Steam Locomotive Economics in Preservation

Discussion in 'Railtours & Preservation' started by Flying Phil, 7 Nov 2017.

  1. Flying Phil

    Flying Phil Member

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    I am very aware that steam locomotives are expensive to run and restore but I wondered, now that the market is "mature", is it possible that the income generated from hiring fees/ charters etc on preserved lines, is sufficient to cover those costs or will locomotives always need extra income? I suspect that for a large express type locomotive the costs will outweigh the possible income, but is it an appreciating asset bearing in mind the cost of new build and scarcity value?
    Obviously wealthy (and not so wealthy) individuals have purchased and restored many locomotives, out of their own pockets, but is it always a costly exercise?
     
  2. mushroomchow

    mushroomchow Member

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    I was of the knowledge that most locomotives "pay for themselves" through passenger revenue, but that's not to say that lines don't make efficiencies wherever possible.

    Case in point, during school holidays the GCR mostly just had the Jinty in steam, as it's one of the cheapest to run but still gives visitors the steam train they want. An Austerity (68067) has also recently been restored to take the strain off the Jinty and give 2 "cheap" runners for light traffic and midweek running, while the "big boys" are reserved for weekends and main events.

    Likewise, I'm aware that a lot of smaller lines like the Battlefield Line which have the capability but not the financial capacity only run steam services when visitor numbers are expected to be greatest and at pre-designated events. They're also more hamstrung by locomotive crew availability and expertise which can lead to a diesel stand-in at short notice.

    I think it was the case that a lot of Galas only just break even due to the sheer number and size of locomotives in steam relative to the number of passengers, and of course a number of the trains in use (goods, TPOs, light engine moves) not generating any profit. A bit of crap weather is often enough to turn off visitors and push the event into overall loss.

    This is offset by greater profits during "quieter" events and non "enthusiast" events. The most lucrative events tend to be ones where the trains themselves don't matter as much - speaking again from my knowledge of the GCR, the Bonfire Night event and Santa Specials have some of the best loadings while the traction for them doesn't really matter so much (though it didn't stop them using the 9F for the former this year!) I've no doubt that the Austerity will end up playing a part in the Santa Specials to minimise costs, unless it ends up on loan at another railway, where it will probably end up being utilised for the same purpose.

    There are also photo charters, carriage hire groups and dining services which are more lucrative (especially the latter), and a lot of these "profit drivers" offset any financial risk gala events may incur. For charters, the photographers essentially pay to put the loco they want into steam, and any additional profits are ploughed back into the railway to help fund galas. For dining services, and evening services in particular, any steam locomotive will do, and more economic choices are often used (although I have often questioned why freight locomotives with their comparably rough ride often get the nod - the appearance of a "Super D" on the service a few years back led to a number of soups in laps!)

    Galas are very important as they attract both enthusiasts and the general public, with a "wow" factor that gets them to come back during times that are paradoxically quieter and yet more valuable overall to the railway's income. That sort of draw helps make up for the financial risk involved with them.

    All of this considered, it still doesn't mean the railway will turn a profit - many still rely on membership subscriptions and grants to get their accounts over the line and into the black, which returns me to the original point - that railways have to make efficiencies, like any other industry, as costs continue to rise, but ensure that their customer base is maintained and where possible grows.

    I can't fully comment on mainline running, as I don't profess to be that familiar with the sector, but it seems a more volatile market - tours are often cancelled if booking are low and there are numerous additional considerations - higher maintenance, paid engine crews, modern monitoring systems, track access charges, water stops and so on.

    Overall, it's not cheap to run steam locomotives and it's only becoming more expensive as coal becomes harder and more expensive to source and heavy industry becomes more fragmented, not just in the UK but overseas as well. I guess we should thank our lucky stars that we have such an established heritage movement providing essentially free manpower for most tasks and that places like Meiningen and Darlington still exist.

    NB - Yeah, that was yet another long ramble, but I guess it all boils down to the point that there are a lot of complexities involved with running a railway and operators, especially on the "big" lines, are having to start thinking more seriously about the economic costs of "recreating the experience" with steam and being more sensible with balancing the "off the street" punter with the enthusiast who wants big locos and 100% authenticity. If you said 10 years ago that there'd be an Austerity tank joining the GCR's top shed roster, for example, you'd have been laughed out the room! ;)
     
    Last edited: 7 Nov 2017
  3. RichmondCommu

    RichmondCommu Established Member

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    From what I understand most locomotives running on preserved railways are not owned by the railway but instead are owned by private individuals or preservation groups. Planning ahead the biggest cost is the ten year refurbishment and any possible "surprises" once the engine is stripped down. A few months a go there was an interesting interview in Steam Railway magazine which suggested that all the locos at Highley would eventually find themselves back into traffic.
     
  4. paul1609

    paul1609 Established Member

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    I think its a very complicated calculation and depends on the circumstances of the individual engine and railway. Certainly running trains on the line Im involved with is a loss maker and we rely on all the associated commercial activities to break even.
     
  5. edwin_m

    edwin_m Veteran Member

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    Most of the preserved railways (not the GCR of course) were formerly branch lines and look the part with single tracks and bucolic stations along with the 25mph operating limit. So in fact a small engine is often a more authentic experience.
     
  6. Flying Phil

    Flying Phil Member

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    Thanks for those comments and it is great that the Austerity 0-6-0 is now finished and working on the GCR - of course in the early preservation days they ran similar tank engines but wanted to run larger engines for the "Main Line" experience. However with the Mountsorrel Branch and "Driver Experience" there is again a need for smaller locomotives.
    Re the actual question of locomotive economics, I looked up the Merchant Navy Locomotive Preservation Group Ltd accounts on - line and they show that typically their "Clan Line" runs around 20 rail tours to generate £150k and costs around £ 120k. Various other incomes bring the total income to around £180k. That operating "profit" of £60k p.a. over the 10 years goes to pay the ten yearly overhaul (which has been contracted to Crewe Heritage centre this time, to get the job done in a short timescale but at a commercial cost. So their operation is virtually cost neutral, but they do have the regular Belmond Pullman contract (approx 12 trips per year). The locomotive value is still on the books as £2200 ie scrap cost from Barry. There was a recent sale reported of an "as Barry" condition GWR 2 - 8 - 0 for £38,000 with an overhaul cost of £270,000 to £750,000 projected.
     
  7. mushroomchow

    mushroomchow Member

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    True. Though I eagerly await the first Gricer to show up at Midsomer Norton and complain that there isn't a 12 carriage, 9F hauled double-header running along its 500 yard length. ;)

    You're right though - most heritage lines aren't former mainline routes, but at the same time, those smaller lines often lack the income to even run steam on anything above a handful of occasions a year. I think it's telling that the steam-dominated lines with the most financial success A) are relatively short, B) operate "little" trains, C) are operated with a more commercial mindset and D) are in areas where they can capture a tourist / casual crowd while retaining a clear "identity". I'm thinking the K&ESR, the Bluebell and the IOWSR, which can then funnel those profits back into maintaining their admittedly excellent but cheaper to operate historical assets. But for every Bluebell, there are 10 lines struggling to make ends meet and barely able to afford firing up a steam loco while visitor numbers remain low. Some of those are just appallingly managed - it's not exactly a "small" line, but the conversation here surrounding the Wensleydale seems apt while we're discussing the cost of steam. Others are just stuck in a cycle - they need steam to attract more visitors, but need more visitors to make running steam affordable.

    The "big loco" exceptions - the NYMR, SVR and WSR spring to mind - are located in areas where the sheer volume of tourist traffic makes their use of such traction viable, and where train loadings often require big locos to cope. In the case of the WSR, the past few years have been mixed by its own admission and it has itself scraped by on the back of trustee donations and wider revenue streams at times. That has been largely blamed on its sheer length, which leads me to think that the GCR's own moves towards a more flexible traction policy are an acknowledgement of the additional running costs and financial risks it will incur once the gap is bridged.
     
  8. alexl92

    alexl92 Established Member

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    Mushroomchow, I found that very interesting, thanks!

    I understand (though I may be mistaken) that the Middleton railway has fairly healthy accounts, hence Conway being dispatched to Shildon a couple of years ago for Cosmetic restoration.

    Their running line is around a mile long and they use one industrial tank loco on a Saturday and one diesel loco on a Sunday, hauling 2 4-wheel coaches converted from SR PMVs. That would back up the idea that shorter lines running smaller locos and lighter trains are more profitable.

    I suppose I’d always assumed that these lines wouldn’t attract the passengers to make it pay, but evidently they do and it’s a really good thing.
     
  9. Flying Phil

    Flying Phil Member

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    " That has been largely blamed on its sheer length, which leads me to think that the GCR's own moves towards a more flexible traction policy are an acknowledgement of the additional running costs and financial risks it will incur once the gap is bridged.[/QUOTE]"

    I have heard other people make the same point about the GCR possibly overstretching itself with the "bridging the gap" but it is not really the case that a 9 mile railway is becoming an 18 mile railway which will double its costs etc. There is actually a 9 mile railway which is covering its costs or better and an 8 1/2 mile railway also just about covering it's costs. The "gap" as such will not increase the operating costs significantly and will make the joint railway more attractive to more people. The mainline connection should mean lower transport costs for some "visitor" engines and possible rail tours. The new Rail museum will also boost visitor numbers.
     
  10. mushroomchow

    mushroomchow Member

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    All good points, and the point about the museum is particularly important, as that will give the line a real "destination" at its southern end to increase footfall and give the railway a solid income from other markets. A lot of people assume Leicester North is a direct connection to the city itself, but that's far from the truth, and the museum will go a long way to stopping the line being "almost Nottingham to almost Leicester" when completed.

    I'm not particularly savvy to the running accounts of the GCRN, but they do seem to have benefitted from a passenger spike recently, not from steam locomotives funnily enough but from having the prototype HST on their books. Then again, there are only a handful of diesels I can think of with the caliber of 41001 which would be a genuine pull factor for passengers (maybe the Deltics?) - steam is king in attracting the casual market, whether that's a huge express locomotive or a little Peckett.
     
  11. 70014IronDuke

    70014IronDuke Established Member

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    "

    I have heard other people make the same point about the GCR possibly overstretching itself with the "bridging the gap" but it is not really the case that a 9 mile railway is becoming an 18 mile railway which will double its costs etc. There is actually a 9 mile railway which is covering its costs or better and an 8 1/2 mile railway also just about covering it's costs. The "gap" as such will not increase the operating costs significantly and will make the joint railway more attractive to more people. The mainline connection should mean lower transport costs for some "visitor" engines and possible rail tours. The new Rail museum will also boost visitor numbers.[/QUOTE]

    I really don't follow the preservation scene, but the idea of creating an 18-mile line in Leicestershire-Notts (ie not an especially exotic tourist area) does make for an interesting business analysis. Unless you need such lengths to get up to some speed, do most punters - even railway enthusiasts - notice the difference between a 2-mile trundle and an 18-mile sprint (if allowed) so much as to pay the difference in fares to meet the true costs?

    My one and only visit to the (southern) line in 1995 (I think), which happened to be on a day when an A4 and Duchess were working the trains, I remember one of their representatives saying to me that it was part of the line's 'brand' to employ large locomotives - so punters could rely on seeing and being hauled by something big and not by some piddly tank loco like an 0-6-0ST.

    Obviously the economic realities of 2 x 50 sq foot grates burning coal no matter whether in use or not appear to have caught up with the line's management.
     
  12. YorkshireBear

    YorkshireBear Established Member

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    Really interesting discussion.

    I echo sentiments above about the highest yield events being those that have nothing to do with the trains themselves really. Beer festivals, Santa and other family events. The ability to run said events will continue to get called into question as the amount of volunteers naturally fluctuates around the country.

    Soon it may not be the costs of running engines we all need to balance, but the wage budget.
     
  13. Flying Phil

    Flying Phil Member

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    On most "average" running days, the GCR has been using the Standard 2 (BR or Ivatt) locomotives as they are economical to run and have a tender, so look like "proper" main line locomotives. Obviously for busy week ends and Gala events they also use the larger locomotives.
    The 18 mile length will not be used for "sprinting" though, the 25mph limit still applies to passenger carrying trains. However the TPO and testing contracts allow up to 50 and 75 mph respectively I believe.
    The overhaul costs for the class 2 engines would probably be around £300k(?) every 10 years.
    There was a good article in the current "Main Line" magazine about the volunteer labour needed to run last years Winter Gala - 123 each day, so about 300 people! ..... Plus paid staff for certain roles.
     
  14. paul1609

    paul1609 Established Member

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    I think the wage budget has always needed to be balanced but you also have to try hard to recruit new volunteers we (K&ESR) even have an article in this months RMT news (Pages 26-27) https://www.rmt.org.uk/news/publications/rmt-news-october-2017/
     
  15. 43096

    43096 Established Member

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    There seems to be an implication in this thread that the GCR will effectively take over the GCRN. That is not the case.

    I’m also sceptical about through running the length of both lines. That is a long round trip for daytrippers. Might be a demand for it on joint gala weekends, but more realistically the GCRN would run through to Loughborough to connect. I can’t really see what the GCR gets from the bridge day-to-day. Strikes me it is about the GCR wanting access to the Network Rail connection.
     
  16. alexl92

    alexl92 Established Member

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    Out of interest, how would the running costs of an LMS Fowler 4F compare to say an Austerity/J94? Both are 0-6-0s in the same BR power class - 4F - but obviously one is a tender loco, one is a tank. I get that at overhaul the LMS loco will cost more because there’s the tender to worry about, but what about day-to-day running costs to operate?
     
  17. Flying Phil

    Flying Phil Member

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    I think that this thread has got slightly sidetracked as my original post was a general question about Steam locomotive economics, obviously I and several others have a good knowledge about the GC but there is a dedicated thread about the Gap. However, I do not think anybody has said or implied that the GCR will effectively take over the GCR(N).

    As alexl92 asked the question about 0-6-0 running costs, I think they will be about the same as coal and lubricating oil are the only significant running costs.
     
  18. uww11x

    uww11x Member

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    What does everyone think of the ELR. Personally my favourite Preserved line. Always seems to be managed well. In the past the Sapper and 80080 would see most of the turns on normal days!
     

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