Elsewhere: The support of civilization

The chaos and confusion in Paris as a result of a recent strike (partial) by metro workers underground highlighted the vital importance of a metro system in modern megacities. In large cities, a metro system transports millions of passengers every day, stimulating economic and public life. Without them megacities would simply choke from the infinite traffic and dense smog, businesses would incur losses and life would stop. The operation and development of metro systems has become a priority program in many countries.

Difficult ways

The metro (or high-speed transport system) will be 145 years old next year. The first underground transport line opened in London in 1863. Both passengers and cargo were transported. Wagons were dragged by steam locomotives, which at the start of the 20th century were replaced with electric locomotives. Now the London underground has 275 stations.

Londoners call the underground "the tube." The tube transports 3 million people daily, and approximately 1 billion people annually. The underground is divided into zones, and for thoughtless or mistaken changes you have to pay extra.

The London underground is an expensive pleasure. A single trip in rush hour varies from 6 to 14 pounds sterling (289-675 rubles) depending on the zone. Tickets for children aged 5-15 years in rush hour cost 1-3 pounds (48-144 rubles). A travel card is much cheaper and there are various ones to choose from.

In Paris the first metro train was recorded in 1900. Now, on 16 lines of the Parisian underground there are 380 stations with total length of 221 km. More than 1.3 billion passengers use it per year. A single journey costs 1.4 euros. A convenient travel card system operates.

In New York the underground is called the "subway." Although this word means underground constructions, 40 per cent of the system is above ground passing over highways. Underground subway lines are only located at Manhattan and central neighboring areas. The New York subway has operated since 1904. Now it consists of 26 lines and 468 stations and more than 8 million people use it every day.

The underground in Buenos Aires started to transport passengers in 1913. It is the oldest underground in Latin America. In Africa the only underground is in Cairo. In 1927 the largest underground system by today’s standards opened in Tokyo, a single fare on which will cost $1.35. The Tokyo underground consists of two systems independent from each other. One inconvenience is that it is necessary to pay to change between lines from one system to another as they are managed by different companies.

One of the biggest disadvantages of many undergrounds is the complexity and inconvenience of changing from one line to another. This is connected with the fact that in the some cities different underground lines were constructed by different private companies, by different projects. Each firm maintained and developed its own line and didn’t care about its relationship with other lines where competitors worked.

In London, passengers who need to change lines, for a long time were forced to go outside and walk some distance to another station of a different line, buy another ticket and again go down. Only after the mass nationalization of the underground in the 1940s-1950s did they start to make tunnels connecting underground stations. That, however, did not always help, due to the lack of an initial uniform plan.

Underground systems blossomed on a global scale in the 1960s-1970s. Then in a number of countries because financial crises and a sharp shortage of public funds the development of underground systems stopped and many stations began to fall into decay. An evident example of this is the subway in New York where it became a symbol of crime and a haven for homeless people. It is supposed that homeless people were the cause of a serious fire at the beginning of 2005 when a whole line was out of operation for a long time.

The revival of the underground begun at the end of the 1990s. In 1998 the Parisian underground made its mark with a completely automated line (14 km) called METEOR. The project cost 1 billion euros. The national government covered 35 per cent of the costs, the regional authorities 35 per cent and the city state authorities the remainder. The active modernization of other lines simultaneously begun.

With the support of the federal authorities in New York, in Manhattan in 2005 the construction of a long-awaited underground line - Second Avenue Subway - which had been spoken about for about 30 years ago began. Now money has been allocated for it from the federal budget, and also from the state and city budgets. The city has also issued non-taxable bonds. The total cost of the project, which is planned to finish in 2013, is $16 billion. In the long term the line will transport over 600,000 passengers daily. Once in operation it will bring $14.4 billion to the city’s gross national product per year.

The Barcelonan underground (operating since 1924) has unrecognizably changed. Experts say that it is one of the most safe, technically equipped and convenient underground systems in the world. Since 2001, with one ticket (single travel – 1.15 euros, travel cards are cheaper), you can not only change as many times as you want from station to station, but you can also use the high-speed escalators connecting different levels to change to above-ground public transport: buses, trams and suburban trains. By 2010 the underground of Barcelona, by the estimations of experts, will become the most advanced European underground in direct and figurative meaning: it will cover all suburbs, will reach the airport, and the technology will be of the most highest level.

Underground transport is considered the most effective in every aspect. It also helps to solve environmental problems and unload roads. Authorities are allocating more funds for the development of underground systems.

According to the European Commission, in European Union countries in the next 5-20 years more than 2,100 km of underground lines are planned to be laid. Of which about 60 km will be in Denmark, in Finland - over 65 km, in Iceland - 110 km, in Norway - over 481 km, in Sweden - 64 km, and in Spain - more than 567 km.

On new light (above-ground) underground lines more than 30 billion euros will be allocated, and on currently under construction and future "heavy" (underground) lines 95 billion euros will be spent. About 14 billion euros will be spent on renewing rolling stock.

Metrostroy is one of the most powerful industrial branches in the EU. Currently, according to the European Rail Research Advisory Council (ERRAC), trams, light and heavy underground, and also suburban trains make up about 50 per cent (36 billion euros) a year of the total turnover of railway transportation.

Motorists will be forced to use the underground

According to Ernst Young, from 1999 to 2006 expenditures on world infrastructure have increased 50 per cent. This includes expenditures on public transport, the level of development of which and scale of use strongly differs depending on the country. In the US, for example, on average less than 5 per cent of the population uses public transport to get to work (in New York it is 53 per cent, in Washington it is 2 per cent). There are more than 200 million cars in the country. There are 760 cars per 1,000 inhabitants in the US, about 570 in France and Germany, and approximately 510 cars in Britain. The relatively low quantity of cars in Europe is explained by the fact that the general maintenance of a car, including taxes, is more expensive than in the US. Because of an abundance of cars on the roads, in tunnels, on bridges and at traffic intersections, multi-kilometer traffic jams are formed, a dense grey fog covers all the main highways, and the speed is a snail’s pace. From 1998 to 2003 the traffic capacity of highways in Atlanta worsened by 375 per cent, in Dallas by 360 per cent, in Chicago and Boston by on 260 per cent, and in New York by on 175 per cent, note analysts at Ernst Young.

The congestion of the underground is slowing down the development of the city economy, and the authorities understand that. For the reconstruction of old lines and stations from 2005 to 2009 $21.2 billion has been allocated from the budget, from the general requirement of $27 billion. The authorities of New York led by Mayor Michael Blumberg are desperately trying to stimulate inhabitants to change from personal transport to public, first of all to the underground. For example, the price for underground travel has not been raised since 2005 and will not be increased up to 2010. It is expected that the low price will attract passengers, which will raise funds and will be simultaneously useful for the city.

Now one trip on the New York subway costs $2 (with a travel card - on average $1.3). At the same time Blumberg is going to impose an additional charge for motorists traveling to the city centre on workdays in rush hours of $8 - one entry per a car (in London it is 5 pounds per car).

Success in motion

In all countries the underground is either the full or significant share of property of state structures. Private companies, as a rule, play the role of operators, which are supervised by the state. Accordingly, the State pays. In Europe in 2008 only Prague is planning to open a completely commercial underground line with three stations. In other European cities the state share in financing the underground is about 50 per cent, and in some places, for example in Amsterdam, reaches up to 90 per cent. In the US, all public transport is 80 per cent financed with public funds.

Meanwhile the expenditures on underground systems are considerable. The cost of laying 1 km of underground line including the construction of stations varies from city to city and depends on the complexity of the ground, the level of subsoil waters, the seismic characteristics, the saturation of underground infrastructure, the level of technical equipment, its safety equipment, and the cost of work and materials in the given region.

The cheapest double-track kilometer in developing countries costs several tens of millions of dollars, with the most expensive in London at $336 million. In Moscow, according to Dmitry Gayev, chief of the Moscow metro, about 2.2 billion rubles are required.

On average in Western and Central Europe the cost of laying 1 km of "heavy" underground is 150 million euros, and for "light" is 15 million euros. But according to Gayev, "the underground is a profitable enterprise on which returns are made, not straight away, but in 15-20 years."

More often the payment for travel on public transport only partially compensates the expenditures on its maintenance, operation and development. The share of income from public transport from payment of travel, in relation to all expenditures on operation/development (Farebox recovery ratio - FRR) in Paris, for example, is 50 per cent, in New York is 67.3 per cent, and in Baltimore is 39,9 per cent. For the remainder, authorities have started involving business in the development of the underground.

In Australia, the US, Canada and other countries investment banks, pension funds and financial companies have begun to invest in underground assets under government guarantees. Thus they have created a Public/Private Partnership (PPP) - cooperation of the state and private capital, or a private-state partnership. However РРРs are not a panacea as private companies are interested only in objects that are capable of bringing large incomes, which is impossible to expect from public infrastructure.

The cost of travel should be adequate otherwise the sense of existence of public transport is lost. This means that the main burden, in any case, should be borne by the government, it is noted in a report of Ernst Young.

To attract businessmen to participate in underground projects, besides the direct guarantees authorities give, for example, tax privileges and allow the use of underground objects for commercial purposes, for example to lease vacant buildings/premises. Participants of РРРs have the opportunity to use the territories running above the railways, and the territory near underground stations. For example, in Hong Kong company-operators are authorized to build real estate premises on the land around stations and along the underground lines. Participants can also receive income from adverts, domestic trade and the laying of communication cables in tunnels, including fiber-optic ones.

Special business-environments form around underground stations. There is always busy trade, and people like to live, study and work near underground stations. Accordingly, in such places there are high profits, and expensive real estate.

German professor Carmen Hass-Klau from Wuppertal has carried out research on the cost of real estate before and after underground stations were opened in 14 European cities. She found that the land near underground stations ("heavy" and "light"), for residential purposes has risen in price by 10-65 per cent, for already built residential buildings by 3-20 per cent, and for offices by 4-25 per cent.

Housing close to underground stations has increased in price on average by 8.2 per cent, class A office prices have risen 23.3 per cent and shopping real estate by 6-18 per cent.

The English way

In some countries attempts to completely privatize the underground have been made. The example of the UK is interesting. They first started talking about privatization of the underground at the end of the 1990s. Originally it was called a "private financial initiative." Under the scheme a contract with French firm Alstom was concluded and the company has undertaken the updating of the rolling stock of the London tube. Then there was a PPP program. According to this, private structures divided the underground into four parts, with one state company London Underground Limited (LUL).

Private companies chosen by a tender have received (in other words-privatized) such assets as trains, tunnels, stations, platforms and alarm systems. Each company supervises certain sites and stations, investing money in infrastructure and the improvement of its sites. LUL controls the activity of the private companies and is responsible for the general condition of the underground, i.e. operative management.

Since 2003 the London underground has functioned on the basis of interaction between the state and private business. The contracts signed at the end of 2002 by the participants of the РРР and the authorities, are valid for 30 years. Every 7.5 years the conditions of the contract should be reconsidered in view of inflation and other changes. In spring 2005 a commission of the House of Commons of the UK began an inspection of the London underground by the results of 2004/2005. The commission noted that improvements were inadequate in relation to the financial assets invested in the PPP schemes. And the operation and development of the underground would have been 90 million pounds sterling (1 pound - $2.065) cheaper if the city would have issued and sold bonds, instead of introducing the PPP program.

As a result of the public discontent of a general director of one of the companies who received net profit of 50 million pounds sterling but has strongly lagged behind the schedule of the planned works has been fired: only 13 stations from 32 had been updated. Other companies have not worked much better.

The commission also noted problems with ventilation, and also paid attention to the fact that the number of passengers has not decreased, although the cost of travel has increased.

As was explained by Bob Crow, general secretary of railway trade union RMT, private consortiums Metronet and Tubelines, which are carrying out the reconstruction of the London underground, have received more than 3.3 billion pounds sterling of public funds, having made from that 300 million pounds, however have failed to improve the condition of the entrusted objects.

In 2005 the participants of the РРР were fined 18.9 million pounds for nonfeasance (while on the accounts of these companies in the 2004/2005 financial year there were more than 2.2 billion pounds - payment for services from different sources, including payment for travel.

It is curious that the share of income from travel payment to operating costs in London is 125 per cent. This means that the underground is profitable and money from travel gathers interest.

Business representatives, in turn, have announced that one of the reasons for the slow reconstruction of the tube is constant floods. In the city many enterprises that used to take away great volumes of subsoil waters for their technical needs have closed. Now water accumulates and in the underground it is necessary to pump out 30 000 cubic meters of water daily. Also, because of the strong deterioration of objects of the underground it is impossible, according to them, to define exact expenditures to replace all old with new and even if it is possible.

In Western and Central Europe the key role in financing city transport projects is played by the European Investment Bank (EIB), created in 1958. From 2000 to 2004 alone 10.7 billion euros has been directly transferred for transport projects, 92 per cent of which are intended for public transport. In total it has financed about 70 projects, 55 of them in the sphere of public transport: "heavy" and "light" underground, and also trams.

At the same time, the EIB has been buying rolling stock and other railway assets in London, Athens, Madrid, Lisbon, Berlin and other cities. In general these investments are profitable, although in some projects problems occur.