Train Service or Train Business?

TrainPostImage300x200Public transportation is a crucial service in any modern society, and vital for the economy. Not only does public transport facilitate workforce mobility, but it does so without the excessive costs to our health and environment that come with private automobiles. Therefore, it’s paramount that the politicians who run the United Kingdom understand this, so they can ensure the best possible service to all of us.

Unfortunately, the current government doesn’t understand. They see public transport as a business and they care only about whether or not it makes profits, which is probably why they privatised it in the first place.

This attitude to transportation was, probably involuntarily, admitted today when rail minister Norman Baker was interviewed on Radio 4. He used the fact that there was a record number of travellers in 2012 as an excuse for raising the fares. This follows the capitalist business-oriented view of supply and demand. If there are more travellers, they can increase the prices and make more profits with nice full trains.

However, if you look at the railways as a service and consider the costs of running them, you’ll find that a higher number of travellers will make the cost per passenger smaller. Here’s a rough equation of how much it costs to run a train:

TrainCostEquation

Here Train Cost is a fixed price for running a train, including maintenance of the railway, train stations, the train itself, train fuel, etc. The Passenger Cost is the extra cost per passenger, made up by extra fuel due to increased weight and extra wear and tear of the trains and stations. If the number of passengers goes up, the Total Cost goes up as well, but as the Train Cost part is fixed the Total Cost per passenger goes down.

The Association of Train Operating Companies (ATOC) has a detailed breakdown of train costs per £1 spent on a ticket.

All in all, this is just another great example of why public services should not be private. Owners of privatised services stop thinking about how to provide the best service for the customers, and start thinking about how to make profits. It seems like the ideal business strategy is to increase prices and maybe lose a few customers, but keep full trains. Even if this means that some people can’t afford the journey, and might have to quit their job that required the commute, or drive to work instead.

But it would be better for the country and the overall economy if the prices were reduced, making it easier to commute. It would increase the mobility of the workforce and reduce the extra cost of running businesses, especially in London.

Look at it this way: if a train service provides 10 million journeys at a price of £20 each, it would make £200 million revenue, while if it served 100 million journeys at £2 each it would make the same revenue at presumably significantly increased costs. That means lower profits for the train operating companies. However, the UK would benefit from getting 10 times as many people transported around the country. We could achieve this with a state-run, publicly financed transport system, but not with capitalist commercial companies running our railways.

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