High Speed Rail better than flying Tiger

The government's original evaluation of fast rail assessed it against the price of an air fare from Tiger for 6am. More realistic assumptions show fast rail will pay its way.

The Zero Carbon Australia Transport Project is currently completing a report assessing a High Speed Rail service operating from Melbourne to Brisbane via Sydney and Canberra. It is the product of 12 months of joint analysis by researchers from Beyond Zero Emissions, a non-profit climate solutions research organisation and the German Aerospace Centre, Germany’s national research institute.

High speed rail in Australia has been discussed for decades. It is widely recognised as a desirable, exciting concept. Anyone who has enjoyed the experience in Europe or Asia is often left asking “Why don’t we have this back home?”. Yet multiple studies and political indecisiveness have made no progress, and positive support for the idea of HSR is often held back by misconceptions about Australia not having enough people to make it viable.

The government-commissioned HSR Phase 2 report from AECOM released earlier this year suggested that HSR could pay its operating costs, but only after the $114 billion capital cost had been paid by the government.

Our work shows that there is enough market demand for Melbourne-Brisbane HSR to pay off its capital cost as well.

One of the key differences is a realistic assessment of actual air fare prices already paid today by customers along our busiest flight corridors. The AECOM report priced HSR fares to undercut the cheapest airfares along the competing routes. But not everyone flies Tiger at 6am on a ticket they booked on sale five weeks in advance. There is significant demand for flights at peak times that are convenient to passengers, which are priced accordingly higher.

Our review of the AECOM Phase 2 report found that by pricing HSR tickets at a discount relative to the average air fares, revenue could be increased significantly. Conversely, if HSR fare prices were as cheap as AECOM assumed, you would expect significantly more mode shift from air to HSR than they projected. Either way, there is more value to be captured.

Unfortunately, the recently released report from the High Speed Rail Advisory Group overlooked this in their recommendations.

Nonetheless we have taken this more logical pricing structure into account in our own comprehensive bottom-up study of east-coast HSR.

We have mapped out Australia’s travel patterns and analysed how they would change with an HSR network from Melbourne to Brisbane via Sydney. We know that the density of travel occurring along this corridor is very high by global standards - Sydney-Melbourne is the fifth busiest flight corridor in the world. Our HSR patronage numbers are based on modal shifts observed internationally – we don’t expect everyone to stop flying and take HSR. But given a competitive door-to-door travel time and a cheaper ticket, the significant majority will.

We find that HSR can be built at three-quarters the upfront cost headlined in the Government Phase 2 report – most of our savings come from improved route design to avoid unnecessary tunnels and bridges. Once fully operational (which could be as early as 2025), it will achieve a profit-to-revenue margin of 70 per cent, making $4.6 billion over and above operating costs in 2030. This would grow with passenger demand. This fare revenue alone would allow the capital cost to be paid back over the following four decades of operation.

Further revenue sources to capture the value of this asset, such as station precinct development, may shorten this time frame further.

It is impossible to reduce greenhouse emissions to zero without transforming our current oil-dependent transport system. However, climate science indicates we must head in this direction. Current travel within the east coast HSR corridor is a significant contributor to Australia's greenhouse emissions. 45 per cent of all non-urban passenger travel in Australia occurs within the Melbourne-Brisbane east coast corridor.

High speed rail can be powered by 100 per cent renewable electricity, meaning that the operation of the network will make zero contribution to global warming, while saving millions of tonnes of greenhouse gas emissions that would otherwise be caused by cars and aircraft.

The business–as–usual alternative to HSR is to deal with our mounting transport and congestion problems by building new airports, freeways, and fringe suburban development. Crowded cities are straining to keep pace with population growth. Air services are actually slower today than 30 years ago due to runaway congestion. Many regional towns languish, excluded from the economic strides the rest of the country has made, while our cities race to expand their urban boundaries.

HSR will greatly enhance travel for the towns between capitals. It will be a far better service than their current options. Much faster and safer than driving long distances; while cheaper and more convenient than infrequent regional flights. Re-connecting these regions to our cities will give them the opportunity to thrive. With no station in the corridor more than an hour and a half from one of the three major cities, Australia’s future development trend can be redefined.

Our analysis is based on conservative projections of future oil prices. However, greater oil price increases could see even more passengers shift their choices in favour of HSR over flying or driving. The study does not quantify the very real but non-monetary benefits of time savings, a lower road toll and less stressful travel. It does not attempt to project the social benefits of lowering regional isolation and the economic benefits of improved regional development.

HSR is a nation-building project that will bring all these unquantified benefits and more, whilst paying its own way.

It is not a cost, but an investment.

It will generate both financial and broader economic returns. It will play a real part in our lives, changing the way we live, work, holiday and travel.

It is up to all of us to ensure that challenges such as climate change are solved, which requires addressing all of our sources of greenhouse gas emissions. HSR is one piece of that puzzle. Other countries have planned, built and operated HSR systems in a decade or less, we can too if we choose to act decisively.

Patrick Hearps and Gerard Drew are transport research directors at Beyond Zero Emissions; and Ben Courtice is media co-ordinator at Beyond Zero Emissions

The Zero Carbon Australia Transport Project findings will be released soon. To keep updated check the BZE website.

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