Owen McShane: Airport rail idea a genuine turkey

It's so easy to spend money on rail. A billion dollars here, half a billion dollars there. Soon you're spending real money. Even the ratepayers might notice.

The latest proposal to spend half a billion or so comes from the Campaign for Better Transport, which wants a rail link between Britomart and the Auckland Airport.

These campaigners say the link would cost $460 million.

Let's be generous and assume they are right, even though rail projects usually cost double the original budget.

The Auckland Regional Council transport committee seems to be taking the idea seriously and has asked staff to investigate the feasibility of the operation.

A few seconds doodling on the back of an envelope suggests that the ARC staff can save their time - and save Auckland ratepayers half a billion dollars.

First, Auckland airport is well served by buses, shuttle buses and taxis, and most passengers arrive and leave in their own cars.

Once people are in a car they are reluctant to drive to a station, park the car, lug their luggage to a platform, wait for the train, hoist their luggage up into the carriage and finally go to the airport.

The campaigners say the trip from Britomart to the airport would be no more than 30 minutes, which would make the train attractive.

But this is only station to station time. When the waiting time between arrivals and departures is added, this so-called rapid transit service takes longer than a trip by car, taxi or shuttle.

The shuttles provide a cheap, flexible and frequent service and pick up and drop off their passengers at the door of the hotel.

Britomart is in walking distance of only four hotels, and who wants to walk with luggage?

Sydney built a rail link between the city and the airport to help manage the Olympic load.

In 1990, the NSW Government assured the citizens of Sydney that a public-private partnership meant the airport link would not require a cent of Government money.

That was right to the extent that Government costs were measured not in cents but in hundreds of millions of dollars.

Including the cost of a new station, the Government ended up paying out $700 million.

Finally the operator went into receivership and the Government had to bail out the operation.

The problem was that optimistic planners had predicted the link would carry 48,000 passengers a day from opening day, rising to 68,000 passengers a day over 10 years.

As usual, the real numbers were about a quarter of the projection and never reached more than 12,000 passengers a day.

Critics blamed expensive tickets, problems handling luggage, and long waiting times between trains.

Also, large planes deliver people in large lumpy numbers so trains were either near empty or overcrowded.

Let's check the numbers on the back of an envelope.

Sydney's airport handles 23 million passengers a year or 63,000 passengers a day. Auckland's airport handles 8.8 million passengers a year or 24,000 passengers a day.

In Sydney about one airport user in five used the rail link.

If one in five Auckland Airport users rode the rail link connecting the airport to Britomart, it would carry 4800 passengers a day, or 2400 in each direction, which is not enough loading to provide frequent arrivals at the station.

At 150 people a train, with trains operating over fifteen hours a day, a train would arrive and depart only once an hour.

That makes a mockery of the 30-minute travel time. If you just miss the train you have an hour to wait. You would return to your car and drive.

That alone should kill this foolish vision.

But in case you are still a believer, look at the revenue against the costs.

If each of those 4800 passengers a day pays $20 a ride each, that's $35 million a year - which is only 7.6 per cent of the $460 million cost of construction.

The current cost of capital is at least 8 per cent and could be 12 per cent. So the revenue does not even cover the cost of capital.

Add on staff, maintenance, fuel, overheads and you are looking at a genuine turkey with total losses in the billions.

But if your pet project cannot even meet the cost of capital there is no point in pecking away at your calculator hoping for salvation.

So the ARC doesn't need to waste money on accountants and analysts. Just have a look at the back of the envelope.

* Owen McShane is director of the Centre for Resource Management Studies