Fare Regulations

Public transportation companies may have the ability to raise fares arbitrarily based on market demands, for examples British buses outside London and American freight railroads. Or they may be subject to regulations capping the fare, for example Japanese railroads. Mixed systems exist as well, such as British rail fares. In Britain, the privatized, mostly deregulated approach is so commonly accepted that a Conservative recently called Labour dangerous socialists for proposing municipalizing bus systems, as in such socialist states as the US, Japan, Germany, etc. In reality, in the case of rail specifically (and perhaps buses as well), there’s a theoretical case with some empirical backing for why reasonable fare caps as in Japan can lead to more investment and more capacity, whereas wholly unregulated fares lead to hoarding and capacity cuts to create shortages.

The model

I’m stealing the economic model for this post from Paul Krugman, who used it to explain the California blackouts of 2000-1. The demand curve is inelastic: the demand is 1,000 units at $20/unit, decreasing to 900 units at $1,000/unit, at which point the curve goes flat. The supply curve is a constant $20/unit, but the market is oligopolistic (say, there are very high barriers to entry because building your own power plant is hard), and there are 5 producers, each with 200 units. If the price is regulated at $20/unit, each producer will supply 200 units. If the price is unregulated, then each producer alone gets an incentive to hold back production, since 100*1000 > 200*20, and then production will be curtailed to 900 units.

The model is simplified in a number of ways: real supply curves slope up; the part about demand going flat at 900 units is unrealistic and exists purely to avoid dealing with optimizing where at 800-something units each producer has an incentive to go back to producing more; capacity constraints involve escalating production costs rather than a God-given restriction on the number of suppliers and their capacity. But with all these caveats, it fits markets that have the following characteristics:

  • There are steep barriers to entry, for example if large amounts of capital are required to enter (to build a power plant, set up a rail operating company, etc.).
  • Demand is highly inelastic.
  • Adding new capacity is expensive.

The issue of capacity

In rail, we can start plugging real numbers for both demand elasticity and the cost of new capacity.

In the above model the price elasticity is -0.0244 in the 900-1,000 units range, which is ridiculously inelastic, on purpose so as to highlight how the model works. TCRP Report 95 says the elasticity in a number of large cities studied is about -0.18, and a VTPI review in a mixture of cities and circumstances (peak vs. off-peak, bus vs. rail, etc.) asserts a short-term average of about -0.3. Unregulated fares will lead to supply reductions if the elasticity times the number of producers is more than -1 (or less than 1 if you flip signs); if no producer has <18% of the market, there will be supply restrictions under unregulated fares, just as a monopolist will hold back supply and raise fares if demand is inelastic.

The cost of new capacity of course depends on the line and the characteristics of competition between different railroads. It’s higher in Japan, where separate railroads run their own lines and trains, than in Britain, where different companies franchise to run trains on the same tracks. But even in Britain, getting a franchise requires a commitment to running service for many years. The significance of this is that the long-run public transport ridership elasticity with respect to fare is more elastic (VTPI recommends a range of -0.6 to -0.9), with a few estimates even going below -1.

For the purposes of this section, we do not distinguish capital from operating costs. Thus, the cost of new capacity is not given in units of capital costs, but in units of operating costs: if increasing service by 1% raises operating expenses by 2% counting the extra investment required, then we say the supply elasticity is 2. Note that supply curves slope up so the elasticity is always positive, but the elasticity can be below 1, for example if economies of scale are more important than the need to invest in new capacity.

Set the following variables: u is quantity of service, r is total revenue (thus, fare is r/u), c is total costs. The railroad is assumed profitable, so r > c. We are interested in the change in profit based on quantity of service, i.e.

\frac{dr}{du} - \frac{dc}{du}.

The important thing to note is that price controls keep dr/du higher in an oligopoly (but not in a competitive environment, like housing – a single landlord can’t meaningfully create a housing shortage). With price controls, we get

\frac{dr}{du} = \frac{r}{u} = \mbox{constant fare}

whereas without price controls, with elasticity e_{d} < 0, we get

\frac{dr}{du} = \frac{r}{u} + \frac{r}{ue_{d}} = \frac{r}{u}(1 + 1/e_{d}).

And likewise, with supply elasticity e_{s} > 0, we get

\frac{dc}{du} = \frac{c}{ue_{s}}.

Note, moreover, that price controls as construed in Japan let operating companies recover profits, letting them raise prices if they invest in more capacity, so that dr/du is actually higher than r/u.

The real world

I do not know to what extent the lack of fare regulation on many British trains contributes to capacity shortages. However, there is some evidence that the same situation is holding back investment in the United States, on Amtrak. Amtrak is a monopolist facing some fare regulations, for example congressional rules limiting the spread between the lowest and highest fares on a given train, but within its ability to set its own capacity in the medium run, it has relatively free hand, and in fact a strong incentive to maximize fares, in order to subsidize money-losing trains outside the Northeast Corridor.

Amtrak generally runs the trains it has on the Northeast Corridor, without explicitly holding back on capacity. However, this is in an environment with very low utilization rates. There are 20 Acela trainsets, but only 16 run in service at a given time, giving them the moniker “hangar queens.” There is no real interest within Amtrak at raising speed just enough to be able to run consistent service intervals, for example hourly with two trainsets coupled to form a 16-car train south of New York. Nor is there any interest in making small investments to permit such long trainsets to run – most Acela stops from New York to the south have platforms long or almost long enough for such trains, but the rest need to be lengthened, within right-of-way so that the cost is positive but low.

In the future, capacity cliffs may prove serious enough to stymie American passenger rail development. Right now the main obstacle are Amtrak itself and obstructive commuter railroads such as Metro-North, but assuming competent, profit-maximizing investment plans, it is not so expensive to invest in capacity and speed so as to permit around 4 long high-speed trains per hour north of New York (or even New Haven) and 6 south of it. But then the next few trains per hour require further bypasses, for example four-tracking most of the Providence Line. High supply elasticity – let’s say around 2 – is plausible. Then eventually a dedicated pathway to intercity trains through New York becomes necessary, raising supply elasticity even higher. In an environment with uncapped, profit-maximizing fares, a rational Amtrak management may well just keep what it has and jack up prices rather than build more capacity.


  1. Herbert

    What do you think of DB’s making the “Flexpreis” higher for trays with higher demand? Doesn’t that defeat the purpose of an “anytime fare”?

    • Alon Levy

      My take on any kind of airline-style fare bucket system is that SNCF hates its customers and so do the airlines, and for years I liked how DB did not do that.

      • Josh

        Exactly the opposite. Price discrimination is a way for a company to maintain high average revenue while increasing supply. In an ideal case of perfect price discrimination, there is no incentive for a monopolist to reduce supply.

        • Alon Levy

          Supply of what? Under a regime of price discrimination it’s plausible that everyone’s service gets worse. For example, Amtrak price-discriminates by branding the Acela as a higher class of service than the Regional. Result: passengers in both segments get half the frequency.

          • Eric

            It would be interesting to have a post on cases where the free market fails in transit. Maintaining an optimum frequency would seem to be the most obvious and common failure.

          • adirondacker12800

            They are both free to choose between either. Being able to say “I took bushiness class” keeps the assholes out of coach.

          • josh

            Supply of trains. I am not sure what you are referring to as Acela already costs more than a regional train. They can add 50% more trains and fill them by offering cheap fares to those who book weeks in advance, while maintaing high fairs for short-notice business travelers.

          • Alon Levy

            It costs a lot more to ride, check Amtrak’s site sometime, or the monthly reports with revenue figures. And yes, Amtrak can yield-manage, and does as far as possible under federal law, as it hates its customers.

          • Josh

            I don’t know where you are getting this negative attitude towards price discrimination from. Economists love it. Even very competitive airline routes have it, and it generally reduces inequality.

          • Alon Levy

            Very competitive for an airline route is still an oligopoly, and “it creates a mess in which people are forced to change their behavior to appear more price-sensitive” is not really what I think of when I think about inequality.

          • adirondacker12800

            If prices aren’t higher when there is a lot of demand, how do you ration the seats?

          • Alon Levy

            You ration them by price. But that’s not the yield management Amtrak is doing. Amtrak isn’t statically increasing prices at times it knows in advance are busy, like weekends and holidays. It’s dynamically pricing seats so that the same seat on the same train may be sold at different rates depending on how much an algo thinks you are willing to pay, an algo that’s probably about as good at its job as the algos that tell tech companies not to hire women.

          • adirondacker12800

            Book early, get a lower price, isn’t all that difficult to understand.

          • Alon Levy

            Okay, so now Amtrak is offering me less flexible travel options for higher prices than (say) the Shinkansen. Bastante.

          • SB

            I betting that tickets are more expensive because of Amtrak itself and not yield management.

          • Alon Levy

            That’s 100% Amtrak, but it’s telling that with yield management, the absolute cheapest tickets cost more per km than the average European HSR ticket and not much less than the average Shinkansen ticket.

          • electricangel

            The cheapest I’ve paid between NY-BOS is $75 on Acela. That’s maybe $.22 per KM. Now, it’s possible to buy Amtrak vouchers off eBay for 50% of face value, making the all-in cost only $37.50, but I haven’t seen a discount voucher on eBay for a while. It regularly takes me 3:30 to traverse that 350KM distance, a measly 100km/hr.

          • adirondacker12800

            If you want to be flexible that’s gonna cost money. Boohoo.

          • Alon Levy

            But flexibility doesn’t actually cost more money to provide. It’s just bullshit revenue extraction, same as when Spirit charges you extra for both a carry-on or a checked bag.

          • adirondacker12800

            Yes it does, otherwise everybody shows up at 4:50 and wants to get on a train. Which then sits in the yard 20 hours a day.

  2. Jack

    I’m not sure how well this model works for the UK, as service levels are set I franchise negotiations, not independently by operators. Interesting stuff though

  3. Florian DelGray

    It’s nice to see some math. Say p is profit. You provide an expression for dp/du and argue that this will be higher (so stay positive longer) sometimes with price controls. Something’s not quite right though, because your expression under price controls is always higher. Where does “elasticity times the number of producers” come in?

    In particular, dr/du = r/u = constant price will be higher with a higher price limit, implying that an infinitely high price limit is best.

    • Alon Levy

      Yeah, so there are two complications here that I didn’t state explicitly: the price control needs to be binding, i.e. at a lower rate than market-clearing rate at existing capacity; and the companies need to be profitable, i.e. the price control should be such that r > c. In a competitive market that has low barriers to entry, like food or clothing or (in a liberally-zoned city) housing, producers add new capacity without price controls until the profit rate falls to breakeven rates, which means that any price controls are either toothless or profit-destroying.

      This explanation also makes a specific prediction regarding rent control: in a tightly zoned market, such that landlords have high profits, rent control should not reduce housing supply. This as far as I can tell is borne in housing economics research, regarding for example California.

  4. adirondacker12800

    There is no real interest within Amtrak at raising speed just enough to be able to run consistent service intervals, for example hourly with two trainsets coupled to form a 16-car train south of New York.

    Um um, they, um, run hourly now. The Acela leaves at :00 and the Regional leaves at :05. Ish. On weekdays. It’s not unusual for the 5:00 and 6:00 PM trains to sell out. The forty-ish percent increase in seats the new trains will enable might make that less usual. Instead of 16 cars once an hour, 8 cars every half hour would even out the crowds at the stations. … I see there is a non-stop, southbound at 6:35 AM and a northbound at 4:35 PM I wonder how that is working out.

    • Alon Levy

      Yeah, consistently running every half hour south of New York is also plausible, provided they can squeeze the rush hour slot through the tunnels.

      • adirondacker12800

        Um, um, they do now…. to Philadelphia anyway. If they had the equipment they could finagle that some other way but they don’t.

        • Alon Levy

          If you include Regionals and Keystones, yes. But my point is that Amtrak could find ways to improve equipment utilization (though to be honest, the lowest-hanging fruit is increasing cant and cant deficiency on the New Haven Line, and there the obstacle is CDOT). It’s not really expensive, but it requires small amounts of spending (I may blog about turnout design soon) and a lot of bureaucratic annoyance with commuter railroads.

          • adirondacker12800

            Um, um, Metro North is north of New York. Along with improving the geometry you have to convince Connecticut that maintaining the track for Class 5 or 6 is worth the effort too.
            Increasing speeds on the local tracks or putting in island platforms or both between New York ad Philadelphia would speed the Kodama class of NEC trains. New Brunswick, Princeton Junction and Cornwells Heights could scare up enough demand for once an hour. Squint at the satellite images of Metropark, they have reserved space for island platforms and perhaps even six tracks.

          • Alon Levy

            The cost of these track repairs is approximately zero, using tools (like track renewal trains) that Metro-North execs seem unaware of the existence of judging by their wanton ignorance of what happens on the other side of the Pond.

          • Nilo

            What about rail engineers for major contractors who seem convinced the United States has the world’s best trains. They don’t seem very aware of what’s happening in Europe or Asia either.

          • adirondacker12800

            Um, we’ve been over that the automated track maintenance machines exist in North America.

          • adirondacker12800

            And if there wasn’t a cost difference between Class 4 and Class 5 or Class 6 they’d maintain the tracks for Class 5 in Connecticut like they do in New York. Which is why trains get up to 90 MPH in New York but not in Connecticut. And New York would have more Class 6 so the trains could go faster than 90 in the places where the tracks are straight enough.

          • Alon Levy

            There is a cost difference, it’s just very small using modern methods that the sort of people who say with great confidence that there are no $2.5 million/car regional trains in Europe are unaware of.

          • adirondacker12800

            How small? The diesel-dual mode trains could go faster. But they don’t spend the money. Hmm?

  5. electricangel

    Amtrak has a monopoly on the NE corridor, and its fares reflect that. Moreover, Alon, its speeds reflect that. If you had high speed rail as in China, you could traverse NY-Boston in 2 hours, making extreme commutes from Providence to NYC possible.

    What’s the solution? I’d love to see your recommendation take effect.

      • adirondacker12800

        Via Long Island serves more than twice as many people and the state, in one agency or another, already owns a very straight ROW.

        • Onux

          Via Long Island also involves a very long and expensive crossing of LI Sound. Not to mention a huge portion of the “twice as many people” are inside NYC and thus have relatively direct NEC access now. Plus ROW ownership didn’t help the LIRR get their third track to Hicksville. I’m sure two HSR tracks will encounter no resistance….

          I would absolutely argue for intercity service to LI given the population, but as a branch off the NEC continuing direct to DC. Ideally it would go through downtown and Brooklyn, bringing intercity service to the nation’s fourth largest CBD. Fulton St-Atlantic Term.-Jamaica-Mineola-Hicksville-Ronkonkoma seems right.

          • adirondacker12800

            It gives Long Islanders a way to get to New England without going through Manhattan. If you are going to send HSR all the way out to Ronkonkoma it’s not that much farther to Shoreham. Expensive causeways across Long Island Sound are cheaper than tunneling through Westchester and Fairfield counties. And once there is HSR between Springfield and Albany, a lot of them a faster trip to Albany and beyond.

          • Onux

            The majority (60%) of Long Islanders are so close to Manhattan (Brooklyn and Queens) that there is no practical penalty for them to route to N. England via the current NEC. Another 17% are in Nassau approx. west of Hicksville, so for 3/4 of the market there is no need to get to Ronkonkoma, let alone Shoreham.

            The causeway would not just be expensive, but very expensive. Shoreham to New Haven is 24 miles, through an active seaway, over water up to 130’ deep. A bridge with ten+ story columns, able to withstand northeasters with clearance for large cargo ships does not cheap construction make.

            In contrast, no tunneling is required in Westchester or Fairfield. Alon has shown that the current NEC route can support HSR with only appropriate straightening, minor bypasses, track and infrastructure improvements (N. Haven to Providence excepted with a new I-95 route).

          • adirondacker12800

            Causeways are a lot cheaper than tunnels. 2.8 million people live in Nassau and Suffolk, 3.1 million live in Connecticut. The ones who don’t live in Fairfield County don’t care if the train goes through Stamford or Farmingdale when they want to get to Philadelphia and beyond.

          • The Economist

            Causeways are a lot cheaper, but when was the last time one exceeding a mile built in the US? Environmental regulations pretty much stymie anything on that scale. Over 24 or so miles there will be one species of animal, fish, bug or whatever, that needs protecting and that will be enough to tank the whole project. Tunnels are the only option, but they are expensive and will get even more so.

          • adirondacker12800

            Chesapeake Bay Bridge Tunnel when regulations were more or less the same as they are now.

          • michaelrjames

            I’m somewhat sympathetic to your causeway scheme. As you say the catchment populations are not trivial and many giant bridges, often involving a mix of causeway, tunnel and bridge (eg. “The Bridge”, ie.  Øresund Bridge connecting Denmark to Sweden, and Norway) have been built with lesser justifications re population. I doubt the numbers for UK’s Humber bridge (which IIRC was the world’s biggest suspension bridge when it was built in the 80s) are any better than this LI-Connecticut bridge. As a road (+ rail) bridge, surely it is a logical continuation of the Verrazano Narrows bridge?

            As for environmental obstructionists, the solution is obvious, innit? Make it part of GND with a big Tidal Power generator as part of that causeway system. Could also incorporate PHES (Pumped Hydro Energy Storage) which is a giant battery to store all that off-peak solar + wind (+nuclear?) energy. Almost a freebie …
            And just the HSR component is Green and very Thunbergian, non? Could probably convince AOC to support it.

          • michaelrjames

            I wrote: “PHES (Pumped Hydro Energy Storage) which is a giant battery to store all that off-peak solar + wind (+nuclear?) energy.”

            Obviously I meant PHES would store that peak low-carbon power (when it is produced in excess to the grid’s need) to resupply at times when solar is not producing. OK, not much of a head, but the concept is to get double-use out of infrastructure that is to be built anyway.

          • Onux

            Causeways are cheaper than tunnels, but as MichaelRJames notes, this would be major causeway+bridge+maybe tunnel. It has to accommodate shipping traffic, which means either a tunnel portion or bridge with 180+ ft of clearance. LI Sound is a longer crossing (24 mi) than most equivalents:
            Oresund 7.5 mi total; Great Belt 11 mi; Yangtze 15.8 mi; Chesapeake 17.6 mi
            Each of these cost $1B+ for shorter distances. At this point you are no longer a cheap causeway. The Pearl River Delta crossings (HK-Macau and Shenzen-Zhongshan) will meet/exceed this length, but their cost is $5-$19B; Alon’s 2012 HSR estimate was $15B for DC-Bos.

            These links are usually at/near the narrowest crossing or the most direct route between major cities. The most direct route between NY and Boston runs basically through Stamford and Bridgeport, and the East River is magnitudes narrower than LI Sound.

            Once again, no tunnels are required for HSR in CT or NY (outside of NYC).

            The population of LI is high, but the comparison is to Fairfield AND Westchester counties: 1.9 million. West LI is higher, but includes people living 14-50 mi from a station in the Hamptons, Montauk, etc. The vast majority of the 1.9 million between the Bronx and N Haven live within 5-10 miles of the NEC.

            By all means give LI service on a branch of the NEC now, and a LI crossing may have merit in the future, but for cost and population served (not population that happens to be in the same jurisdiction) the first HSR route for NY-BOS has to follow the NEC.

          • adirondacker12800

            An hour between New Haven and New York is not high speed.

          • Onux

            An hour between NY and New Haven would not be high speed, but a route that does DC-BOS in four hours would cover the 75 mi of NY-NH in about 40 min. That is ~115mph average, which implies a 152mph/245kph top speed. HSR is generally defined as new lines with a top speed of 250kph+, or upgraded lines with a top speed of 200kph+. The Shinkansen when it first opened covered Tokyo-Osaka at an average speed of just 81 mph and peak of 135mph/217kph.

          • Alon Levy

            The Kodama first averaged around 130 km/h, yeah, but within a year the Hikari opened, averaging 170. Germany can barely hit that average speed today, more than 50 years later, on 2 lines, Berlin-Hamburg and Frankfurt-Cologne.

          • Onux

            I was not aware the slower speed at the Shinkansen’s opening was due to stopping pattern, not infrastructure, thank you for the information.

            Regardless, DC-BOS in 4 hr averages 185kph, so my point stands that it would be HSR.

          • adirondacker12800

            So that less than a million people what was Fairfield County get a slightly faster ride and everybody else wastes time. Including the 8 million on Long Island. Who won’t be able to get to New England without going through the Bronx.

          • michaelrjames

            you’re never going to convince the nit-pickers and econocrats. Better to take a different approach which I previously suggested: 1. like Ike did in the 50s, make it a part of completing the IHS as a matter of national security: look at the map and it’s a no-brainer; if they could justify those Chesapeake Bay crossings … and in any national (security) emergency the only escape for all those 8 million Long Islanders is to join the traffic/rail jam with those 8 million New Yorkers … or have a Dunkirk-style scramble across the waters.
            and 2. eco- Green New Deal (you see that AOC had a nice moral victory on Friday:-).

          • Onux

            Except via CT isn’t slower for everyone else. NY-NH on the NEC is 75mi. Penn-Ronkonkoma is 50.3mi, to Shoreham 18mi, and the crossing 24mi to NH. That’s 92.3 mi, 23% farther, so to achieve 40 min you must average 142mph, or 185mph/300kph+ top speed. If you can build 92mi of 300kph track (42 mi brand new, plus billions for a bridge/tunnel) you can afford to upgrade 75mi beyond 250kph and the current route is still faster.

            But since a Nozomi/Express won’t stop NY-NH on any route (so no LI stops), going to Penn to catch an express is faster for everyone in NYC than taking the limited or regional that actually stops in LI.

            So a LI route is slower for tens of millions living S of NY and N of NH so the 3M people on LI not in NYC can have a faster trip. Not a good trade.

            Michael R James you make good points about a LI sound for larger reasons than just HSR.

          • adirondacker12800

            Going through Long Island serves 8 times as many people. And service to Wall Street the country’s third biggest business district can be finagled into it. Third biggest after Midtown and Chicago’s Loop. Which implies it’s a bigger destination or origin than anything else on the NEC or the country for that matter.
            Long Island is a great big pile of sand and gravel. Digging a hole for four or six tracks of railroad will be real easy. Put the very high speed trains in hole they can make lots of noise and go 350 kph. It’s reallly reallllly straight east of Jamaica. It’s not that bad west of Jamaica considering everything is going to stop in Manhattan.
            The express to Boston can leave at :00, the train that is expressing from Wall Street can too and loiter a bit in Woodhaven, merge as soon as it can behind the one from Midtown. The trains that stop in Jamaica can leave at :05 and :20 and again at :10 and :25 to get to Boston via Harford, Springfield and Worcester. Which together have more people than Rhode Island or metro Providence, which spills over into Massachusetts. :00 and :15 via Stamford. Rinse, repeat starting at :30.

          • electricangel

            I’d think connecting to New Haven would not be the optimal through-LI routing. Better to go out the North fork (Build tunnels under the LIE using TBMs?) and land in New London: you’d have a shorter crossing and a more-direct route. You could pay for a large amount of the construction by slapping an increased-land-value tax around New London, which is really quite cheap as cities go. It’s tenuously connected to the urban economic colossus that is NYC via Shore Line East, with a morning train taking 3:45 to get to GCT. Get a 1-hour ride to NYC via Long Island and land values rise extremely, as would land values near HSR stops in Riverhead, Islip, and… somewhere in Nassau? NY State might capture the increased value near LI stops by increasing density near them and capturing the value in land tax, while CT could contribute its part to the scheme by capturing the value in New London.

            Here’s a 2000sf house, looks very nice and near the ocean, walkable to downtown New London for sale at 189K. There’s a LOT of cheap property there.

          • adirondacker12800

            There are more people in New Haven-Hartford-Springfield-Worcester than there are in Providence.

            Reimagine the LIRR so that Suffolk gets higher speed expresses through Nassau and Queens. And Nassau and Eastern Queens. No you can’t stuff them on the Queens Blvd subway, it takes too long and those pesky people in Western Queens are using it. It all needs more tracks.

          • electricangel

            Nice map! Now I see why connecting from LI to NH will cost so much: it appears to be at the very widest point in LI sound that you could choose. Of course, the sound is half the depth of the English Channel, so a Chunnel-style tunnel should be somewhat easier to build but… ugh.

            Since the politicians are in Hartford, and the route along I84 is already there, I’d guess that the most cost-effective option is improving the rails to New Haven, and then going from there in a viaduct over 91/84 to Worcester, in terms of cost per possible passenger passed. If anyone wants to take advantage of low-cost housing in New London, let him push to run local EMUs to Providence from there.

          • electricangel

            I drive 84 regularly. There are truck-slowing steep hills, but no sharp curves. Given proper cant deficiencies and elevation, not a problem. I think here of the solution the 9th Avenue elevated in building the high Station at 110th Street to avoid a roller-coaster effect on passengers. The Germans build Autobahns with high bridges over valleys to keep the road level.

            I recall seeing the high speed tracks between Nürnberg and Munich alongside the autobahn, but cannot recall if they used the same strategy. Is there a reason it couldn’t be used along I 84?

          • adirondacker12800

            Too expensive? so that the people in Willamantic won’t have a station because there aren’t many of them?

          • electricangel

            According to
            “China’s high speed rail with a maximum speed of 350 km/h has a typical infrastructure unit cost of about US$ 17-21m per km, with a high ratio of viaducts and tunnels, as compared with US$25-39 m per km in Europe and as high as US$ 56m per km currently estimated in California.”
            So, at European Costs for viaducts of about $40MM/km, you could do the 115Km from New Haven to Worcester for about 4.6 billion. I have no idea whether that’s too expensive; it is only 1/1000th of the sum the USA has elected to throw away on post-9/11 wars, as candidate Donald Trump once pointed out.

          • adirondacker12800

            China is flat. Tunnels through hills are expensive. So are viaducts teetering over valleys. If you are going to do that. it makes much more sense to do where there are passengers.

          • electricangel

            We agree tunnels are expensive. Thus, viaducts. There really aren’t (m)any passengers in Willimantic:
            “As of 2010, Willimantic had a population of 17,737 people.”. At least not compared to Hartford and Worcester, which population centers are the reason for routing through CT rather than Proividence, as your map indicated was wise.

            I’d imagine that Europe is more mountainous around the Alps, and used European standards for viaduct cost. Given that Interstates are supposed to have a maximum grade of 7%, and HSR can go at 4%, I’d wonder if there are ANY grades from NH to Worcester that are insuperable. I think I saw a couple of 6%, so you’d have to adjust a bit. But most of the grades are HSR-compatible as is.

          • adirondacker12800

            I forget that Hartford is the center of the universe.

          • electricangel

            And Isostatic rebound, which offsets it. Since 1880, sea level has risen 8 inches. Meanwhile, on the southern shore of Hudson’s Bay:

            “That land along the southern coast of Hudson Bay coast is rising at about 1 to 1.3 meters (3.4 to 4.3 feet) per hundred years. ”

            Rates of land rise around NYC, which is where the glaciers stopped, are probably slower. But from NYC north, I’d expect sea level rise to be offset by Isostatic rebound. From NYC South, as in Miami, a problem.

          • electricangel

            Yeah, NYC and Long Island were the southern edge of the last glacier. Still some rebound. Coastal issues are much more severe where there was no glaciation, and also where warming, expanding seas are a threat. Don’t build HSR on the barrier beaches of Florida is an obvious idea. But then it looks like the only HSR that WILL get built is in that state. Go figure.

          • michaelrjames

            That would be a good laugh if it wasn’t a sad reflection of how too many Americans think of rail. Brightline is using the same freight lines/track that the company already owns and thus the average speed of the train, at 129km/h, is almost precisely half of what is commonly accepted as the minimum speed for HSR, 250km/h. Someone should take them to court over misleading advertising.
            And worse, if this line fails, it will be confirmation of the road-lobby, oil-lobby and general redneck lobby that God never intended America to have HSR.

            I have no idea if Brightline can succeed. It is wrapped up in big shopping malls, and is funded via tax-exempt bonds, and the track improvements will benefit its freight function, so who knows? But as a passenger transport project I know it is the last type of ‘showcase’ for HSR that needs to be built if one wants to convert the American public to its benefits.

          • Eric

            The real showcase will be Texas Central Railway, if/when it gets built. It will be vastly faster and more comfortable than driving or flying. Built in a red state with no public subsidies, it will also shatter a lot of people’s ideological preconceptions. I can imagine a lot of imitation projects a couple years after TCRR begins operating.

          • michaelrjames

            One can hope so. The glass-half-empty is that if the private effort fails …
            The quirk with the Texas plan is that it doesn’t terminate in the centre of either city, Dallas or Houston. Almost certainly this is to keep costs down because those last 10km or whatever, and a downtown station, are very expensive. OTOH, it is Texas and these Sunbelt cities don’t have much in the way of dense city cores, so maybe a suburban terminus, off orbital freeways and with masses of cheap surface parking, might work. Who knows?
            The other odd thing is that there is relatively low air traffic between the two (three) cities (Houston-DFW), of only 585,860 pax in 2018-19. Close to one twentieth of the world’s third busiest air-route, Melbourne-Sydney with 9.24 million in 2018. Oddly the first American city-pair on the busiest city-pair list is at #29 (NYC to LA with 3.97m). So the Texas line is going to have to build travel between these cities to reach profitability a long way short of, say, the nearly 12m pax p.a. of Eurostar ….

            (Incidentally the next American city-pair is LA-SF at 3.6m air pax p.a. (world #32) and that won’t include Oakland or San Jose airports. Or other cities on the proposed HSR route. CaHSR is a lot longer, much more challenging route and into the centre of cities and thru heavily built-up areas, but there is much less doubt that a completed project would get the traffic to at least make it profitable on an operational basis.)

            As to lots of imitation projects based on Texas, no others have such an easy route or relatively easy to acquire ROWs (despite the hoo-ha by some Texans). Most others will have to terminate in the centre of their target cities.

          • Alon Levy

            This is airport-to-airport, and the busiest American air routes involve metro areas with multiple airports each and no single pair as dominant as JFK-LAX. The busiest in the US are LA-SF and NY-South Florida, each with around 8 million annually.

          • Eric

            The Dallas station is at the edge of downtown. With time, downtown will surely expand in that direction. The site already is a light rail stop.

            The Houston stop is indeed in a suburb.

            I believe the low traffic is because most people are driving not flying. However, as the cities grow, the highway will get more congested and this will become a worse alternative. Already HSR will be much faster than driving (4hr drive, vs 1.5hr HSR trip plus some time to get to your destination at the end)

      • electricangel

        You’ve done a lot of work on it. I’d love to see your small suggestions for speed up take effect, cutting out minutes here and there. Just getting the NE regional to3.5 hours between both cities with your minor suggestions would be a great improvement.

        I just bought a bunch of Amtrak NY-BOS tickets for $39. Not a bad price, but I’d love to pay twice that for a two-hour train, as I could over the same distance in Italy, which would cost $50. I can work on the train with WiFi when there aren’t too many people onboard, so it keeps productivity higher than buses or planes. But I could take advantage of a lot more opportunities if the time were cut in half, so I could get from one to the other for a 9am arrival departing at 7am.

        Thanks for your work.

  6. rational plan

    Most rail fares are regulated in the UK, the government determines how much they are allowed to increase fare prices every year. Regulation is greatest over commuter fares. Longer distance trains have less regulation and all operators use airline yield management to manage capacity. Hence why you can pay very high and very low fares in the UK.

    Since Privatisation passenger use has near doubled and it is at it’s highest ever level far in excess than the numbers in the 1920’s on a network a third the size. Now we can argue we could have higher growth in numbers without privatisation but privatisation did for a while anyway remove the restraints from growth in the network. The old practice under nationalisation was whenever passengers numbers grew was to jack up prices to throttle growth and cut the subsidy needed. Prior to privatisation rail investment was always at the back of the queue in government spending and jump up and down due to political whim. For a time fixed track access charges meant that investment in the railway became much more predictable and operators chased growth in putting ever more services on the tracks which has driven investment in more capacity. But over time the dead hand of the DFT has crept back in central government control over the railway is now much greater than when it was at arms length under BR.

    Thanks to wonderful DFT management the franchise system seems to breaking down, with more companies not interested in bidding anymore. Change is coming but no one is really sure what they are going to do yet.

    • Alon Levy

      Since privatization in the UK, passenger rail has grown very rapidly in Germany, in France, in Switzerland, in the Netherlands… and France and Germany do so charging around €0.12 per passenger-km.

  7. michaelrjames

    privatisation did for a while anyway remove the restraints from growth in the network.

    I call bs. Seriously, there is absolutely no valid case for that. Rail traffic increases are independent of service especially where the alternatives are seriously deficient or heavily penalised. Heck even the Amtrak network has increased pax numbers despite its generally mediocre performance. Ditto the NYC subway where the increased ridership has brought it to breaking point because it is so poorly maintained and under-invested etc.

    And to talk about rail investment post-privatisation as if it is due to privatisation is beyond dishonest. Try to remember that the most important part of the network (the rails, signalling, even stations really) were an utter failure under privatisation. Indeed very close to actual disaster (not just financial but serious accidents etc) such that it had to be rapidly re-nationalised.

    Next, you’ll be using Brit rail privatisation as a laudable model for privatising the NHS.

    • Nathanael

      Post UK privatization the government in the UK spent twice as much oin rail as before. They would have gotten better results by just spending twice as much on British Rail. Perhaps the only purpose of privatization was convincing Tories to devote tax money to trains, by promising them that some of it would be extracted as private profits through graft. Tories only support public services if there is graft involved, so you have to promise them some graft to get their support.

    • Alon Levy

      The increased ridership didn’t bring NYCT to a breaking point. What are you talking about? Peak ridership into the Manhattan core is lower than it was in the late 1980s. The entire increase has been off-peak and to non-core destinations. The breaking point came because the MTA slacked off on certain kinds of investment (namely, rolling stock maintenance), and got overzealous about flagging and slow zones because Cuomo’s political appointee Ronnie Hakim cared more about avoiding lawsuits than about providing good service.

      • michaelrjames

        The increased ridership didn’t bring NYCT to a breaking point. What are you talking about? Peak ridership into the Manhattan core is lower than it was in the late 1980s. The entire increase has been off-peak and to non-core destinations.

        I didn’t actually talk about specific timeframes, nor whether it was core or outside the core. But, to cite Adam Rahbee, ridership increased from 1.03 billion in 1990 to 1.8 bn in 2015, an 80% increase. (I have his graphs onscreen but alas don’t seem to have saved the link.) I kinda can’t believe this increase doesn’t span the “late 80s” but whatever …
        Now, are you seriously saying this has nothing to do with all the problems and complaints about overcrowding? Of course it is exacerbated by the maintenance issues that I (and you) alluded to, but I also can’t believe you’re claiming it doesn’t happen in peak hours, or in the core?As far as I remember from the endless media discussion it is happening systemwide on all lines. The slowing of trains to cope with failing or inadequate signalling, over-zealous safety concerns, and in a vicious circle, crowding at platforms, perhaps may have happened without such a big increase but all this stuff happened together.
        That’s what I was talkin’ about!

        • Alon Levy

          Yes, this indeed has nothing to do with the complaints about overcrowding. There was more overcrowding 30 years ago than there is now. There was even more overcrowding in the 1970s, and (I think?) yet more in the 1950s. London for that matter has worse overcrowding than New York on its busiest lines, and that does lead to problems like cascading station closures on the Bank branch for crowd control, but maintenance in London is perfectly fine and long-term investment is getting it to be in way better shape than New York (if worse than Paris with its 42 tph lines). Overcrowding is mostly the MTA’s excuse, because it couldn’t exactly say “sorry, we goofed, our top manager is a Cuomo political appointee who doesn’t understand the engineering side for shit.”

          • michaelrjames

            There was more overcrowding 30 years ago than there is now. There was even more overcrowding in the 1970s, and (I think?) yet more in the 1950s.

            Not solely for the sake of being an obsessive nit-picker but I did find a useful graph (hope it loads here). This data stops at 2012 but we know it has continued to grow and at that rate it is very close to surpassing the 1930s peak (or 1947s 2.051bn); it has long passed any 60s-70s level:

          • Tonami Playman

            @Michaelrjames, does that graph account for the fact that in the 60s and 70s, ridership was more concentrated at peak times while today it’s more spread out? The concentration at peak times even if the overall ridership was lower would mean that overcrowding would be greater than it is today.

          • michaelrjames

            Of course not, it is raw data, not manipulated to fulfil a desired goal.
            But if you can find data on peak versus non-peak, it wouldn’t be without interest. However, not sure exactly if they would be comparable since peak hours have probably doubled and the day’s end-peaks are at risk of merging.

  8. Mike

    Firstly subsidies in the U.K. rail network post privatisation have been roughly double per passenger journey in the 20 years 1996 to 2016 compared to the 20 years 1976 to 1996. I haven’t got the exact source to hand but this is from the work of the excellent U.K. railway journalist Roger Ford. So much for privatisation unleashing the power of private investment. Secondly with regulation doesn’t mean cheap – as per the U.K.. Finally Eurostar. As the monopoly provider for anyone who wishes to commit to carbon friendly journeys from the U.K. to Europe and of course not n reverse I think they are seriously beginning to abuse their position. About a year ago they cut some service to make seats more scarce and some journeys are becoming seriously ridiculous. There are actually some three hour gaps in service between London and Brussels. Remember the tunnel as a whole is only operating at 58% capacity so there is plenty of room for more passenger trains. Since the U.K. government – of course – sold off its share the operation is now 90% Sncf owned. Two thirds of the passengers are British. A very dispiriting situation.

    • michaelrjames

      Remember the tunnel as a whole is only operating at 58% capacity so there is plenty of room for more passenger trains. Since the U.K. government – of course – sold off its share the operation is now 90% Sncf owned. Two thirds of the passengers are British.

      Those dastardly froggies:-)
      But what has happened about competition since the EU directive on such things? It is happening in France on their TGV lines. Is Eurostar somehow exempted, especially as it is only nominally profitable.
      Are the fares comparable to Thalys, say Paris to Brussels?
      I found this:

      In August 2018, Bloomberg Businessweek reported that Getlink is interested in setting up an Ouigo-style low cost high speed rail service between London and Paris, travelling between the railway stations of Stratford International and Charles-de-Gaulle.[31]

      (Minor point and I may have this wrong, but the UK didn’t sell off their share to SNCF but to other non-French interests so that SNCF retains a 55% share, still a controlling share.)

      • Mike

        Regulation is used to close off competition. DB were interested in running an ICE service from London to Koln and operated an ICE set to London in 2014 or so to prove concept but since then have confirmed the idea has been dropped. My recall on Eurostar ownership is that SNCF have since bought out the other shares and indeed have 90% of the company.

      • Mike

        Michael, in addition the requirement for full passport, customs and security control at Stratford International would be enough to put off a low cost operator.

        • michaelrjames

          I suppose HM Customs & Immigration charge full cost-recovery or more. But then they presumably do the same for the LCC Airlines? Surely it’s not a deal-breaker? Anyone travelling from the EU to the UK has to go thru it.

          It’s more likely there either isn’t room for competition on the most used routes, or it’s effectively stifled. For example I can’t quite see the Paris-CDG to London route being that big. Although I have recommended people fly into CDG instead of Heathrow, it is so they can spend a day in Paris before catching the last Eurostar from Gare du Nord. The reason for this is, other than the free day in Paris, flying into Heathrow is about $100 more expensive than any other European airport (from Asia-Pacific) so even with the Eurostar cost it is no more expensive (or was when I last looked at this, some years ago).

          Re Eurostar ownership, as far as I can tell nothing has changed since the UK sold its share in 2015:

          SNCF: 55%
          SNCB: 5%
          Patina Rail LLP: 40%

          Patina Rail is the consortium of Caisse de Depot et Placement du Quebec (30%) and Hermes Infrastructure (10%) that bought the UK’s share.

  9. Nathanael

    Just gotta call you on the old canard “money losing trains”. As far as I can tell, all but six of Amtrak’s routes make a marginal profit… They provide more revenue than their avoidable expenses.

    They do not contribute much to covering Amtrak’s very large fixed overhead, but that is a different matter.

    Amtrak hides the profitability of their routes using an economically unjustifiable accounting scheme called “allocated costs”, under whichmore than a billion dollars a year in fixed costs is arbitrarily “allocated” to whichever routes are politically disliked by the “creative accountants”. The allocations are so bad that they charge trains for maintenance of track in states they do not run through, and charge Miami for snow removal.

    This does not really change your conclusion: the phokny accounting gives Amtrak political excuses to jack ticket prices well above the revenue optimizing point,.

    • Alon Levy

      Avoidable expenses do not include the costs of stations that would be shut down if the long-distance trains were put out of their misery.

      • Nathanael

        What stations could you shut down? Far fewer than you think. And the genuine station costs are not a significant part of Amtrak’s overhead loading.

        Even if you shut down all of the PROFITABLE so-called long-distance trains, you can’t shut down Chicago, Buffalo-Depew, Rochester, Syracuse, Utica, Schenectady, Albany, Rhinecliff, Hudson, Poughkeepsie, Yonkers, NY Penn, Springfield MA, Worcester MA, Framingham, or Boston, because they’re shared by state-supported trains of various sorts.

        Pittsfield, Bryan, Waterloo, and Elkhart are unstaffed and have no significant costs. That’s most of the stations on the Lake Shore Limited. How much do you save by shutting down the other three, namely Cleveland, Toledo, and South Bend? It doesn’t amount to a hill of beans.

        If Amtrak ever published the real, true avoidable costs for the Lake Shore Limited it would be pretty obvious that it’s profitable.

        A similar analysis applies to the Silver Service trains and the Crescent. As long as the Carolinian is funded, most of the stations have to stay open, and most of the rest are unstaffed and have no real expenditures. And a similar analysis applies to the Coast Starlight; as long as the Pacific Surfliner, Capitol Corridor, and Cascades are running, you can’t close any significant stations.

        The overhead which is allocated is mostly not from stations anyway. It’s mostly from central-office stuff like the reservations system and the big repair facilities at Bear and Beech Grove. Then there’s the totally bogus allocations like snow removal in Miami, of course.

        I don’t know why this myth that the so-called long-distance trains “lose money” has persisted. It’s flat-out false at this point. Maybe it was because they “lost money” in the 1980s (then, they actually did) and nobody wants to change their beliefs as the times change.

        Of course, many subway lines actually lose money on *avoidable costs* and people think that is OK, so there’s nothing wrong with government-subsdized transportation. But I hate to see decisions made based on essentially phony numbers. Some of the “state-supported” Amtrak trains are actually the ones which have the worst ratio of revenue to variable costs.

        • Nathanael

          I double-checked. All the stations on the LSL appear to be either shared with state-supported rail, or unstaffed, or both, except for Cleveland, Toledo, and South Bend.

    • Josh

      I don’t see why Amtrak or any company, monopoly or not, should have the goal of maximizing revenue. It ignores real costs.

      • Nathanael

        Jacking prices above the revenue-optimizing point is guaranteed to lead to lower ridership, lower revenue — essentially more need for government subsidy for fewer people served.

        Having prices below the revenue-optimizing poitn may actually make a lot of sense, to promote ridership, with environmental benefits etc.

        Amtrak is using their bogus accounting as an excuse to jack prices above the revenue-optimizing point, for the political purpose of suppressing ridership so that they can make political attacks on the profitable trains which are in the so-called “long-distance” category. (They don’t seem to bother to do this on the trains which are actually unprofitable like the Sunset Limited — I guess they don’t need to artificially suppress ridership in order to make their political attacks on that train.)

  10. Martin

    I think the very flexible pricing of airlines actually is an important reason how they efficiently have been able to increase the market share of intercity travel in Europe and Japan. By filling up low demand seats with cheap tickets, while making money from more scarce ones, they can both efficiently serve the low-cost market, while capturing more revenue from business travellers. The European airline market really is brutally efficient and competitive (and cheap), and that it outperforms trains is sad both from a passenger comfort perspective, urban planning, and an environmental perspective.

    The Swedish railways have adopted a very dynamic cost system, and while it indeed as a customer is highly annoying and disliked, on most performance measures it has performed very well with the average price in the system going down and ridership up (presumably mostly through charging people travelling for business that are price-insensitive more).

    All those cheap bus and airplane tickets on undesirable time slots have very real value for people with scarce income and running empty trains while cheaper busses are running nearby that are much slower is not really desirable for anyone. Trains do not exist in a vacuum and their competitors use highly dynamic pricing (busses and planes).

    I agree that a monopoly provider can of course always increase prices by reducing supply, but the only solution to combat that is really competition (or a very well regulated national operator. Giving a monopoly to a certain franchise over a limited time period is probably never going to work). Competition has also pushed down prices on the most profitable train rides in Sweden, that used to cross-subsidy the national carriers less profitable trains (and perhaps indirectly reduced service on some less profitable ones). If the national government really wants to push down prices for train travel, they should invest in longer platforms so that it is easy and straightforward for a train operator to run longer trains with low marginal extra cost. I think having as a policy the reduce the average prices of trains by half in the west, should be a higher priority than increasing speed by 10-20%, and would affect rail market share much more. Making it easy to increase supply is probably the easiest way to get there.

    • michaelrjames

      I think having as a policy the reduce the average prices of trains by half in the west, should be a higher priority than increasing speed by 10-20%, and would affect rail market share much more.

      They can do both. The time savings are more significant on longer routes vis a vis competition with air.

      If the national government really wants to push down prices for train travel, they should invest in longer platforms so that it is easy and straightforward for a train operator to run longer trains with low marginal extra cost.

      Not sure capacity is the limitation in many routes. For example, Eurostar, as discussed above in comments.
      In any case double-deckers are a solution without need for other infrastructure changes.

      But really, attitudes, not just costs, are more important than anything and they take time to change. Greta Thunberg has probably been the biggest fillip to train travel in recent years. #jagstannarpåmarken #stayontheground
      Another cultural change that I am sure is in our near-future is the 4-day working week. This effectively creates every weekend as a long-weekend or even 4-d or 6-d breaks each 2 to 4 weeks. A lot of those extra airmiles in the era of LCCs over the past few decades in Europe are weekend city-breaks. With longer breaks people should be tempted to use a more enjoyable, less frantic and of course more-eco-responsible means of travel. That’s my theory but then I was doing it (Euro travel) the Thunberg way probably before she was born!

  11. josh

    Isn’t it kind of obvious that a government-owned and subsidized monopoly shouldn’t be run to maximize profit? Additionally I think fare caps are a kind of crude way to deal with Amtrak. No one is proposing that NY state should set a fare cap on the MTA. In fact, it directly sets the fares itself. Amtrak should be run with an eye towards economic efficiency, and as it has its own internal data on costs, should be allowed to set prices accordingly.

    • Nathanael

      Amtrak has been ordered by Congress to publish actual avoidable costs by train route (in 2008), and refuses to do so. Many people suspect that Amtrak does not actually *know* what its costs are; the accounting seems really, really bad. So I question whether they actually have internal data on costs.

      Management can’t make good decisions with totally bogus numbers.

  12. Pingback: Surplus Extraction | Pedestrian Observations

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