Is it cheaper to put Greek train passengers in taxis?
- 13 May 2012
- From the section Magazine
It's been said that the Greek railway network is so under-used and over-subsidised that it would be cheaper to put the train passengers into taxis. Is that true?
The claim that it would be cheaper for Greece to send every rail passenger to their destination by taxi was most recently made in the book Boomerang by Michael Lewis, the Moneyball author.
But it was first made by Stefanos Manos, the former Greek finance minister, in 1992. Manos used the railway system to illustrate what he saw as gross public sector waste.
"I was in favour of the Maastricht Treaty and was supposed to defend it in Parliament," says Manos, now heading his own party, Drasi.
"I said we should drastically reduce the size of the public sector and its expenditure. And I gave as an example the railway where there were exorbitant wage bills compared to the revenue of the country."
He says it was an off-the-cuff remark but about right.
"I knew the number of passengers and I made a brief estimate of what it would cost to send them from Athens to the north of Greece and I decided it was quite obvious it would be cheaper to send them there by taxi rather than train."
He says he thinks it's still true today, and might even be worse.
It's difficult to check the figures from 1992 but rail experts have said they think he was probably broadly correct at that time.
Panos Prevedouros, professor of transport at the University of Hawaii, says it may have been an exaggeration "but not a huge one. At that time the OSE's [Greek railway's] passenger service was dismal and ridership was low."
But what of Manos' suggestion that it would still be cheaper to put all Greek rail passengers in private cabs instead?
There is a more accurate way of calculating the cost of rail travel than the one originally used by Manos. It gives a picture of the entire network rather than just the route between Athens and Thessaloniki.
In 2007, the last year we have figures for, passengers travelled 1.8bn km(1.1bn miles) on the Greek railways.
Assuming this figure was the same in 2010, when the Greek rail system was making a loss of just over 1bn euros (£804m; $1.3bn) a year, it's costing the Greek railways 0.60 euros per passenger kilometre. Compare that to the UK, where in 2010 it cost 0.30 euros.
According to Greg Moisiadis, a cab driver in Thessaloniki, a cab from Thessaloniki to Athens would cost 700 euros - that's about 1.20 euros a kilometre, double the amount being paid to send people by train, if there is only one person in the taxi.
If four people were to share a taxi, the cost would be 0.30 euros per person per kilometre. Two taxi passengers would cost the same as the train.
Further investigation found that Greg's prices were similar to other cabs on other routes in Greece.
So Mr Manos is correct if there are more than two passengers in each taxi.
But either way, the Greek railways are in a pretty awful mess, and while train journeys may cost less than cab journeys, they are more expensive than travel on other forms of public transport, including air.
"Over $13bn has been pumped in, in the last 15 or 16 years. In terms of passengers, long-distance rail has 2.7% of the share and in terms of freight it's truly a joke because it's 0.08% of the freight so the costs are staggering," says Prof Prevedouros.
Of course, the government isn't about to close down the railways and put everyone in taxis, but there are other ways in which the government can save money on the railways.
It's already closed some lines and mothballed some rolling stock and as Prof Prevedouros points out, there are other good alternatives to the train.
"The closest alternative is the intercity buses which are totally privatised. For the main trip from Athens to Thessaloniki, the bus charges 32 euros per trip. If you do it by air, that's roughly 75 euros. And if you were to do the trip by mid-sized car, it would cost 95 euros."
So on these prices, to send everyone by plane would cost 0.14 euros per kilometre, by bus it would cost 0.08 euros per kilometre, and in a private car that would be 0.18 euros.
Compare that to the 0.60 euros being paid to subsidise the trains. Not to mention the money that could be made selling off the potentially more profitable routes, the rolling stock and other assets.
But of course the elephant in the room is that the Greek railway has huge debts.
In the past, the Greek government acted as guarantor for the money the railway borrowed so this meant although it only had a turnover in the low hundreds of millions, it was able to borrow billions.
In 2010, this debt was 8bn euros and cost 420m euros in interest payments.
Of course, even closing down the railways would still leave the government to pay off these debts.