An interesting article in the Herald yesterday on the potential future of rail operations in Auckland.
Auckland Transport boss Lester Levy won’t rule out ditching rail operator Veolia if it can’t shape up.
The city’s public transport network faces pressure after Prime Minister John Key demanded a drastic increase in rail passengers if Auckland wants to bring forward its $2.86 billion underground railway project.
Levy was confident he could get the necessary 20 million rail passengers per year required to bring the start date forward, and was prepared to dump of Veolia if necessary.
“If they can deliver what we want then all good. If they can’t, we would re-look at it. In the end, I’m so determined that we’re going to get this done that no-one and nothing will get in the way,” he said.
Levy said ‘customer revolution’ was required to get Aucklanders back onto public transport – with improvements needed to park and ride facilities, bus shelters and timetables.
“We need to change almost everything we do, re-frame everything we do to actually deliver on frequency and precision. We need to have a total re-look at pricing, which must be attractive and appealing. It’s a total change.”
Veolia’s contract to operate Auckland’s passenger rail network runs out in June 2016, but Levy called for major improvements in the next 18 to 24 months.
“We can’t afford for this to drag on. So they need the opportunity to respond to this. It’s a very different relationship now.”
Veolia certainly has come under a fair amount of criticism over the years for the way they have handled things. I suspect that in some cases the criticism is valid while other cases the company has been the scapegoat for the convoluted way rail operations are set up in the city. We currently have:
Kiwirail own and run the infrastructure, that means they are in charge of maintaining the tracks and running the signalling system. Further they currently perform the maintenance of our ageing fleet of trains, own the locomotives that haul around many of the trains and employ a large number of the train drivers. To make matters more confusing they are also run freight trains which is their primary source of income and which competes for space on the tracks with our suburban trains.
Note: I’m not suggesting that Kiwirail are giving freight trains priority but just that there are conflicts which occur. This is one of the key reasons why many of us here on the blog believe that Kiwirail should be split up with the infrastructure and planning side of the business being moved the NZTA with Kiwrail left as a freight only company that is also opened up to competition.
Auckland Transport owning the trains themselves as well as setting the policies which influence patronage including fares. Auckland Transport also funds the operations.
Veolia who as of this morning are now known as Transdev actually run the services. They are the ones that employ the staff you see around the rail network including many of the drivers. They are responsible for the day to day management of our passenger trains, effectively a middleman between Auckland Transport and Kiwirail. Being a private company they also need to make a profit and last year they doubled the profit on their Auckland operation to $1.9 million not including another almost $800,000 they paid as a management fee to their parent company.
Thanks to electrification, over the next few years there will be some aspects of the operations that are streamlined but there will also be more players involved in rail operations. Kiwirail will continue to be in charge of running the infrastructure and will still be running freight trains. Auckland Transport will continue to do what they currently do. Veolia will continue to run the operations and according to the latest AT business report will also take over the management of all drivers. The addition though is that our new trains come with a 10 year maintenance contract so manufacturer CAF will be responsible for that aspect.
Of course VeoliaTransdev are keen to keep involved.
Veolia chief operating officer Martin Kearney said they had made huge improvements to the rail network in recent years.
“I won’t tell you that we’re perfect but I’ll tell you that we’re striving for continuous improvement.”
He was confident Veolia would continue to operate Auckland’s trains, and said the company also wanted to be considered to run the City Rail Link.
I know some people are very keen for operations to be moved internally back to Auckland Transport and I suspect that there are a lot of merits to that happening but the one thing we know for sure is that any change is bound to be disruptive. Something also pointed out by Lester Levy:
Levy said it was feasible for Auckland Transport to run the trains on its own, but any changeover would be disruptive
The last thing we would need is a Labtests/Diagnostic Medlab type situation.
This also comes as interesting timing as across the ditch, Sydney is in the process of changing its rail operations by splitting up the company previously running the system. I’m sure there are bound to be some lessons that can be learned from that exercise.
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Is it just me being some crazy socialist, or does anyone else believe that the company that operates public transport in Auckland (ie the trains) should be operating them with the main focus being on giving users the best experience for their funding – not a company who needs/wants to make profit. If it was run by AT, then surely the focus would be on passengers and money would go back into the company and make the service better or cheaper to run for the Auckland ratepayer, rather than into a middleman’s pocket.
I tend to think something like this. Put another way, if the current system is an example of the calibre of privately run PT, then why on earth would we want such a system?
The 1992 Local Government reforms actually made it illegal for Regional/District/City councils to own PT services themselves – it’s that glorious “funder/provider” split which was supposed to ensure value for money, when – as we can plainly see in Auckland – what it really does is muddle the lines of accountability. The problem is that the “provider” in this case is in a monopoly position and the funder (AT) is not in a position to just put them off the run for screw-ups.
This system debatedly works as planned with buses: clearly far less so with trains or ferries (as any Waiheke Islander can tell you, with Fullers substituted for Veolia).
Well Christchurch Council managed to skirt the 1992 reforms for 20 years – it owns the “Red Bus” fleet, while ECan contracts it to run the services.
Admittedly not all bus services in Christchurch are Red Buses, but the majority are.
So, why couldn’t AC organise things so that one CCO (say “Auckland Public Transport”) own/run the trains while another part of AC (AT) funds it along a similar line to Christchurch?
Since the CCO’s are all Government controlled (as the Government appoints the majority of the shareholders to the CCO’s) you can’t say that AC is dishing out money to another bit of AC and buying services from them in contrenvention of the 92 reforms.
Auckland Transport isn’t the council and it has the ability to own and operate PT services.
Auckland Transport already owns the trains (except the locos) and the stations (except perhaps Britomart – was ACC, now AC?), and already funds both.
hmm, AK Transport running the train service any better than a Veolia? Have any of you even dealt with AT professionally, most of the people working there would not last a day in the professional sphere?. If AK overseas massive delays in the roll out of services, electrification etc and you want them to run the trains (tell me why the glacial speed to get a single train station open (Parnell)?. I would worry not about my train being 5 minutes late, but with AT running the show, 6 months months.
I remember the olden days when the ARA ran buses. Of course the Council should run the trains, for the benefit of residents not for profit.
From the home of one of the biggest rail privatisation experiments:
http://www.guardian.co.uk/uk/2013/jun/07/privatised-rail-higher-fares-older-trains
I think we all know this is the case.
But I would really want to know AT was up to it – feels like they can’t even contract out properly, based on current Veolia terms, let alone run the show.
I don’t see how rail privatisation is related to this topic, as in the case of Auckland Transdev is only an operator, not an owner. They have no say in what kinds of trains are used, or their age. Plus of course we are getting brand new trains anyway.
The most efficient operator Auckland could have would be KiwiRail, as it’s their network, and having the same people co-ordinate services (including freight), signalling and track work would bring about cost reductions and enable faster and more transparent communication throughout the operation.
That would be true if kiwirail gave two shits about running commuter trains.
They run them in Wellington, don’t they?
Matt, you cannot be serious about getting NZTA to run the trains or the train network. Despite their mandate to look after all land based transport in NZ, they are avowedly anti-train and pro-road, and that would just be a total death wish for trains. Yes, they should fund them, but they should stay the hell away from running them.
Bring back Ontrack, i.e., a rail version of NZTA. I agree with Matt, KiwiRail should be an operator only, and have nothing to do with network ownership or maintenance. And ideally other operators would be allowed too. Have open access instead of a monopoly. Just imagine if Telecom was still the only telecomunications company in NZ, and nobody else was allowed to offer phone or internet services!
Gosh yes.
I would go so far as to say that a new Ontrack should be part of NZTA, make it a real transport agency with the power and responsibility for the strategic transport system as a whole. Definitely agree on open access!
Sadly, as you well know Geoff, we have had experience of KiwiRail, in their earlier guise of Tranz Metro, running the Auckland commuter train network. It was that experience that led to newly formed ARTA to open the operation of the network to tender. That tender was won by Connex, aka Veolia, Veolia Transdev and now just Transdev presumably on the grounds that it was the most affordable. In the ‘good old days’ of Tranz Metro we had a service that barely functioned; the equipment was a barely re-jigged second-hand joke, the infrastructure, most of it dating from the 1940s and earlier was so run-down it was on the verge of collapse, the timetable was even more of a joke than the current one and users of the network were treated with casual contempt. Half the stations were unidentified by any sign, passenger facilities usually comprised a second hand tin shed, there were few if any forms of communicating with passengers and trains were regularly up to half an hour late, if they bothered to turn up at all.
I’m far from impressed by efficiencies touted for private rail operators anywhere – the best trains I caught in the UK last year were run by what is an effectively renationalised East Coast Rail (the Tories are doing their best to flog it at the moment) – but I’m certain we don’t want to hand the operation of the Auckland commuter rail network back to KiwiRail.
I may be wrong, but I think it was Tranz Rail’s decision to withdraw from the Auckland suburban market that led ARTA (or whoever it was at the time) to go to tender, and to purchase Auckland rail network – TR was trying to get out of Wellington subbies at the same time (proposed purchase by Stagecoach fell through) and out of Tranz Scenic. It was the era of the virtual freight-only national railway.
TR did not tender for the contract that Veolia (then Connex) won.
The negatives related to Tranz Metro that you mention, were all results of lack of council and government funding, and were not decisions by Tranz Metro.
Tranz Metro pulled out of the Auckland market as part of a strategic exit from passenger operations by Tranz Rail at the time, and they intended to pull out of Wellington as well. Toll Rail changed this strategy in time to keep Wellington, but too late to get Auckland back, as the tender went to Connex.
I think if the contract were put out to tender again today, KiwiRail would bid. If that ever happens, I would welcome it, simply because I think the fewer companies involved, the better. I would just hope they don’t bring back the Tranz Metro name. It’s well past its use by date.
I was amazed Veolia alias Connex was awarded the contract in the first place considering they were previously sacked from their contract for SE Trains in England and were having problems in Melbourne at the time as well!!
Presumably Auckland Transport is the ARC under a different name and they seemed to manage the Auckland buses OK until as previously stated were forced to sell by the Government of the day in about 1992. The Government of the day made some inane changes to various laws at that time which negatively affected the population as a whole and cost us heaps. (The party shall remain nameless in the interests of commercial sensitivity!)
London UK presents interesting case studies on in-sourcing vs out-sourcing metro rail:
– London Underground – operated by TfL staff (TfL=Transport for London, organisation with probably similar goals to AT)
– Docklands Light Railway/DLR – metro system in east London operated for TfL by a private company Serco.
One reason to keep a private company between AT and the staff is for better industrial relations and HR management. The London Underground experienced regular network-wide strikes, I would estimate 1-4 days of strikes each year I lived there 2009-2012. On strike days, generally timed by the unions for busy weekdays for maximum impact, few services were available across the network.
Being dependent on the London Underground to get to work, I looked across the city with envy at the other major metro system in London, the DLR, which never seemed to have strikes …. as a public transport user I know which arrangement looked better for the passengers!
Although I am probably missing other subtle reasons the DLR staff were on strike less often.
SB – it should be noted that DLR trains do not have drivers (just wandering “train captains”) and so the train network is much less susceptible to strikes….
How in the hell can you ever hope to have a reliable commuter rail service if it is intermingled with freight? seriously WTF.
I’m surprised Veolia even bother to get out of bed for such a pittance, especially when they have to deal with such shocking infrastructure, which is only recently seeing some investment. I mean when locomotives crap out or signals fail, it’s hardly the fault of Veolia.
I’m suspicious as to where Auckland Transport would get the expertise without hiring some offshore help. I see Sydney has brought in a guy with experience of running the London Underground.
@SB
All buses in London are run privately by Stagecoach, First etc for TfL and they too have union issues. If you delve deeper into the strikes that have happened here over the last few years, it was certain Unions that caused the strikes and they would have happened irrespective of the Deep Tube Lines (the lines affected by the strikes) being privately run or not
Note: Some of the lines are PPP operated and I having previously worked for one the invovled PPP Private companies.
Didn’t the Metronet PPP go bust and end up costing taxpayers there about GBP 400 million? Would have thought the Railtrack plc experience was a pretty big warning sign before that. Seems to be quite a few examples outside the UK of countries having public ownership and delivering a pretty good service. It would be interesting to know the legal and KPI monitoring/enforcement costs here of the current model in addition to the noted profits which are sucked out of the system. Another aspect might be if the new Kiwirail CEO makes any big changes, as that side of the coin is still pretty important for infrastructure quality and access given Auckland’s unusual freight sharing network etc.
As far as rail operations go, they sit much more easily together with the network than apart – that is certainly the British experience. However, what does need to be together is the overall land transport planning, so that one agency is specifying overall planning for rail and road. Where New Zealand has suffered is that those things have always been kept apart. I wouldn’t put rail network operation and roads operation together, as the respective operating environments are too different.
[Observations based on nearly eight years’ work in a transport planning agency which pays its services operator, separately pays its network operator, and will hopefully benefit from a policy of ‘deep alliancing’ between the network and the main operator]
I think Ross is right here.
NZTA really comes out of the old National Roads Board, set up in opposition to the [then powerful] Dept of Railways. This opposition and separation at the planning level has not served NZ well. It does seem that NZTA is growing into a truly multi-modal agency, or at least trying to if the politicians allow it. And that this is surely the answer. Including responsibility for our vast, valuable, and under-exploited rail infrastructure.
We look forward to the day we the question truly is ‘how do we best enhance access and quality to this place’ instead of the old; ‘where are we putting the next State Highway’?
The individuals I deal with at the NZTA seem to have their heads and hearts in the right place. I couldn’t comment on the top brass and ministerial direction though.
Transit New Zealand as-was, was established in 1989 with a supposed multi-modal focus. The following year, its budget was cut by a quarter IIRC and that meant that we spent the next five years struggling to keep our heads above water in running the state highways network (and funding local roads), never mind anything to do with public transport. The changed arrangements for that [PT] over those years was a further aggravation; simply, no-one in the organisation had a clue about how to go about integrating the modes in the planning outlook. (Prior to 1989, a quite separate office, with about ten staff, was responsible for urban transport funding).
A key event was the amalgamation of Transit with Transfund to form NZTA, meaning that all land transport was funded by then organisation that was also responsible for most of the actual spending, but on just one mode. (It’s different now that rail expenditure has been pulled from the National Land Transport Fund, a bizarre decision in its own right.)
I’d put together the National Roads Board and ONTRACK as were as the land transport infrastructure provider, as happens in Sweden (and Finland, I think).
Well, Transfund was hived off from the old Transit NZ in 1996, so the recombination of the two, with the old Land Transport Safety Authority, was timely. I would have ended up in Transfund had I not escaped at that time to the far more challenging environment of Tranz Rail.
Also – yes, Finland does have its railway network in the same organisation as its roads agency.
Matt L – “Kiwrail left as a freight only company that is also opened up to competition.”
Don’t you think that having a railfreight operator, who the government wants to fund entirely the maintenance and renewal of the rail network, compete against road hauliers, who do not have to directly fund maintenance and renewal of the highways, is competition enough?
I agree that the rail operations and network infrastructure management should be integrated particularly for a urban passenger operation. However I dont think that KiwiRail is necessarily the best entity to do this for either the Auckland or Wellington passenger systems. My prefernce would be for separate entities to run these networks and operations with KiwiRail Freight having contracted access rights for freight services. This would align operations and network infrastructure maintenance to the requirements of the major user – passenger services.
I don’t however think that Auckland Transport would necessarily be the most appropriate organisation to run the Auckland network and operations as this would require both a dedicated team of specialist rail resources and a rail infrastructure and operations safety licence. I suspect that AT may struggle to attract and retain the necessary senior personnel for operating and maintaining the network. It may therefore be better to engage a vertically integrated rail operator/maintainer such as MTR, Serco- with an robust contract and performance regime. The model used in Melbourne (currently operated my MTM) could be a possible model.
“My prefernce would be for separate entities to run these networks and operations with KiwiRail Freight having contracted access rights for freight services.”
The problem there is that you end up having network borders, with different management and oversight of each network. That increases risk to the safe operation of trains. It would be fine for a quiet branch line, but for high-traffic areas, it should be avoided.
Doesn’t ETCM mitgate a lot of the safety concerns?
Bravo Lester Levy!
You only need to compare the excellent state train services run in Northern Europe to the shambles that is Britain to see that PT is not suitable for competition or privatisation. Of course there are also shambolic state services but that is more a reflection of the quality of management than the natioanlised nature of the systems as such. Bad management happens in the private sector as well – as I find out every day at work.
If the people at AT/Kiwirail/whoever are not up to the task then we need to find people who are, not just send it off with the (so far vain) hope that the private sector will do it better.
I am not against privatisation as such, but it works best when it is in an environment where genuine competition is desirable – telecommunications/electricity is a good example. I just believe PT is more like health and education – its benefits go far beyond what is able to be accounted for in dollars and cents on a balance sheet. Competition just leads to duplication whcih is not efficient as we have seen in AKL with buses.
In saying that of course the operator needs to be accountable for bad management and results, just as hospitals and schools are.
Privately-owned infrastructure works fine, as long as it doesn’t need to be subsidised. Auckland Airport is a classic case in point. Tranz Rail’s privatisation failed because a rail freight business in New Zealand cannot be run without substantial subsidy – a railway company is hardly a monopoly provider of transport services but it is a monopoly provider, in effect, of the benefits we get from moving freight on rail and not roads.
In truth a major issue with any running of the trains is the unions. A well run organisation requires good staff. Companies and organisation find it very hard to get rid of underperforming staff, the unions will tend to support any member no matter what. Also under performing staff are paid as the same as well performing staff (union agreements).
As mentioned above a couple of million $ profit is pretty much nothing in the grander scheme of things. We are talking about budgets for operating and capital expenditure of $100’s millions so focus on Transdev’s profit is a little silly.
Also a huge amount of restrictions on Transdev in the operating of the trains. Remember integrated ticketing, this deadline as set so Transdev reorganised all its staff then AT delayed it, imagine the cost incurred my this AT delay?
The only power workers’ have is the right to strike! Are we meant to be mindless proles or functioning members of society and the workplace? Go back to Donkey in Parnell where poverty is not living in a $10M house.
So… what? You’re talking about busting the railworkers’ unions, or banning workers from clubbing together to defend their terms and conditions?
So…… my point being it’s no use harping on about the need to provide an efficient train service and at the same time ignoring the fact that unions work to keep under performing personnel in jobs which in turn contributes no worse service. I don’t want to get in a big company vs poor worker discussion.
As the business case indicates long term profitability in a growing market, a partial share float similar to MRP/Air NZ that New Zealanders, particularly Aucklanders could buy into might be a way of raising capital and accelerating progress and engagement. Private railway operators like Keio in Tokyo (2010-2014 plan below) have substantial consumer shareholdings and dividends include a regular 20 trip ticket in the mail every few months.
http://www.keio.co.jp/english/pdf/2009kimatu_ir_E.pdf
Keio is a department store (38% of revenue) that happens to run trains (28%) and real estate, leisure and construction (the remaining 34%).
Are you suggesting Smith & Caughey Rail?
Change of subject here but does any else find the angle shapes on the front of the train in the image above above quite retro 70s…? Not saying I don’t like ’em, just saying they’ve got a retro style going on…?
@ Craig SS
I was an employee for Metronet at a high level and I can assure you there was a lot going on that was never made publicly available. TfL kept making demands on Metronet outside of the terms of the contract that Metronet was obliged to do by TfL but when Metronet approached TfL to pay for the work that was outside of the original scoping they refused to pay. Really it was just a way for the ex Mayor Livingston to have his own way with London’s transport.
Serco etc learnt from this experience and no PPP undertakes work form TfL without first being paid.
@ Ross Clark
Auckland airport is the equivalent of the Rail network not Kiwirail. Air NZ is Kiwirail and it needed the NZ taxpayer to buy it our to stop it going out of business just the same as Kiwirail so that argument falls flat.
There is nothing intrinsically wrong with the tender out to private operators as long as the state maintains control of the network. Here in Stockholm very few sections of the transport network are actually operated by Storstockholms lokaltrafik (SL) (in fact I think only the Pendeltåg is)! We’re known for very high quality public transport and operators are punished if they do not meet targets. Veolia used to run our tunnelbana (metro), now the Hong Kong MTR do. Bad operators lose their contracts.