UK Transport

As its title suggests UK Transport covers all aspects of transport in the UK. It is written from a libertarian perspective, in other words, that the less the State involves itself in the running, regulation or funding of roads, railways or anything else - the better.
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Saturday, July 13, 2002

Will Self in the Standard

I have just posted up a takedown of this ridiculous article over on UKT Extra. To summarize: lefties play fast and loose with the English language and tube trains are inherently safe.

Eurotunnel debt refinancing

Most companies turn losses into profits by either increasing revenue or coming up with cheaper ways to do what they'd been doing previously. Not so Eurotunnel, the builder and operator of the Channel Tunnel. Eurotunnel gets it debtors to agree to a refinancing deal (also see graphic).

Not knowing much about such things I am guessing that this is the outturn of that old adage "If you owe £100 you're in trouble. If you owe £100 million, the bank's in trouble." The fact that some banks have been prepared to sell their debt at 43% of its face value would seem to bear this out. This may seem pretty tough but before you shed a tear for the banks spare a thought for the shareholders. As I understand it, they've lost far more.

But there is a silver lining to this cloud: the tunnel has cost the (British) taxpayer next to nothing. All those who have lost money have been volunteers.

Friday, July 12, 2002

Coming to a main road near you...

Yesterday, I visited the offices of my local council to view their plans for one of the main roads in the area. The basic idea is to increase the number of lanes from one to two (yes, there is space), one of which is to be a dedicated bus lane. The council had said that a member of the Highways Department would be available to discuss the plans but even so I was pretty amazed when one showed up. I was even more amazed to find him personable, intelligent and on the ball.

I started by confirming that the primary aim of the project was to increase the flow of buses. Yes, he replied, by having a dedicated bus lane they would be able to move around faster and so increase their frequency. All well and good.

Then I asked him why they simply didn't put a toll on the road. That completely flummoxed him. "Er, well, it would be a nightmare." "Why?" "Err...Em... It's not on the agenda....Maybe in the future." I put that down as a "don't know".

Part of the plan was to introduce raised sections of road and double yellow lines (meaning no parking) at junctions. Now, personally speaking, I find sections of road raised to the same level as the adjacent pavement (US=sidewalk) extremely irritating. People get confused and I can't imagine it's any safer.

Mulling it over later I got confused. Is this part of the prevention vs punishment debate? Is it actually a good thing that as pedestrians we are allowed to kill ourselves? Would a private road owner be any better?

And what about those yellow lines? Surely, it is already illegal to park at junctions? Turns out it is. The problem is that the police don't enforce the law and traffic wardens can't issue tickets unless there is a yellow line there.

But the conversation got really interesting when we started talking about money. Richmond-upon-Thames is one of the richest areas in the country. Its roads budget is £1.5m a year. But of that, £1.4m is in the form of ring-fenced grants. So that leaves only £100,000 to actually spend on maintaining roads. The rest can only be spent on schemes like this one, which incidentally will cost £500,000.

I also discovered that when it comes to road maintenance a stich in time really does save nine. If you make sure that the road surface is kept in good condition then your road will give you many years of good service. However, if you allow the surface to deteriorate then the sub-surface is exposed to the elements you get potholes and the bills get very big indeed.

So, it is not difficult to see why we are getting a whole bunch of bus lanes and raised road sections when the rest of the road network is disintegrating.

Thursday, July 11, 2002

Wednesday, July 10, 2002

Airline Seats

What should be done about airline seats? As this BBC article demonstrates it is clearly becoming an issue. Some passengers are too fat, some too tall and some die of deep vein thrombosis. I should point out right at the beginning that when I say "should be done" I do not intend that it should be the state doing the doing. But what are the options open to airlines?

Well, they could offer everyone a nice, large seat with plenty of legroom. But that would mean taking seats out and therefore putting up the prices. Seeing as most ordinary seats are (just about) acceptable to most ordinary people any airline that did this would find itself at an immediate competitive disadvantage. Mind you, removing seats was the subject of a whole American Airlines advertising campaign so it may not necessarily be the case.

They could take out the odd row of three and replace them with rows of two. They could also offer rows of seats with more legroom. Come to think of it BA is already doing this. I think they call it World Traveller Plus. The customer gets an extra 7" over the standard 26". But the cost is enormous. WTP costs well in excess of twice the standard fare. Why? Why, for that matter does Business Class cost so much more? Beats me, but I assume there is a good business reason for so doing. The point is that larger Economy Class seats would have a tendency to depress Business Class revenues.

[Massive aside here but in the 1870s the Midland Railway abolished Second Class. Actually, it abolished Third Class seating and First Class fares. So, for a Third Class fare you got a Second Class seat and for a Second Class fare you got a First Class seat. For some reason it appears the sums added up.]

Actually, this may not be such an irrelevant aside. People's desires change over time. Not so long ago they were delighted just to be able to fly but now, in a richer age, they want more. I suspect that this was just what was happening in the 1870s: the poor were getting richer and to keep hold of their custom railway companies were having to improve their travelling conditions so much so that in the end there was almost no difference between Third and Second Class. The big difference is that on aeroplanes the issue is one of space which was not the primary issue on the railways.

It may be that left to its own devices the market will solve the problem. But, of course, these days markets are not left to their own devices. Right now, at an airline near you the following conversation could be taking place:

"Why don't we increase seat sizes?"

"Because, the government is thinking of introducing some new regulations."

"How does that affect us?"

"Because, if we go ahead and change all our seats we could find they're too small and have to replace them again."

"Oh. And if they're too big?"

"Then with the new regulations, everyone will assume that the problem has been solved and we'll lose any competitive advantage we might have had."

"So, we're better off waiting for the government?"


So, the change will be late, you won't have a choice and the state will take the credit.

Stelios on Radio 4

Yesterday morning I happened to catch EasyJet's Stelios Haji-Iaonnou (don't ask me how to pronounce it) being interviewed by John Humphreys on the Radio 4 programme "On the Ropes".

"On the Ropes" is dedicated to interviews with people who have been in deep doo-doo which is hardly a category which I would have put Stelios in. Taking on British Airways at their own game and beating them sounds like success to me.

Humphreys couldn't quite decide what the tone of the interview was going to be. On the one hand, Stelios is a capitalist and therefore evil. On the other hand he has created a business which has transformed the way we travel and he does have considerable charm. So, he escaped with a light roasting.

Humphreys asked him about the manslaughter charges. Before be founded EasyJet Stelios ran a shipping line. One of the ships blew up and five crewmen were killed. The Italian authorities prosecuted him for manslaughter. Humphreys probed and Stelios weaved: "It was the worst day of my life..."; "You have to understand the context...". It didn't sound convincing. Had it been me I think I would have said: "I thought in England a man was presumed innocent until proved guilty. Or is that old hat?" and left it at that.

The interview then moved onto the EasyJet story. Stelios said surprisingly little though I was glad to hear him say something like: "Safety isn't just good for customers it is good for the bottom line." This is something that businessmen need to hammer home. Actually, they need to buy the hammer and nails first. It is all very well saying that safety is important but the public at large know perfectly well that a business's primary purpose is to make money. Businessmen will always be vulnerable to the charge that they put "profits before safety" and hence vulnerable to intrusive legislation until they convincingly demonstrate that safety is good for profits.

But I digress. There was a short section on the EasyJet way: one class of seat, quick turnaround, no refunds, no meals, cheap airports. The charge that there was some financial chicanery involved was brought up. Stelios replied that the economics was not rocket science. I suppose the proof of the pudding is that EasyJet has raised the money to buy Go - but why didn't he say it?

The last section (and, yes, I know this is miles from UKT's brief) was all about EasyEverything the internet cafe business. I was surprised to hear that it hadn't been a success because whenever I pass one it looks well turned out and packed with people. Stelios remarked that he hadn't given it the attention it deserved and that the very name - EasyEverything - betrayed its lack of focus.

Tuesday, July 09, 2002

More on Amtrak (Part II)

Following my piece on the foundation of Amtrak I received an e-mail from Stephen Karlson of the University of Northern Illinois:
Getting to the most shocking news first ... yes, deregulation of domestic air fares and freight transport began during the Carter administration. Ralph Nader's organization was rather vocal in branding the Interstate Commerce Commission a cartel manager -- as was University of Chicago graduate and transport historian Professor George Hilton. Senator Edward Kennedy was a major advocate of deregulating the airlines, and economics Professor Alfred Kahn as chairman of the Civil Aeronautics Board encouraged price cutting and all sorts of price policies. (President Carter rewarded him for his success in deregulation by naming him inflation tsar.)

"Trains" has been a long-time critic of passenger train policy. And yes, it was bizarre. For example, the Interstate Commerce Commission allowed The Milwaukee Road to discontinue the Pioneer Limited (think a Midwestern version of the Night Scot), a full-service train connecting Chicago with Minneapolis while requiring continued operation of local trains 55 and 58, one-coach all-stoppers on the same route with very little ridership, inconvenient departure times, and no parcels traffic to speak of.

Amtrak's arrival marked the discontinuance of over half of the passenger train service remaining in the States at 1970-1971. Since then, it has made marginal improvements in running times and frequency in the Northeast, but elsewhere, trains are slower and less frequent now than they were immediately after World War II ended.
So, what was the Interstate Commerce Commission?
The Interstate Commerce Commission is one of the first agencies set up to regulate transportation rates. The short form of price and service regulation is this: it has a legal foundation in English common law (look for Lord Chief Justice Hale's De Portius Maribus -- sorry if I've mangled the Latin) and the Supreme Court here held in 1877 that "property becomes clothed with a public interest when it is used in such a way as to affect the public at large" (that ruling applied to fees charged for the storage of grain at the port of Chicago). The idea of independent commissions regulating rates caught on both in individual States and with the federal Congress. In 1887 Congress passed "An Act to Regulate Commerce" creating the Interstate Commerce Commission with powers to regulate rates, entry, exit, and other changes in service. Hilton claimed in an article in "Trains" that the purpose of the Commission was to stabilize cartels thatthe railroad managements couldn't stabilize on their own. Some of the subsequent amendments such as banning rebates (ostensibly aimed at Standard Oil and other large shippers) and setting up rate bureaus (also ostensibly to protect railroads against large shippers holding-up the railroads), and the extension of Commission authority to motor trucks and inland barges during the Great Depression certainly look like cartel management. During the massacre of passenger trains in the late 1960s,the Commission frequently allowed railroads to discontinue full service trains but required the continued operation of accommodation trains, often citing the additional stops the latter made (never mind at odd times).Another Amtrak 'reform' was eliminating some of the stops made by the remaining full service trains!

Airline regulation operated in much the same way. You may recall the meeting of the International Air Transport Association to define a sandwich, when the Scandinavian carriers started putting lots of edible food on large loaves of bread because they couldn't cut prices. Most ofthe Civil Aeronautics Board orders established minimum fares, most of their route allocations involved ensuring that each carrier had its share of lucrative routes so as to support its share of dogs (required, no doubt, by the public interest.) There was also a hearing to determine that coach passengers had to pay US $1 (in those days a small fraction of the pound) to rent a headset to listen to the movie. (Hilton lays out the general principle for such behavior in an article called "The Basic Behavior of Regulatory Commissions" that appeared in the American Economic Review Proceedings long ago.)

And yes, Senator Kennedy was instrumental in deregulating both surface and air transportation. I believe he was the Senate sponsor of the Staggers Act freeing railroading. Representative Staggers was an unlikely sponsor in the House: he chaired the Transportation Subcommittee, and to appease him Amtrak operated an experimental Turbotrain (not at all like the Oxford Local) from Washington, DC into West Virginia.
Don't you just love pork barrel politics?

The Evil of Subsidy

I recently mentioned proposals from the Institute of Directors, IoD, to shut down large parts of the UK rail network. In the most recent edition of RAIL magazine these proposals were heavily criticised by two pressure groups. In a rage I dashed off a letter:
The claim that subsidised railways represent "value for money" cannot be allowed to pass unchallenged. Even on the fairly limited basis that TR&IN and ACoRP work on I find it difficult to see how they reach this conclusion. When one takes into account the amount of tax that could be spent elsewhere, on other forms of human happiness, it becomes impossible.

Not to put too fine a point on it: subsidy has been a disaster for the rail industry. Of course, it sounds great because in theory it means that the industry can keep branch lines open and build high-speed lines to the Continent. But in practice it undermines good management, commercial practice and long-term planning.

Had British Rail not been in receipt of subsidy the solution would have been simple: privatise it lock, stock and barrel. It would then have been able to take its place alongside the many efficient and effective private railways in Japan and the US.

But BR was subsidised. Before, pseudo-privatisation things were bad enough with a largely directionless BR trying to do everything on the cheap ever fearful of the next round of spending cuts.

After pseudo-privatisation the government needed some way of getting the money into the industry without being fleeced by monopoly suppliers. The result was franchising and the accompanying disasters of the wheel/rail split, track access charges and short-termism. And it still got fleeced.

In Japan decades of private ownership have allowed railways to plan for the long-term and develop engineering-led safety, maintenance and train systems that put us to shame. I would go as far to say that had we adopted the Japanese approach and with the input of British flair by now it would be the Japanese coming here on study trips and not the other way round.
It didn't get published.

Monday, July 08, 2002

Congestion Charging: some real losers

Having proved that everyone would be better off under real congestion charging ie privatisation, I now find that there would in fact be some real losers. Though anyone who finds that his house has declined in value from £275,000 to £225,000 can hardly claim to be swelling the ranks of the poor.

I have every sympathy with these people. I think if I were faced with a loss of £50,000, I might find reasons to block the highway. These people have bought property on the understanding that they (or a future buyer) would be able to drive to Central London for free. Now, they find that the rules have changed. Of course, what ought to happen is that they receive compensation - but that is not in the nature of modern government.

Having said that, I don't have much time for the chap who complains about it costing £5 to go to the doctor's. If you think £5 is too much to pay then there can't be that much wrong with you.

Are buses and cars compatible?

The news that Transport for London is filling in bus lay-bys (I didn't know that such things existed in London) raises some interesting questions about how buses and cars (and vans and lorries) might rub along if roads were ever privatised.

The problem is that buses stop, other vehicles don't. If buses stop on the highway they cause congestion to other road users. When I used to drive in Central London one of my greatest fears was finding myself trapped behind a stationery bus picking up a whole bunch of passengers and not being able to move out into neighbouring lane.

On the other hand, if buses have lay-bys it is they that can't get out. Indeed, under private roads and hence (I assume) faster moving traffic the problem could get far worse. You'd have to have a special set of traffic lights to stop the traffic and let the bus out.

This kind of problem has a parallel on the railways. There is currently one hell of a dispute on the West Coast Main line between Virgin (the Inter-City operator), commuter operators (like Silverlink) and freight operators (like Freightliner). Virgin want to operate trains at a maximum speed of 140mph. But to do that the train needs a clear path in front of it. Put a commuter train there (maximum speed 100mph) which also stops or a freight train (maximum speed 90mph, I think) and reliable, high-speed operation becomes impossible.

In Japan they built their Shinkansen lines to a different gauge from the rest of the network precisely because it made it impossible for other types of trains to use it.

All other things being equal I suspect that we would see one or other type of transport system dominating. Or we could see a stark division between bus road and non-bus roads. Who knows, we might even see specialised bicyle roads.

At the end of the day money will do the talking. If so, I think buses will win out. It is one of the great ironies that as car use increased in Central London, so the number of people entering Central London by road fell: blocked by cars buses became slower and less reliable. Buses, quite simply, can move more people and more people means more money.