Business Models

The principal aim is to outline potential growth options and business choices available to major urban passenger rail operators in an increasingly commercialised context.

Investigation into the business models of notable international rail operators will identify performance criteria, success factors and the approaches and strategies and potential business growth options for urban passenger rail. Priority will be given to developing an understanding of the approaches, frameworks and methods of international operators with outstanding financial performance profiles.

The role of urban passenger rail in providing a key element of access and mobility for the community and the reliance on public subsidy will be critically analysed in the context of shrinking public funding, emerging commercialisation trends and impact of new commercial rail operators. Annual reports of rail operators, for example, still tend to reflect a limited focus on growing revenues, either through ticket sales or other market-based mechanisms and business strategies. This constrained business approach is due to some degree to the formal arrangements between rail operators and government stakeholders.

Asian and European agencies are relatively more commercially-oriented and have recently seen substantial improvements in business self-sufficiency and strategic outlook. Examples from Singapore, Japan and Hong Kong are particularly compelling. In these cases, a sustained focus on ticket revenue improvement, in addition to diversified income streams (such as real estate), have delivered strong growth outcomes and financial performance.

A level of recognition seems to be emerging that rail can best meet community service needs through effective management and high quality level-of-service outcomes within its defined corridors. These issues will be engaged with by asking the following key questions:

• What are the key performance indicators that differentiate higher performing major rail operators?

• Which agencies and rail operators on an international basis are performing at a high level (based on identified performance indicators)?

• What are the strategies and approaches that are employed to produce successful outcomes?

• How might these strategies be formulated for adaptation in Australian/NZ cities and by local passenger rail operators?