[Article] Subsidy for Luas if passenger numbers are low

Victor

http://home.eircom.net/content/irelandcom/topstories/3394157?view=Eircomnet

Subsidy for Luas if passenger numbers are low
From:ireland.com
Tuesday, 15th June, 2004

The Department of Transport is prepared to give a subsidy to Dublin's Luas system - if the system fails in meeting passenger numbers.

The Department said the subsidy would be a "doomsday" situation in which it would have to step in if passenger forecasts - which currently envisage Luas carrying about as many passengers as the much larger DART system - fail to materialise.

Current forecasts for Luas are for eight million or nine million people on line B, the green line to Sandyford; and 12 or 13 million on the red, or Tallaght line, in the first year of operation.

That is a combined total of 20 million passengers per year travelling on 23km in two tram routes that are not integrated in the city centre.

The passenger forecast is similar to the DART line figure, which was 21.6 million people last year. In contrast, however, the DART line is more than twice as long at almost 52 kms and is not broken in the city centre.

Luas needs to carry the 20 million passengers to collect fares totalling about €20 million in order to achieve a break even position on the €20 million a year it has agreed to pay the system operator, Connex, each year for the next five. Yet, the DART only collected fares of about €24 million. In addition the DART is given an operating subsidy of more than €11 million. The Rail Procurement Agency projections see Luas operating without a subsidy.

While Luas will run up to 12 trams per hour, compared to the DART's 10 trains, the capacity of a 30-metre tram is 235 people, whereas a DART train of six carriages can carry about 900.

The figures indicate that on a kilometre by kilometre basis, the RPA sees the Luas system as being at least twice as effective as the DART.

The RPA said yesterday that this was a start-up position. While a spokesman cautioned the first year figures would be affected by a "ramping up" of services and the fact that only the Sandyford line would be in operation for up to two months following the system's launch, growth in passenger numbers was expected.

A spokesman for the Department of Transport said should passenger numbers fall badly short of target, "there would be some sort of onus on the Government to intervene". The spokesman said that "everything is geared towards breaking even or making a profit" and that while he accepted the figures when compared to DART were ambitious, payment of a subsidy would be a "doomsday situation".

Earlier this summer the British National Audit Office (NAO) reported new tram lines across the UK had failed to achieve predicted passenger numbers - sometimes by 45 per cent.

The NAO found light rail has improved the quality and choice of public transport in the cities served, but the anticipated benefits had been overestimated or were not being exploited fully. Forecasted passenger numbers had been well in excess of those experienced in a number of tram schemes.

Victor

http://www.thepost.ie/web/DocumentView/did-366821156-pageUrl--2FThe-Newspaper-2FSundays-Paper-2FNews.asp

State subsidy is likely for Luas
20/06/04 00:00
By Niamh Connolly

The prospect of Luas requiring state subvention has increased dramatically. Newly released figures show that only one in five passengers will be checked by an inspector to see if they have bought a ticket.

Tram operator Connex has confirmed that the Sandyford to St Stephen's Green line, which is due to open in less than two weeks, has not yet completed all the safety tests.

The chairman of the Railway Procurement Agency (RPA), Padraic White, has conceded that some form of subvention will be required in the start-up phase of Luas. But he declined to state the sum that might be involved.

"It's accepted that there will be an initial period when people are getting used to it, and that would be covered by funding given to the RPA. But after that initial period, it's clear that we have to make this a self-sufficient system. There is no question of ongoing subsidies," said White.

The RPA estimates that there will be 20 million passenger journeys a year on Luas, based on modelling studies carried out in conjunction with the Dublin Transportation Office.

But this figure is being challenged by transport industry experts. They believe the passenger numbers will be closer to 14 million.

The Dart,which carries 21.6 million passengers annually, received a subvention of €11.15 million last year.

Only 16 ticket inspectors will police up to 30,000 passengers each day on the Green line from Sandyford to Stephen's Green.

The penalty for fare evasion will be €45, according to Connex operations manager Brian Brennan.

Frank Allen, chief executive of the RPA, said last week that "a philosophy had to be imported" in relation to the Luas ticketing system.

"To some extent it's an honour-based system," he said.

White said the RPA board had decided that a €4daily charge would apply to parkand-ride facilities at the Sandyford terminus.

"There is competition for limited parking in Sandyford Industrial Estate. When the board looked at park-and-ride it decided it was not sensible to allow everybody and anybody to park there," he said.

It has emerged that RPA staff have been travelling on trams to monitor timekeeping by the Connex drivers. This has been deemed necessary to ensure that the Luas schedule will be adhered to when the service begins operations on June 30.

Steve Conway

It's important when discussing subsidy to understand who gets what, and where the revenue goes.

Connex are the company brought in to operate the service, but the infrastructure is owned by the state.

Connex do not take the revenue from the LUAS, or rather, they collect the revenue and pass it all on to the Government (through the RPA).

Connex have bid to operate the LUAS system for a particular price (not sure exactly what the price is) - i.e. "you pay us xx million, and we'll run the trams, arrange all the ticketing, and pass all the revenue on to you". So Connex will get paid exactly the same amount whether the LUAS carries 10 pax or 10, 000, 000.

That's a disincentive to good performance, though there are some penalty clauses which will cost Connex money if they fail to run the correct number of trams, or fail to run them on particular days - unless the failure is due to circuimstances beyond their control, such as idiots driving onto the Peter Place Ramp (!)

So, any subsidy as such will not go to the LUASoperators - they get paid no matter what- but will go to the RPA if the ticket sales fail to generate the amount of money that they need in order to pay Connex their contracted fee.

I wonder if a split arrangment - i.e. an element of fixed fee, and an element of commission on ticket sales, would have been better - i.e. encouraging Connex to attract as many people as they could by running the best possible service.