Why a very fast train system will never fly
It's funny - and it's kind of true. People do often want to talk about their plane trip; I often do. If you don't catch planes all the time, how you spend the hours and what you watch when you're tucked into those weird little unnatural plane-spaces seems to matter more than it should.
But the plane trip as a staple of post-holiday conversation is probably, and perhaps sadly, drifting from fashion in this part of the world. People are travelling more. The dollar is high. A lot of us can at least pretend to be more sophisticated and knowing.
What hasn't gone from fashion is the inevitable post-holiday comparison of how they do things overseas and how we do things here.
For Australians, one of the main subjects of comparison - the deficient state of transport in this country - was placed in the foreground this month with the release of a $20 million government report into high-speed rail down the east coast.
They've had these fast trains in Japan for decades. You couldn't get around the place without them. They've got them in Europe and they're the best way to see the continent. But why, in a place like Australia, are they seemingly no chance to happen?
First up, and to be clear, no one is going to be building high-speed rail in Australia any time soon. The Gillard government isn't putting up any money. And Tony Abbott seems to have the misguided view that the motor vehicle is the last word when it comes to moving people around. He's not going to stump up the billions. But the fact is, we taxpayers spent $20 million on this report that looked into the economics, the finances, and the engineering required to get a high speed rail system up. We might as well see what it says.
One point that emerges from the study is that, in convenience terms, the fast trains would be brilliant.
The study compared the experience of a business traveller making their way from Melbourne's inner east to Sydney's central business district on train and plane. At the moment, that traveller would need a taxi or to drive to Tullamarine Airport. At the airport, checking-in and waiting around would take about an hour or more. The flight would be about 85 minutes. After landing at Sydney, you'd be lucky to get into the CBD by train or cab within 40 minutes of touching down.
But the experience with the hypothetical fast train could be about 20 per cent faster. You could take a much shorter cab ride or public transport to Melbourne's Southern Cross Station, arriving there within 15 minutes or less to departure. The trip would be longer, at about 2 hours and 45 minutes. But if the fast train made it all the way to Central station, the business traveller could get from there to Sydney's CBD in 10 minutes or so.
In fact, the report pretty much shows that if a system like this were ever erected, the domestic airline industry would be gutted.
If it was ever built, high-speed rail between Brisbane, Melbourne, Canberra and Sydney would attract 84 million trips a year by 2065, the report predicts. Of these, about 46 million of them would come from trips people would otherwise have flown for. (At the moment, the Australian domestic aviation industry carries about 56 million trips a year.)
The study argues that if high-speed rail did pose a threat to airlines, they would not compete by lowering prices. There has been so much discounting anyway that prices are probably low enough.
Instead, airlines would fly fewer planes on routes that compete with high-speed rail. They would shrink as businesses. This was the response in France when the Marseille to Paris TGV opened: Air France cut services, and easyJet left the route.
According to the study, the airline industry would cop a $9 billion hit to revenues from a high-speed rail line, using 2012 dollars. (The report assumes no second airport will ever be built in Sydney. This is strange because Anthony Albanese, the Transport Minister who commissioned the study, insists one is needed. The assumption also helps to make high-speed rail more commercially viable.)
There is no need, however, for Qantas, Virgin and Tiger to embark on a lobbying campaign to knock off the possibility of very fast trains. The study shows that if it were built, a fast rail network would be able to pay its way - including maintenance - charging fares comparable with those on domestic airline routes. But it wouldn't be able to pay off the estimated $114 billion in construction costs (again in 2012 dollars) needed to build the system. And a price tag this big will ensure that articles like this one will remain projections of something many people would like, but governments are unlikely to ask them to pay for.
Ross Gittins is on leave.
Frequently Asked Questions about this Article…
The government-commissioned study (paid for with about $20 million of taxpayer money) found high-speed rail along the east coast would be highly convenient and commercially able to cover operating and maintenance costs with fares similar to domestic airfares. However, it concluded the system could not pay off the estimated $114 billion (2012 dollars) in construction costs and that building the network is unlikely without major government funding.
The study's door-to-door example showed the fast train could be about 20% faster for a typical business traveller. The current plane trip involves time getting to Tullamarine, about an hour for check-in, an 85-minute flight and roughly 40 minutes to reach Sydney CBD after landing. By contrast, the fast train scenario had about 15 minutes to Southern Cross, a 2 hour 45 minute train journey, and about 10 minutes into Sydney's CBD.
The study predicted a Brisbane–Melbourne–Canberra–Sydney high-speed rail network could attract about 84 million trips a year by 2065, of which roughly 46 million trips would be journeys people would otherwise have taken by air.
According to the study, high-speed rail would significantly dent the domestic airline industry. It estimated about a $9 billion hit to airline revenues (in 2012 dollars) and predicted airlines would respond by flying fewer planes and cutting services on competing routes rather than engaging in large price wars.
The study argued airlines probably would not successfully compete by lowering prices because there has already been heavy discounting and fares are likely low enough. Instead, airlines are expected to shrink capacity on routes that compete with the rail line, mirroring what happened in France when the TGV opened between Marseille and Paris.
The article says it is unlikely high-speed rail will be built soon because governments have not committed the billions required. The Gillard government wasn’t putting up money at the time of the study, and the then-opposition (Tony Abbott) appeared unlikely to fund it. The study’s large construction price tag ($114 billion in 2012 dollars) makes government willingness to pay a key barrier.
The report assumes no second airport will ever be built in Sydney, which the article notes helps make the high-speed rail option look more commercially viable. This assumption contrasts with some political views—Transport Minister Anthony Albanese (who commissioned the study) insisted a second airport is needed.
For everyday investors, the study signals a potential long-term structural threat to domestic airlines if high‑speed rail were ever built (the report forecasts large passenger shifts and a multi‑billion dollar revenue impact). At the same time, the project’s enormous up-front cost and lack of committed government funding mean it’s unlikely to happen soon. In short: operationally viable but commercially unable to cover construction costs, and politically and fiscally challenging — a development to monitor over the long term rather than an immediate investment catalyst.
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