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Interregional Travel: A New Perspective for Policy Making (2016)

Chapter: 5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
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5

Public-Sector Role in the Provision
of Interregional Transportation
in the United States and Europe

As discussed in Chapter 3, the provision of interregional transportation in the United States is a public- and private-sector enterprise. Privately owned automobiles and buses use a road network that is planned, built, and maintained by state and local governments with funding obtained mainly from taxes on motor fuel and other fees levied on highway users by federal and state governments. Aircraft owned and operated by commercial airlines and privately owned and operated general aviation aircraft fly between airports run by state and local entities. They use the federally managed airways and air traffic control system, which are funded primarily from taxes and other fees paid by airlines and their customers.1 Intercity passenger train service is provided almost exclusively by Amtrak, a quasi-public corporation created by the federal government. Amtrak’s train operations are paid for with ticket revenues supplemented by federal and state funds, while the equipment and track in the Northeast Corridor (NEC) are publicly subsidized. Most of the other track used by Amtrak belongs to private freight railroads, which charge for its use according to access requirements established by the federal government.

The many public and private entities controlling and providing aspects of interregional transportation create a complex environment for funding and coordinating investments in transportation infrastructure and services. Most transportation infrastructure serves multiple purposes, which makes the environment even more complicated. For example, track is shared by short- and long-distance freight trains, regional commuter railroads, and intercity trains; freight-hauling trucks, intercity

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1 Military and government-owned aircraft also use these airports and the air traffic control system.

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
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buses, local commuters, and motorists traveling longer distances are commingled on the highways; and flights are shared by short-haul passengers and longer-haul travelers making connections. Public facilities like Boston’s South Station, New York’s Port Authority Bus Terminal, and San Francisco’s Transbay Terminal accommodate intercity bus, rail, and transit services.

The funding environment is discussed first, because it can dominate the planning and coordination of transportation infrastructure investments. Governments fund most of the fixed infrastructure of roadways, airways, runways, and terminals. These funds are derived mainly from users paying motor fuel and airline ticket taxes. The revenues from these fees are credited to trust fund accounts and mainly disbursed to state and local governments according to formulas. The disbursements, for the most part, can only be used to pay for projects in the specific mode. In the case of Amtrak, total revenues from passengers, who are not taxed, have never been sufficient to cover all operating and capital costs, and the federal government and states subsidize the railroad’s operations and capital expenses. Accordingly, Amtrak’s ability to make investments in the infrastructure it needs to provide rail service in the NEC and other interregional corridors is examined.

Consideration is then given to the planning environment, particularly to the coordination of transportation plans and decisions at an interregional level. The planning of highways is largely a state and local responsibility. However, federal law requires state and local governments to coordinate their plans for urban transit and highway investments from a metropolitanwide perspective. Interregional transportation corridors, which often span multiple states and metropolitan areas, are not subject to similar coordination requirements. The federal government has a more direct role in the planning of aviation infrastructure because of its exclusive authority over the design, management, and operation of the nation’s airspace. State and local governments exercise primary responsibility over the planning and prioritization of airport investments.

The influence of transportation funding on the planning environment is evident. In general, the user-based financing of the public highway and aviation systems, coupled with assurances that user revenues are reinvested in their respective systems, has provided a predictable stream

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

of funds for highway and aviation development. A disadvantage of this approach is its reinforcement of the already strong tendency of mode-specific transportation agencies to plan and program transportation on a mode-by-mode basis. Because Amtrak lacks such a steady and sufficient stream of revenues derived from users, it faces continuing challenges in the planning and prioritization of its intercity rail services and capital investments.

To conclude the chapter, the approach used for providing interregional transportation in the United States is contrasted with the approach in Europe, particularly with regard to intercity passenger rail. The focus of the discussion is on rail because its often large public investment requirements create special challenges in the multijurisdictional setting that characterizes most U.S. interregional corridors. A number of factors have favored the provision of passenger rail service in Europe, only a few of which can be discussed in depth here. An important consideration is the tendency of distances between major cities in most European countries to be shorter than in the United States. National-level transportation planning in Europe therefore will naturally focus on the interregional scale, that is, on 100- to 500-mile corridors. In comparison, U.S. city-pair markets span distances ranging from a few hundred to more than 2,000 miles. They create a mix of short-, medium-, and long-haul corridors that are legs of extensive highway and air transportation networks. However, a number of heavily traveled 100- to 500-mile corridors in the United States are possible candidates for more interregional passenger train service. The European approach and experience in providing passenger rail are therefore summarized. The European experience can help inform U.S. decisions about when and where to invest in this interregional mode.

PUBLIC FUNDING OF INFRASTRUCTURE BY MODE

Highways

Nearly all travel by private automobiles and buses in the United States takes place on the public road network. The backbone of this network, the Interstate highway system, accounts for less than 3 percent of public road lane mileage but includes the main routes used for most inter-

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
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regional travel and accounts for about 25 percent of all vehicle miles traveled.2 With rare exceptions, the Interstate highways and other public roads are owned, operated, and maintained by state and local governments with funding assistance from the federal government.

As noted above, most highway funding is derived from users. The federal Highway Trust Fund obtains revenues from fuel taxes and other fees imposed on motorists. Most states levy additional user-based taxes and fees, as well as tolls, to pay for their highway programs. The revenues dedicated to the federal Highway Trust Fund could be used only for highway projects until 1983, when Congress made public transit projects eligible. Although Highway Trust Fund revenues continue to be used primarily for highway projects, Congress has from time to time approved other related uses such as paying for bicycle and recreational trails and for environmental mitigation. Disbursements, for the most part, can only be used to pay for projects in the specific mode.3 In recent years, the revenues credited to the federal Highway Trust Fund have fallen behind program disbursements, which has reduced funding predictability and required the annual appropriation of general fund revenues to supplement highway spending.4

In 2013, federal, state, and local governments spent more than $200 billion on capital improvements, maintenance, operations, and traffic enforcement on the public road system.5 This large public investment is made with varying degrees of coordination among federal, state, and local governments. Within large metropolitan regions, coordination is both complicated and essential, since dozens or even hundreds

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2 http://www.fhwa.dot.gov/policyinformation/statistics/2012/.

3 A dedicated trust fund provides more certainty than reliance on the general fund; funds deposited in trust funds are considered guaranteed because they are not subject to congressional appropriations. The trust fund contract authority means that funds can be obligated in advance of an annual appropriation, which is valuable for projects that can take several years to complete, since the total funds for a given project do not need to be available at the project start date.

4 During the past decade, user fee revenues have not kept pace with federal authorization levels, in part because of the slowing of growth in gasoline and diesel consumption due to increases in vehicle fuel efficiency and a reduction in vehicle miles traveled. Because Congress has not increased the level of user fees or decreased authorizations, transfers from the general fund to the Highway Trust Fund have been required five times since 2008 (Nigro and Burbank 2014).

5 Federal Highway Administration, Highway Statistics 2013, Table PT-3C (http://www.fhwa.dot.gov/policyinformation/statistics/2013).

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

of local authorities have responsibility for aspects of the system. The federal government has long required, as a condition for aid, the prioritization and programming of urban transportation systems through a metropolitanwide planning process that is “comprehensive, continuous, and coordinated.”6 The planning must be multimodal, to include public transit, and extensive interagency and interjurisdictional involvement (sometimes multistate) is required.

Today, more than 350 metropolitan planning organizations (MPOs) monitor traffic conditions, carry out forecasting, and develop short- and long-range transportation plans in accordance with this requirement. Each year, the federal government provides an average of $300 million for MPOs to carry out their responsibilities.7 Highway and public transit projects are the main subject of this planning because they are the modes most directly eligible for federal aid from the Highway Trust Fund. However, the federal government does not impose similar coordination requirements for the expenditure of highway funds from an interregional perspective.

Airways and Airports

Airlines must cover their own capital and operating costs from passenger revenues. In addition, passenger revenues contribute nearly all of the funding for the public aviation infrastructure. This infrastructure, including airways and airports, is supplied by a mix of public-sector agencies.

The Federal Aviation Administration (FAA) has exclusive responsibility for the airways. The National Airspace System consists of the terminal and en route airspace and the navigation, surveillance, and communications infrastructure that make up the air traffic control system. Airport and Airway Trust Fund revenues are also used to pay for the National Airspace System. As noted above, these trust fund revenues are derived from taxes and fees paid by airlines and their passengers.8

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6 Federal-Aid Highway Act of 1962.

7 http://www.fhwa.dot.gov/map21; http://www.fta.dot.gov/documents/FTA_Funding_Summary_Fact_Sheet.pdf.

8 In 2014, user taxes contributed $13.5 billion to the Airport and Airway Trust Fund, mainly from a 7.5 percent federal tax on airline fares and a $4.00 flight-segment fee (http://www.faa.gov/about/office_org/headquarters_offices/apl/aatf/media/14).

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

Airports are the responsibility of state and local governments. There are about 500 commercial-service airports in the United States. Most are owned and operated by county and municipal governments or by special-purpose authorities created by states. Although the country’s largest commercial-service airports are publicly owned, they are largely self-sufficient. They derive substantial revenues from concessions; public parking; landing fees; and the rents charged for gates, terminal space, and other facilities used by airlines and other aircraft operators and support units.9 In addition, the 40 largest airports are allowed by federal law to levy a passenger facility charge that is folded into the price of an airline ticket. These revenues can be used by airports for capital projects.10 The Airport and Airway Trust Fund also pays for the federal Airport Improvement Program, which provides grants to airport authorities for a variety of purposes, including runways, navigation aids, and noise abatement programs.11

Amtrak and Intercity Rail

According to the original plan for Amtrak, it was to be managed as a for-profit company that would be free of federal subsidies within a few years.12 Timetables for self-sufficiency were established, including requirements for the railroad to report on the profitability of each route and to make plans for withdrawing service from money-losing routes (CBO 2003). At the same time, Amtrak was designed to have public service functions. It was to be overseen by a politically appointed board of directors, required to provide discounted fares for classes of riders, and required to maintain a network of long-distance routes that had for years been losing money for the private railroads unable to compete with airlines (CBO 2003). Therefore, Amtrak does not have the autonomy to

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9 More details on airport financing are given by Sengupta (2007).

10 For example, noise abatement procedures for an airport can reduce available capacity during certain hours of the day and restrict the use of departure and approach paths that pass over residential areas.

11 These direct and state block grants are apportioned through funding formulas and awarded through competitive applications.

12 The Amtrak Improvement Act of 1978 amended Amtrak’s statute to provide that the company be “operated and managed as a for-profit corporation” instead of the original “shall be a for-profit corporation.”

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

structure its business and services in a manner that would enable it to be managed like a for-profit company. Indeed, it faces substantial restrictions on this ability, which are evident from an examination of Amtrak’s revenue and cost profile.

Table 5-1 indicates that Amtrak carried 31 million passengers in Fiscal Year 2014. Its systemwide load factor, or passenger miles per seat mile, was slightly more than 50 percent, and the average trip length was 215 miles. The average ticket revenue per passenger was about $71, and total ticket revenues were slightly less than $2.2 billion. The cost data reported in the table are for Amtrak’s train operations and maintenance expenses, including fees paid for accessing freight lines. They do not include costs associated with infrastructure maintenance and renewal, such as on the NEC right-of-way. The $2.2 billion earned from ticket revenues covered about 83 percent of Amtrak’s expenditures on train maintenance and operations. When income from other sources such as food and beverage sales and the public subsidies provided by states is counted, 97 percent of the carrier’s expenditures were covered.

Systemwide averages do not reveal the considerable variation in revenue-to-cost ratios by type of route. Table 5-1, which is based on calculations by Amtrak, disaggregates revenue and traffic data for the NEC (Acela, the Northeast Regional routes, and special trains), state-subsidized, and long-distance routes. It also allocates costs across the three route types. The three incur similar average costs per passenger mile, but average ticket revenue per passenger mile varies considerably. These revenues were substantially higher on the NEC and covered 162 percent of allocated costs. When other revenues, which do not include state subsidies, are factored in, the NEC routes covered 167 percent of costs. The revenue-to-cost ratios suggest that the NEC routes generate enough net income to contribute to part of the corridor’s maintenance and capital costs not included in the allocated cost figures.

The other routes did not perform as well. Ticket revenues covered only 59 percent of the operating and maintenance costs of the state-supported routes, but state subsidies, which accounted for most of the other revenue, brought the ratio to about 92 percent. In comparison, ticket revenues on long-distance trains covered only 48 percent of their costs. Because it does not have a source of subsidy for these routes,

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

TABLE 5-1 Amtrak Traffic and Performance Metrics, Fiscal Year 2014

Metric Amtrak Systemwide NEC State-Supported Long-Distance
Passenger trips (millions) 30.92 11.64 14.73 4.54
Average trip length 215 166 132 607
Passenger miles (millions) 6,655 1,929 1,948 2,758
Total revenue ($ millions) 2,551 1,232 755 564
Ticket revenue ($ millions) 2,189 1,191 487 511
Other revenue ($ millions) 362 41 268 53
Fully allocated operating and maintenance costs ($ millions) 2,632 735 825 1,072
Passenger trip share (%) 100 38 48 15
Passenger mile share (%) 100 29 29 41
Ticket revenue share (%) 100 54 22 23
Fully allocated cost share (%) 100 28 31 41
Ticket revenue/total revenue (%) 86 97 65 91
Ticket revenue/fully allocated cost (%) 83 162 59 48
Fully allocated cost per passenger trip ($) 85.12 63.11 56.00 235.96
Fully allocated cost per passenger mile ($) 0.40 0.38 0.42 0.39
Ticket revenue per passenger trip ($) 70.79 102.27 33.06 112.48
Ticket revenue per passenger mile ($) 0.33 0.62 0.25 0.19
Ticket revenue shortfall per passenger trip ($) 14.33 (39.15) 22.94 123.48
Ticket revenue shortfall per passenger mile ($) 0.07 (0.24) 0.17 0.20

SOURCE: http://www.amtrak.com/ccurl/243/158/Monthly%20Performance%20Report%20-%20September%202014%20(Preliminary%20and%20Unaudited).pdf, pp. A-3.5, C-1.

Amtrak must use the excess generated from the NEC to cover the revenue shortfall on the long-distance routes, which averaged $123 per passenger. In effect, most of the excess revenues generated from the NEC, which accounted for 38 percent of Amtrak’s passenger trips, were used to cover the deficits incurred by providing service to the 15 percent of Amtrak riders who made long-distance trips.

Similarly, route-specific data indicate wide variations in revenue-to-cost ratios. Figure 5-1 shows the ratios by individual route, with the average passenger trip length on the horizontal axis. The circle sizes

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

images

FIGURE 5-1 Ratio of Amtrak ticket revenues to fully allocated operating costs by average passenger trip length, Fiscal Year 2014. [SOURCE: http://www.amtrak.com/ccurl/243/158/Monthly%20Performance%20Report%20-%20September%202014%20(Preliminary%20and%20Unaudited).pdf, pp. A-3.5, C-1.]

are scaled to the number of riders on the route. The figure shows that five Amtrak routes had ticket revenues that exceeded their costs, while the remaining 47 routes had ticket revenues below their costs. The figure indicates that Acela had the highest ratio, with ticket revenues twice as high as costs. For the other NEC regional trains, ticket revenues exceed costs by about 37 percent. The state-supported routes varied considerably in the ratio of ticket revenue to costs. Three had ticket revenues that exceeded costs; the remaining 26 routes had ticket revenues that were less than costs. The three with revenues exceeding costs are between Washington, D.C., and locations in Virginia, with continuing service to New York. They could be viewed as southern extensions of the NEC. All long-distance routes had ticket revenue deficits relative to costs [one of them, the Auto Train, had ticket revenues covering almost all of its costs (95 percent)]. The data for each route are shown in Figure 5-2.

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

images

FIGURE 5-2 Amtrak ticket revenue shortfall per passenger trip, in covering fully allocated operating costs by route, Fiscal Year 2014. (Prefixes: NEC = Northeast Corridor, SS = state-supported, LD = long distance. The number after the prefix is the Amtrak route number, and the number immediately after the route name is the number of passengers carried.) [SOURCE: http://www.amtrak.com/ccurl/243/158/Monthly%20Performance%20Report%20-%20September%202014%20(Preliminary%20and%20Unaudited).pdf, pp. A-3.5, C-1.]

Mode-Neutral Project Funding and Financing Opportunities

At the federal level, there are few transportation financing and grant programs designed specifically to broaden modal and jurisdictional eligibility. One financing program is the Transportation Infrastructure

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

Finance and Innovation Act (TIFIA) program, which provides federal credit assistance to surface transportation projects, including intercity passenger rail, some types of freight rail, and intermodal freight transfer facilities. TIFIA offers three types of financial assistance to applicants: loan guarantees, secured loans, and lines of credit provided to public authorities and private entities completing projects sponsored by public authorities. The leveraging of public investments is intended to lower the cost of borrowing by private entities; for example, the Federal Highway Administration claims that a $1 billion TIFIA authorization will support about $10 billion in actual lending capacity.13 TIFIA was first authorized in 1998 and was significantly expanded by Congress in the last surface transportation reauthorization (Moving Ahead for Progress in the 21st Century Act). It reached $1 billion in Fiscal Year 2014.

Another federal transportation grant program that seeks to broaden modal eligibility is the Transportation Investment Generating Economic Recovery (TIGER) discretionary grant program administered by the U.S. Department of Transportation. The grant program’s eligibility criteria are designed to encourage state and local governments, in conjunction with private-sector partners, to pursue multimodal and multijurisdictional projects that are ineligible for funding through traditional federal transportation programs. TIGER funding levels are small relative to the mode-specific federal funding programs (they have averaged about $1 billion per year since the program’s inception in 2009). The program’s concept is unique among federal transportation programs. For example, program grants can be used to fund port and freight rail infrastructure projects that are otherwise ineligible for federal funds. TIGER grants can also be made directly to public entities other than states, including municipalities, counties, port authorities, Amtrak, and MPOs. Because of the high demand for TIGER grants, fewer than 5 percent of project applicants receive funding, and the U.S. Department of Transportation has had to develop rigorous selection criteria for choosing among the applicants (Feigenbaum 2012). The

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13 https://www.fhwa.dot.gov/ipd/tifia/.

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

TIGER grant program could be a model for the funding of projects having an interregional dimension and fewer modal restrictions. Its popularity could be an indication of substantial interest in such funding opportunities.

A recent report of the National Cooperative Rail Research Program (NCRRP) reviews options for funding intercity passenger and freight rail projects (CPCS et al. 2015). The options considered range from dedicated sales and property taxes to more demand-based pricing of fares. The report also examines project financing methods such as revenue bonds, government loan programs like TIFIA, and public–private partnerships. The information in the NCRRP report offers a starting point for public officials interested in funding and financing interregional transportation projects.

ARRANGEMENTS FOR COORDINATING INTERREGIONAL TRANSPORTATION PLANNING

The combination of federal, state, and local governments having responsibility for the provision of transportation infrastructure creates a complex environment for the planning of investments in transportation, even within individual modes. As has been noted, in the case of highways and transit, the federal government has instituted a requirement for the creation of MPOs, which engage in multimodal planning of transportation systems serving metropolitan areas. The purpose is to counter the tendency for public investments to be programmed on a mode-by-mode and community-by-community basis. However, MPOs have a state and local orientation and therefore do not necessarily need to consider the effect of highway and transit development on the functioning of interregional transportation systems and corridors.

One reason for the lack of formal coordination and planning mechanisms at the interregional level is that many interregional trips span multiple states. The division of federal transportation programs also contributes to the fragmentation of transportation planning and programming. The federal highway and transit programs use the same trust fund and are authorized under the same legislation that mandates MPOs. However, the federal aviation program and its trust fund are

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

authorized in separate legislation developed by congressional committees different from those responsible for the surface modes. The federal statutes that govern Amtrak and appropriate funds to cover the operating and capital costs of intercity passenger rail derive from yet another set of congressional committees. Each of these mode-based funding programs comes with its own eligibility restrictions, allocation formulas, and authorization periods. The differences reinforce the mode-specific decision-making structures and complicate efforts to plan transportation investments in a well-coordinated and modally integrated manner.

Modally diverse state transportation agencies can assume an important role in planning and conducting objective appraisals of interregional transportation policy and investment options. For example, the Florida Department of Transportation is assessing the safety implications and public benefits of plans by the Florida East Coast Railroad to upgrade existing freight railway lines and construct 30 new miles of line to provide passenger service for 230 miles between Orlando and Miami.14 The Texas Department of Transportation has periodically reviewed plans to improve the state’s interregional transportation system, including a proposal that would have created multimodal corridors containing separate highway lanes for cars and trucks and separate rail lines for high-speed passenger and freight trains.15 However, even when an interregional corridor spans only a single state, there is evidence that modal “silos” tend to hinder multimodal planning and decision making. In California, after voters approved funding for a high-speed rail system, the mission of the California High-Speed Rail Authority (CHSRA) evolved from promoting the system to planning and implementing it. The planning and implementation have proceeded outside the context of a comprehensive statewide transportation plan. In May 2013, the chairman of an expert panel charged by the state to review CHSRA’s development plan remarked that “early development of the California high-speed rail project put the cart before the horse. Instead of having high-speed rail emerge from a statewide transportation context considering interregional competition and urban connections, the high-speed

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14 http://www.allaboardflorida.com/.

15 http://ttc69.files.wordpress.com/2008/02/ttc_report_full.pdf.

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

rail proposals were essentially free-standing with little recognition of the need for access to stations or connectivity to conventional and commuter rail.”16

Both formal and informal means are available to states to coordinate their transportation plans and priorities on a multistate basis. Multistate compacts have been used to plan transportation improvements having interregional impacts, such as the rail compact formed by North Carolina and Virginia. In addition, coalitions of public and private entities have been formed to advocate improvements in the performance of particular transportation corridors that serve broader regions. For example, in the 1990s, transportation agencies and operators in the Northeast formed the I-95 Corridor Coalition, which has expanded to cover the length of the corridor from Maine to Florida. The coalition provides a forum for addressing transportation system management and operations issues of common interest to agencies and users. Similar coalitions have been formed for other major Interstate highways, such as the I-85, I-80, and West Coast corridor coalitions.17 In addition, regional councils of governors and legislators will often develop multistate strategies to guide highway development and investment decisions. The Coalition of Northeastern Governors has an ongoing program to facilitate the exchange of information and to promote opportunities for closer coordination of highway and transit assets in the Northeast.18

The combination of federal, state, and local responsibilities for the provision of aviation infrastructure creates an especially complex institutional environment for the development of air transportation capacity to serve interregional markets. FAA invests in the NAS on the basis of its interest in ensuring that the aviation system operates in a safe, orderly, and efficient manner at the national and international scale. FAA investments must be informed by airport investment plans for runways, taxiways, and terminal capacity. These development plans are, in turn, the product of many local interests, including those of airlines, concessionaires, and

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16 http://www.cahsrprg.com/files/22_version_of_lst_statement_for_may_28_2013_submitted_version.pdf.

17 The Federal Highway Administration maintains a list of these regional coalitions at http://www.ops.fhwa.dot.gov/freight/corridor_coal.htm.

18 http://www.coneg.org/programs/trans.htm.

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

communities. Local community interests, such as noise abatement and environmental protection, can influence airport planning and development substantially.

In some metropolitan regions, a single county-, city-, or state-authorized special-purpose authority may operate all or most of the large commercial-service airports, such as the Port Authority of New York and New Jersey, the City of Los Angeles, and Metropolitan Washington Airports Authority. However, the airports in a metropolitan region may compete for airline tenants and passengers and thus may have little incentive to collaborate in their planning of capacity. With financial support from FAA, some airport authorities in the same metropolitan region have collaborated on their development plans; for example, by jointly developing forecasts for regional air travel demand and using the results to coordinate their airport investments and ensure that they are not duplicative. According to the Government Accountability Office, such regional plans are usually developed by MPOs but are only sometimes integrated with the planning of other transportation modes.19 FAA does not condition airport grant eligibility on such planning, at either the metropolitan or the interregional level.

To assist with the planning of NEC rail investments, Congress established the NEC Commission, whose members include the eight states served by the corridor. The long-range planning document that currently guides NEC rail investments, known as the NEC Master Plan,20 was created by Amtrak in collaboration with the state members of the NEC Commission and the Federal Railroad Administration (FRA) in 2010. With additional assistance from FRA, the NEC Commission is developing an implementation plan to identify investment opportunities consistent with the master plan. Sources of funding for the capital investments remain elusive. As discussed in Chapter 3, the eight commuter railroads that operate in the NEC are required to pay Amtrak access rates that are designed to recoup only “avoidable” costs, and thus they do not contribute to capital costs. Congress has called for reforms to these

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19 http://www.gao.gov/products/GAO-10-120.

20 The Northeast Corridor Infrastructure Master Plan, prepared by the NEC Master Plan Working Group, May 2010. http://www.amtrak.com/ccurl/870/270/Northeast-Corridor-Infrastructure-Master-Plan.pdf.

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×

reimbursement agreements,21 but whether the states and their respective commuter railroads will be in a position to contribute substantially more to Amtrak’s capital program for the NEC rail right-of-way remains to be seen. The lack of a shared funding commitment hinders the planning and prioritizing of investments in the multipurpose NEC rail line.

While the NEC Commission is made up of members from eight state departments of transportation, its emphasis is on passenger rail rather than on planning transportation services generally in the corridor. Nevertheless, the commission’s state department of transportation membership could provide a framework for examining transportation investment opportunities more generally and from a multimodal perspective in the NEC. To support the NEC Commission, FRA has created the NEC Future Program, which provides technical analyses of market conditions and environmental impacts for the evaluation and prioritization of NEC investments through 2040. The NEC Future Program has so far concentrated on rail. A broadening of its analytical role and an expansion of its dialogue with operators of intercity buses, airlines, and airports appear to be natural steps toward supporting a more comprehensive and modally diverse planning role for an interregionally focused NEC Commission.

In sum, neither the U.S. transportation funding approach nor its institutional environment has favored the development of transportation systems from an interregional perspective. For transportation systems that have a strong interregional dimension, such as intercity passenger rail, this situation can be problematic. As discussed in the next section, circumstances differ in Europe. Cities that are considered distant in a European country, such as Paris–Marseille in France (about 400 miles), Madrid–Barcelona in Spain (about 300 miles), and London–Glasgow in Great Britain (about 350 miles), are separated by roughly the same distance as the Los Angeles–San Francisco (about 350 miles) and Washington–Boston (about 400 miles) corridors. These and other interregional corridors in the United States span a single state or group of states; intercity markets that would be considered distant can span two or three time zones and more than 2,500 miles.

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21 Passenger Rail Investment and Improvement Act of 2008, Section 212.

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National-level transportation system planning in Europe is therefore more likely than in the United States to be at the interregional scale—a scale of 100 to 500 miles that is also suited to intercity rail.22 The early development of high-speed rail in Europe was entirely at the national level and used domestically produced technology (Nash 2009). These domestic systems have been increasingly integrated across European Union (EU) member countries with the aim of creating a trans-European rail network. The high-speed lines linking Paris, Brussels, and London have been the greatest success to date. Nevertheless, integration is complicated because the funding, planning, and delivery of service are affected by the decisions of individual member countries. For example, a recent article (Economist 2015) reports how the EU “is finding it hard to transform a bunch of national rail monopolies into a pan-European market in which operators compete across borders.” The institutional challenges are being addressed by the EU, which has established requirements for open access to new operators and common technical standards for new infrastructure and rolling stock. Therefore, an examination of how passenger rail systems have been provided in Europe can provide insights relevant to the provision of interregional transportation in the United States (Nash 2009).

Before the European experience in providing intercity rail is discussed, the rationale for not similarly examining the provision of rail in another continental-size country, China, is mentioned. Since 2008, China has added more than 12,000 miles of high-speed lines and 1,200 train sets. High-speed trains in China carried more than 800 million passengers in 2014 and accounted for more than half of worldwide high-speed traffic.23 China’s longer-range plan is for high-speed lines to serve 90 percent of cities with populations of 500,000 or more (Wu 2014).

There are many reasons to study China’s experience in developing and operating high-speed railways, but there is little to be gained in terms of policy insight. China’s form of government allows infrastructure decisions to be made in a centralized manner that bears no relation to the policy

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22 Rodrigue and Notteboom (2010) provide a qualitative comparison of the configurations of the European and North American transport and logistics networks. They discuss several relevant contrasts, including the tendency of European infrastructure projects to be designed on a scale that is more national than continental.

23 http://www.uic.org/High-Speed-History.

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environment of the United States. Early evaluations of China’s investment in a high-speed rail network suggest that major uncertainties were overlooked or considered irrelevant by decision makers. Among them was whether the projected traffic would materialize to enable repayment of substantial amounts of debt and whether the added investment in faster service would be cost-beneficial in regions where travelers have low valuations of travel time (Wu et al. 2014). Such a decision-making environment is not germane to the United States, where political, economic, and demographic conditions are more closely aligned with those of Europe. Furthermore, the Chinese transportation system bears little resemblance to that of the United States. It serves a population having much lower income,24 motor vehicle ownership rates,25 and airline usage.26

EUROPEAN EXPERIENCE WITH PROVISION
OF INTERCITY RAIL

Table 5-2 compares mode shares for all travelers in interregional markets in the European Union with modes shares for travelers in the 200 most heavily traveled interregional markets in the United States. In some respects, interregional travel patterns in Europe today resemble those of the United States. In both places, the automobile is the dominant mode by a large margin for trips of less than 300 miles (about 500 kilometers). Car ownership rates in the United States have long been higher than in European countries, but the gap has been closing (Berri 2009).

Similarly, in both the United States and Europe, air travel accounts for a substantial share of trips longer than 200 miles (about 300 kilometers). However, there is a notable difference in the use of passenger rail across all distances. Rail mode shares are in the single digits for all mileage levels in the United States and typically below 3 or 4 percent. Rail shares in

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24 According to World Bank data for 2014, China’s gross domestic product per capita was $7,594, compared with $54,630 in the United States.

25 According to World Bank data for 2010, China averaged 58 vehicles per 1,000 people, compared with 797 in the United States (http://web.archive.org/web/20140209114811/http://data.worldbank.org/indicator/IS.VEH.NVEH.P3_).

26 According to World Bank data for 2014, air passengers in China totaled 390 million. The corresponding figure for the United States, which has only 23 percent of the population of China, was 763 million (http://data.worldbank.org/indicator/IS.AIR.PSGR).

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TABLE 5-2 Interregional Mode Shares in the European Union and for Travelers in the Top 200 U.S. Markets

Jurisdiction and Distance Auto Bus Air Train Other
European Union, 150–199 km 78.2 6.6 11.9 0.8 2.5
European Union, 200–249 km 74.9 6.0 13.1 2.1 3.9
United States, ~160–240 kma 94.4 2.8 2.6 0.3 na
European Union, 250–299 km 66.5 7.9 17.0 4.8 3.8
United States, ~240–320 kmb 88.1 3.3 4.2 4.5 na
European Union, 300–499 km 60.2 7.8 18.2 10.6 3.2
United States, ~320–480 kmc 74.4 5.4 6.7 13.5 na
European Union, ≥500 km 29.2 5.9 8.7 53.2 3
United States, ~480–800 kmd 41.9 3.1 1.0 54.1 na

NOTE: Mode shares are percentages; na = not applicable (“other” applies only to European Union).
a100–149 miles; b150–199 miles; c200–299 miles; d300–500 miles.
SOURCE: Directorate for Energy and Transport 2014 for EU data; Federal Highway Administration trip tables discussed in Chapter 4 for U.S. data.

Europe are between 12 and 18 percent for distances up to 300 miles and are nearly 10 percent even for longer trips. In short, Europe’s passenger railways have retained a substantial market share for domestic interregional trips, particularly in the largest city-pair markets of individual countries, such as Paris–Lille, London–Manchester, Madrid–Barcelona, and Frankfurt–Cologne (Crozet 2014; Nash 2014).

There are many possible reasons why passenger rail is more prevalent in Europe than in the United States. After World War II, Europe’s historic cities were preserved, and damaged cities were rebuilt with land use restrictions to retain compact designs. Narrow, congested roads and scarce parking limited the attraction of cars. The low level of household incomes after the war led to low automobile ownership levels and a public willingness to tax motor fuel and automobiles as luxury goods. By the time automobiles were widespread in the 1960s and 1970s, most cities were already mature. Meanwhile, motor fuel taxes were kept high27 as

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27 Country-by-country motor fuel prices are given by the International Energy Agency (2015, Tables 9, 10, and 11, pp. 374–376).

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European cities invested in public transit systems, which tend to function well in compact cities (TRB 2001). The combination of good public transit and city centers that continued to be major attractors of business, shopping, and leisure trips gave downtown train stations locational advantages over airports, which tended to be located on the edges of metropolitan areas because of noise and land requirements. In addition, most major European airports impose stronger regulatory controls on takeoff and landing slots to address concerns over capacity shortages than do airports in the United States. Such supply constraints may limit the ability of airlines to offer competitive flight frequencies for short-haul trips that can be made by rail and other interregional modes (Gillen and Morrison 2008; Starkie 2008).

A thorough review of these and other geographic, demographic, historical, and policy-related factors that have contributed to differences in rail use and availability in Europe and the United States is beyond the scope of this study. However, a review of some of the factors can offer insights that may be useful for interregional transportation planning in the United States.

Public Investments in Passenger Rail Infrastructure

As discussed in Chapter 3, after World War II, the use of passenger rail declined precipitously in the United States as automobiles and airlines attracted travelers. Rail did not experience the same magnitude of decline in Europe. When European rail corridors experienced declining freight traffic after World War II, many were upgraded with public investments for more intensive use by passenger trains. Today, the major cities of Europe are linked by a network of interconnected passenger rail corridors. Freight continues to be transported by rail in many European countries, but traffic volumes and mode shares do not resemble those of the United States. According to Furtado (2013), the rail share of the freight transportation mode split (including truck and water), on the basis of ton-miles, was about 37 percent in the United States and less than 10 percent in the EU.

European investments in substantially upgraded and new higher-speed passenger lines have usually been made in corridors that already had high train ridership (Preston 2014). Because their rail networks are

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devoted mainly to passenger trains, service levels could be expanded incrementally over time to a point where capacity limits and the demand for major service and infrastructure investments became evident. In this regard, Europe has followed the Japanese approach in building the Shinkansen, which was the first high-speed railway in the world (Kurosaki 2014; Nash 2014). When the Shinkansen was being planned in the 1950s, central Japan’s existing Tōkaidō trains were heavily used, but travel was slowed by narrow-gauge tracks that often meandered to circumvent the mountainous coastal terrain (Kurosaki 2014). Although construction and operation of a line specially built for high speed were expected to be costly, Japan was confident that the rail service would attract substantial ridership because of the already large base of train ridership (Toshiji 2007). In short, the national governments of Europe and Japan have made large investments to create integrated networks of passenger trains. For the most part, their investments in new or substantially upgraded passenger rail lines have been made in markets already having significant rail service and demonstrating high rail ridership.28

European governments have invested in a mix of conventional and higher-speed passenger trains (Nash 2009). Programs to upgrade heavily used conventional rail systems, such as those in Great Britain, Germany, and Sweden, have resulted in average speeds of about 90 miles per hour, top speeds of about 125 miles per hour, and scheduled service at least hourly in many markets (Givoni 2006; Ellwanger and Wilckens 1994). Examples of these upgrades are tilting trains that allow faster speeds through curves and the addition of new track sections to circumvent bottlenecks. The faster trains typically share track with freight trains, but the freight volumes are generally not large enough to pose major traffic conflicts. In some cases, such as where chronic capacity shortages arise because of high volumes of freight or commuter traffic or where existing infrastructure is of poor quality and difficult to upgrade, new passenger lines have

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28 The construction of the Channel Tunnel and its high-speed rail line (HS1) to London could be considered an exception to this approach. Ridership in the London–Paris and London–Brussels markets had previously been served by airline and combinations of ferryboat, bus, and rail services. The HS1 line has not met original ridership forecasts. The overestimation appears to have resulted from the London–Paris–Brussels markets not experiencing the anticipated growth in travel demand, in part because of the advent of low-fare airlines offering service to more distant cities (Booz and Company 2012).

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been built. The new lines are not constrained by existing infrastructure and are typically built for nonstop services scheduled for speeds of 125 to 150 miles per hour (Givoni 2006). According to the World Bank, as of 2010 Europe had about 3,400 miles of high-speed lines on which trains regularly travel with a maximum speed of 150 miles per hour or higher (Amos et al. 2010, Figure 1).

France decided to invest heavily in high-speed rail lines in the 1970s and now has more passengers using high-speed trains than any other European country. Although construction of the Train à Grande Vitesse (TGV) led to faster intercity service, a main reason for the French decision to invest in the system was to free capacity for regional service on the existing rail network and to curb congestion on the country’s main highways.

The French experience has demonstrated the benefits of integrating high-speed rail services into the mostly conventional national rail network. The TGV provides frequent, high-speed service between Paris and several major French cities and connects to the junctions of conventional lines that can accommodate high-speed trains operating at reduced speeds to access more French cities. For example, the trains that first ran on the high-speed line built between Paris and Lyon were able to continue on conventional lines to reach Marseille, Nice, and Montpellier (new high-speed lines have since been built on these routes). This purposeful integration has allowed the high-speed trains to access traditional stations in many more cities without the need for expensive reengineering. The French high-speed system thus differs from the Japanese system, whose high-speed trains can only operate on dedicated lines because of the narrow gauge of the country’s conventional lines.

The original Paris–Lyon line now accommodates more than 150 trains per day operating at a cruising speed of about 200 miles per hour. According to Crozet (2014, 75), only the high-traffic routes serving Paris earn enough revenue to contribute to the TGV’s maintenance and capital replacement costs. Trains operating in smaller city-pair markets such as Lille–Lyon and Lyon–Nantes are generally cross-subsidized with revenues earned from the Paris markets because of the lighter traffic in the former markets.

More recently, Spain has invested heavily in high-speed rail. Because its cities are arranged radially around Madrid, Spain has had to construct four separate high-speed main lines (plus some spurs) to serve a

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number of individual city pairs (i.e., Madrid–Barcelona, Madrid–Seville, Madrid–León, and Madrid–Valencia) (Nash 2014; de Rus and Inglada 1997). In this sense, the geography of Spain is comparable with that of Midwestern regions of the United States, with long distances between the major cities and limited intermediate population centers (Nash 2009).

Efforts to fund rail infrastructure privately have had mixed success in Europe. Both the Channel Tunnel and the high-speed line linking it to London were conceived as being private ventures requiring no government funding. However, in both cases financial difficulties compelled government contributions; for example, the track access charges imposed on some forms of traffic were subsidized. The private company that was awarded the franchise for the high-speed line between London and the Channel Tunnel sought government underwriting of the debt. No direct public subsidies have been provided to the Channel Tunnel operator, but the rail infrastructure at each end of the tunnel was subsidized. Although evidence indicates that private-sector involvement has aided the development of passenger rail infrastructure in Europe, it has not eliminated the need for substantial government funding.

Throughout Western Europe, the rail infrastructure is owned by government. Great Britain is the only country without a publicly owned passenger train operator; however, most other European countries have divided their once vertically integrated national rail companies into separate organizations responsible for train operations and rail infrastructure (Mizutani et al. 2015). For instance, Sweden, the Netherlands, and Denmark have established separate operational and infrastructure companies; France, Germany, and Italy have established subsidiaries within a government-owned holding company. These divisions have been required by EU law, which mandates nondiscriminatory access for freight and international passenger operators, ensured by an independent regulator. The EU is considering proposals to extend this access requirement to all passenger train services (Mizutani et al. 2015).

In Great Britain, where there is no national rail carrier, almost all intercity trains are operated by private carriers under franchise agreements. The franchised passenger train operators pay for access to the infrastructure on the basis of a variable charge covering marginal cost plus a lump sum contribution to the fixed costs of the system. In addition,

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on the most profitable routes, bids for franchises offer a premium to the government, which in some cases covers the remaining fixed costs. However, high access charges have discouraged competitor entry into the market for passenger services on the Channel Tunnel (Nash et al. 2013). Entrants who might otherwise make use of underused capacity have also been discouraged by the stringent safety conditions for trains, which have had the practical effect of prohibiting the use of standard rolling stock by large operators such as Deutsche Bahn.

Many passenger railways in Europe were long protected from competition from intercity buses. Train operators did not compete with buses to the degree that they competed with airlines (Van de Velde 2009). For example, French bus operators were not allowed to enter markets served by the French national railway, and German law restricted competition by bus operators on routes that parallel intercity railways. In contrast, Great Britain has not provided railroads with protections against bus competition since the intercity bus industry was deregulated and opened to competition in 1980. National Express, once a government-run bus line, now competes with the railroads as well as with Megabus and other low-cost bus companies (Van de Velde 2009). Despite the competition from the deregulated buses, intercity passenger rail demand has remained high and continued to grow in Great Britain.29

The bus–rail competitive landscape in Europe has been changing in recent years, as new EU regulations require the opening of domestic portions of international travel routes to competition through cabotage by bus operators from other countries. Because the regulatory changes were adopted recently, information on their implementation and effects on bus and rail competition is limited.

Assessments of the Public Benefits and Other Effects
of Passenger Rail Investments

The first four high-speed lines in France served more than 15 million passengers per year shortly after opening (Nash 2014). Experience has

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29 U.K. Office of Rail and Road, Passenger Rail Usage, Statistical Release for Quarter 1, 2015–2016, October 1, 2015 (http://orr.gov.uk/__data/assets/pdf_file/0009/19377/passenger-rail-usage-2015-16-q1.pdf).

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caused some analysts to conclude that break-even volumes (i.e., volumes yielding benefit–cost ratios greater than 1) for new high-speed lines are on the order of 10 million passengers per year (de Rus and Nombela 2007; Nash 2014; Graham and Melo 2010). However, the specific breakeven point can vary with construction costs and the value attributed to savings in time. Construction costs can be especially important to benefit–cost ratios (Campos et al. 2009). For example, France made use of existing surface routes to allow high-speed trains to access stations in the main cities, which lowered construction costs, and benefit–cost ratios have been shown to be above 1 (Nash 2014). In comparison, construction of the high-speed rail line from London to the Channel Tunnel required the building of expensive new approaches to the city’s train stations, including long stretches of tunnel because of the region’s topography and high urban densities (Nash 2014). The hub-and-spoke structured high-speed corridors in Spain (centered on Madrid) have annual ridership levels of about half the benchmark 10 million figure. According to de Rus (2012), the benefit–cost ratios for the Spanish lines are below 1, despite relatively low construction costs.

For the most part, the European intercity rail systems have been competitive with air travel in interregional markets. Table 5-3 shows examples of before-and-after studies of mode split for high-speed lines in France (TGV), Spain (AVE), and Germany (ICE). All three have led to travelers shifting from air to rail. As shown in Table 5-4 (which also includes some Japanese corridors), rail attracts more passengers than

TABLE 5-3 Mode Shares Before and After Introduction of High-Speed Rail Service

High-Speed Rail Service
TGV Sud-Est AVE Madrid–Seville ICE Hamburg–Frankfurt
Mode Before After Before After Before After
Airplane 31 7 40 13 10 4
Train 40 72 16 51 23 51
Car and bus 29 21 44 36 57 45

NOTE: Mode shares are percentages.
SOURCE: de Rus 2009.

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TABLE 5-4 Rail Share of Rail–Air Market and Rail Station-to-Station Travel Times, European and Japanese Corridors

Interregional Corridor Year Travel Time Straight-Line Distance (miles) Effective Average Travel Speed (miles per hour) Rail Mode Share (%)
Paris–Brussels 2006 1 h 25 min 165 116 100
Paris–Lyon 1985 2 h 15 min 240 107 91
Madrid–Seville 2003 2 h 20 min 245 105 83
Brussels–London 2005 2 h 20 min 200 86 60
Tokyo–Osaka 2005 2 h 30 min 250 100 81
Madrid–Barcelona 2009 2 h 38 min 315 120 47
Paris–London 2005 2 h 40 min 215 81 66
Tokyo–Okayama 2005 3 h 16 min 335 102 57
Paris–Geneva 2003 3 h 30 min 255 73 35
Tokyo–Hiroshima 2005 3 h 51 min 420 109 47
Paris–Amsterdam 2004 4 h 10 min 270 65 45
Paris–Marseille 2000 4 h 20 min 410 95 45
London–Edinburgh 1999 4 h 25 min 335 76 29
London–Edinburgh 2004 4 h 30 min 335 74 18
Tokyo–Fukuoka 2005 4 h 59 min 550 110 9

SOURCE: Nash 2014.

air when the station-to-station travel time is under 3 hours, and it continues to attract a significant market share up to travel times of about 4 hours. When travel times are about 2 hours, rail largely eliminates air from the market, although sometimes airlines book space on rail for their connecting passengers and some major airports [such as Charles de Gaulle, Schiphol (Amsterdam), and Frankfurt] are served directly by high-speed trains. In general, conventional rail that averages 125 miles per hour competes effectively with air for distances of up to 300 miles; newer high-speed lines offering faster average speeds are competitive for longer distances. However, for trips that start and finish well outside Europe’s main metropolitan areas, travel by train may be less convenient if a transfer to a slower local train is required. There is evidence that low-cost airlines have learned to exploit this market by providing

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direct service between cities that are located off the main railroad lines (Dobruszkes 2009).

SUMMARY

The provision of interregional transportation in the United States is a public- and private-sector enterprise whose funding, planning, and operations differ by mode. For the most part, private individuals and companies supply the transportation service, and the federal, state, and local governments supply the transportation infrastructure. The mix of public- and private-sector responsibilities creates a complex environment for coordinating the provision of transportation, especially where interregional corridors span multiple states.

Taxes and other fees paid by transportation users are an important source of funding for aviation and highway system infrastructure. User-based financing has a long history in the United States. It provides a reliable source of revenue for system investments and ensures that those who benefit directly from the investments bear much of the cost. User-based financing has the disadvantage of contributing to a general tendency for transportation planning and programming to be undertaken on a mode-by-mode basis because user revenues must be reinvested in the source mode. To limit the tendency for mode-specific transportation decision making at the metropolitan level, the federal government has long required that large public investments in urban highway and transit systems be coordinated on a metropolitanwide basis by a mode-neutral planning body as a condition for federal aid. This aid is derived from a single account, the Highway Trust Fund. There are no similar conditions for federal aid to be used for interregional transportation corridors, in part because the funding for each of the interregional modes is derived from different revenue sources and trust fund accounts.

User-based financing is not practiced in passenger rail. When rail passenger revenues exceed operating costs in the heavily traveled NEC, the excess is usually used to cover operating deficits incurred elsewhere in the rail network instead of being retained as capital for the Amtrak-owned NEC. The federal and state governments appropriate general funds to cover any remaining deficits incurred by Amtrak’s operations

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as well as its capital projects. Passenger rail poses special challenges for system funding and planning because it lacks both a dedicated capital fund and a means of governance that aligns with multistate routes. In the United States, few institutional structures align with transportation systems that are regional in scope rather than local or national.

National governments in Europe have made passenger rail a priority to a greater extent than in the United States, in part because the compact size of these countries creates many shorter-haul interregional markets suited to this mode of travel. Despite geographic, historical, and policy differences, the European experience in supporting passenger rail offers insights into the conditions that would encourage the use of rail for interregional markets in the United States. Experience there suggests that rail is more competitive when it serves cities having neighborhoods, employment centers, and travel attractions close to downtown train stations and extensive, well-functioning transit systems that make station access convenient for travelers. In cities having these characteristics, downtown train stations are more convenient to access than are the airports located on the edges of metropolitan areas. Europe’s experience also suggests that trains must be capable of providing 2- to 3-hour downtown-to-downtown service with a high degree of schedule frequency to compete effectively with airlines in most interregional markets.

As in Japan, European investments in upgraded and higher-speed passenger rail lines have usually been made in corridors that already have high train ridership. Because their rail networks are devoted mainly to passenger trains, service levels can be expanded incrementally to a point where capacity limits and the demand for major service and infrastructure investments become evident. During the past 40 years, a number of European countries have upgraded their conventional passenger rail networks to allow trains to average about 90 miles per hour and reach top speeds of about 125 miles per hour. In some cases where there are capacity shortages because of high volumes of commuter trains or where existing infrastructure is of poor quality and difficult to upgrade, completely new passenger rail lines have been built to average speeds of 150 miles per hour or higher. European and Japanese experience indicates that the break-even volume, in social benefit–cost terms, for the construction of a new high-speed line is on the order of 10 million passengers per year.

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The European experience with passenger rail has more relevance to the NEC than to other U.S. travel corridors. As in Europe, the NEC’s publicly owned rail right-of-way is oriented toward passenger trains, which minimizes the impact of freight traffic on Amtrak’s ability to add trains and reduce schedule times. The demand for trains in the NEC is well established; the conventional regional trains and premium-service Acela trains transport about 10 million riders per year. The uncertainties associated with investments in upgraded or new passenger rail services will always be large. However, the high levels of train use in the NEC minimize these uncertainties in comparison with other U.S. corridors, few of which have any competitive train service on which to base assessments.

REFERENCES

Abbreviations

CBO Congressional Budget Office
TRB Transportation Research Board

Amos, P., D. Bullock, and J. Sondhi. 2010. High-Speed Rail: The Fast Track to Economic Development? World Bank, Washington, D.C. http://documents.worldbank.org/curated/en/2010/07/12582340/high-speed-rail-fast-track-economic-development.

Berri, A. 2009. A Cross-Country Comparison of Household Car Ownership: A Cohort Analysis. International Association of Traffic and Safety Sciences Research, Vol. 1, No. 22, pp. 21–38.

Booz and Company. 2012. Review of HS1 Demand Forecasts. Prepared for HS2 Limited, London.

Campos, J., G. de Rus, and I. Barrón. 2009. The Cost of Building and Operating a New High Speed Rail Line. In Economic Analysis of High Speed Rail in Europe (G. de Rus, ed.), BBVA Foundation, Bilbao, Spain, pp. 33–50.

CBO. 2003. The Past and Future of U.S. Passenger Rail Service. Sept. http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/45xx/doc4571/09-26-passengerrail.pdf.

CPCS, Harral Winner Thompson Sharp Klein, Inc., Thompson, Galenson and Associates, LLC, First Class Partnerships, Limited, and Portscape, Inc. 2015. NCRRP Report 1: Alternative Funding and Financing Mechanisms for Passenger and Freight Rail Projects. Transportation Research Board, Washington, D.C.

Crozet, Y. 2014. Performance in France: From Appraisal Methodologies to Ex-Post Evaluation. In The Economics of Investment in High-Speed Rail, Organisation for Economic Co-operation and Development, pp. 73–105.

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×

de Rus, G. (ed.). 2009. Economic Analysis of High Speed Rail in Europe. BBVA Foundation, Bilbao, Spain.

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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
×
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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
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Suggested Citation:"5 Public-Sector Role in the Provision of Interregional Transportation in the United States and Europe." National Academies of Sciences, Engineering, and Medicine. 2016. Interregional Travel: A New Perspective for Policy Making. Washington, DC: The National Academies Press. doi: 10.17226/21887.
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Next: 6 Data and Analytical Tools for Interregional Transportation Planning and Decision Making »
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 Interregional Travel: A New Perspective for Policy Making
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TRB Special Report 320: Interregional Travel: A New Perspective for Policy Making examines the demand for and supply of interregional transportation in the United States. Major additions to transportation infrastructure, including high-speed rail, are being considered for some of the country’s most heavily traveled 100- to 500-mile corridors. The availability and use of the automobile, airplane, and train for interregional travel are reviewed along with the rejuvenated intercity bus. U.S. interregional corridors and transportation options are contrasted with those in Japan and Europe, where substantial investments have been made in passenger rail.

Public investments in new, long-lived transportation infrastructure can be risky because of uncertainty about future demand and the development of new technologies and competing transportation services. Decisionmakers in interregional corridors face the added challenge of having to coordinate investments across multiple jurisdictions. The report recommends actions to reduce this uncertainty and create stronger institutional means for developing the country’s interregional corridors.

TR News 303 features an article on Interregional Travel: A New Perspective for Policy Making.

A video about the research is now available:

At the 2016 TRB Annual Meeting, January 10-14, 2016, a session entitled Interregional Travel: Policymaking from a New Perspective was webcast live. These videos provide an overview of various components of the project.

Introduction:

Part 1: Overview of Project Scope

Part 2: Data and Information Needs

Part 3: Intercity Bus Operations

Question and Answer Session

Presenters:

  • Tom Deen
  • Nancy McGuckin
  • Joe Schweiterman

Moderated by: Martin Wachs

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