Peter’s Blog

Face value | Mr High-speed Europe | Economist.com

TGV accounts for only one-third of SNCF revenues, but its fat margins lifted the railway to a profit of €695m in 2006, after fees paid to RFF, the track owner, are taken into account. How do the TGVs make so much money when so many railways struggle? Mr Pepy points out that a double-decker TGV can make two round trips between Paris and the south or west of France every day, carrying about a thousand passengers on each leg. The combination of size and speed brings economies of scale, boosted further by the route through Strasbourg to Germany opened last summer, and the new high-speed Eurostar link to London.

French railways stand out in Europe not only because they manage to turn a profit, but because they remain solidly in the public sector while doing so. Instead of conflict between politicians and managers, there is a clear division of responsibility. French towns and regions now pay SNCF to run less glamorous local services or even extend TGV services on slower lines into the depths of Brittany. Since the regions pay, they, rather than the railway, decide where and when the local trains run. This keeps the politicians off the backs of Mr Pepy and Anne-Marie Idrac, his chairman. It also keeps politics out of the railway, since no party would dream of privatising SNCF—sparing France the agonies that Britain and Germany have faced over privatisation.

I wonder if SNCF’s TGV group’s profitability includes tracks funded by the French government. Assuming that RFF doesn’t rent the tracks to them at a loss, I guess so. If this is true, this makes me more optimistic for the California high speed rail project. I love the idea but have been worried that there was no pay the costs for the infrastructure (part of me figures that it’s fine for the state to eat the cost regardless). However, if the TGV group can make over a $1 billion a year, then there’s hope for t.

And, if you’re interested, here are some takes on the California high speed rail proposal. First, a government funded video, complete with soothing female voice:

Check out those garish blue and yellow paint schemes! I think Tyler Brûlé needs to turn his attention to the trains’ design. I like one of the YouTube comments for the video:

The only problem, why would you want to go to Sacramento?

=)
Of course, there are also the haters. Some say the rail system will destroy wildlife, some think costs will balloon out of control, and some love the idea but don’t thinking it’ll ever be built. That may be true, as the main bond issue keeps getting pushed back as the state has financial problems.