example of a company that bit off more than it could chew was MTM (Metro Trains Melbourne) which is primarily owned by the MTR Corporation. Thanks to the problems with the network due to Victorian government underinvestment and due to the seething passengers dissatisfied with service from Veolia (Connex), the consortium had great difficulties with the network – and continues to do so. Due to this, a lot of people feel that the MTR good name has been dragged over the coals and that MTR is no longer synonymous with amazing service and slick corporate efficiency. Melbourne is one of the largest contracts in the world for a train operator, so it garnered a lot of interest, by comparison Auckland is more “small-fry”, so for the short to medium term, I wonder if the network would be seen as attractive enough to another company experienced in running urban rail systems.

  • Malcolm M

    Is the high cost of train operation is why so few extra services were added with the last timetable change ?

    Once the EMU’s come into service, it would take perhaps the first 7-10 x 3-car trains to cover the current night and weekend timetable, and perhaps one third of the order would need to be in service before there would be sufficient to cover these periods with decent frequencies. So until the end of 2014 at the earliest (by which time a third of the trains would have been delivered), it would be expensive for AT to increase night and weekend frequencies. By that time, the Veolia contract would have run its course and a new contractor would be keen to show what extra value it can deliver.

    • Peter M

      Yes the real tragedy is that these cost blowouts have delayed previously promised service improvements like 10 minute peak frequencies on the Western Line plus better off peak and weekend frequencies.

      I look forward to the rail system actually forming part of the frequent network.

  • baw

    I appreciate these details on today’s story.

    However it would be nice to see the passenger projections versus cost after electrification has been introduced and the old rail cars sent to the museum.

  • Icebird

    @baw : You could just install gates at every station. Alternatively have random ticket inspectors on trains (by which I mean there would be a ticket inspector on some of the trains some of the time rather than on all the trains all the time as at present).

    • Exactly, that is the system used in most of Central and Eastern Europe and it seems to work OK. Certainly cities like Prague have one of the best PT systems I ever used in Europe.

      Identity cards make it a lot easier as everyone has to carry ID at all times. In New Zealand you would need more police or security back up as the kind of people who dont pay are usually not that happy about being busted. I think the fine would have to be in the range of $50-100.

  • The Westie

    Virgin Trains might be looking for a new home…. Mike L. could give Richard B. a call.

  • bob

    @ Matt L – misleading style Herald headlines, huh? ‘Old Stuff Costs a Lot to Run’, but the Veolia costs jumped by 52% (from $48m to $73m) compared with a 27% rise (from $17.85m to $22.6m) in rolling stock maintenance (extrapolating first 8 month figures to full year, as noted by Joe Hendren and Cam Pitches). So the contract blowout has little or nothing to do with ‘old rolling stock’. Have repair jobs on the DMUs or SAs risen over the last few years? Doesn’t look like it.

    Yes, Svartmetall, take the contract off Veolia and give it to Kiwirail. Keep the staff (who else would they work for?). At least then if Kiwirail price gouge, it will cut the amount taxpayers have to invest to upgrade their operations ;)

    And like baw said – where is the evidence that EMUs will cost less than the current DMUs and SAs? More likely any cost savings will just get soaked up into extra profit for Veolia, which is more reason to ditch them and get it all under Kiwirail, so any profits get locked back into the state, if not AC.

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