California high speed train proposal a train wreck

California…the land that cars built. And now it wants to build a high speed train system, that runs at 220 MPH. There is a proposition on the Nov 2008 ballot to make the taxpayers pay for this white elephant on wheels. (Update: Here is a writeup in LA Times Editorial by a pro and a con)

That would mean a high speed train like  the shinkansen in Japan or the TGV in Western Europe.

The backers want to float a bond that will cost us 647 million a year for 30 years, plus one billion a year for operating costs. Of course, the bond is guaranteed by the taxpayers.

So, this enterprise will cost us Californians 1.647 billion dollars a year.

Let’s do a little financial analysis to find out just how the numbers work out.

We will have to sell almost that much in tickets to make it back. We can get a few dollars from concessions.

The train is supposed to service the northern California cities of Sacramento, San Francisco, Oakland, San Jose and the southern California cities of Los Angeles and San Diego.

Today, you can fly between any of the northern and southern California cities for, let’s say $100 one way.

1.647 billion dollars annually means we have to sell 16,470,000 tickets at $100 each to break even.

That is 45,100 one-way tickets per day.

That would be the equivalent of 322 flights per day, assuming 140 seats per flight on a Boeing 737. Airlines fly 80% full if they are doing well, so that would be the equivalent of 402 flights per day.

One train can transport about 425 passengers, so we will need to have about 100 trains running at 100% capacity every single day.

Southwest currently flies 376 flights per day within California.  It claims a good load factor at 80%, meaning it flies 80% full on the average.

Here is the distribution of flights in California for Southwest. Yes, I really did goto the SWA website and go through every single combination to do this. I really am that dedicated.

Southwest schedule in California

Therefore, Southwest sells 44,518 seats per day for travel within California.

Problems:

The train system would have to sell 45,100 tickets per day just to BREAK EVEN. SWA makes a profit at that number. Southwest is the dominant provider in the California market, and it is a very nimble competitor. I doubt that this train system will make as much money as SWA can.

The environmental benefit is miniscule, because the plants that generate the electricity will have to be fossil fuel. Alternative energies just don’t have the capacity to provide the massive amounts of voltage required to push train at 200 MPH.

The design of this proposed high speed rail system is all wrong and the benefits from this design are dubious. Northern and southern California are very spread out areas, and SWA flies point to point between many of these cities, making for quick and easy travel. I don’t think it is going to be feasible for the high speed rail system to be built in such a way that it would connect the population centers the way the airports do right now. A train will not be able to travel point to point, like Southwest can. A journey between ONT and SFO, for example, would probably take four hours or so, if you were to include stop and travel time from ONT to the high speed rail line station.

The train system currently does not require security checks, but I think a high speed rail system would, just like an airport. That would add security fees and check-in time. This would reduce its attractiveness to the traveling public.

The proposed budget does not include cost overruns. Government project routinely run over their cost(see here), sometimes by as much as 300%.

A government run railway would have a salary structure higher than what the private sector would provide, and it would of course not be as efficient.

Solution:

The California state government is right in wanting a railway. But, they should work on fixing the existing railway system, which can be done at a fraction of the 50 billion of a high speed rail system. If they can just speed up the existing trains to an average of 80 or 90 mph, a speed that trains used to run at back in the 1930’s, then that would go a long way towards making rail transportation more viable.

But, if they truly want a high speed rail system, that can also be done by the private sector. All that the government has to do is guarantee the right-of-way that is needed for a private company to build railroad tracks, and make sure that all legal issues for this right of way are addressed. There are sure to be many companies that will try to build this railroad. After all, the American West was settled by the use of private railroad companies. It would cost the government no more than a billion dollars to buy the land needed for the tracks and the stations, and they can then sell that land to any company that promises to build the railroad.