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The Business of Operating a HSR System
May 3rd 2011
Denis DOUTÉ
CEO,
SNCF America, Inc.
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Why do public subsidies to HSR make sense ?
0
40
80
100
Total created value
Private financing
Public funding
Revenues
Net Present Value
15%
85%
€ 3.8bn
€ 0.6bn
Infrastructure
Rolling
stock
Public funding
€ 3.2 bn� 50% State
� 50% local auth.
« Private »
funding
€ 1.2 bn
Example : TGV East (investment costs)
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Ex post evaluation of Paris to Marseille HSL
8%4,1%11%17,52001Valence -MarseilleLN5
11%6,1%7%11,91994Lyon -ValenceLN4
28%15,2%0%4,81983Paris -LyonLN1
(% of investt)(€03/km)
economical IRR
financial IRR
subsidycostyear
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SNCF TGV business revenue split in 2010 (%)
Energy; 4,3
Maintenance; 12,0
Infrastructure; 23,4Ticketing & stations; 17,3
Rolling stock amortization; 18,0
Operations; 11,7Taxes; 2,1Profit; 5,5
Structure; 5,6
* Maintenance of rolling stock** Infrastructure = maintenance + amortization
*
**
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Early operator involvement (EOI) enables advice regarding planning, design and
construction of the system.
The objective is to create “benefit sustainability” by eliminating avoidable costs that
arise during operations, as project designers often overlook issues of importance
to operations such as life-cycle costs, standardization, and ease of maintenance.
Mechanism : involve the operator in all phases of the project development.
Experienced operators have a wealth of knowledge in areas that are critical to the
success and long-term sustainability of the system.
Early operator involvement
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Early involvement, right from the design phase, ensures that the line configuration will
include parameters that will guarantee optimum operation (passenger service performance,
operating costs and, thereby, economic results)
These operating parameters relate to :
� infrastructure
� rolling stock
� safety standards laid down by the safety regulator
Design & Build
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Optimization of :
� trip time - speed limits at the switches giving access to the stations served,
passenger boarding/alighting times in stations, duration of the door closing
sequence;
� train-set maintenance costs - choice of materials for the inside fittings and inside
layout in relation to cleaning operations, restroom design, etc.;
� cost of train-sets.
The operator has to prepare for operations long before the actual commissioning of
the line: specifications for the train movement and information systems, design and
acceptance reviews, operator training, dry runs, etc.
���� The operator represents the interests of the passengers and the long-term economics of the system.
Operations & Maintenance
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Infrastructure
Successful HSR operation requires infrastructure that is:� Optimally designed to provide the required level and quality of services both now
and in the future� Available for trains to run every day, on schedule, comfortably and profitably� Maintainable without excessive costs� Built safely – enabling trains to run at the required speed while meeting federal
safety requirement.
���� The Operator is in the best position to make certain these criteria are met
Infrastructure
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Safety
The Operator is in the best position to achieve:
� Train traffic safety
� Train environment safety (e.g., platforms, grade separations, etc.)
� Staff and passenger safety
Safety
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Maximizing Ridership
Only an experienced Operator can maximize Revenues.
� Intercity trips
– Capture commuter market with intermodal connection decisions at the early stages
� Airport access trips
– Capture air travelers by securing code shares with airlines as early as possible
– Capture air travelers by providing airport connections and associated services
� Yield-Management Revenue System (i.e., pricing system)
� Other
– Early agreements with sponsoring entities such as Disney, Convention Centers and other
significant commercial and educational venues
Revenues
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Appropriate top speed
26%
6%
68%
OPEX increasing with speed
OPEXdecreasing with speed
Paris -Bordeaux
OPEX independent of speed
5%
30%
65%
104100
224 mph186 mph
+4%
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Location of the maintenance of way yards� Optimization given planned and future line setup
� Response time on incidents
Human resources� Planning the appropriate staff number and qualifications
Environmental Aspects� To be taken into account
� To be mitigated.
Maintenance of Way facilities
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55 miles circle
Sacramento
Stockton
Modesto
San Jose
Fremont
OaklandSan Francisco
Maintenance of Way facilities
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Station location are based on a fourfold strategic approach :
HSR stations : Location
• Accessibility
• Intermodality and connectivity issues
• Urban development opportunities
• Existence of historical station building
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HSR Stations : Accessibility
Convenient connection with existing rail networks
• adapting street layout in station neighborhood
• facilitating taxi access and properly designing taxi waiting area
• well dimensioned parking facilities (with extension capabilities)
Bring the cities public transports as far as possible into the station
complex (Buses, Light Rail Systems, Subways)
Nevertheless car traffic flows have to be correctly managed
Feeders for non-motorized modes and new mobility concepts
• bicycles
• car sharing and electrical cars
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HSR Stations
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Mutual benefit
Coordination of :
• Ticketing services
• Information services
• Schedules
• Perturbations and crisis
Importance of regional connections for HSR
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What coordination with the airlines ?
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What can the Operator do for the CHSRA ?
� The operator can help CHSRA face the challenges in developing and implementing a HSR system that must
– Be on time and on budget
– Meet high standards of quality & performance
– Be safe
– Be reliable
– Be maintainable
– Be economically sustainable
� The challenges are amplified by intense federal scrutiny and oversight and the national demand to achieve success
� “Failure is not an option”
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Why choose the Operator as early as possible?
The Operator can invest in the project early and take ridership risk
� No one’s interests are more aligned with CHSRA
� No one (other than CHSRA) has a greater stake in the system being designed and built
properly and quickly
� No one has a better view of how to design and integrate the various elements of the
system
� No one is in a better position to identify and address technical and commercial risks and
opportunities regarding:
• Infrastructure
• Safety
• Ridership (forecasting and capturing)
• Connectivity
• Maintainability
• Financial participation
• Expedited project completion
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Our experience suggests that a multi-step process for selection :
� Preserves and enhances competition, ensuring the competitive pressures will
keep cost to a minimum;
� Facilitates information exchange between companies and the Authority , without
creating a conflict of interest issue;
� And enables the Authority to select the best possible consortium for the project.
Early Operator selection
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Thank you for your attention