Tuesday, September 13, 2011

Rugby World Cup public transport success story

Large numbers of people arrived for the Rugby World Cup with nary a problem using some public transport. They were using the commercially driven public transport, that doesn’t need subsidies to operate or to reinvest in capital. It has vibrant competition and a wide range of services. It’s called aviation.

The airline industry has had a few years to plan for the Rugby World Cup and has managed admirably. Air New Zealand delayed retiring aircraft it would have sold, in order to provide more services on routes between the main centres, displacing turbo-prop aircraft to provide some more to provincial centres. It is also using mothballed Boeing 747s for two additional services to London via LA when it ends. It had increased services on its London-Hong Kong-Auckland route. Qantas has done similar keeping aircraft it was to retire to provide additional services for the Rugby World Cup. Other airlines have increased the size of aircraft flying to and from New Zealand.

You can’t pretend the airline industry is in a healthy state. Qantas is undertaking a substantial restructuring of its international services to stem huge losses, and Air NZ is undertaking a thorough review of long haul services given its own losses. Yet they and their competitors all are able to deliver people internationally (and the pair domestically) at a time of peak demand. The corollary of it is that at certain times on certain routes air fares are high, but then so is demand and people prepared to pay get seats, they get a generally consistent level of service. The airports too, all run on a commercial basis, handle the crowds with little fuss.
Contrast that to a mega local authority co-ordinating a rail service that it owns, sub-contracted to a management company on tracks owned by the state.

Finger pointing all round given it is the silly season (election), as the railevangelists blame the Government – because it isn’t completely craven to their endless demands for other people’s money to gold-plate a service that costs more in subsidies than it generates in fare revenue.

The Government blames the council that IT set up running on a network that IT owns. For years the ARC complained that it didn’t have enough control or authority over transport in Auckland, that there were too many agencies. Now it is the Auckland Council contracting Kiwirail, both government bodies. The railevangelists protest that a fortune of your money (well your children’s, they would borrow now and make you pay later) should have been spent years ago building a gold-plated system that would work like clockwork and handle peaks (don’t talk about the subsidies to run them – because we’ll just manufacture figures to claim roads are worse), ignoring that the current socialist administration has spent a fortune to electrify the network (but it doesn’t happen overnight) to meet their dreams. The socialist administration chooses to impose a benign martial law over the Auckland waterfront and blame the Council it set up, cravenly following almost the entire model it inherited from a Helengrad inspired Royal Commission.

Should this not all demonstrate how the incentives to perform for government are so abysmal compared to commercial organisations? Even partially government owned companies like Air New Zealand and Auckland Airport are models of efficiency compared to Auckland’s quaint little commuter railway.

It’s worth noting that there is plenty of public transport in New Zealand that operates efficiently, commercially, without taxpayer subsidy (the Air NZ bailout was unnecessary and the fault of government intervention in the first place) and handles peaks and troughs quite adequately. It also has very high capital requirements, is exposed to extremely volatile changes in input prices (aviation fuel) and exchange rates (affecting costs of capital and fuel, as well as demand). It’s called the airline industry.

On a more modest scale, the entire intercity bus operation also operates efficiently, commercially and without taxpayer subsidy, meeting the needs of tourists and people without cars, with little fuss and no state planning (and also maintains individually unprofitable services because they contribute to the network, such as Napier-Gisborne). The movement planners who are obsessed with using other people’s money to prop up the modes they like, but to take from the ones they don’t, who want to tell landowners to build higher densities because they think it is “good for them and society”, ignore all of that. For it would appear than when governments stop planning so obsessively how people get about, businesses and their customers rather remarkably, seem to manage quite well.

And if you think cities are different, ask yourself why freight seems to move with little effort in cities, the only problem it faces is when bottlenecks of infrastructure or poor pricing mean that the government owned networks stop functioning efficiently.


John Macilree said...

Well spotted! Actually some carriers have made minor reductions in their flights to New Zealand as tourists who might otherwise visit are avoiding the RWC which has seen accommodation prices increase.

Andrew B said...

More examples of the success of the private sector - rugby league can't be shown in the state-funded party zones so the fans are filling the extra Air NZ flights and flying to Sydney to see it: http://tvnz.co.nz/national-news/warriors-grand-final-banned-fan-zone-4419129