26 July 2007
On the weirdness of popular rail economics
Patrick Crozier

I saw this in the Guardian’s account of the Cross Country announcement in which the franchise has been stripped from Virgin and awarded to Arriva (via Tim Hall):

The ticket hike will help pay for 40 more carriages and 3,000 more seats on the new Cross Country service…

Is there any other business that’s run on these lines?  Did Tescos charge more for tinned peaches in order to pay for their self-service checkouts?  Of course not.  Any decent well-run company is charging top whack anyway.  And any investment should be able to pay for itself.

Of course, neither of these things apply to the rail industry where fare control with its concomitants of losses and subsidy mean that all sorts of perfectly sensible investments cannot be made without someone - whether the passenger or taxpayer - being made to feel a loser.

The answer is to abolish fare control.

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Arriva’s proposed new livery

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  1. I am told the electrical power utility industry is being run along those lines in the United States.  Increase in capacity to meet new demand is said to require rate hikes on all utility users.  Part of this is that the electric power company is a regulated monopoly that is not allowed to charge what the market will allow for its monopoly electric service; another part is that incremental increases in electric generation or transmission capacity is subject to much stricter environmental controls and approvals than the existing infrastructure.

    Posted by Paul Milenkovic on  29 July 2007 at 06:25 am

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