Submitted by/Soumis par: R.T.
Leclair, Deputy City Manager/Directrice municipale adjointe,
Public Works and Services/Services et Travaux publics
Contact/Personne-ressource: G.
Diamond, Director/Directeur,
842-3636 ext. 2271, gordon.diamond@transpo.ottawa.on.ca
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Ref N°:
ACS2004-TUP-TRN-0009 |
That the
Transportation Committee receive this report for information.
BACKGROUND
Two recent articles appeared in the media, which commented on the costs and revenues of the O-Train, gave the impression that the cost-recovery of the O-Train is low and if judged on the same basis as the bus system, its future would be questionable. A third and contradictory article (editorial) supported the O-Train pilot project and its continued operation until the first phase of the Ottawa Rapid Transit Expansion Plan (ORTEP) is in place.
To clarify the debate, this
memorandum provides information about the current and past performance of the O‑Train
and looks ahead to what may be anticipated when the system is expanded as part
of the ORTEP.
DISCUSSION
The O-Train has been in operation since 15 October 2001. It was introduced as a pilot project, as the first step of a rail-based rapid transit system in Ottawa. The current operation consists of eight kilometres of track, five stations, three trains (two in operation and one maintenance spare) and a maintenance facility.
Current Performance
Ridership
Customer satisfaction with the O-Train is high. The average travel-time savings reported by riders in surveys carried out in 2002 was 20 minutes per trip. The initial ridership target for the O-Train pilot project was from 5,100 to 6,400 customer-trips per day. From October 2001 to July 2003 the service ran every 20 minutes because of track speed restrictions. During that period maximum ridership on weekdays was about 6,000. After the installation of continuous welded rail last summer, maximum ridership increased to over 8,000 customer-trips per day.
Operating costs
System operating costs are currently approximately $4.5 million, including the cost to lease the corridor and property taxes. A large component of these costs is the insurance. Immediately following 9/11, all transportation-related insurance costs increased dramatically. This, coupled with the fact that the O-Train is the first system of this kind in North America, led to costs in excess of $900,000 per year. These costs have now been reduced; the O-Train having demonstrated itself to be a very safe system and the time since 9/11 having increased. The latest insurance rate, for the period from April 2004 to March 2005, is $430,000.
Revenue/cost
The ridership revenues and operating costs for 2002, 2003 and 2004 (projected) are shown in Table 1. This table also shows the system operating costs with those items that are not included in bus transit operating costs (lease, property taxes for the corridor). The revenue/cost ratio is also shown in Table 1, based on both operating costs.
It can be seen from the results in this table that, if all costs are included, the system revenue/cost has improved from 23% in 2002 to 36% this year. However, to make a fair comparison with the bus system revenue/cost, the lease costs and corridor property taxes should be removed. This results in higher values of revenue/cost; rising from 26% in 2002 to 39% this year.
Comparison with Bus System
Although a comparison of the bus and O-Train system is provided for the purpose of this memorandum, to compare a pilot project, which is carrying overhead that would support a larger system, with a fully mature bus transit system is not a reasonable comparison. However, putting that aside, the revenue/cost of the bus system is currently about 55%. Performance on individual routes varies; none have revenue/cost ratios of less than 25% in off-peak times; none have revenue/cost ratios for less than 35% in peak times. Therefore, under the City’s current service design guidelines, the O-Train’s current cost‑recovery is acceptable.
Economies of Scale
The O-Train is a small system: costs will not increase proportionately as the system grows. The track and station maintenance would increase only marginally were the number of trains to double and the costs of providing a 24/7 maintenance facility would not grow in proportion to the number of trains. Management and supervision is another area in which costs are relatively high because we are operating a small railway. Whether the railway has three trains or three hundred, railway rules, regulations and safety management systems must be developed and monitored and relationships with the federal and provincial regulatory authorities must be maintained.
The current operating cost per hour of service on the O-Train is $330. In the course of the Rapid Transit Expansion Study information from larger systems was collected to assess potential operating costs for a mature system. These costs range from $150 to $200 per hour.
Impact of Eliminating O-Train
Were the O-Train to be discontinued, it would take at least 16 buses to replace the service at a capital cost of more than $7 million and an operating cost of $2.9 million. Furthermore, the average 20 minute time-saving would be lost to customers and ridership would decline.
CONCLUSION
The O-Train will carry 1.85 million customer-trips this year, saving customers on average 20 minutes per trip. The small size of the operation requires overheads that would support a larger operation. Although, at 39% its revenue/cost is lower than that of the full bus system (55%), the O-Train is operating at a cost-recovery level well above the minimum standards for the transit system and would not be threatened in the annual system performance revue.
As the system grows it will benefit from economies of scale and, based on experience elsewhere, costs per vehicle-hour are expected to fall by close to a factor of two. This will make the cost recovery very attractive in comparison with the bus system.
SUPPORTING DOCUMENTATION
Attachment 1 – Table 1: Light Rail Revenue / Cost Estimate
ATTACHMENT 1
Table 1
Light Rail
Revenue/Cost Estimate
|
Year |
Ridership million |
Revenue |
Cost (1) $million |
Cost (2) $million |
RC (1) % |
RC (2) % |
|
2002 |
1,298,600 |
1,116,796 |
4,825,549 |
4,358,615 |
0.23 |
0.26 |
|
2003 |
1,434,000 |
1,233,240 |
4,732,044 |
4,318,044 |
0.26 |
0.29 |
|
2004 (3) |
1,853,000 |
1,593,580 |
4,454,750 |
4,040,750 |
0.36 |
0.39 |
(1) Costs including lease and ROW property taxes.
(2) Costs excluding lease and ROW property taxes.
(3) 2004 Projections (Note: original budget allocation of $4.942 million has been reduced to $4.454 million as a result of the reduction in insurance ($337,250) and contingency ($150,000) costs)