Title

PRICING COMMUTER, INTERCITY, AND FREIGHT TRAINS IN A TERMINAL RAILWAY CONTEXT: AN APPROACH

Authors

B K. Bertie

Document Type

Journal Article

Publication Date

2003

Subject Area

infrastructure - track, ridership - commuting, economics - operating costs, economics - capital costs, economics - pricing, place - urban, mode - rail

Keywords

Track rehabilitation, Track maintenance, Toronto (Canada), Railroad transportation, Railroad commuter service, Rail transportation, Rail maintenance, Pricing, Operating costs, Maintenance of way, Maintenance of specific facilities, Links (Networks), Interurban transportation, Intercity transportation, Freight transportation, Cost recovery, Cost of service pricing, Cost of operation, Commuter rail, Capital costs, Budgets, Budgeting, Budget estimates

Abstract

The cost-of-service (or fully allocated cost) pricing model has been criticized in the economics literature. The criticisms generally focus on the issues of cross-subsidization problems from using average costs and economically inefficient pricing. A fully allocated cost model, applied to a terminal railroad setting, is presented that can substantively overcome these criticisms by using a resource consumption approach for key cost drivers. A successful implementation of a new cost recovery system in Toronto, Ontario, Canada, is used that applies these resource consumption concepts. A necessary precondition to this approach is the charting of the classes of traffic (commuter, intercity, and freight) into operated-track segmented paths, each of which consists of a set of one or more track links. Each traffic class path is characterized as either consisting of sole-use links, joint-use links, or a combination thereof. Operating and capital costs directly attributable to the track links are calculated. A reverse engineering work-effort-per-activity approach is used for assigning the total routine maintenance of way and maintenance of signals budget dollars to the terminal track links. The resource consumption approach provides a logical framework and analytical platform for analyzing link infrastructure complexity; system, path, and link capacity; path and link cost performance; and path and link renewal and replacement capital planning and capital sharing responsibility.