Comments on: Luas in profit, or is it?

By: Light Rail SMACKDOWN: Dublin’s LUAS vs. SF MUNI’s T-Third « blog

Sat, 24 Nov 2007 04:20:17 +0000

[...] franchise agreement. Actual farebox recovery unavailable. Of course, report of an operating surplus does not subtract any sort of amortized capital construction [...]

By: Breaking Even on Rapid Light Transit | DarrenBarefoot.com

Breaking Even on Rapid Light Transit | DarrenBarefoot.com — Mon, 26 Jun 2006 22:08:11 +0000

[...] I was impressed to read last week on Sarah’s blog that Luas, Dublin’s newish light rapid transit system, turned a small profit in 2005: The 2005 surplus of just â‚¬0.2 million, while small, allowed the Railway Procurement Agency, the developers of Luas, to inform Minister for Transport Martin Cullen that his planned â‚¬2.32 million subvention would not be required. Last year was the first full year of operation for both lines. [...]

By: Darren

Darren — Mon, 26 Jun 2006 22:07:26 +0000

All that success, despite having the ugliest seats in the known universe:

http://www.darrenbarefoot.com/archives/2004/09/photos-of-the-luas.html

By: Sarah

Sarah — Sat, 24 Jun 2006 12:06:36 +0000

oh dear, few lines in support of Luas first I guess. It is brilliant. I have used it. And actually, I don’t really believe that public transport should even be required to make any profit. I’d be happy enough to see any of the buses/trains/luases etc run at a loss provided they were giving a great service. The “profit” is in getting people around efficiently and encouraging people to leave cars at home. (btw Billy why don’t you get the train to Cork? its only 2.5 hours and way easier to go to Heuston rather than a trek to the airport).
Anyway, my objection to the IT report was this: I felt they weren’t comparing like with like. It is great that it is doing so well and is making an operating profit. However, by adding in the subsidy to Dublin Bus and Iarnrod Eireann I wasn’t happy that THOSE figures were relating to “running” costs. AFAIK Dublin Bus are buying loads of new buses and Iarnrod Eireann are doing loads of upgrading. It just wasn’t a fair comparison and the deliberate suggestion was that privately run companies will inevitably make more money than publicly run ones. Perhaps in 5 years time (when they’ve ripped up the faulty pieces of rail and need to upgrade the trams) they might need to look for more money. Give it to them. But don’t slag off the other transport sectors because they need investment now. Oh and yes, I do know the unions make life difficult. But wow, I do feel sorry for Dublin Bus drivers. That is a hard job…

By: Colman

Colman — Fri, 23 Jun 2006 12:46:39 +0000

The thing is that Coke would be able to borrow to fund the expenditure. I’m not sure how free a Dublin Airport that is in danger of privatisation is to borrow or that the government is willing to provide the capital for investment.

Luas is being subsided by government to the tune of (say) 21 million a year (if you assume a loan being paid interest only at 3%, which isn’t completely unreasonable for sovereign debt – start including capital repayments and things get much, much worse). I don’t have a problem with that, but let’s not pretend it’s otherwise.

(The problem with this sort of thing is that you either end up making awfully shallow comments or spending a day or two of your life doing the research journalists should have done before writing the stories…)

By: boldeye

boldeye — Fri, 23 Jun 2006 09:30:00 +0000

You haven’t attributed the quote but I think it’s from the Irish Times? If you had read the similar piece in the IT the day before (21 June) you would have seen the addendum: “Luas is not, however, repaying its construction costs of EUR 750 million.”

Given that the operation of Luas was outsourced, it wouldn’t quite make sense to include the cost of construction in the annual figures, I would have thought. Furthermore, though the cost of construction was significant, the network (limited as it may be at the moment) is nevertheless an asset in the hands of the government. Finally, does anyone realistically believe that CIE would have done a better job?

I’m no privitisation junkie, but found interesting yesterday Dublin Airport’s complaint that their increased charges aren’t high enough to fund development of the airport. What private companies pass on the charge of capital expenditure directly to customers by raising prices before capital investment? Does Coca Cola raise the price of a can of Coke before developing a new product line or building a new production factory?

The Luas has its flaws, but is still a tremendous success. The problem is that expansion will take a long time, but also that Irish people are consistently unwilling to accept any large expenditure, whether justified or not.

By: Pete

Pete — Fri, 23 Jun 2006 09:21:56 +0000

Whichever way you look at it, the fact that Luas didn’t cost the taxpayer any money this year has to be a good thing.

By: Spanner

Spanner — Fri, 23 Jun 2006 09:06:59 +0000

Ben,

I’m not sure that I agree re annual surplus. In most businesses the amortisation costs of capital expenditure projects are included in the calculation of quarterly and annual P&L.

That being said I am a fan of the Luas and I am delighted that thay are making an operating profit.

Spanner

By: Joe Drumgoole

Joe Drumgoole — Fri, 23 Jun 2006 07:14:34 +0000

If capital infrastructure projects were ever expected to make good their initial investment then we would have the private sector queuein up to invest. That is why this is a “government funded project”. All the pissers and moaners who said Luas was going to be an operational disaster can jump in lake.

By: John of Dublin

John of Dublin — Thu, 22 Jun 2006 22:44:37 +0000

Sarah, yes it’s just operating profit. It’s not taking into account the massive construction costs which were over budget (surprise, surprise!).

However LUAS is likely to continue to be a good success in spite of some well documented negatives.

I just wish a private business-like passion and freedom could be injected into public projects by government agencies. I think of the various toll bridges and the profits.being milked privately.