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Note that the Tokaido shinkansen is only profitable in terms of OpEx -- paying drivers, running stations, buying legendarily bad coffee, paying for electricity

by patio11 12y ago

Note that the Tokaido shinkansen is only profitable in terms of OpEx -- paying drivers, running stations, buying legendarily bad coffee, paying for electricity and car maintenance, etc. It relies on government-provided CapEx -- laying thousands of miles of earthquake-resistant track, in some cases requiring drilling through mountains to get from A to B because curving is difficult. The CapEx cost, which the government essentially wrote off when they privatized JR, was north of half a trillion dollars.

ekianjo 12y ago
Well, in all countries with popular train networks, the profitability/cost index is totally opaque. It's fairly obvious that it can't be as profitable as having a fleet of planes. The sheer maintenance of high speed trains + their kilometers of tracks render them very costly per mile.
- cromwellian 12y ago
  Airports and Air Traffic systems also cost money. Several tens of billions of dollars were spent on SFO+LAX+SJC+OAK+SAN upgrades in California in the last few decades. If you add up the CapEx, it's on par with the CapEx for high speed rail. Operationally, the FAA budget is $15 billion a year, the TSA is $7 billion per year, so minimally, $22 billion in government subsidy.
  - ekianjo 12y ago
    The difference being that an airport can be used for intercontinental travel, not just domestic. Your Shinkansen lines in Japan can only be used where they go. Airports can connect to everywhere in the world (within a certain range at least), it's a much better investment for your buck.
    - cromwellian 12y ago
      For travel of 5 hours and less, I'd disagree. The airport is a less efficient use of one's time, even if it is cheaper per mile flown. Traveling from SFO to LAX on high speed rail is far preferable to me than driving for 5 hours or a 5-hour airport experience. Mythbuster's recently tested this, and the actual difference between driving and flying door-to-door was like 15 minutes. A 2.5 hr train ride would not only be faster, it would be far more pleasant in terms of getting on/off, and in terms of comfort and space onboard.
      - ekianjo 12y ago
        Even if it's not that much faster, flying is way cheaper. In Japan there's just no way you get as far with the train as the plane on the same budget. Hell, for a Osaka-Tokyo trip by train, I can fly to Korea for the same price.
  - dworin 12y ago
    Air traffic systems aren't a good analogy - for the most part, they're funded through user fees. Eighty percent of the FAA budget [1] is funded through the Airport and Airway Trust Fund, which is based on taxes and service fees levied on operators and passengers. This was designed to allow the agency to grow with the size of the industry, without taking over the federal budget. It's also more progressive, since air travelers are generally wealthier, it makes it so you don't have to subsidize travel for the rich with taxes on the poor and middle class. Airport construction follows a similar system. Most airports in the United States are public-private partnerships. They issue Airport Revenue Bonds, which are similar to municipal bonds from a tax perspective, but they're backed by airport revenues, not municipal tax revenue.[2] The airport authority has to pay back the debt through the fees they collect from operators or concessions. The latter is why everything from bottled water to rental cars is more expensive in an airport. It's not just that they have a captive audience, it's that concession sales actually pay for the operation and expansion of the facility. In both cases - the FAA and capital expenditures - it's mostly paid for by the users, not the taxpayer. [1] - https://www.faa.gov/about/office_org/headquarters_offices/apl/aatf/media/AATF_Fact_Sheet.pdf https://www.faa.gov/about/office_org/headquarters_offices/ap... [2] - http://www.nap.edu/openbook.php?record_id=14041&page=12 http://www.nap.edu/openbook.php?record_id=14041&page=12
    - Maven911 12y ago
      Curious how do you know so much about the Airport industry and how I can get more information about the airport industry
    - cromwellian 12y ago
      Well, the same excuses have been made about the road system, that it's funded by gas taxes, but when people crunched the numbers, it turned out it's only about 50%. Since the subsidy you link to, varied between 70% and 80%, it could still be the case that the Airport system in California got subsidies within a small multiplicative factor over it's entire lifespan compared to the proposed costs of the high speed rail system. The objections to high speed rail IMHO, aren't 100% based on economics or funding, because other things have gotten massive subsidies, they're also based on a kind of weird political tribe association people have against trains. Let me quote George Will as an example: "To progressives, the best thing about railroads is that people riding them are not in automobiles, which are subversive of the deference on which progressivism depends. Automobiles go hither and yon, wherever and whenever the driver desires, without timetables. Automobiles encourage people to think they—unsupervised, untutored, and unscripted—are masters of their fates. The automobile encourages people in delusions of adequacy, which make them resistant to government by experts who know what choices people should make. Time was, the progressive cry was “Workers of the world unite!” or “Power to the people!” Now it is less resonant: “All aboard!”" So, to some people, trains are a Euro-socialist kind of thing, anti-freedom.
samth 12y ago
This is like describing FedEx as only profitable because of government-provided investment in roads/airports/ATC systems/etc. Which is fine, but you should recognize that it isn't usually the way we account for things.
- brandonmenc 12y ago
  Are other companies and individuals able to use the track for general purpose, with their own trains? If that's not the case, your comparison is incorrect.
snogglethorpe 12y ago
> the Tokaido shinkansen is only profitable in terms of OpEx [...] The CapEx cost, which the government essentially wrote off when they privatized JR [...] That doesn't seem to actually be true. To quote Alon Levy (from http://pedestrianobservations.wordpress.com/2011/06/06/high-speed-rail-operator-profit/ http://pedestrianobservations.wordpress.com/2011/06/06/high-...): "... 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. Construction was only one eighth of the debt burden, and that part the JRs did have to pay.[1] In other words, the government really just subsidize JNR’s operating losses from its inefficient pre-restructuring days." [1] From Wikipedia: JNR's Shinkansen-fueled debt eventually ballooned to ¥28 trillion [...] The privatized JRs eventually paid a total of only ¥9.2 trillion to acquire JNR's Shinkansen network.
BrainInAJar 12y ago
And what is the CapEx cost of the road network in the USA ? Probably several trillions of dollars Not to mention the national economic benefit of those train lines quite aside from OpEx probably makes them worthwhile

by patio11 12y ago

ekianjo 12y ago

Well, in all countries with popular train networks, the profitability/cost index is totally opaque. It's fairly obvious that it can't be as profitable as having a fleet of planes. The sheer maintenance of high speed trains + their kilometers of tracks render them very costly per mile.

cromwellian 12y ago
Airports and Air Traffic systems also cost money. Several tens of billions of dollars were spent on SFO+LAX+SJC+OAK+SAN upgrades in California in the last few decades. If you add up the CapEx, it's on par with the CapEx for high speed rail. Operationally, the FAA budget is $15 billion a year, the TSA is $7 billion per year, so minimally, $22 billion in government subsidy.
- ekianjo 12y ago
  The difference being that an airport can be used for intercontinental travel, not just domestic. Your Shinkansen lines in Japan can only be used where they go. Airports can connect to everywhere in the world (within a certain range at least), it's a much better investment for your buck.
  - cromwellian 12y ago
    For travel of 5 hours and less, I'd disagree. The airport is a less efficient use of one's time, even if it is cheaper per mile flown. Traveling from SFO to LAX on high speed rail is far preferable to me than driving for 5 hours or a 5-hour airport experience. Mythbuster's recently tested this, and the actual difference between driving and flying door-to-door was like 15 minutes. A 2.5 hr train ride would not only be faster, it would be far more pleasant in terms of getting on/off, and in terms of comfort and space onboard.
    - ekianjo 12y ago
      Even if it's not that much faster, flying is way cheaper. In Japan there's just no way you get as far with the train as the plane on the same budget. Hell, for a Osaka-Tokyo trip by train, I can fly to Korea for the same price.
- dworin 12y ago
  Air traffic systems aren't a good analogy - for the most part, they're funded through user fees. Eighty percent of the FAA budget [1] is funded through the Airport and Airway Trust Fund, which is based on taxes and service fees levied on operators and passengers. This was designed to allow the agency to grow with the size of the industry, without taking over the federal budget. It's also more progressive, since air travelers are generally wealthier, it makes it so you don't have to subsidize travel for the rich with taxes on the poor and middle class. Airport construction follows a similar system. Most airports in the United States are public-private partnerships. They issue Airport Revenue Bonds, which are similar to municipal bonds from a tax perspective, but they're backed by airport revenues, not municipal tax revenue.[2] The airport authority has to pay back the debt through the fees they collect from operators or concessions. The latter is why everything from bottled water to rental cars is more expensive in an airport. It's not just that they have a captive audience, it's that concession sales actually pay for the operation and expansion of the facility. In both cases - the FAA and capital expenditures - it's mostly paid for by the users, not the taxpayer. [1] - https://www.faa.gov/about/office_org/headquarters_offices/apl/aatf/media/AATF_Fact_Sheet.pdf https://www.faa.gov/about/office_org/headquarters_offices/ap... [2] - http://www.nap.edu/openbook.php?record_id=14041&page=12 http://www.nap.edu/openbook.php?record_id=14041&page=12
  - Maven911 12y ago
    Curious how do you know so much about the Airport industry and how I can get more information about the airport industry
  - cromwellian 12y ago
    Well, the same excuses have been made about the road system, that it's funded by gas taxes, but when people crunched the numbers, it turned out it's only about 50%. Since the subsidy you link to, varied between 70% and 80%, it could still be the case that the Airport system in California got subsidies within a small multiplicative factor over it's entire lifespan compared to the proposed costs of the high speed rail system. The objections to high speed rail IMHO, aren't 100% based on economics or funding, because other things have gotten massive subsidies, they're also based on a kind of weird political tribe association people have against trains. Let me quote George Will as an example: "To progressives, the best thing about railroads is that people riding them are not in automobiles, which are subversive of the deference on which progressivism depends. Automobiles go hither and yon, wherever and whenever the driver desires, without timetables. Automobiles encourage people to think they—unsupervised, untutored, and unscripted—are masters of their fates. The automobile encourages people in delusions of adequacy, which make them resistant to government by experts who know what choices people should make. Time was, the progressive cry was “Workers of the world unite!” or “Power to the people!” Now it is less resonant: “All aboard!”" So, to some people, trains are a Euro-socialist kind of thing, anti-freedom.

samth 12y ago

This is like describing FedEx as only profitable because of government-provided investment in roads/airports/ATC systems/etc. Which is fine, but you should recognize that it isn't usually the way we account for things.

brandonmenc 12y ago
Are other companies and individuals able to use the track for general purpose, with their own trains? If that's not the case, your comparison is incorrect.

snogglethorpe 12y ago

> the Tokaido shinkansen is only profitable in terms of OpEx [...] The CapEx cost, which the government essentially wrote off when they privatized JR [...] That doesn't seem to actually be true. To quote Alon Levy (from http://pedestrianobservations.wordpress.com/2011/06/06/high-speed-rail-operator-profit/ http://pedestrianobservations.wordpress.com/2011/06/06/high-...): "... 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. Construction was only one eighth of the debt burden, and that part the JRs did have to pay.[1] In other words, the government really just subsidize JNR’s operating losses from its inefficient pre-restructuring days." [1] From Wikipedia: JNR's Shinkansen-fueled debt eventually ballooned to ¥28 trillion [...] The privatized JRs eventually paid a total of only ¥9.2 trillion to acquire JNR's Shinkansen network.

BrainInAJar 12y ago

And what is the CapEx cost of the road network in the USA ? Probably several trillions of dollars Not to mention the national economic benefit of those train lines quite aside from OpEx probably makes them worthwhile