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Loss-making rail routes in Ireland


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Image from irishrail.ie

A review report by the Irish National Transport Authority published in 2016 makes for some interesting reading. It highlights the issues faced by many rail companies world-wide in that not all routes are profitable. When this occurs, many States subsidise services in the general public and social interest.

The 2016 report includes an interesting use of a breakeven approach to identify poorer performing routes. The analysis calculated the cash per journey required to breakeven. This was done by taking total cash costs less revenue divided by the passenger journeys on each route. The report notes that all government subvention, capitalisation, depreciation and exceptional costs were excluded. It identified four poorly performing routes, as shown below.

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What this graphic shows taking the first route as an example is that about €550 per passenger journey is needed to cover what we might classify as the running and  maintenance costs.I like its simplicity, and I don’t think  anyone would be prepared such a fare. Using such figures, the rail company or the State has to decide if it can subvent to that amount on an on-going basis. The latter to routes seem to be more workable in terms of a combination of increased fares, cost cuts and/or subvention.

 

 

 

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About martinjquinn

I am an accounting academic, accountant and author based near Dublin, Ireland.

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