Wednesday, 5 February 2014

"If only they could join the dots…"

… says TBH, who emailed in an article from The Evening Standard:

There’s a 99.9% good service on the Hong Kong Metro so no wonder TfL’s bosses are looking to the East…

Hong Kong manages this partly through a ferocious culture of continuous improvement, such as that used to tackle delays. It also spends a lot — HK$5 billion (£400 million) a year — on maintenance and repairs alone*.

That it can afford to do so is thanks to another factor being studied enviously by TfL: a funding mechanism that leaves the Hong Kong system needing no operational subsidy (in fact, MTR generates a surplus of HK$5.1 billion a year for the Hong Kong government). This is despite low fares: most central journeys cost only around HK$10 — about 80p.

The key is MTR’s Rail + Property scheme. This exploits the fact that the freehold to much land in Hong Kong is government-owned: MTR has to buy leaseholds at market rates but is then gifted development rights. It thereby effectively captures the increase in the land’s value resulting from a new metro station via the deals it extracts from developers of new housing, offices and malls over and around the line.

* For comparison, London Transport/London Underground receives about £3.5 billion a year in 'subsidies' and fare income of about £3.5 billion (annual report 2013). It's not immediately clear how much they spend on repair, maintenance and improvement of existing Tube capacity.

PS, I know that Tube drivers are well paid (base salary nearly £50,000 a year), but the table on pages 124-125 of those accounts shows that 8,000 lucky people get a salary of more than £50,000 from London Transport, and 327 really lucky people get a salary of more than £100,000.


Bayard said...

There's none so blind as them that don't want to see.

The Stigler said...

Good spot.