The Five Year Curve

One of the best train bloggers out there is DoDo, and over at the European Tribune he offers one of his best pieces yet - an examination of the AVE system's ridership growth and a comparison to other HSR systems around the world. He draws two key conclusions, which I'll explore in some detail below (though you need to read his full post to get the full picture), the first of which is:

What should be striking is that traffic seems to reach its full potential in at least five years. (Air/rail market share data would have been more appropriate for this purpose, but it's harder to come by, and you get the picture.)...

The lesson from this: high-speed rail (and not just high-speed) is a long-term investment. Do not insist on instant success -- but do expect a permanent change in travel patterns.

In short, if the LA-SF route is fully opened around 2018, then we will not see the "full potential" reached until 2023. However, we WILL see a permanent long-term shift in how Californians get around this state, which is of course the core goal here.

DoDo uses as his model the AVE line from Madrid to Barcelona, which was finally completed about a year ago. It replaced the "Puente Aéreo" - the "air bridge" between Madrid-Barajas and Barcelona-El Prat that was the world's busiest air route by flights. The "Puente AVE" as DoDo calls it has eaten heavily into the Puente Aéreo, to the point where the AVE trains now take about 50% of the market share of Madrid-Barcelona travelers.

But as DoDo also notes, the Madrid-Barcelona AVE, despite those impressive gains in modal share, has yet to meet ridership expectations:

RENFE missed its own expectation for the entire line by almost 250,000 -- and that for the Madrid-Barcelona relation alone by 300,000. Only the last few months of Spanish intercity traffic were affected by the economic crisis, so there is something else at play here. I criticised high ticket prices a year ago, and I find that this has indeed become a theme in the Spanish media over the past year. Even at the anniversary press conference, where new airline-style last-minute discounts were announced.

What explains this? To DoDo the answer is obvious: "all potential customers won't try out a new offer instantly - you have to wait for people to discover that the new alternative is better."

This leads to DoDo's second key conclusion - that there are certain bad decisions that typically get made by HSR builders and governments in response to the slow start (though some of these bad decisions are made in the design and construction phase):

It happens actually quite often that a major new rail project gets off to a really bad start, generating bad publicity -- and then turns into a solid mainstay of the transport system a few years later (with less media coverage). To sum up the reasons:

1. an expectation that people will change travel patterns instantly;



2. financing (e.g. interest rates and period of maturity) and rosy projections themselves are tailored for short-term expectations on profitability;



3. after diverse construction delays, (especially high-speed) lines are often opened half-finished (missing sections, stations, local transit connections, trains, signalling), and thus can't realise their full potential instantly



4. when the builders become nervous about their ridership projections (be it due to cost overruns or 'half-finished' openings as per above), they tend to bet on passengers accepting higher ticket prices -- which usually doesn't work out.

I can all too easily envision some or all of these coming true in California. And though DoDo explains how SNCF successfully handled some of these issues in the early 1980s, under the Socialist leadership of François Mitterand (bringing down ticket prices to encourage long-term ridership growth), I think that at this stage in the process we have the opportunity to avoid some of these problems.

First, we cannot expect ridership goals to be met immediately. DoDo's analysis shows they will be met but not until around five years have passed. This will produce hackles from the usual HSR deniers (who will still be with us in ten years' time) - the Wendell Coxes and Martin Engels who will say that "omg you haven't met ridership - the HSR train is a boondoggle! kill all remaining extension plans!" We must resist them patiently but firmly and let the project steadily attract riders.

Second, we need to oversee the financing process to ensure that the project's finances are not going to be imperiled by expectations of high ridership out the gate. This is a long-term project; its financing should be long-term as well. This is one reason I am skeptical of some of the more broad public-private proposals for how to fund the train. Government has the luxury of waiting for the system to mature and work properly; the private sector instead demands immediate profits at the expense of long-term planning (and we see how well THAT worked out).

Third, construction delays. I have always said that we are likely to see both delays and cost overruns, but that we can and should work to ensure the are minimal. Sometimes the two are linked - Peninsula NIMBYs are inherently arguing that it is OK to both make the HSR project more delayed and more expensive to suit their demands. We may well see similar problems on other sections of the route. We cannot let these delays compromise the overall system. The route has always been intended to be opened in stages, as was BART, but the finances, operation, and political support for the project cannot be made dependent on that staging. Further, the stages should be opened for practical reasons, and not in an effort to cut corners or costs. Again the long-term vision for the system must be kept in mind at all times.

Fourth, fares. Whether the $55 fare from SF-LA is possible even in 2018 dollars is an open question. But the system cannot raise ticket prices to try and cover financial shortfalls or cost overruns if they are to build a long-term ridership base.

It is entirely possible that ten years from now the short-sighted short-term political and economic worldview that helped create the present economic mess will have been replaced with a renewed emphasis on long-term planning and infrastructure, and that Californians will be willing to wait a few years for HSR ridership to rise to expectations.

But I wouldn't bet on it. Instead we are going to have to continue to fight to ensure that HSR is built the right way, the proper way, without compromising for people who put all sorts of petty and small concerns above the HSR project itself.