demand forecast, rail simulation & access fees new ... · jean-pierre arduin civil engineer...

Transport Research Institute

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Paris 19, 23 June 2006

Session: Friday 23 June 2006

Demand Forecast, Rail Simulation & Access Fees

New Perspectives in Financial Feasibility

Jean-Pierre Arduin Civil Engineer

Economist

Director



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Summary

1. INTRODUCTION: HIGH SPEED RAIL IN EUROPE, A SUCCESS

STORY ______________________________________________________________________________ 4

2. DEVELOPMENT OF HIGH-SPEED RAIL IN EUROPE _______________ 4

2.1 BASIC PRINCIPLES OF HIGH-SPEED RAIL ____________________________________________ 4 2.1.1 New line dedicated exclusively to passenger traffic ____________________________ 4 2.1.2 Compatibility with the existing network_______________________________________ 5 2.1.3 Operations based on high frequency and short journey times ___________________ 5 2.1.4 Interoperability of high-speed rail network in Europe__________________________ 6

3. ECONOMIC MODELING: DEMAND FORECAST, RAIL

SIMULATION & INTERNAL RATE OF RETURN. ___________________________ 6

3.1 BASIC ECONOMIC ANALYSIS OF A HSR PROJECT_____________________________________ 6 3.1.1 Investment cost ____________________________________________________________ 7 3.1.1.1 Fixed installations______________________________________________________________ 7 3.1.1.2 Rolling stock___________________________________________________________________ 8

3.1.2 Profitability & Economic balance____________________________________________ 9 3.1.2.1 Discounting principle __________________________________________________________ 9

3.1.2.2 Internal rate of return (IRR)____________________________________________________ 9 3.1.2.3 Profitability & Economic balance _____________________________________________ 10

4. TRAFFIC MODELING: AIR COMPETITION & INDUCED DEMAND 10

4.1 TRAFFIC AND REVENUES FORECAST ______________________________________________ 10 4.2 TRAFFIC FORECAST METHODOLOGY ______________________________________________ 10 4.3 CALCULATION OF REFERENCE SITUATION _________________________________________ 11 4.4 CALCULATION OF PROJECT SITUATION____________________________________________ 11 4.4.1 Air Rail Competition: Price-Time Model ____________________________________ 12 4.4.2 Induced Demand: Gravity Model___________________________________________ 13

4.5 SIMULATION AND OPERATING EXPENDITURE RAILSIM ® MODEL______________________ 14

5. ACCESS FEES : INTEROPERABILITY FOR FREIGHT &

PASSENGER TRAINS____________________________________________________________ 15

5.1 TRANS –EUROPEAN INTEROPERABLE HSR NETWORK _______________________________ 15 5.2 OFFICIAL RULES TO OPERATE THE EUROPEAN HIGH SPEED RAIL NETWORK. EU DIRECTIVES

ON ACCESS FEES______________________________________________________________________ 16 5.2.1 EU Principles of charges for Access fees ____________________________________ 16 5.2.2 Rules and principles for the architectural structure of the OPERAs model______ 18 5.2.2.1 Presentation of OPERAs model _______________________________________________ 18 5.2.2.2 Charging principles contained in OPERAs model _____________________________ 19

5.3 NEW SCHEME FOR HIGH SPEED RAIL IN THE US BASED ON THE EUROPEAN EXPERIENCE _ 19

6. APPLICATION IN AFRICA, NORTH-AMERICA._____________________ 20


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7. APPENDIX __________________________________________________________________ 22

7.1 HIGH-SPEED RAIL IN FRANCE & EUROPE __________________________________________ 22 7.2 FRANCE_______________________________________________________________________ 22 7.2.1 Germany _________________________________________________________________ 24 7.2.2 Spain ____________________________________________________________________ 25 7.2.3 Italy _____________________________________________________________________ 25 7.2.4 Netherlands and Belgium __________________________________________________ 26 7.2.5 UK: Channel Tunnel Rail Link _____________________________________________ 27


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1. Introduction: High Speed Rail in Europe, a success story

The TGV system will undoubtedly go down as a landmark in both European and

worldwide transport, railway and HSR history.

In France, as a combination of superb rail infrastructure and extremely sophisticated rolling

stock, the TGV system is a fast, safe, frequent, comfortable and efficient means of transport

accessible to all. Ever since the South-East TGV was first placed in service, nearly a

quarter of century ago, it has been a technical, commercial, economic and financial

success. There is no doubt as to the technical prowess of the TGV. Its technical

performances are well known: the world rail speed record was set at 320 miles per hour on

the southwestern section of the Atlantic TGV. The Southeast, Atlantic, North-European

and Mediterranean TGV, progressively placed in service over the past twenty years, have

proved the reliability of the technical options selected for the TGV system in actual

operations.

This HSR system in operation has spread over all Europe: France, Germany, UK, Spain,

Italy, Netherlands, Belgium and Switzerland etc. Numerous projects are under construction

or under study. The future Trans-European interoperable high-speed rail network will reach

more than 12 600 kilometers of high-speed lines of which 8 400 will be operated in 2010.

The high-speed railway revitalises the railway transport, is adapted to the mass passenger

transport with full security and efficiency and has become a symbol of modern society.

TGV is the world standard for HSR.

2. Development of high-speed rail in Europe

2.1 Basic principles of high-speed rail

Whilst the Japanese had implemented high-speed rail services at 125 mph in 1964, it was in

1967 that the SNCF began studies and research into the concept of very high-speed rail at

more than 160 mph. First results emerged in 1970 with the proposal to build a new line

between Paris and Lyon on the basis of the following three basic principles: new line

dedicated exclusively to passenger traffic, compatibility with the existing network and

operations based on greater frequency and much shorter travel times.

2.1.1 New line dedicated exclusively to passenger traffic

A new line dedicated only to passenger traffic combined with a high power to weight ratio

train-set allows steeper gradients to be traversed over the new line. The following

advantages are associated with this option:

• substantial reductions in the cost of infrastructure investment by virtue of steeper

gradients, cutting the number and size of the structures needed (tunnels, viaducts, etc.)

and ensuring the straightest possible alignment, thus shortening the length of new line

to be built and reducing the corresponding journey times.

• maximum use of capacity available on the new line through uniformity in the speed of

the trains worked over the line.


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• allocation of the new line exclusively to passenger traffic, thus releasing substantial

capacity on existing conventional lines to the benefit of freight traffic and ensuring

optimum exploitation of capacity in both cases because trains are worked at similar

speeds.

2.1.2 Compatibility with the existing network

By ensuring compatibility with the existing network, TGV train-sets may continue their

journey over older lines and penetrate deeply into cities, thus offering full territorial access

to the new network, as a result of:

• through working into city centres using existing lines without new urban rail

infrastructure which would, by definition, be very costly;

• avoidance of the need to change trains at either end of the new line, and

• gradual introduction and extension of TGV services.

This approach contributes towards reducing the cost of new line construction, broadening

the potential catchment area and increasing traffic. TGV train-sets are fully compatible

with the existing network and can thereby continue their journey over this network at the

speeds allowed by the local line layout, thus serving towns some hundreds of kilometres

from the end of the new lines. As a direct consequence, the high-speed new lines are fully

integrated within the network of existing lines by being interconnected with this network in

several different places.

High-speed trains use existing lines:

- to run through into the city centre and serve existing termini

- to extend services far beyond the new lines increasing the market share of HSR.

For countries with different track gauges (difference between conventional existing gauge

and high-speed gauge), the new lines can still be constructed to existing station locations

by modifying existing gauge of tracks in the vicinity of the terminal stations. But for large

penetration of territory, solutions also exist. Rolling stock capable of changing gauge

automatically has been developed in Spain and Japan (prototype stage).

2.1.3 Operations based on high frequency and short journey times

TGV train-sets are lightweight push-pull train-sets with a

high power to weight ratio that can be coupled together in

pairs. As a result, they can:

• attain a maximum operation speed of 190 – 220 mph and

high mean commercial speeds (including use of existing

classic lines and station stops) in the region of 160-190

mph. Mean commercial speeds such as this generate

substantial cuts in journey time, giving timings that are

competitive with the airlines over distances of up to

1,500 km.

• run on a frequent basis despite the limited number of

available train-sets through rapid turn-round (push-pull

design and ease of changing direction in stations).

• make full use during peak periods of the capacity available on the new line through

the formation of one train by coupling two trainsets together.

These technical principles for the high-speed railway in France have proven very reliable.


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A high-speed system based on the principle of significantly more frequent services and

reductions in journey times constitutes a totally new departure for the travelling public. The

sudden upsurge in traffic recorded may be ascribed to this phenomenon.

These technical design options for the high-speed railway in France have proven very

reliable. They made it possible to achieve high commercial speeds of about 150-

170 mph, to optimise the use of TGV and the commercial capacity of the new line, to

reduce operating and maintenance costs of the new line and rolling stock, and to free large

freight transportation capacities on existing conventional lines. All these factors have

contributed to the growth of traffic, to the increased profitability and to enhance the return

on investment of the high-speed railway project.

2.1.4 Interoperability of high-speed rail network in Europe

With the success of high-speed rail in France demonstrated other European countries such

as Germany and Italy developed their own high-speed railways. These individual national

high-speed railways have different technical specifications and were not generally

interoperable. The European Community contributes to the establishment and development

of a trans-European Network in the high–speed railway sector. For this it is mandatory that

interoperability between the individual railways and their individual systems is guaranteed.

Therefore, as a first step, the Council adopted Directive 96/48/EC on Interoperability of the

trans-European High-Speed Railway System on 23rd July 1996. It is to be noted that the

main basic technical characteristics of infrastructure, rolling stock and operations of the

French high-speed technology have been integrated in this directive.

3. Economic Modeling: Demand forecast, Rail simulation & Internal Rate of Return.

3.1 Basic economic analysis of a HSR project

In view of their economic, social, financial and technical importance, major high-speed

railway projects require extensive studies taking their specific natures into account.

The first impact of a new railway is the increased traffic. This impact extends over the

entire network because the improvement has direct and indirect benefits.

Evaluation of a large railway project is divided into four major sections:

- Estimation of investments based on experience and market knowledge,

- Estimation of future traffic based on using traffic forecast models,

- Simulation of railway operation based on simulation models,

- Estimation of economic and socioeconomic balance.

Estimation of future traffic indicates future earnings, making it possible to calculate the

economic advantages of the new line. Future traffic is estimated by econometric models

explaining the passengers' choice of transport mode.


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Railway operation is estimated by models coherent with the future traffic projections.

Simulation of operation provides operating costs, calculates rolling stock, and proposes

timetables.

Estimation of an investment for construction uses many techniques, and its scope is very

wide covering geology, hydrology, civil works, etc.

Knowledge of revenues, operating expenditure, investments and scheduling, makes it

possible to calculate the internal rate of return. The internal rate of return depends on the

updated difference between the earnings from the traffic (with and without the project) and

the operating costs (with and without the project) related to the initial investment.

The socioeconomic rate of return takes into account the advantages of the project for the

entire national community, such as advantages to railways companies, time savings for

passengers, net losses of other transportation operators, net benefit to the State, reduction of

road congestion, and impact on economic activity in regions related to the project.

3.1.1 Investment cost

3.1.1.1 Fixed installations

In conducting economic studies, the principal investment cost factors are specific to the

particular corridor under examination. In particular, the cost of purchasing land and

expropriation should be calculated from experience with the cost of similar operations.

Civil engineering costs may be established by reference to other comparable large-scale

projects.

The main data to be compiled relates to the following factors:

- mapping topography

- soil geology, geo-technology

- hydrology

- earth movements, excavation work, …

- interconnection with communications

facilities.

In addition, a study should be conducted into links

between the new line and the towns and cities it is to

serve, into the technical facilities to be provided in

stations and the general data concerning the technical

specifications for track and turnouts. Technical

specifications also concern electrification, signaling

and telecommunications.

Investment or capital costs relate essentially to the

following:

• infrastructure:


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- land acquisition costs

- the cost of reconstituting sites and ensuring access

- earthworks

- drainage facilities

- underpasses

- ordinary and special engineering structures

- noise abatement installations

- reconstitution of roadways

- landscaping

- fencing

- etc.

• superstructure (railway equipment):

- track and ballast

- safety and signaling installations

- electric power supply facilities

- telecommunications installations

- buildings and terminal installations

- overheads

- etc.

3.1.1.2 Rolling stock

Rolling stock investment is estimated with the following factors:

• the technical features of the high-speed trainsets. Technical requirements relate

primarily to power rating, speed, capacity, noise, stability, maintenance, life cycle

and comfort (running behavior).

• the commercial features of the

high-speed trainsets.

Commercial requirements relate

to inside layout: highly

comfortable seats, saloon

compartments for 4 passengers,

family or group compartments,

telephones, fax, television, on-

board video, individual

headsets, etc.

Naturally these technical and commercial features have to be adapted to the

requirements of the particular market.

• the number of high-speed trainsets required. This may be calculated from the

operating schedule which is, in turn, designed to meet the demand forecast for the

project under investigation.

The technical and commercial requirements determine the unit cost per high-speed

trainset. Rolling stock investment costs are, therefore, obtained by multiplying the number

of trainsets needed to handle demand (including a few extra trainsets in reserve) by the

unit price.


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3.1.2 Profitability & Economic balance

By knowing the revenue that will be earned from the traffic predicted, the operating costs

and the amount of investment outlay and the way these sums will be spread out over time,

it is possible to calculate the internal rate of return for the project using the discounting

technique.

3.1.2.1 Discounting principle

To take account of the fact that monetary flows in year j will not have the same value at

the time they occur as they have today, it is necessary to project forward into the future

and for this the discounting method is applied. This consists of transforming all the flows

staggered from year 0 to year n into equivalent flows for a given year.

The equivalent for a given year (year 0 for example) of sum Sj appearing in year j is

shown as:

SS

a

j

j01

=+( )

where a is the discount rate.

The discounting period usually begins in the year in which the first monetary flow occurs

(when the first expenditure for building the new line is incurred) and continues throughout

expected project life. A twenty-year operating life cycle is taken a basis in the project for

producing economic balance sheets. For all cost items that have not become obsolescent at

the end of this period, a residual value is taken into account in the last year of operations.

The formula for the discounted incremental benefit for 20 years of operations is as

follows:

BA aInv

a

Inv R Dep

a

VR

a

m

m

m m m

mmm c

( )( ) ( ) ( )

= −+

+− + −

++

+==−

−

∑∑∆ ∆ ∆ ∆ ∆

1 1 1 200

191

where :

∆Invm : annual incremental investment (infrastructure, rolling stock)

∆Rm : annual incremental revenue (or positive benefits)

∆Depm : annual incremental expenditure (or negative benefits)

∆VR : incremental residual value at the end of 20 years of operation

a : discount rate

c : construction period

3.1.2.2 Internal rate of return (IRR)

The rate of return on investment in any given project is assessed on the basis of numerous

criteria, the most important of which are:

- the internal rate of return, which is defined as being the discount rate which

offsets the discounted benefits. This rate is naturally dependent on the date on

which the investment is placed in service but it is independent of the discount

year. The rate takes no account of inflation and thus measures the intrinsic


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value of the project. Compared to the real rate of interest on the market

(inflation excluded), it shows the margin that should be released for the

promoter of the project as against the risks he incurs in its implementation.

- discounted benefits calculated at a given rate

- discounted benefits per monetary unit invested, this showing the degree of

benefits to be derived from the investment.

3.1.2.3 Profitability & Economic balance

The economic balance for a high speed rail project is prepared over a period running from

the first year of the investment schedule until the twentieth year of operation of the project.

At the end of the operating period, a residual value is assigned to the railway equipment

which is not yet economically obsolete.

The two main economic indicators used are net discounted profits, calculated at a specified

rate and on the date when the project is implemented, and the company's real internal rate

of return attached to the project, i.e. the rate that cancels the net discounted profit.

This analysis shows the profitability-value to be derived from a TGV project, and when

faced with various scheme and route options, this analysis allows the choice of the most

profitable alternative.

But, even if a project is not justified from a strict economic viewpoint, it can still be made

viable for the community.

4. Traffic modeling: Air competition & Induced demand

4.1 Traffic and Revenues forecast

Any corporate investment project is studied in a defined socio-economic and competitive

context. The study of the passenger traffic and its growth is based on data concerning the

transportation sector and the general economy. The economic and competitive

environments are factors in each stage of study. The principal data are the socio-economic

indicators and the transportation supply of competing modes of transportation.

Implementation of a transportation project causes changes in the overall market and in the

market share of each carrier both in terms of volume (resulting from transfer of passengers

and creation of new trips), and in the structure and final characteristics of the passengers.

4.2 Traffic forecast methodology

The first task in a high speed rail study is to forecast the traffic-levels associated with the

project. Projections are carried out on a step-by-step basis, using econometric models.

The development of a transport project brings about changes to the global travel market

and for the market of each transport operator. It affects the volume, the structure, and the

characteristics of traffic.


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The steps are presented in the following figure :

Traffic

STEP 1

STEP 4

STEP 2

Years

STEP 3

- Step 1 concerns the basic year, the year for which the last statistical results or the most

recent surveys are known.

- Step 2 concerns the transition from the basic year to the year of the commissioning of

the project, or the reference year.

- Step 3 consists of estimating the additional traffic and the modifications resulting from

the project. During this stage, the situation with the project replaces the reference

situation and the project starts to be implemented.

- Step 4 permits estimation of traffic for any year after the project has been completed.

4.3 Calculation of Reference Situation

A general model can be made for each of the concerned transportation modes (planes,

trains, private vehicles and buses) linking the traffic for each mode to a series of relevant

parameters.

The above-mentioned model concerns socioeconomic and transportation supply variables.

4.4 Calculation of Project Situation

Building a new line may cause a transfer of demand from air transport to the project.

Passenger may travel by plane in the reference situation, but take the TGV in the project

situation; this can be estimated by a price-time model. Similarly, passengers may leave

their car or bus and change to the TGV because of reduced travel time.

Traffic may be induced by mobility, either by an increased number of trips of railway

users or by the appearance of new trips; this can be forecast by a gravity model.


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Consequently, it is appropriate to estimate these various components of the additional

traffic. This is the purpose of the two models used and developed by SNCF : price-time

model, and gravity model.

4.4.1 Air Rail Competition: Price-Time Model

The price-time model can determine the shares held by the different modes of

transportation with respect to the

total number of passengers

travelling. The model is based on

the hypothesis that the choice a

passenger makes between types

of transport, is based on the value

that the passenger places on time,

and on the cost and travel time.

Thus, user "k" selects the

transport mode for which the

generalized cost, taking into

account its time value "hk", is the

lowest.

It is assumed that on a given route

there is a typical distribution

among the travelling population

where the value they attach to

time f(h) is concerned and the

distribution function

∫=h

dxxfhF0

)()( gives the

proportion of journeys where the

value of time is less than h.

Assuming f(h):

)))ln()(ln(2

1exp(

2

1)(

2

2 mhh

hf −−=σπσ

then

HSR share = Probability (h< h0) =

)))ln()(ln(2

1exp(

2

1)(

2

2

0

0mh

hhF

h

−−∫=σπσ dh

Using the distribution of revenues in the population for each specific corridor and in a

large number of countries, it is possible to select a log-normal density function for the

time value f(h).

Probit Model

0%

20%

40%

60%

80%

100%

0 250 500 750 1000

Value of time

H

S

R

Cg

RailAir

Value of timeh0

HSR

h1


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4.4.2 Induced Demand: Gravity Model

The gravity model predicts the total volume of additional traffic for each transportation

mode.

The induction or generation of traffic is a fundamental phenomenon and can be estimated

from the gravity model. Traffic between two geographical zones i and j can therefore be

expressed in the following form:

r

ij

ijCg

PiPjKTraffic =

where :

Pi and Pj : Respective populations of the two geographical zones i and j,

Cg ij : generalized transport cost taken into consideration in zones i and j,

γ : Elasticity of traffic in relation to this generalized cost,

K : Adjustment parameter.

Following a change in the services offered, the variation in traffic δTij s linked to the variation in the generalized cost δCgij by means of the formula :

δγδTij

Tij

Cgij

Cgij= −

The generalized cost of the mode studied may then be expressed in the general form :

Cg = p + h Tg

where:

p : Average price of the journey between i and j

Tg : General time factor between i and j

h : Monetary parameter representing the average value of time as perceived by

the passengers

Depending on the mode of transport studied, the parameter Cg may be broken down into

detail in order to reflect the journey time as well as the access time either end if

applicable, and the intrinsic performance and quality of the mode under consideration :

trip time, frequency, interchanges etc.

The validity of traffic forecasts is best appreciated when comparing predictions with actual

results. Differences recorded may reveal shortcomings in the method adopted.

The impact of high-speed rail on air traffic is undisputed. Air routes in competition with

high speed lines all feature a similar pattern.


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4.5 Simulation and operating expenditure Railsim ® model

After calculating the traffic using these models, the economic coherence between the

supply and the demand is verified in accordance with the following criteria:

• Relevance of stops on route with respect to passenger flow,

• Calculation of train occupation rate for purpose of remaining in commercially- and

economically-acceptable range,

• Calculation of required fleet of train-sets and of corresponding productivity ratios,

and

• Calculation of operating costs.

The model for simulating operation is therefore associated with the traffic forecast models.

Often it is necessary to adjust the services initially planned in the light of this exercise. By

repeating the process a few times on an iterative basis it is possible to achieve consistency

in the supply and demand built into the project.

Simulation programs are widely used to estimate the likelihood of the forecast in relation to

operating programs. Railsim ®, a SYSTRA Consulting computerized program, is an

excellent product in these regards. With each optimized operating program, the operating

and maintenance costs are associated.


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5. Access fees : Interoperability for Freight & Passenger Trains

5.1 Trans –European interoperable HSR network

The future interoperable trans-European high-speed railway network was adopted by

European Union and presented in the left map. This network will reach more than 12600

kilometres of high-speed lines of which 3700 kilometres are in operation in 2002 and 8400

kilometres planned for operation in 2010.

This scheme presented below is now widely used in Europe where it is at the level of

European Directives. Its implementation in the US can lead to the successful first high

speed rail project in operation in a very near future.

Three line categories are defined for constituting

the trans-European high-speed railway network:

- category I: specially built high-speed

lines equipped for speeds generally equal

to or greater than 250 km/h,

- category II: specially upgraded high-

speed lines equipped for speeds of the

order of 200 km/h,

- category III: specially upgraded high-

speed lines which have special features as

a result of topographical, relief or town-

planning constraints, on which the speed

must be adapted to each case.

Interoperability of the trans-European high-speed

railway concerns the following sub-systems:

infrastructure, energy, control-command,

operation, maintenance and rolling stock.

The basic parameters of interoperable high-speed

rail system are as follows:

- Minimum Infrastructure Gauges: The

minimum gauge for infrastructure on future category I lines is the GC UIC gauge

and on existing category I lines and category II lines is the GB UIC gauge. UIC:

International Union of Railways.

- Track Gauge: 1435 mm, based on the UIC standard gauge.

- Minimum Platform Length: 400 m.

- Platform Height: two permissible values: 550 and 760 mm.

- Power-supply Voltage: power supply voltage is 25 kV 50 Hz.

- Catenary Geometry: two values are possible: 5080 mm and 5300 mm.

- Control Command and Signalling System: ERTMS.

- Axle Loading: Axle load applied to the track may not exceed 170 kN.

- Maximum Train Length: less than or equal to 400 m.


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5.2 Official rules to operate the European High Speed Rail network. EU directives on Access fees

The EU 91/440 directive, modified by the directive 2001/12, made compulsory a split, at

least in the accounts, between Infrastructure and Operation. Infrastructure managers (IM)

and Railway Undertakings (RU) or Train Operating Company (TOC) should work

separately.

For the purpose of the clear understanding, the following definitions of Infrastructure

Manager and Railway Undertaking or Train Operating Company are given by the

directive:

- Infrastructure Manager (IM) means any body or undertaking that is responsible in

particular for establishing and maintaining railway infrastructure. This may also

include the management of infrastructure control and safety systems. The functions of

the infrastructure manager on a network or part of a network may be allocated to

different bodies or undertakings.

- Train Operating Company (TOC) means any public or private undertaking, licensed

according to applicable Community legislation, the principal business of which is to

provide services for the transport of goods and/or passengers by rail with a

requirement that the undertaking must ensure traction; this also includes undertakings

which provide traction only. Proposals for the access rights to the infrastructure and

relative pricing are made.

Actually, following the alignment and implementation of EU directives, the railway in

France is as follows:

RFF

French Infrastructure Manager

SNCF

French Railways Operator

• Infrastructure charges

• Capacity allocation

• Improvement and expansion

• Timetables

• Business Units Passengers

Long Distance, Regional, Paris IDF traffic

• Business Unit Freight

• Business Unit Stations

Government (Ministry of transport)

• Business Unit Infrastructure Management

(Traffic Control, Maintenance

Construction, Timetables)

• Traffic control

• Maintenance

• Construction Other TOCs

Organism of control

5.2.1 EU Principles of charges for Access fees

Since the directive 91/440/EC, the separation of infrastructure and railway operation has

become an actual fact in European Union. The directive 2001/14/EC gives precision on


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allocation of railway infrastructure capacity, charging principles and the safety

certification.

The determination of the charge for the use of infrastructure, Access fees, and the

collection of this charge shall be performed by the infrastructure manager. Infrastructure

managers shall ensure that the application of the charging scheme results in equivalent and

non-discriminatory charges for different railway undertakings that perform services of

equivalent nature in a similar part of the market.

The basic principles of charging are the followings:

• Charges for the use of railway infrastructure shall be paid to the infrastructure

manager and used to fund his business.

• The charges for the minimum access package and track access to service facilities

shall be set at the cost that is directly incurred as a result of operating the train

service.

• The infrastructure charge may include a charge which reflects the scarcity of

capacity of the identifiable segment of the infrastructure during periods of

congestion

• The infrastructure charge may be modified to take account of the cost of the

environmental effects caused by the operation of the train. Such a modification

shall be differentiated according to the magnitude of the effect caused.

Following the Directive, the exceptions to charging principles are as follows:

• In order to obtain full recovery of the costs incurred by the infrastructure manager

a Member State may, if the market can bear this, levy mark-ups on the basis of

efficient, transparent and non-discriminatory principles, while guaranteeing

optimum competitiveness in particular of international rail freight. The system

shall respect the productivity increases from the railways companies.

The level of charges must not, however, exclude the use of infrastructure by

market segments which can pay at least the cost that is directly incurred as a result

of operating the railway service, plus a rate of return which the market can bear.

• For specific investment projects, in the future, or that have been completed not

more than 15 years before the entry into force of this Directive, the infrastructure

manager may set or continue to set higher charges on the basis of the long-term

costs of such projects if they increase efficiency and/or cost-effectiveness and

could not otherwise be or have been undertaken. Such a charging arrangement

may also incorporate agreements on the sharing of the risk associated with new

investments.

The directive contains also rules in regard to:

• Compensation schemes for unpaid environmental, accident and infrastructure

costs of competing transport modes in so far as these costs exceed the equivalent

costs of rail.

• Performance scheme: Infrastructure charging schemes shall through a performance

scheme encourage railway undertakings and the infrastructure manager to

minimize disruption and improve the performance of the railway network. This

may include penalties for actions which disrupt the operation of the network,


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compensation for undertakings which suffer from disruption and bonuses that

reward better than planned performance.

• Reservation charges: Infrastructure managers may levy an appropriate charge for

capacity that is requested but not used. This charge shall provide incentives for

efficient use of capacity.

The accounts of an infrastructure manager shall at least balance income from

infrastructure charges, surpluses from other commercial activities and State funding on the

one hand, and infrastructure expenditure on the other. Without prejudice to the possible

long-term aim of user cover of infrastructure costs for all modes of transport on the basis

of fair, non-discriminatory competition between the various modes, where rail transport is

able to compete with other modes of transport, a Member State may require the

infrastructure manager to balance his accounts without State funding.

5.2.2 Rules and principles for the architectural structure of the OPERAs model

This section develops and presents the rules and principles for the access fees OPERAs

model. This is a privately designed and owned model concerning the access and relative

pricing of railroad infrastructure.

5.2.2.1 Presentation of OPERAs model

The OPERA model is presented as follows:

Infrastructure Charges = OPE + R + A + S

Where:

OPE: OPErating costs of trains

R: Reservation charges

A: fixed Access right

S: Social effects of rail mode on environment.

A The (A) of the formula will stand for fixed access right. It is a fixed cost, price per

kilometer, and allows the railway company to operate trains on the network. This

fixed payment for network access is independent of the reserved capacity and the

traffic.

R The second charge (R) is related to the reservation of train slots, train scheduling. It

is based on a price per slot-kilometer and could depend on:

• quality categories of the section of line (fast lines, regional lines etc.)

• periods of the year, month, week, day,

• types of traffic (freight, passenger etc.)

• commitments regarding trains delays

• number of slots operated

• contract duration

• delay between the booking and the use of capacity

As there are strong possibilities to get various operators on the network, it would be

desirable to take into account most of these parameters in order to allow operators to

adjust their offer of transport according to the demand and the costs.


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OPE The term (OPE) is directly linked to the use of train slots. It is based on train-

km and could depend on mainly the characteristics of trains:

• speeds

• types of traffic

• tonnage of trains

• axle loads

• traction types

• types of rolling stock

S Fourth part (S) could be added according to the willingness of the State to charge

railway services:

• by taking into account the cost of the environmental effects caused by the

operation of the train or

• by using compensation schemes for unpaid environmental, accident and

infrastructure costs of competing transport modes in so far as these costs

exceed the equivalent costs of rail.

5.2.2.2 Charging principles contained in OPERAs model

Depending on the methods for calculating the level of OPE, R, A and S, the presented

method theoretically integrates the three variants below:

• Marginal cost: this principle consists to charge the marginal cost of usage of

railway infrastructure. With this principle, the infrastructure equipment is

considered as natural source at the disposition of any user due to its positive

external effects. But this charging method does not allow the financial equilibrium

of Infrastructure Manager.

• Full infrastructure cost: the revenue from track usage charges should cover all

the expenditure for construction, maintenance and usage of railway infrastructure.

• Contributing capacity: railway operators pay the infrastructure manager what

they can pay taking into account their revenue, operation and maintenance

expenditure.

It is to be noted that the European Directive is in favor of the principle of marginal cost.

5.3 New scheme for High Speed Rail in the US based on the European experience

It is now the time to look at the present situation in the US. This European scheme could

be a solution for the implementation of HSR in the US.

States build and own high speed rail infrastructure. As highways, ports, airports are build

and owned by the State, High Speed Rail infrastructures are just like another state owned

infrastructures. Railways operators use this infrastructure as far they pay an access fee,

which is calculated in relation with the provided service. This new service is available

without restrictions.


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Railways operators invest in rolling stock are allowed in some place to invest in their own

stations, operate the infrastructure, collect revenues from the traffic, pay an access fee to

the State and make profit.

Doing that, a State is doing what a State must do, provide infrastructure to operating

companies. These companies can make a profit if they give a fair economic answer to the

Market.

The next picture presents a new scheme for High Speed Rail project in the US, and the

State of Florida is taken here as an example.

On this scheme, the State of Florida will invest on High Speed Rail infrastructure, and this

infrastructure will belong to the State of Florida. Railway operators will operate this

infrastructure with their own rolling stock, and will pay an access fee to the State of

Florida. This companies will make a profit if they do their job with efficiency, and the

State of Florida, as a provider of infrastructure, will help the development of Florida, and

make this State more attractive to the business, tourism, and quality of live.

Scheme for High Speed Rail Project

Florida

Build, Own

HSR Infrastructure

Collect Access fees

Railways Operators

Own rolling stock,

Stations,

Collect traffic revenues

Maintain & Operate

Pay Access fees

State of Florida

ACCESSACCESSACCESSACCESS

FEESFEESFEESFEES

PPPProfitability = (Revenues - Operating Costs )rofitability = (Revenues - Operating Costs )rofitability = (Revenues - Operating Costs )rofitability = (Revenues - Operating Costs )

IIIInvestmentsnvestmentsnvestmentsnvestments

Private Industry

6. Application in Africa, North-America

This scheme can find an application in Africa, in Morocco for instance.

Recently, Morocco is studying the implementation of a new high speed rail network,

connecting Casablanca, Marrakech and Agadir. Financial opportunities are big for the

investors and surely the new scheme will be very helpful.


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Travel by high-speed train revolutionises ground travel, revitalises the railway passenger

transport system and remains competitive up to 1000 miles with the airlines. High-speed

lines built to date are also commercially successful. The high-speed railway is

environmentally friendly: the most efficient mode in energy consumption and pollution;

occupation of land area is twice less than a highway, and provides a solution for easing the

road and air space and airport saturation congestion.

The high-speed railway is a highly secure transport mode. It has a very positive impact

on economic activity (trade, tourism, hotel industry, services, etc.), urban development,

real estate, and employment etc. The high-speed railway revitalises the railway transport,

is adapted to the mass passenger transport market with full security and better efficiency

and has become a symbol of a modern society. With the success of the high-speed railway,

we can conclude that: Countries that have created high-speed systems have powerful

national goals with HSR supporting these goals. These countries are prepared to fund the

large investment costs involved because of the belief in their projects and the vision of the

future created by these. In Europe the interoperable high-speed network is seen as a factor

to unifying the countries of the European Union. In Japan the high-speed is seen as the

main transport mode supporting the economic and social development of the country.

HSR has been highly developed since 40 years and proved as a fast, safe, frequent,

comfortable and efficient means of transport accessible to everybody in Japan and Europe

(France, Germany, UK, Spain, Italy, Netherlands, Belgium and Switzerland etc.).

Numerous HRS projects under construction or planned in the near future are located in

Europe, Africa and Asia: Korea, Taiwan and China.

The reduction of the infrastructure cost and the facilitation of low impact construction must

be taken into account as an important factor for improving the chance of success of a new

HSR project. The need of demand to transport the passengers, the general consideration of

the economic, socio-economic and environmental aspects for a HSR project should be

privileged for the future implementation of the HSR network in Africa and North America.

All these options are contributory factors in increasing traffic and enhancing the return on

investment in high-speed rail projects.

We hope that in the next future, HSR projects will be built in Africa, North America

(USA and Canada) using the technical, commercial, economic and financial

experience proved in Europe and Japan.


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7. Appendix

7.1 High-speed rail in France & Europe

7.2 France

The Master Plan for high-speed rail covers a total of 4,600 km of high speed lines. Services

will concern 11,000 km of line with the inclusion of existing lines upgraded to differing

degrees for higher speeds.

France is the first European country, which introduces the High-speed TGV system. The

total lines under operation have a length for a total of 1520 kilometres of high-speed lines

in 2002, presented in the map:

- TGV South East (417 km): first commercial service in 1981 for St. Florentin – Lyon

Sathonay and second commercial

service in 1983 for Combs la Ville

(Paris) – Saint Florentin

- TGV Atlantic (281 km): first

commercial service in 1989 for

Bagneux (Paris) – Connerré Junction

(Le Mans) and second commercial

service in 1990 for Courtalain

Junction – Monts Junction (Tours)

- TGV North Europe (333): first

commercial service in 1993 for Paris

– Lille and Lille – Calais

- TGV interconnection lines in Paris

region (104 km): commercial services

in 1994 and 1996 for the link

connecting the North, South East and

the Atlantic TGV lines

-

- TGV Rhône-Alpes (121 km): first commercial service in 1992 for Montanay Junction

– Satolas Airport and second commercial service in 1994 for Satolas Airport – St

Marcel les Valence

- TGV Mediterranean (251 km): first commercial service in 2001 from Valence to

Marseille and Nîmes

Thus from the extreme north of France (the Channel Tunnel) to extreme south of France

(the Mediterranean Sea), we have an unique high speed line of 1070 kilometres from Calais

to Marseilles at 300 km/hour with a trip time of a little more than 3 hours by a TGV train-

set. The put into service of the TGV network has changed deeply the French geography in

term of trip times from Paris, as of June 2001 with the TGV Mediterranean opened, shown

in this map.


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The planned TGV project under construction

is the TGV East (300 km for first stage) from

Paris to Strasbourg. Other very advanced

projects, which will be put in service in the

near future, are:

- TGV Rhin – Rhône from Lyon to

Strasbourg by Dijon (205 km from

Mulhouse to Dijon)

- TGV Nîmes – Montpellier (61 km)

- TGV Perpignan – Figueras connecting

France and Spain (32 km for French

section)

By 2010, there will be 2117 km of high-speed line in operation. Construction will have

averaged just over 60 kilometres per year during the 35 years since 1975 when construction

of the TGV south-east started. The French Master Plan for high-speed rail envisaged a total

of 4700 km of high-speed lines. Services will cover 11000 km of lines including existing

lines upgraded to differing degrees for higher speeds.

D ev e lo pm e n t o f F r en c h H ig h -S p e e d

N e tw ork

0

5 0 0

1 0 0 0

1 5 0 0

2 0 0 0

2 5 0 0

1 9 8 0 1 9 8 5 1 9 9 0 1 9 9 5 2 0 0 0 2 0 0 5 2 0 1 0

3 0 y ea rs p e riod

L e

n g t

h

in

op e

ra t i

on

(k

m )

C um ula tive le n g th in op e ra tion

Comprising to other European countries, the French high-speed wheel-on-rail projects are

cost effective concerning the construction costs. The first TGV project (South-East TGV

from Paris to Lyon) had a cost per kilometre of only 4 millions Euro. This is the cheapest

high-speed line world-wide. The average price of recent projects is about 10 million Euro


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per kilometre. The most recent Mediterranean TGV project (in service since 2001) is

composed of 7 large viaducts and one long tunnel. Total lengths of these structures are

17.155 km of viaducts and bridges and 12.768 km of tunnels. Even in these difficult

conditions, the cost per kilometre of high-speed line is about 15 million euros.

7.2.1 Germany

Corridors in operation, under construction or advanced planning are as follows:

- Hannover-Würzburg (326km): commercial service in 1991

- Mannheim-Stuttgart (99km): commercial service in 1991

- Hannover-Berlin (264km):

commercial service in

1998

- Berlin – Leipzig (152 km):


2002

- Köln-Frankfurt (177km):


2002

- Hamburg – Berlin (286

km): commercial service in

2004

- Nürnberg-Ingolstadt

(89km): on works and


2005

- Köln – Aachen (69 km): on

works and commercial

service in 2005

- Erfurt - Halle-Leipzig (114

km): commercial service in 2007

- Nürnberg - Erfurt (122 km): commercial service in 2007

- Stuttgart - Ulm (61 km): commercial service in 2010

- Karsruhe - Basel (193 km): planned

- Rottendorf – Iphofen (25 km): planned

- Hannover – Hamburg (92 km): planned

The total length of these high-speed rail projects is 2069 km. The technical choices are

different from France. The past high-speed lines are not dedicated to passengers transport.

The maximum speeds of these German lines are 250 km/h. The German track is also

different from French choice: slab track in Germany and ballasted track in France.

Consequently, the costs of construction of high-speed lines in Germany are higher than the

French costs.

The project Köln-Frankfurt (177km) is the very first real high-speed line dedicated to

passenger traffic for the speed of 300 km/h. This line was put in commercial service in

2002. Consequently, the first German trainset to be run at 300km/h is the ICE 3 on this

line. Facing the difficult topography, this line is composed of 47 kilometres of underground


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structures (30 tunnels, the longest one is 4.5 km) and 6 kilometres of viaducts (18 larges

viaducts). 155 km of track is slab track. The cost per kilometres approach 28 millions Euro.

7.2.2 Spain

The situation of Spanish high-speed rail network at the end of year 2002 is presented in this

map. The gauge of

the existing railway

network in Spain is

1668 mm rather than

the European

standard gauge of

1435 mm. From the

very first Spanish

high-speed project,

the French TGV

technology with

European standard

gauge has been

adopted allowing

direct links to the

Trans-European

High-Speed Network

through France. The compatibility with existing railways is assumed by constructing

automatic gauge changing rolling stock. Projects in operation or in construction are:

- High-speed rail line Madrid – Sevilla: The principle of a rail link between Madrid and

Sevilla was decided in 1988 and put into operation in 1992 for the World Expo using

AVE rolling stock (French TGV technology). The length of the high-speed line is 471

km and the travel time is 2:15 between Madrid – Sevilla. Some Talgo 200 tilting

trains, which can change gauges, run at minor speeds avoiding interchanges during the

journey going beyond the high-speed line. In a near future, this high-speed line will be

extended to different branches linking the cities as Cadiz, Toledo, Malaga and

Granada.

- High-speed rail line Madrid - Zaragoza - Barcelona - French border: This project is

under construction and will be put into service in 2004 and 2006. The length of the

high-speed line is 796 kms. This will be the first high speed line in the world with a

commercial speed of 350 km/h allowing a travel time of 2:30 between Madrid and

Barcelona in place of 6:30, meaning a gain of 4 hours. For this project, two types of

350 km/h rolling stock are to be procured, the Siemens ICE350E and the Adtranz-

Talgo 350 trainsets, 20% of train manufacture to be in Spain.

- Connection between Iberian Peninsula and European high-speed network: The study

of a rail link between Barcelona and the French border is accomplished. The

international section between Perpignan (France) and Figueras (Spain) will be

constructed as a BOT type project (build, operation and transfer). The international

tender is in progress. The year of commercial service will be 2008.

7.2.3 Italy

The new Italian high-speed lines are designed to upgrade and modernise the Italian rail

system so as to improve the service offered to the public at a national and local level. This


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objective is achieved by structurally expanding the railway network along the most

intensely used lines and improving the functionality of the traditional routes. The key

features of the new high-speed lines are:

- improvement in the railway transport service by upgrading the main lines: the cross-

country route Turin-Milan-Venice

and the dorsal route Milan-

Florence-Rome-Naples, the

connecting line between Genoa

and the Po Valley via the Terzo

Valico (third pass), the

international links to France

(Tunnel under the Alps, more than

50 km), Switzerland and Austria

and reorganisation of the urban

junctions;

- an increase in capacity of the

entire railway system due to close

integration with the existing

network;

- the utmost compatibility with

environment;

- use of state-of-the-art construction technologies in line with the highest international

quality standards.

Main high-speed rail corridors in Italy are:

• Florence – Rome (242 km) in operation since 1992

• Florence – Bologna (78 km): commercial service in 2006

• Rome – Naples (204 km): commercial service in 2004

• Turin – Milan (125 km): commercial service in 2005 and 2007

• Milan – Bologna (182 km): commercial service in 2006

• Milan – Venice (248 km): planned

The future network will be composed of more than 1100 kms of high-speed lines.

7.2.4 Netherlands and Belgium

The North-European TGV network services are

composed of Channel Tunnel and high-speed

railway links between UK, France, Belgium, the

Netherlands and Germany linking Paris and

London to Brussels, Amsterdam and Frankfurt.

The Channel Tunnel (52 km) was opened to

commercial service in 1994 and is the key link for

the North European high speed rail network.

Eurostar services serve the European cities like

London, Ashford, Lille, Paris and Brussels. The

travel time in 2002 between Paris – London with


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Eurostar service is 3:00 and between London – Brussels is 2:40.

The high-speed line Lille – Brussels has been put into service in December 1997 with

Thalys trainsets. The current 2002 Thalys services, throughout the day, and always at

extremely competitive prices, provide links to Paris, Brussels, Amsterdam, Cologne,

Geneva as well as to Liège, Antwerp, Bruges, The Hague, Rotterdam, Düsseldorf, Airport

Charles De Gaulle, Disneyland® Resort Paris etc. Thalys makes up to 30 return trips each

day between Paris and Brussels in just one hour and 25 minutes.

7.2.5 UK: Channel Tunnel Rail Link

The Channel Tunnel Rail Link is is Britain's first major new railway for over a century - a

high-speed line running for

113 km between St Pancras

station in London and the

Channel Tunnel.

The new high-speed line is

being built in 2 Sections.

Section 1 (74 km) has been

under construction since

October 1998 and runs

between the Channel Tunnel

and Fawkham Junction in

north Kent. The first Section was opened in September 2003. Work on Section 2 (39 km)

began in July 2001 and completes the new line into London's St Pancras. Section 2 is on

schedule for completion by the end of 2006.

The topography of the route is difficult. Long tunnels are necessary to penetrate in London

St Pancras station. In total, the route has 26 km in tunnel and 4 km in large viaducts. Due to

the tunnel for penetration in central London, the cost of construction of this line is

extremely expensive, attaining 74 million euros per kilometre. The design speed is 300

km/h. 8 Eurostars per hour can run when the line is finished. This project will reduce travel

time between Paris and London from 3:00 to 2:35 in 2003 and to 2:15 in 2007. The travel

time between London and Brussels will be reduced to only 2:25 in 2003 and 2:00 in 2007.


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