High-Speed Rail Operator Profit

I intended to write a post debunking the myth that high-speed lines do not pay for themselves, but Paulus Magnus has written one instead. He posts the revenue and net income figures for the mainland JRs, SNCF, DB, and RENFE. All but RENFE have positive net income, and even RENFE has positive EBIT.

The only thing I want to add is that there’s a myth going around that the Shinkansen isn’t really profitable because the government wiped its construction debt. While it’s true that the government wiped JNR’s debt, that debt was predominantly operating losses before restructuring; since JNR got few subsidies, it had to keep borrowing to cover its losses: see pages 46 and 88 on this PDF. Construction was only one eighth of the debt burden, and that part the JRs did have to pay. In other words, the government really just subsidize JNR’s operating losses from its inefficient pre-restructuring days.


  1. Stephen Smith

    Are we talking operating profits or total profits? With regards to the Shinkansen it looks like you’re talking about overall profits, but some of the figures that Paulus gives seem like they’re only operating profits.

    • BruceMcF

      operating surpluses ~ having ‘operating profits’ is contingent on that operating surplus being inside a distinct organization, like a trucking company running losses on a full-capital-basis can have an operating profit if enough of their ROW capital costs are covered by cross-subsidy and direct subsidy.

    • Alon Levy

      It’s total profits – that’s why Paulus talks about EBITDA (i.e. operating profits), EBIT (profits including depreciation but not interest or taxes), and net income (profit that could be distributed in dividends if the company were private). I’m pretty sure Amtrak is the only company in the bunch that excludes depreciation in its headline numbers in order to look more profitable. SNCF actually tries to do the opposite: cry poverty in order to reduce its tax payments.

      • Danny

        Does this take into account the fact that in many countries subsidies are counted as revenue?

        • Alon Levy

          Yes. The mainland JRs do not receive operating subsidies, and have to pay the government back for Shinkansen construction. And SNCF and DB receive no subsidies for intercity rail; they receive subsidies for providing regional service under contract, but they’re no different there from Veolia or any other private operator.

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