Profitability of the Tube v trains/DLR

[ScotGG]

Before covid it was said often that the underground is the only profitable element of public transport in London. I was wondering how did it compare to Metro routes on national rail and the DLR?

Why would the DLR also not be profitable given the areas of extremely high population and density it now passes through and lack of station staffing? Or perhaps that is why as no need to get a ticket and can risk not being checked? Is shorter trains another factor?

For someone in Stratford, Canary Wharf or Lewisham where the DLR was packed day in day out so how was it not profitable? I can't think of any area or branch now where it wasn't super busy before the pandemic. Frequencies were also very high though a tad below the tube in some areas.

Did TfL have a target for when it would break even?

And I don't supposed TOCs break down metro only routes v long distance (where possible)?

 

[Dr Hoo]

Before covid it was said often that the underground is the only profitable element of public transport in London. I was wondering how did it compare to Metro routes on national rail and the DLR?

Why would the DLR also not be profitable given the areas of extremely high population and density it now passes through and lack of station staffing? Or perhaps that is why as no need to get a ticket and can risk not being checked? Is shorter trains another factor?

For someone in Stratford, Canary Wharf or Lewisham where the DLR was packed day in day out so how was it not profitable? I can't think of any area or branch now where it wasn't super busy before the pandemic. Frequencies were also very high though a tad below the tube in some areas.

Did TfL have a target for when it would break even?

And I don't supposed TOCs break down metro only routes v long distance (where possible)?

Any chance of some quotes so we can see 'who' was saying it? (E.g. Mayor of London, Head of TfL or whoever.)

TIA

 

[Taunton]

Breaking "profitability" down across a single shared network is dependent more than anything else on how the accountant does the books. As TfL is politically managed, this is done for those ends.

For example, I go off on Oyster and make several trips on the Underground, and hit my daily cap. Then I go on the DLR and a bus. I'm not charged any more. What does the DLR get as revenue ? Nothing ? My whole daily cost divided across everything I do ? What if I'd gone on the DLR before the Underground ? What revenue does each element get from schoolkids or Freedom Passes ? You tell me. It's an issue all transport operators with more than a single route face.

 

[Mawkie]

Any chance of some quotes so we can see 'who' was saying it? (E.g. Mayor of London, Head of TfL or whoever.)

TIA

I believe the quotes came from the 2018/19 TfL Annual Report.

 

[Dr Hoo]

Thanks, Mawkie.

So at face value the answer to the OP's question is that the Underground did indeed make a respectable surplus (in 2018/19), the buses lost money hand over fist, the Overground (i.e. 'Metro') just about broke even, the Elizabeth Line (presumably TfL Rail for the Liverpool-Shenfield line) lost money heavily and the DLR and Croydon Tram (as presumably large slices of 'Other operations') probably lost money. (Recognising that things like the bikes, river boats, and some some other bits and pieces might have been in there too.)

 

[Mawkie]

Thanks, Mawkie.

So at face value the answer to the OP's question is that the Underground did indeed make a respectable surplus (in 2018/19), the buses lost money hand over fist, the Overground (i.e. 'Metro') just about broke even, the Elizabeth Line (presumably TfL Rail for the Liverpool-Shenfield line) lost money heavily and the DLR and Croydon Tram (as presumably large slices of 'Other operations') probably lost money. (Recognising that things like the bikes, river boats, and some some other bits and pieces might have been in there too.)

If I recall correctly, there was a discussion around the renewal of train sets not being amortised in the LU operating surplus, whereas new buses are often specified in the respective tenders. I'm sure someone will have a better memory/understanding.

 

[Cesarcollie]

If I recall correctly, there was a discussion around the renewal of train sets not being amortised in the LU operating surplus, whereas new buses are often specified in the respective tenders. I'm sure someone will have a better memory/understanding.

I believe that’s correct so the comparison is apples vs pears. The tube ‘surplus’ is simply on day to day operating costs. I guess the DLR is the same. Capital expenditure is not included. Bus tender costs though include the full cost of vehicles purchase/finance/leasing through the tender process (the exception may be the NBFL’s which are owned directly by TfL).

 

[Bald Rick]

Re the DLR probably doesn’t do as well as the tube, simply because most of the fares in the outer zones are lower. Whereas there are a lot of trips on the tube just in Zone 1.

 

[AlastairFraser]

I believe the quotes came from the 2018/19 TfL Annual Report.

The buses seem to be heavily subsidized as expected, but I expect bus subsidy to be reduced when the ULEZ extension to the North and South Circulars comes in (assuming normal work patterns do resume) as people use the bus more then.
The DLR had just had a lot of new units ordered at that times, so it's understandable that it would be in the red at that time, same for Rail I would think.
The Elizabeth line will no longer be a financial drain when it enters revenue earning service.

 

[matt_world2004]

The average break even point for a tube to be "profitable" is 35 passengers per trip compared to 55 passengers the national rail network. Economies of scale probably come into play here the tube uses infrastructure quite intensively and the infrastructure costs do not rise.linearly to cover those costs.

There are about 60 bus routes in London that are profitable.

 

[Mojo]

Why would the DLR also not be profitable given the areas of extremely high population and density it now passes through and lack of station staffing? Or perhaps that is why as no need to get a ticket and can risk not being checked? Is shorter trains another factor?

In addition to what others have said, the official fare evasion estimates have fare evasion as much higher on London Underground as compared to the DLR.

 

[Snow1964]

The average break even point for a tube to be "profitable" is 35 passengers per trip compared to 55 passengers the national rail network. Economies of scale probably come into play here the tube uses infrastructure quite intensively and the infrastructure costs do not rise.linearly to cover those costs.

There are about 60 bus routes in London that are profitable.

That sounds likely for Operational running costs vs revenue.

Probably excludes periodic renewal of trains, signalling and track (which is rather unfair, as on average need to replace X carriages, Y signals and cables, Z metres of track each week to maintain same average condition across the network).

I have never been a fan of describing a simple renewal (without enhancing speed, capacity etc) as capital spending, rather than routine repairs (even if those repairs only happen every few years). I don’t mind Accounting classing it as a fixed asset (as has multi year lifespan), but you do need to bring the depreciation / amortisation charge into operational costs

 

[AlastairFraser]

The average break even point for a tube to be "profitable" is 35 passengers per trip compared to 55 passengers the national rail network. Economies of scale probably come into play here the tube uses infrastructure quite intensively and the infrastructure costs do not rise.linearly to cover those costs.

There are about 60 bus routes in London that are profitable.

Makes sense about the buses, there always is going to be a higher service provision for London that is profitable, because they are a social necessity in so many areas with poor rail/other TfL provision.

That sounds likely for Operational running costs vs revenue.

Probably excludes periodic renewal of trains, signalling and track (which is rather unfair, as on average need to replace X carriages, Y signals and cables, Z metres of track each week to maintain same average condition across the network).

I have never been a fan of describing a simple renewal (without enhancing speed, capacity etc) as capital spending, rather than routine repairs (even if those repairs only happen every few years). I don’t mind Accounting classing it as a fixed asset (as has multi year lifespan), but you do need to bring the depreciation / amortisation charge into operational costs

Agreed, especially when they never describe road/streetscape repairs as capital expenditure.

 

[stuu]

The DLR had just had a lot of new units ordered at that times, so it's understandable that it would be in the red at that time, same for Rail I would think.

That would be capital expenditure, and would be accounted for very differently. The figures in the table/discussion are purely operational expenditure vs. income

 

[AlastairFraser]

That would be capital expenditure, and would be accounted for very differently. The figures in the table/discussion are purely operational expenditure vs. income

How come operational expenditure is so high then? There must be a large unexpected lump sum paid in that sum, surely?

 

[stuu]

How come operational expenditure is so high then? There must be a large unexpected lump sum paid in that sum, surely?

No idea, but it definitely won't be new trains. Capital expenditure will be a separate table. New leasing costs would come under operating costs but they wouldn't be paying those until the trains arrive

 

[Taunton]

I have never been a fan of describing a simple renewal (without enhancing speed, capacity etc) as capital spending, rather than routine repairs (even if those repairs only happen every few years). I don’t mind Accounting classing it as a fixed asset (as has multi year lifespan), but you do need to bring the depreciation / amortisation charge into operational costs

Likewise. I have never understood how TfL's auditors have allowed this. It's accounting class 1.01.

 

[Egg Centric]

In addition to what others have said, the official fare evasion estimates have fare evasion as much higher on London Underground as compared to the DLR.

Clearly utter nonsense. How do they say that with a straight face?

 

[Starmill]

Clearly utter nonsense. How do they say that with a straight face?

I guess it depends on what the actual percentage estimates are. If they're 5% and 3.5% that could be described as "much higher" but in fact not represent much in £ terms.

 

[Mojo]

Clearly utter nonsense. How do they say that with a straight face?

I guess it depends on what the actual percentage estimates are. If they're 5% and 3.5% that could be described as "much higher" but in fact not represent much in £ terms.

If I take 2018/19 (as 19/20 was affected by the start of Covid), the estimates for LU is 2.5% and for DLR is 0.56%.

I wouldn't say it's "utter nonsense," but the numbers have to be taken into account bearing the following: -

1. They will have different methodologies for the calculation of the figures so they are only really useful for working out trends over time for a single operator and working out an annual financial loss to TfL, rather than making comparisons between operators
2. The number of tickets inspected as part of the fare evasion survey on all operators will be a minuscule proportion so a check taking place on a bad or good day may sway the figures in either direction when they are extrapolated
3. DLR is operated by a private company, in the contract with TfL, they have a fare evasion target
4. LU is not a private company and therefore doesn't have a target for fare evasion
5. The fare evasion surveys for LU and DLR are carried out by their own staff [read in conjunction with point 3 ]
6. LU carries many times more customers than the DLR does
7. The demographics of the areas DLR and LU serve can vary significantly
8. Your chances of having a manual ticket check (ignoring gatelines for one second here) is probably higher on the DLR

 

[matt_world2004]

The franchisee doesn't conduct their own fare evasion surveys iirc it is Kantar that do it on behalf of tfl. The problem is the average fare evader is not going to know the difference between an revenue block and a fare evasion survey. They are just going to see someone checking tickets and I don't think people refusing to show their ticket is counted as ticketless travel but not surveyed.

 

[Mojo]

The franchisee doesn't conduct their own fare evasion surveys iirc it is Kantar that do it on behalf of tfl. The problem is the average fare evader is not going to know the difference between an revenue block and a fare evasion survey. They are just going to see someone checking tickets and I don't think people refusing to show their ticket is counted as ticketless travel but not surveyed.

The contracted irregularity surveys are carried out on Tramlink, TfL Rail, and Overground. The DLR ticket irregularity survey is carried out by initialising a full revenue block and combining the numbers with the automated counting systems at the stations.