Why very fast train 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 Melbourne 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 Southern Cross Station, arriving there within 15 minutes or less of departure.
The trip would be longer, at about two hours and 45 minutes. But if the fast train made it all the way to Sydney's 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 built, 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 would come from trips people would otherwise have flown for. (At the moment, the Australian domestic aviation industry does 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 revenue from a high-speed rail line, using 2012 dollars. (The report assumes no second airport will 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 study found a high‑speed train could be very competitive door‑to‑door for business travellers. Although the train trip itself would be longer (about 2 hours 45 minutes), shorter access and egress times (for example arriving at Southern Cross within 15 minutes of departure and reaching Sydney CBD quickly) could make the overall trip roughly 20% faster than flying when you factor in driving, check‑in and transfers.
The report predicts about 84 million trips a year by 2065 on a high‑speed rail network linking Brisbane, Sydney, Canberra and Melbourne. Of those trips, roughly 46 million would be trips that people would otherwise have flown.
The study suggests high‑speed rail would severely disrupt domestic airlines on competing routes: airlines would likely fly fewer planes and cut services rather than engage in heavy price competition. The report estimates a roughly $9 billion hit to airline revenue (in 2012 dollars) on routes that compete with fast rail, and cites the France example where Air France reduced services and a low‑cost carrier exited a route after TGV service began.
Operationally the report says a fast‑rail network could cover running and maintenance costs and charge fares comparable with domestic airfares. However, it would not be able to pay off the very large upfront construction bill—estimated at about $114 billion in 2012 dollars—so it wouldn’t be commercially self‑funding in that sense.
The study’s release didn’t mean imminent construction. Politically and financially it looks unlikely in the near term: the government that commissioned the report hasn’t committed the billions needed, and alternative political views have downplayed large public spending on rail. In short, while the study outlines a feasible system, governments are unlikely to fund the construction cost soon.
Taxpayers funded the study at a cost of about $20 million. One key assumption in the report is that no second Sydney airport is built; that assumption increases the commercial viability of the rail option. Different infrastructure choices—like adding another airport—would change the economics and projections.
The study argues airlines wouldn’t primarily respond by cutting fares. Because there has already been substantial discounting in the market, prices are likely seen as low enough. Instead, airlines would typically reduce service frequency or withdraw from direct competition on the affected routes.
The report highlights a potential long‑term competitive risk to domestic airlines: significant passenger diversion and a projected revenue hit if high‑speed rail were built. For everyday investors that means airline businesses could face structural challenges on certain routes in a scenario where the network is developed. That said, the large construction cost and political hurdles make build‑out uncertain, so the risk is long‑term and depends on policy decisions rather than an immediate market shift.
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