NCPA - National Center for Policy Analysis


September 24, 2009

One of the most frequently mouthed claims about high-speed rail is that it is enormously profitable.  Judging by the claims made by proponents, you might wonder why all the world's capital has not "beaten a path" to the station, says Wendell Cox, a senior fellow with the Heartland Institute.

Some of the wildest profit claims have been made by board members and staff of the California High Speed Rail Authority, which plans to build a $50 billion system from San Diego and Los Angeles to San Francisco and Sacramento.

Sadly for rail advocates, these claims are largely bogus, says Cox, who believes that rail promoters ignore accounting principles:

  • In some countries, government payments that would be called subsidies in the United States are called commercial revenues.
  • In others, high speed rail operators operate over tracks owned by government infrastructure companies, which are likewise subsidized in some cases.
  • Often, previous write-offs are not a part of the profit equation.
  • The lack of transparency in accounting practices makes it difficult to make a judgment as to the level of profitability.

Taiwan Today recently characterized the high-speed rail system as "loss-plagued" and noted it was in the process of seeking to restructure its debt.

  • A principal problem was that less than 90,000 of the 275,000 daily riders projected to use the system bothered to buy tickets.
  • The stations aren't full of turnstile-hopping commuters; the Taiwanese were either staying at home or using other forms of transportation.

Projecting more passengers than show up is not unusual in high-speed rail, notes Cox:

  • The Eurostar service from Paris to London attracts less than one-half of the ridership forecast five years ago and has required a government financial bailout.
  • The new high-speed rail system in Korea is carrying little more than one-half the passengers originally projected.

All of this is ominous news for California, says Cox, where daily ridership projections of Taiwan levels are often cited despite lower population adjacent to the lines, a longer corridor, and a much higher rate of automobile ownership.

Source: Wendell Cox, "High Speed Rail Is an Unprofitable Train Wreck," Heartland Institute, September 2009.


Browse more articles on Environment Issues