The benefits of high-speed rail in comparative ... - Invensys Rail

The benefits of high-speed rail
in comparative perspective

2 : Invensys | The benefits of high-speed rail in comparative perspective

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Contents
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INTRODUCTION: HIGH-SPEED RAIL
IN A SHIFTING GLOBAL CONTEXT 4
Diverse paths toward the future of HSR 6
EXECUTIVE SUMMARY 7
The benefits of HSR 7
HSR success factors 9
SPAIN 10
Key attributes 10
Context 10
Anticipated benefits 11
High-speed rail network 11
Challenges 12
Financing 12
Track gauge 12
Competition and Market Share 12
Freight and Short Lines 13
Signalling 13
Realised benefits 14
Economic impact 15
GERMANY 16
Key attributes 16
Context 16
Anticipated benefits 17
High-speed rail network 17
Challenges 18
Financing 18
Local environmental objections 18
Signalling 19
Realised benefits 19
Hannover - Berlin 19
Cologne - Frankfurt
Impact on intermediate towns:
19
Montabaur and Limburg 19
THE ‘EUROSTAR NETWORK’:
LONDON TO PARIS AND BRUSSELS 20
Key attributes 20
Context 20
Anticipated benefits 21
High-speed rail network 21
Challenges 21
Interoperability 22
Environmental objections 22
Financing of HS1 22
Operator Organisation 23
Competition 23
Realised benefits 24
Traffic and journey time benefits 25
Environment 25
Lille and regeneration 25
JAPAN 26
Key attributes 26
Context 26
Anticipated benefits 27
High-speed rail network 27
Challenges 28
Land acquisition 28
Financing 28
Safety and training 28
Signalling 28
Realised benefits 29
CHINA 30
Key attributes 30
Context 30
Anticipated benefit 31
High-speed rail network 31
Challenges 32
Financing 32
Signalling 32
Competitiveness 32
Realised benefits 33
CONCLUSION 34
ABOUT THE AUTHORS 35
Invensys Rail 35
Oxford Analytica 35
The benefits of high-speed rail in comparative perspective | Invensys : 3

Introduction:
high-speed rail in a shifting global context
Transportation infrastructures around the world are being challenged
by shifts in demographics, fluctuating fuel prices, and public concern
over climate change and environmental protection. Growing
populations have created new travel demand, while urbanisation
has concentrated this demand within expanding cities. Aging
transportation networks have been stretched well past their intended
capacities, and the rising price of fuel has made conventional forms
of travel more expensive than ever for the consumer. Meanwhile,
public concerns over climate change have increased pressure on
policymakers to improve energy efficiency in spite of increasing
requirements for safe, efficient, and affordable transport.
4 : Invensys | The benefits of high-speed rail in comparative perspective

This study shows how high-speed rail (HSR) has
played an important role in addressing these and
other transportation challenges across five case
studies: Spain; Germany; the ‘Channel Tunnel’ network
connecting London with Paris and Brussels; Japan; and
China. Its goal is to inform future HSR development
by highlighting past achievements, pointing to factors
that enable success, and identifying strategies for
overcoming an array of policy and planning challenges.
Each case study is presented in the following format:
> Key attributes. Summarises vital statistics, strategies
utilised, and benefits accrued.
> Context. Establishes the political, economic, or
demographic context in which the decision to
develop an HSR network was taken.
> Anticipated benefits. Summarises the anticipated
benefits of HSR development as articulated in the
planning stages.
> High-speed rail network. Describes the nature
of the resulting rail network, drawing attention to
contrasts with other national strategies.
> Challenges. Examines the major challenges
confronted by policymakers (and in some cases
their private sector partners) and identifies the often
unique strategies employed to match the capabilities
of HSR technology with varying constraints of
geography, demographics, funding, and politics.
> Realised benefits. Establishes the economic, social,
environmental and other benefits realised by the
adoption of HSR and compares these to the original
rationale for HSR investment.
The benefits of high-speed rail in comparative perspective | Invensys : 5

6 : Invensys | The benefits of high-speed rail in comparative perspective
Diverse paths toward
the future of HSR
The case studies explored in this report were chosen to
highlight a contrasting set of strategies used to realise
the benefits of HSR, each taking into account national
policy priorities and unique constraints of funding,
geography, demographics and politics. Some countries,
for example, have invested in high-speed rolling stock
for partial use on conventional rail networks, sacrificing
top speeds for the decreased cost and complexity
of operating and maintaining a single network.
Others have entered into public-private partnerships,
dispersing risk across multiple levels of government and
private operators. The diversity of HSR networks in the
case studies below indicates that defining ‘success’ in
HSR development should be done with an eye toward
the national context, and in reference to national goals,
rather than against a set of generic priorities.
Yet on the broadest level, global trends in transportation
requirements are likely to make HSR an increasingly
important part of the policy toolbox. As growing
populations and expanding cities strain existing
transport networks, and as improving technologies
yield increases in speed and efficiency per dollar of
investment, we expect HSR’s competitive advantage
over other modes of transport to grow. The case studies
below paint a picture that will allow future investors
to take advantage of improving technologies while
ensuring that their planning leverages the collective
experience of current and past generations of
HSR practitioners.
High speed rail distance by country (km)
4500
4000
9500
3000
2500
2000
1500
1000
500
0
UK Germany Spain France Japan China
Before 2000 2001 to 2005 2006 to April 2010

Executive summary
While the benefits of HSR vary in different
contexts, the achievements identified in the case
studies below can be synthesised into a number of
categories spanning a broad set of transport and
economic development policy challenges.
HSR investment has commonly resulted in:
> reduced travel times;
> reduced congestion on established modes
of transport;
> improved access to markets and commerce;
> decreased carbon footprint in comparison
to road and air transport;
> and creating industry growth and
export opportunities.
Similarly, while challenges vary greatly by country, HSR
investment experiences reveal a number of factors that
define both the technology’s potential and its limitations
in a global context. Examining the diverse challenges
faced by governments and their private-sector partners
across each of the case studies yields a number of
lessons for ‘best practices’ in future development. From
the studies below, we can conclude that:
> successful HSR can adapt to a variety of geographic
and demographic layouts – within limits;
> financial sustainability of HSR relies on existing
capacity constraint within the low-speed rail network;
> maximum speed should not always be the goal;
> HSR succeeds as part of a holistic
transportation policy;
> and HSR’s excellent safety record reflects sufficient
investment in training and safety infrastructure.
Each of these benefits and success factors is now
divided into component parts based on experiences
from the case studies below.
Door-to-door journey time (hours)
The benefits of HSR
Reduced travel times.
> HSR offers faster net travel times than conventional
road, rail and air travel between distances of
approximately 150 kilometres (km) and 800 km.
> For distances shorter than 150 km, the competitive
advantage of HSR over conventional rail is decreased
drastically by station processing time and travel to
and from stations.
> For distances longer than 800 km, the higher speed
of air travel compensates for slow airport processing
times and long trips to and from airports.
Journey times v. distance for rail (HS and conventional
lines) and air transport
8
7
6
5
4
3
2
1
0
High-speed rail fastest
High-speed necessary
for rail to be fastest
0 100 200 300 400 500 600 700 800 900 1000
High-speed rail
Conventional rail
Air
Distance (km)
Source High-speed rail: International comparisons, Steer Davies Gleave,
Commission for Integrated Transport, London, 2004
The benefits of high-speed rail in comparative perspective | Invensys : 7

Reduced congestion on established modes
of transport.
> Within the parameters above, HSR reduces
bottlenecks on conventional rail routes, improving
their reliability, increasing efficiency, reducing wearand-tear
on the conventional network, and increasing
capacity for freight traffic on conventional lines.
> As air travellers move to HSR, short-haul flights are
discontinued, increasing runway capacity for longer
flights on which air travel maintains a competitive
advantage over HSR.
> As drivers shift to HSR, motorways become less
congested, reducing maintenance costs and in
some cases lowering the number of traffic fatalities.
Improved access to markets and commerce.
> Through reduced travel times, HSR reduces the
opportunity cost -and commonly the expense-
of inter-city commerce and tourism.
> This increases the reach of small businesses, improves
the operational efficiency of larger ones, and enables
commuting over longer distances while maintaining
quality of life.
> Stations in underdeveloped communities attract new
retail and hospitality investment, while businesses can
take advantage of comparatively low property values
and easy access to major city centres.
> This in turn can reduce regional disparities, as has
been the case in Spain and on certain parts of the
Eurostar network.
8 : Invensys | The benefits of high-speed rail in comparative perspective
Decreased carbon footprint in comparison to road
and air transport.
> Comparative CO2 emissions between HSR
development and the continued use of conventional
transport vary significantly case-by-case, but on a
per-passenger, per-kilometre basis, HSR is a distinctly
more climate-friendly mode of transport than either
road or air travel.
> While HSR emits more CO2 on this basis than
conventional rail networks, the greater potential for
HSR to challenge road and air travel often makes it the
‘greener’ option within the distance parameters above
when considering new investment.
Creating industry growth and export opportunities.
> Many countries have sought to maximise the
long-term economic benefit of HSR investment
by developing indigenous HSR technology and
manufacturing sectors.
> Many of these have gained reputations for quality and
innovation and have created export industries that
contribute significantly to the national economy. This
is particularly visible in signalling, where European
manufacturers have leveraged the successful
construction and operation of an international
control system to create business opportunities in
new markets.

HSR success factors
Successful HSR can adapt to a variety of geographic and
demographic layouts – within limits.
> HSR planning strategies can accommodate the
‘scattered’ major cities of Germany as well as the
‘linear’ or ‘spoked’ arrangements centred on the capital
cities of Japan and Spain.
> Similarly, technological innovation has made HSR
appropriate for a variety of topographies and has
increased opportunities for minimising
environmental impact.
> Maximising revenue on HSR lines requires connecting
cities with sufficient population size and density to
ensure a significant customer base with good access
to stations.
> Investing in HSR links between two cities beyond the
800 km threshold described above is unlikely to
provide a sustainable addition to the
transportation infrastructure.
Financial sustainability of HSR relies on existing capacity
constraint within the low-speed rail network.
> HSR networks that cover costs with revenue do so most
often because they serve an existing travel market that
challenges the capacity of existing infrastructure.
> While immediate cost covering is commonly a
secondary concern to governments investing in
HSR, matching HSR services with existing capacity
constraints lowers the financial risk of investment
considerably and shows taxpayers -- including those
who continue to favour other forms of transport --
a clear return on investment.
Maximum speed should not always be the goal.
> HSR has fared poorly when planning prioritises
maximum speed at all costs. While increasing speeds
on the longest HSR lines can narrow the gap with air
travel in terms of journey time, settling for lower speeds
often enables higher revenue with minimal effects on
competitiveness with other modes of transport.
> Placing intermediate cities on long high-speed lines
increases revenue across the line and allows the growth
benefits of HSR to accrue to smaller cities.
> Many of the countries examined below have
lowered costs and increased the customer base
by incorporating varied services with a range of
maximum speeds into their HSR networks.
> Instead of focussing on achieving top speeds over
limited distances, the adoption of advanced signalling
systems can increase average speeds across the line
while lowering long-run operational costs.
HSR succeeds as part of a holistic transportation policy.
> Planners can maximise the benefits of HSR
by streamlining linkages with other forms of
transportation, and by utilising ‘mixed use’
technologies that can operate on either high-speed
or conventional track. This enables HSR rolling stock
to serve wider markets that pay a smaller premium for
moderate reductions in travel time.
> Station placement should seek to balance the
necessities of efficient operation and urban
planning priorities. Strategic station placement
is a principal enabler of HSR-related growth in
underdeveloped communities.
> Introducing ‘yield management’ pricing strategies
enables dynamic competition with regularly shifting
airfares, increases revenue on high-speed lines with
remaining capacity, and allows access to HSR services
by customers with varying travel budgets.
HSR’s excellent safety record reflects sufficient
investment in training and safety infrastructure.
> HSR’s global safety record is impressive, matching that
of air travel and beating road travel by a wide margin.
> The few HSR incidents to date reveal not a problem
intrinsic to the technologies employed, but attempts
to cut construction and management costs by
under-investing in infrastructure and training.
> Where countries new to HSR have attempted to
indigenise technologies such as signalling, in which
established companies have created a track record of
quality construction and operational best practices,
safety may compromised.
The benefits of high-speed rail in comparative perspective | Invensys : 9

Spain
Key attributes
First year of
operation
1992
Length of track 2,057 km
Top speed 305 km/h
Cost per kilometre 12 million euros
Strategies employed > Adoption of centralised, cross-platform
signalling technology
> Allowing freight on high-speed lines
> Lower speed services on less-travelled
routes
Key benefits > Dramatic reduction in travel times
> Large modal shift from air travel
> Increased access to large economies
from intermediate cities
The Spanish high-speed rail network in 2011
Source International Union of Railways
10 : Invensys | The benefits of high-speed rail in comparative perspective
Context
Before investment in HSR, Spain’s conventional rail
system had played a minor role in the transportation
network. Lower than average speeds on the rail system
reflected extreme topography on popular routes,
necessitating sharply curved tracks and climbs on steep
gradients. The network was limited to single-track
lines, which constrained capacity on the most popular
routes. The use of tilting rolling stock was of some
help in raising speeds, but both speeds and capacity
were still inadequate to capture a significant portion of
transportation demand. Railways therefore played only
a limited role in intercity passenger transport, which was
dominated by the road network.
By the 1980s, Spain’s rail system was in desperate
need of modernisation, and the hosting of the 1992
World Expo in Seville provided the spark for the
country’s first investment in HSR. Strained capacity on
the conventional track between Seville and Madrid
threatened to decrease local revenue from the Expo,
and Spain’s accession to the EU in 1986 opened
funding opportunities for transportation reform in
underdeveloped regions such as Andalucia, where
Seville is located.
The distribution of cities in Spain falls well within
the established distance parameters to ensure a
competitive advantage in travel time against other
modes of transport. Madrid, with a population of three
million in the metropolitan area, is located in the centre
of the country some 400-700 km from most other
major cities. This includes the major cities of Barcelona
(population 1.6 million), a commercial and industrial
centre and capital of Spain’s richest province, Valencia
(population 0.8 million), Seville and Zaragoza (both
population 0.7 million).
Spain’s high population density presented the prospect
of easy access to rail stations by a large percentage
of the urban population, which made HSR planners
confident that travel time to and from centrally-located
train stations would not be significant enough to nullify
HSR’s competitive speed advantage over other modes
of transport. The average density of the five largest
cities in Spain is 6,200 inhabitants per square kilometre
-- twice the density of the five largest German cities. This
density reflects continuing trends toward urbanisation,
and rural population densities remain low with an
average of only 81 inhabitants per square kilometre.

Anticipated benefits
The main objectives of Spain’s HSR development
were to reduce travel times and increase capacity on
the rail network in order to improve access to large
economies from smaller cities and to help mitigate
regional disparities and tensions that had persisted
since the 19th century. In particular, policy makers
sought to encourage growth in cities other than Madrid
and Barcelona, which had developed at a significantly
faster rate than other cities with smaller industrial
and service-based economies. Other objectives
were to provide employment opportunities through
construction and maintenance outside of the major
cities, to increase development opportunities for the
domestic rail industry, and to reduce the environmental
impact of travel by encouraging shifts from road and air
transport. Efficiency in conventional freight traffic was
also expected to benefit from capacity made available
as passenger services moved to high-speed lines.
The government decided early on that to compete with
other modes of transport, HSR would have to ensure
travel times from regional capitals of less than four
hours by train to Madrid and six hours to Barcelona. In
addition, the government’s current transport plan aims
to bring 90% of the Spanish population within 50 km of
an HSR station by 2020.
Spanish HSR development has received significant
assistance from the EU as part of its Trans-European
Networks initiative (TENs), which seeks to use
transportation policy to improve environmental
sustainability through modal shifts away from air travel,
to improve economic integration under a ‘single market’
concept, and to address regional disparities across
the Union. In the early days of HSR, the EU hoped in
particular that the Madrid–Barcelona HSR line would
largely replace air travel between the two cities, freeing
capacity at both airports for longer journeys. EU priorities
for Spanish HSR development also included connecting
the network to the French TGV system, in the hopes
of further reducing the necessity for air travel and
encouraging regional integration.
High-speed rail network
To reduce the cost of construction and to avoid public
opposition to new construction in city centres, planners
opted to run HSR services through existing rail stations.
In rural areas, lines were built with a minimum of tunnels
and earthworks (in contrast to Japan as described later
in the report).
This often resulted in steep gradients, which are viable
for passenger-only high-speed lines providing the
rolling stock is designed with adequate power and low
weight. Notably, HSR construction in Spain demonstrates
that in mountainous areas, high-speed lines can in fact
represent a cheaper solution for capacity problems than
conventional lines due to the possibility of using
direct alignments.
Since the opening of Spain’s first high-speed line in
1992, the network has expanded considerably, enabling
travel between Madrid and Barcelona via cities such
as Zaragosa, and now offers access to cities off the
principal southwest-to-northeast line such as Valladolid
and Valencia. High-speed networks now represent 14%
of total rail kilometres in Spain. The line connecting
Barcelona to the French border will be opened in 2012,
and will allow the first passenger services between
Spain and France without change of gauge.
Three types of passenger train services now operate on
high-speed lines:
> Since 1992, AVE trains with top speeds of 300-350
kilometres-per hour (km/h) have operated over long
distances, only on high-speed lines.
> Since 2004, Avant trains with top speeds of 250 km/h
have operated over shorter distances, again only on
high-speed lines.
> Since 2006, dual gauge Alvia trains with top speeds of
250 km/h have operated over long distances on both
high speed and conventional lines.
Spanish HSR has thus identified a balance of speed
and pricing on individual routes allowing it to rely
less heavily on the most popular high-speed routes to
subsidise operations elsewhere. The introduction of
Avant and Alvia services, in addition to the AVE, has
led to greater traffic volumes and revenue on the
HSR network as a whole. This division of services
has become common practice for successful
HSR investment.
The benefits of high-speed rail in comparative perspective | Invensys : 11

Challenges
FINANCING
High-speed lines in Spain are cheaper to build than
elsewhere in Europe, with an average cost of 12 million
euros per kilometre compared to over 30 million
euros in Germany. This is because low rural population
densities reduce the cost of acquiring land for track
construction, and reduce the number of objections to
the construction of high-speed lines, which in other
countries have necessitated costly mitigation measures.
Wages are also relatively low in Spain, lowering the cost
of construction. Despite these relative benefits, Spanish
HSR has necessitated considerable government
investment. In 2005, the government set out plans to
build a further 9,000 km of high-speed lines between
2006 and 2020 at an anticipated cost of 83 billion euros.
While a precarious economic environment has
compelled the government to moderate its HSR
development targets somewhat, continued investment
has been made possible by extensive use of publicprivate
partnerships (PPPs). The Spanish government
now has a goal of funding 19% of HSR investment from
‘outside the budget’ until at least 2015.
PPPs initiated by Adif, the public infrastructure
management company, have attracted numerous
bidders, thus enabling the government to negotiate
favourable distributions of risk between public and
private actors.Competition for private involvement
in PPPs has also ensured considerably more efficient
management of HSR networks than had been achieved
in the past, and has, in general, allowed the network
to use a deep pool of private capital to replace reallocated
government funding. The new line leading into
France from Figueras was built under a 50-year contract
between the French and Spanish governments and a
special-purpose company, T.P. Ferro. Two new PPPs are
now in the planning stages.
TRACK GAUGE
12 : Invensys | The benefits of high-speed rail in comparative perspective
Spain’s conventional track uses gauges that differ from
the European standard. The government decided to use
the standard European gauge on the high-speed lines,
ensuring interoperability with the rest of Europe with
which the Spanish network will soon connect. To ensure
connectivity with existing conventional lines in Spain,
Renfe, the state-owned rail operator, has introduced
locomotive-hauled Talgo trains (branded Alvia), which
use gauge changers to alter the width of the wheels to
and from the Spanish standard.
COMPETITION AND MARKET SHARE
High-speed rail faces considerable competition in
Spain. Coaches have historically been the main mode
for short/medium distance public transport.
Over longer distances, air is the still the main
competitor to high-speed rail, and private road
transport is important at all distances. A key challenge
for high-speed rail in Spain, as in the majority of cases,
is to match air in terms of journey times while ensuring
a cost advantage. Spanish HSR has succeeded in doing
this by achieving travel time between city centres of 2
½ hours (well within the 3-4 hours generally thought
necessary for rail to compete with air on overall journey
time), and fares that are generally lower than the price
of air travel. Renfe is currently planning to introduce
yield management techniques (differentiated pricing
based on number of seats available or travel dates)
in order to leverage spare capacity and ensure that
opportunities to take advantage of HSR are available to
customers in a variety of income brackets.

FREIGHT AND SHORT LINES
While domestic freight has benefitted from HSR
through the freeing of capacity on conventional lines,
international freight, which has greater potential as a
driver of economic growth, was initially hampered by
the proprietary Spanish track gauge. To take better
advantage of growth opportunities in international
freight, the Spanish government’s HSR strategy now
includes development of hybrid passenger/freight
lines operating on European standard gauge for routes
that cross borders. In combination with the phasing out
of HSR services in areas of particularly low demand,
this decision constitutes a narrowing of the HSR focus
to routes that ensure a balance between social and
economic benefits and sustainable revenue.
SIGNALLING
The expansion of Spain’s HSR network has posed a
challenge for signalling systems, which normally differ
considerably between conventional and high-speed
networks, and between higher- and lower-speed
services offered on the AVE, Alvia, and Avant lines. The
efficient functioning of these varied systems is ensured
by advances in signalling control technologies that have
enabled the regulation of all networks from centralised
locations. Spain was the first adopter of this technology,
which now regulates HSR operations across Europe as
the European Rail Traffic Management System (ERTMS).
Aside from ensuring safety and efficiency across various
rail services, this has removed the necessity of building
expensive signalling centres across the network,
thereby lowering the cost of HSR investment.
The benefits of high-speed rail in comparative perspective | Invensys : 13

Realised benefits
Because of the poor state of Spain’s conventional rail
system, high-speed rail has reduced travel times by an
average of 60-70%. Reliability is exceptional with 99.8%
of AVE trains between Madrid and Sevilla arriving within
three minutes of schedule. Improvements in speed and
reliability have enabled economic development in cities
that were previously poorly connected to the network.
Since the opening of the Madrid-Seville line, ridership
has increased from three million to five million per
year. While this level of traffic and the rate of growth
(around 3% annually) are relatively low by comparison
to other high-speed lines around the world, HSR growth
has induced a significant modal shift away from air
travel -- one of the government’s key objectives. The
following tables show that air travel’s share of traffic
fell from 40% to 13% during a period of major HSR
network expansion between 1991 and 1994. By 2009,
five times more passengers were carried by rail than
by air between the two cities. These modal shifts have
substantially reduced CO2 emissions from transport,
and reduced congestion at both airports.
Even greater reductions in travel times were achieved
on the line between Madrid and Barcelona, initially
to 2.75 hours. Following the introduction of ERTMS in
2011, travel times between Madrid and Barcelona were
further reduced to only 2.5 hours. Traffic on this line
now exceeds seven million passengers per year, some
of whom travel to intermediate cities on the corridor.
Between Madrid and Barcelona, rail market share has
increased from 12% to 49%. Renfe, the national rail
operator, estimates that by providing a fast and costeffective
alternative to road travel, this line alone saves
250,000 tonnes of carbon emissions and 144,000
tonnes of oil, and reduces road fatalities by an average
of 68 incidents annually.
Before AVE (1991)
After AVE (1993)
14 : Invensys | The benefits of high-speed rail in comparative perspective
Airplane 11%
Conventional train 14%
Bus 15%
Car 60%
Airplane 4%
Conventional train 2%
Bus 8%
Car 34%
AVE 52%

With the completion of several new lines over the
past few years, total high-speed rail traffic more than
quadrupled to 11.5 billion passenger kilometres in
2009. Although this is less than the high-speed rail
traffic in France and Germany, it represents half of all
rail passenger kilometres in Spain. HSR has been such
a popular success in Spain that Renfe’s high-speed
division is now the only one for which revenue covers
operating cost.
The reduced costs of construction and the unusually low
speeds and inadequate capacity of the conventional
rail network make Spanish HSR highly successful on
a benefit-per-passenger basis. Spanish HSR planners
have leveraged the strengths of HSR while minimising
its cost by: running services which go off the highspeed
line using gauge changing techniques; allowing
freight on some high-speed lines (especially those to
France to take advantage of the gauge); limiting the
construction of high-speed lines to longer distances
where the time advantages are more significant; and
introducing ERTMS to further reduce journey times.
ECONOMIC IMPACT
In addition, HSR has had a significant impact on the
economies of Spain’s smaller cities. Residents of
Ciudad Real and Puertollano, each with a population
of approximately 50,000 and located about 200 km
from Madrid, can now access the capital city in one
hour. These cities had previously been isolated from
the main transport routes but, as result of the highspeed
line to Seville, are now better integrated into
the wider economy. New residents have moved in
to take advantage of cheap property, commuting to
Madrid has become common, and property values
have increased as a result of the line. Economic growth
has also been promoted by urban revitalisation around
stations, particularly when stations have been placed
close to city centres. In Lleida, for instance, planners
have attributed a 15% growth in tourism and a 20% rise
in business conventions to the strategic construction of
a station between the historic and newer centres of the
city. 1 In general, the effects of HSR on Spanish economic
and social life have been such that, despite the difficulty
in ensuring sustainable revenue on less-travelled lines,
the Spanish government has continued to prioritise HSR
investment in these places.
1 Todorovich, Schned and Lane (2011). ‘High-speed rail: international lessons for U.S. policy
makers’. Lincoln Institute of Land Policy.
The benefits of high-speed rail in comparative perspective | Invensys : 15

Germany
Key attributes
First year of
operation
1991
Length of track 1,284 km
Top speed 305 km/h
Cost per kilometre 32 million euros
Strategies employed > Emphasis on intermodal transit: HSR
stations at airports, code-sharing
with airlines
> High speed rolling stock operating on
conventional lines
> Lower average speeds to suit a
polycentric distribution pattern
Key benefits > Improved reliability, particularly in
the east
> Eased transfer of capital back to Berlin
> Modal shift from road/air travel
> Significant growth in intermediate cities
The German high-speed rail network in 2011
Source International Union of Railways
16 : Invensys | The benefits of high-speed rail in comparative perspective
Context
Germany’s urban population is polycentric and
widely dispersed. Berlin has 3.4 million inhabitants,
Hamburg 1.8 million, Munich 1.3 million and Cologne
1.0 million. There are eight cities with populations
between 500,000 and 1 million. This is in contrast to
countries such as Spain, where the urban population
is concentrated in two major cities. The average
population density of the five largest cities in Germany
is only 3,000 inhabitants per square kilometre, meaning
that much of the population of these cities often must
travel significant distances to reach a railway station.
Population densities in the countryside are higher than
in Spain, though lower than in Japan.
Long-distance trains in Germany have therefore always
passed through many major cities, often operating
frequent services with many stops. Rail lines also run in
a variety of directions in a ‘web-like’ formation rather
than converging on the capital in a hub-and-spoke
arrangement as in many other countries. This makes for
a particularly complex rail network. A large population
divided amongst a significant number of major cities,
combined with the fact that German manufacturing has
historically generated considerable freight transport
volumes, led Germany to develop Europe’s largest
conventional rail network.
Germany’s HSR investment was designed to address
a capacity shortage on an aging and slow rail
network in the face of growing demand, with specific
bottlenecks that inhibited the growth of commerce
and tourism. Continuing development of the air and
road infrastructure also compelled government to
search for new approaches to ensuring rail’s overall
competitiveness. HSR was also seen in the immediate
post-Cold War era as a means of improving transport
links between the newly united east and west,
supporting the economic and social objectives
of re-unification.

Anticipated benefits
While planning for HSR in the 1960s sought principally
to accommodate new demand for rail and relieve an
aging conventional network in West Germany, the
opportunity to improve connections with Berlin after
re-unification in 1990 injected significant new political
capital into the push for extending HSR in a new round
of investment. This would represent a marquee element
of a broader push for transportation reform in eastern
Germany, which found its infrastructure in disrepair after
the end of the Cold War.
The German public’s enthusiasm for environmental
sustainability further built political support for
investment in HSR as it offered a compelling alternative
to air and road travel. A major feature of HSR planning
was an emphasis on the construction of stations at
airports to increase the accessibility of HSR to those
transferring to or from international flights, and to
provide a station within reach of the many residents of
areas close to major airports. A station built at Frankfurt
airport -- Germany’s largest airport and the third-largest
in Europe -- was viewed as particularly important
because some 35 million people live within 200 km,
giving it a larger catchment population than any other
European airport.
High-speed rail network
High-speed rail investment in Germany has focused
less on new high-speed lines than on the purchase of
special high-speed rolling stock operating mainly on
conventional lines (Inter-City Express [ICE] trains). In
Germany, less distinction is made than in other countries
between conventional and high-speed systems in
the eye of the consumer, with both high-speed and
conventional trains able to operate on high-speed and
conventional track.
The polycentric distribution of German cities did
not lend itself to the development of a few new
high capacity rail lines converging on the capital as
was constructed in Spain. Instead, new sections of
track were constructed where there were particular
bottlenecks on the network. These were designed for
both freight and passenger traffic, although their use
by freight has been limited and more recent lines have
been constructed for passengers only. This is in contrast
to Spain, where passenger-only lines gave way to dual
purpose ones as planners sought new sources
of revenue.
Operations began on the first high speed line between
Hannover and Wurzburg in 1991. The line was built
using extensive tunnels and bridges to reduce gradients
in order to allow freight as well as passenger services,
and to mitigate environmental damage. The German
approach later incorporated passenger-only highspeed
lines that would allow for steeper gradients. This
culminated in the passenger-only line opened in 2002
between Frankfurt and Cologne via Frankfurt airport.
Lines to Berlin were also improved over the course
of the decades following reunification, including the
introduction of HSR services to Hannover in 1998 and
to Hamburg in 2004. A further high speed line between
Berlin and Nuremberg is expected to be complete in
2017 and will allow travel from Berlin to Munich in four
hours, partly on high speed lines, compared to eight
hours before construction began.
German HSR constitutes only 1.6% of Germany’s rail
network, far less than in Spain. Yet because high-speed
ICE trains run extensively on conventional tracks that
have often undergone upgrades and at a cost far
less than the construction of new high-speed lines,
these services account for 30% of total rail passenger
kilometres in Germany, and about two thirds of
passenger kilometres on intercity services. ICE services
also carry twice as many passenger kilometres as highspeed
services in Spain thanks to their ability to operate
off of high-speed lines.
The benefits of high-speed rail in comparative perspective | Invensys : 17

Challenges
FINANCING
High rural population densities in Germany have
increased the cost and difficulty of acquiring land for
construction of new lines, and this has been a principal
factor in Germany’s emphasis on using high-speed
rolling stock at reduced speeds on conventional
networks. Objections to the construction of these
lines are common and costly mitigation measures
such as tunnelling and the use of noise barriers have
had to be taken to increase the acceptability of new
construction to local residents. This has meant that HSR
construction in Germany typically costs 32 million euros
per kilometre more than double that in Spain. Highspeed
rail in Germany faces competition from low cost
airlines over distances at the top end of the HSR range.
It has also faced competition from road travel over the
relatively short distances between most German cities,
which is exacerbated by the absence of tolls and
speed limits.
Deutsche Bahn (DB) has found it difficult to compete in
some markets because its fares are not based on yield
management – most passengers simply turn up and
travel at a fixed cost. This has resulted in overcrowding
on some trains but low overall load factors (50%
compared to 70% for most other European high speed
rail systems which have reservation-based ticketing
systems). This traditional pricing structure reduces both
traffic and total revenue.
This combination of relatively high costs and low
revenue encouraged a selective approach to investment
by the federal government as well as shrewd marketing
strategies. ICE trains are marketed as a premium service
in their own right, and thus are commonly used on lowspeed
lines at an increased cost.
18 : Invensys | The benefits of high-speed rail in comparative perspective
LOCAL ENVIRONMENTAL OBJECTIONS
Despite strong political and public support for highspeed
rail, mainly on environmental grounds, there
have been objections from those living near routes
about noise and blight. Mitigation measures, such
as construction near motorways and in tunnels and
cuttings, have helped reduce these objections but have
often delayed and increased the costs of construction.
SIGNALLING
East and West German railways operated a variety
of signalling systems that slowed the integration
of German rail immediately after reunification. The
investments in new signalling technology that came
alongside HSR development have allowed increased
synchronisation across various regions, a process which
has been aided by the progression of ERTMS across
the continent. The use of ERTMS level 2 on some lines,
which enables in-cab signalling, has further reduced the
operating costs of HSR on new lines.

Realised benefits
The combined effect of high-speed investment,
including both rolling stock and high-speed line, has
been to reduce travel times by around 50% compared
to conventional rail. Additionally, high-speed rolling
stock now carries 30% of passenger kilometres by rail in
Germany and two thirds of intercity traffic.
HANNOVER – BERLIN
The 185 km high-speed link between Hannover and
Berlin was designed largely as a symbol of east-west
cooperation after reunification and in preparation for
a significant increase in demand given the lowering
of political barriers to business and leisure travel. In
combination with the Würzburg-Hannover high-speed
line, it now provides a corridor of access to the national
capital for significant segments of the population
throughout western Germany. Travel time between
Hannover and Berlin was reduced from four hours to
1.5 hours.
COLOGNE – FRANKFURT
The line between Cologne and Frankfurt is part of
the Trans-European Network, which is designated by
the EU for all network infrastructure, especially in the
transport sector, which has a European rather than just
a national role. The line’s construction reduced travel
times between these cities to one hour, a 55% reduction
from the old railway and 35% faster than by road. Even
before high-speed rail, the classic rail line carried most
travellers between the two cities. With the adoption of
high-speed rail, however, rail has come to account for
97% of the air/rail market share between the two cities.
This leveraging of an existing and growing rail market
represents a particularly low-risk, high-return form of
HSR investment. The success of the Cologne-Frankfurt
line has also been bolstered by the high-speed rail
station at Frankfurt airport, which allows international air
passengers to access the airport by rail. Airlines agreed
to code share for ICE trains from Cologne and Stuttgart
(as if they were airline tickets). In order to free slots for
international flights, Frankfurt airport helped fund the
airport station and encouraged local traffic to shift
to rail.
IMPACT ON INTERMEDIATE TOWNS:
MONTABAUR AND LIMBURG
The small towns of Montabaur and Limburg offer a
unique case with which to challenge the common
criticism that economic impacts of HSR development
are impossible to isolate. This line of logic assumes
that stations are generally built to expose pre-existing
growth in urban areas to new markets elsewhere on
the line. Yet these two towns, placed just 20 km apart,
were able to secure stations on the HSR route between
Cologne and Frankfurt purely as a result of heavy
lobbying by state governments rather than by virtue
of pre-existing economic potential. Their inclusion on
the line was opposed by most HSR planners, who saw
the price of station construction and the concomitant
increase to travel times on through-going journeys as
unacceptable compromises given the tiny populations
in question: 12,500 in Montabaur and 34,000
in Limburg.
Cologne and Frankfurt can now be reached from
Montabaur and Limburg in www.oxan.com about 40
minutes, providing these towns with access to two
major cities. Because the placement of these stations
reflected local political priorities rather than attempts by
HSR planners to leverage existing economic potential,
researchers have succeeded in isolating the economic
impact achieved by access to HSR. They conclude that
the access to larger markets and increased labour
mobility provided by the HSR line has had a striking and
permanent effect in both towns, increasing GDP by an
average of 2.7%. Unsurprisingly, this was facilitated by
a combination of low property values in the small towns
combined with a willingness by local authorities to
zone areas close to ICE stations for industrial and
commercial use. 2
2 Ahlfeldt, Gabriel M and Feddersen, Arne (2010). ‘From periphery to core: economic
adjustments to high-speed rail’. London School of Economics & University of Hamburg
(unpublished).
The benefits of high-speed rail in comparative perspective | Invensys : 19

The ‘Eurostar
network’:
London to Paris
and Brussels
Key attributes
First year of
operation
1994
Length of track 531 kilometres (London - Paris – Brussels)
Top speed 300 km/h
Cost per kilometre 60 million euros
Strategies employed > Unique bureaucratic model streamlines
international travel.
> Building close to motorways and pre
existing track to minimise
environmental degradation.
> Shifting funding strategies in United
Kingdom to match shifting
economic situation.
> Yield management pricing structure.
> Competition expected to lower prices,
improve service.
Key benefits > Particularly acute reduction in travel
time. Almost completely replaced other
modes of travel on this corridor.
> Regeneration of Lille.
The ‘Eurostar network’ in 2011
Source International Union of Railways
20 : Invensys | The benefits of high-speed rail in comparative perspective
Context
Before the adoption of HSR, travel between London,
Paris and Brussels had relied on air or land transport
combined with ferries. The construction of a direct
link between London and cities of continental Europe,
which had proponents as early as 1802, had been
largely sidelined by the growth in ferry traffic and
the advent of commercial air travel. A rail link had
long been thought to offer opportunities for regional
integration and improved access to markets for both
Paris and London, and by the 1970s, improvements in
tunnelling technology lowered the cost of construction
to the point necessary to attract investment interest
from the private sector. The construction of the Channel
Tunnel began in 1988 and sought to take advantage of
high-speed technology, which had been implemented
since 1981 on France’s popular TGV service. The
present-day HSR connection between London, Paris
and Brussels is referred to for the purposes of this
paper as the ‘Eurostar network’, reflecting Eurostar
International’s status as the only operator utilising the
Channel Tunnel. This will change in coming years due
to recent liberalisation of the European HSR
service market.

Anticipated benefits
The governments in the countries served by the
Eurostar network, (United Kingdom, France and
Belgium) anticipated rather different benefits from
high-speed rail. To the French, services through
the Channel Tunnel were a logical next step for the
export of France’s model for high-speed rail services
(light rolling stock with high power-to-weight ratios
operating over steep gradients) and of promoting its
railway manufacturing industry. High-speed rail had
the advantage of promoting the development of postindustrial
areas in northeast France, including the city of
Lille, which would be served by the Eurostar network as
well as domestic French TGV services.
For the British, the Eurostar network would provide
a direct rail connection with Paris, the largest
metropolitan area in continental Europe; with Brussels,
the administrative capital of the European Union; and
eventually with other cities. The British government
saw an opportunity to route the line through the
underdeveloped eastern sections of London and built
a station at Ashford to encourage development of
that area. Spurring growth in the poorer areas of Kent
was an additional goal. Both the British and French
governments also anticipated a significant reduction in
congestion at London and Paris airports.
The Belgian government’s support for the Paris –
Brussels HSR link was part of a broader push for
regional integration that included both Eurostar services
to Paris and London and Thalys services running
between Paris, Brussels, Cologne and Amsterdam.
Service was extended to both Bruges and Ghent to spur
growth in these mid-sized cities, though they lack the
strategic placement on main corridors enjoyed by Lille.
High-speed rail network
Eurostar services are in essence an extension of the
French TGV system, using French technology and
design standards. Overhead line electrification in
the United Kingdom is licensed from the French, the
signalling system is French in origin, and current rolling
stock is a modified TGV design. The infrastructure has
been developed in stages. The Channel Tunnel itself
and the line from Paris to the tunnel were opened in
1993-1994, shortening travel times from London to Paris
to three hours. Next, the line from the French border
to Brussels was opened in 1997. The section of track
connecting the Channel Tunnel to London (known as
‘High-Speed 1’ [HS1]) was opened in two stages, in
2003 and 2007, further shortening travel times from
London to Paris to 2 hours and 16 minutes non-stop.
High-speed domestic trains within Southern England
share this line with Eurostar services, providing an
improved commuter service between London and
Kent. The network also carries significant freight traffic
running between the United Kingdom and
continental Europe.
The benefits of high-speed rail in comparative perspective | Invensys : 21

Challenges
INTEROPERABILITY
Establishing effective international governance of
services on the Eurostar network was a significant
bureaucratic challenge. To avoid stopping at borders
to change crew, accommodations had to be found
regarding train crew training and certification. A
common set of vocabulary was agreed between French,
Belgian and British rail authorities so that specially
trained drivers could conduct services over the
entire journey.
The Eurostar network uses a variety of different
signalling systems across the line, which reflects varying
levels of new investment in signalling technologies by
the nations involved. While ensuring operability across
signalling systems presented a challenge in planning
stages, in practice strict operational guidelines have
prevented serious problems. As national governments
prepared to allow competition among service providers
on the network, ensuring a coherent signalling system
became a renewed priority, and a goal has now been
set to implement the first phase of ERTMS by 2014.
ENVIRONMENTAL OBJECTIONS
Across the network, impact was reduced considerably
by building HSR track as close to motorways as
possible, which limits the necessity to disturb
previously pristine areas and prevents the ‘islanding’
of communities between motorways and rail lines. In
Southern England, planners took the decision to tunnel
under the heavily populated area of London near the
St. Pancras terminus. They also pursued extensive noise
mitigation measures, such as tunnels and deep cuttings,
in attractive rural areas between London and the
Channel Tunnel. Overall, 25% of the Eurostar network is
built in tunnel.
FINANCING OF HS1
22 : Invensys | The benefits of high-speed rail in comparative perspective
Financing of the British section of the network highlights
both the challenges and the diverse possibilities of PPPs
as a tool of HSR investment, and supports the conclusion
that construction and management of HSR will always
involve an element of government capitalisation.
HS1 financing presented a particular challenge for the
British government, which has advertised the line as the
first stage of a wider HSR program expanding into the
northern regions. Cost per kilometre on HS1 has been
more than 60 million euros per kilometre, far more than
anywhere else in Europe. The high proportion of the line
in tunnel partly explains the high construction cost, as
does the decision to build four stations in smaller urban
areas between London and the southern coast.
Although the British government would have preferred
to build HS1 as a privately funded project, comparatively
low initial traffic volumes meant that the line would
require public funding. A contract for design, build,
finance and maintenance (DBFM) of the link and the
operation of HS1 services were therefore put out to
tender and awarded in 1996 to London and Continental
Railways (LCR), a private consortium. It was envisaged
that the consortium’s primary sources of funds during
the construction phase would be profits from travel
on HS1.
In 2009, when LCR debt had increased to 5.2 billion
pounds, the government took over full and direct
ownership of LCR for a nominal price. This restructuring
relieved LCR’s high-speed infrastructure subsidiary,
HS1 Ltd, and the train operator, Eurostar (UK), of their
financial liabilities. In 2010 the government then sold
HS1 Ltd, which has a 30-year concession to manage
the high-speed line for 2.1 billion pounds, to a private
consortium. The government will continue to own the
HSR network itself and monitor the private consortium,
while HS1 Ltd can sell access to the track and stations on
a commercial basis.

OPERATOR ORGANISATION
Eurostar services were originally separated into three
national entities, posing significant challenges for
coordinated marketing. British marketing strategies
were significantly more aggressive than those pursued
in France and Belgium, and the British eventually sought
to entrench their marketing strategy by restructuring
the management contract. In 2000, LCR established a
management contract to run Eurostar (UK) through a
consortium, which included the National Corporation
of French Railways (SNCF) and the National Railway
Company of Belgium (SNCB) as shareholders. This
arrangement improved the alignment of objectives
between the British, French and Belgian partners, and
this ran until 2010. In September 2010, after complex
negotiation with regulators, Eurostar became a single,
unified corporate entity owned by three shareholders:
SNCF, SNCB and LCR. These successive structural
changes have largely relieved the governance and
management problems that have impeded Eurostar’s
otherwise considerable growth since its inception.
COMPETITION
European law now requires Eurotunnel (which
operates the cross channel rail link through the
tunnel), and the governments involved to open up
access to infrastructure to competition. Eurostar will
soon be competing with Deutsche Bahn (from 2013)
and possibly other open access operators. To match
this competition, Eurostar has to reduce costs and is
buying trains with higher capacity (900 seats instead
of 750) and lower per-unit costs from Siemens, ending
its previous relationship with Alstom. Both Deutsche
Bahn and the new Eurostar trains will use modified
German ICEs with distributed power. These trains will
be interoperable in order to allow service to more
destinations in the future, which is seen as a principal
benefit of increased competition.
The benefits of high-speed rail in comparative perspective | Invensys : 23

Realised benefits
Although traffic has been less than originally envisioned
on the Eurostar network as a whole, the line has
revolutionised travel from London to Paris, Brussels
and Lille. Eurostar now carries 81% of the total air and
rail traffic from Paris to London, a far higher proportion
than HSR in other European countries. HSR has also
had considerable effects on local economies in those
smaller urban areas that have successfully leveraged
increased accessibility with conducive urban
planning policies.
Eurostar network yearly passengers (millions)
10
9
8
7
6
5
4
3
2
1
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
24 : Invensys | The benefits of high-speed rail in comparative perspective

TRAFFIC AND JOURNEY TIME BENEFITS
The Eurostar network has almost completely replaced
‘rail-sea-rail’ travel, which took 6-8 hours from London
to Paris or Brussels, reducing the time to 2-2.5 hours.
This is a greater reduction than is usual for high-speed
lines over land because changes between modes are
avoided. The ease of HSR travel has proven a boon to
the significant tourist traffic between the areas served
by Eurostar, and HSR has largely replaced air travel
between these cities.
While LCR forecast that by 2004-2005 nearly 24 million
passengers would use the Eurostar network, the actual
figure was only 9.1 million in 2008, the first year after
line was fully operational. By 2010, traffic had reached
9.5 million, the level LCR forecast for 1996-1997. It
appears unlikely that it will reach 24 million for many
years, if ever, although competition among service
providers could provide a boost to overall traffic
numbers. This shortfall is partly a consequence of the
rise of low cost air carriers competing with the Eurostar
network, though not usually for the same destinations
(Eurostar sees itself competing for leisure travellers
with London-Berlin by air, for instance). Eurostar is also
hampered by the fact that it must pay 15 pounds to
Eurotunnel for every passenger passing through the
Channel Tunnel. However, it has improved connections
between the three capitals, and the Eurostar network
has permitted the number of air services to be reduced
between London and the near continent, freeing slots
for long distance flights.
Carbon emissions from different modes:
London to Paris (kg CO 2 )
300
250
200
150
100
50
0
ENVIRONMENT
Return journey by plane Return journey by HSR
Despite objections from Kent residents to the
construction or alignment of HS1, neither Eurostar nor
Kent County Council has received noise complaints
since the line was opened. This reflects the use of many
of the costly mitigation techniques described in the
German case, which explains in part the extraordinary
cost of HSR construction in southern England.
LILLE AND REGENERATION
There is strong evidence that the Eurostar network has
had a significant impact on development in a variety
of small and mid-sized cities along the line. This is
particularly visible in Lille, France, which had floundered
economically as industry moved away from the region
and local planners sought new growth in the service
sector. The arrival of HSR placed the city as the nodal
point between Paris, Brussels and London. Urban
planning around HSR stations has sought to maximise
the local economic impact of both Eurostar and TGV,
encouraging the development of a variety of services
for both tourists and commuters in close proximity to
the station. Lille used the arrival of HSR to undertake a
large-scale shift in urban planning, centring its service
industry in the area between the historic district and
the station while installing when possible in abandoned
buildings to reduce build-out costs and remove blight. 3
Development in Lille shows how economic benefits are
more likely when the sweeping changes in accessibility
brought by HSR are complemented by supportive
planning policies, which explains in part the significant
difference in economic benefits accrued in Lille and
across communities in Kent.
3 Nuworsoo and Deakin (2009). ‘Transforming high-speed rail stations to major activity
hubs: lessons for California’. Transportation Research Board.
The benefits of high-speed rail in comparative perspective | Invensys : 25

Japan
Key attributes
First year of
operation
1964
Length of track 2,663 kilometres
Top speed 305 km/h
Cost per kilometre 5.4 million euros for Tokyo-Osaka
Strategies employed > Effective spreading of risk through PPPs,
reflecting lowered expectations for
government funding.
> Strategic station placement adapting to
high land prices.
> Concentration on cities with highest
population density.
Key benefits > Huge reductions in travel times on
main business arteries.
> Tokyo-Osaka covers costs
through revenue.
> Revitalisation of small communities.
> Establishing Japan as a world leader
in technology.
The Japanese high-speed rail network in 2011
Source International Union of Railways
26 : Invensys | The benefits of high-speed rail in comparative perspective
Context
Japan’s rail system in the 1960s faced geographical
challenges similar to those in Spain. Rail travel was
slow due to mountainous terrain, which required tight
curves in conventional track and either steep gradients
or the construction of expensive tunnels. Capacity was
also limited and demand was increasing quickly in line
with Japan’s rapid economic growth. Even in 1960,
conventional rail accounted for 51% of passenger
transport in the country, making the relief of capacity
constraints a priority goal for transportation policy.
Population densities and layout in Japan are
particularly suitable for HSR. Tokyo has over eight
million inhabitants (the population of the wider Tokyo
area is 35 million) and is located some 400-700 km
from most other major cities, an ideal distance for
obtaining a competitive advantage over other forms
of transport. Other major cities are Osaka (population
2.5 million), and Nagoya (population 2.2 million). The
average density of the five largest cities in Japan is
8,000 inhabitants square kilometre, nearly three times
that in Germany; this has meant that the majority of
city inhabitants have relatively easy access to railway
stations. In addition, cities are placed in a roughly linear
manner across the country, enabling a ‘hub and spoke’
configuration similar to that in Spain.

Anticipated benefits
After early development starting in the 1950s, the
first high speed line between Tokyo and Osaka via
Nagoya began operations in 1964 (and soon gained
international recognition as the ‘bullet train’). The
principal rationale for this investment was to relieve the
overcrowded, narrow-gauge Tokaido line, which was
then carrying 24% of all Japanese National Railways
(JNR) passengers.
A secondary objective was to reduce the journey time
between Tokyo and Osaka, which sat at 6.5 hours. This
was to be achieved mainly through faster speeds but
also through a more direct alignment -- the new highspeed
Tokaido line sheared 41 kilometres off the length
of the existing line.
The decision to build the first line was controversial.
There was considerable resistance from both politicians
and rail officials, who saw HSR as a risky investment
given the unproven nature of HSR technology at
the time.
Opposition to the line was overcome through force of
will on the part of a small number of advocates, who
portrayed the continued reliance on conventional
rail as a greater risk to the economy than potential
losses from HSR investment. They also built significant
support through the argument that a Japanese HSR
network would help establish the country as a leader
in the technology field in general. However, such was
the success of the first high-speed line that scepticism
was replaced by strong desires from local and regional
politicians for new HSR connecting their areas to Tokyo
and its growing economy.
High-speed rail network
High-speed lines in Japan are built to standard
European track gauge, wider than the conventional
lines in Japan to provide the stability required for high
speeds. The Shinkansen relies on distributed power
rolling stock (electrical multiple units), an automatic
train control (ATC) signalling system, and centralised
traffic control designed with duplication to protect the
system in case of earthquakes. Although the maximum
gradients are only 1.5%, Shinkansen lines are not
designed for freight, which, in contrast to Germany,
never constituted a major portion of Japanese railway
traffic. On the main Shinkansen lines (Tokaido, Tohoku,
and Sanyo), which run the length of Honshu, Japan’s
main island, there is heavy demand. Typically, 14 trains
per hour operate in each direction on the Tokaido line,
among the highest rate of service in HSR networks
worldwide. Trains have up to 1320 seats in 16 cars,
compared to 900 seats for the new Eurostar trains
(which have yet to be put in service). In the 1990s, ‘Mini-
Shinkansens’ were introduced, operating at 130 km/h
as a ‘hybrid’ HSR and conventional system. These trains
service smaller markets, decreasing travel time between
those cities and larger ones without incurring the full
cost of HSR development.
The benefits of high-speed rail in comparative perspective | Invensys : 27

Challenges
LAND ACQUISITION
Land acquisition has been a major problem because of
the very high population densities in Japan and soaring
property and land values. About 50,000 households
had to be relocated for the construction of the original
Tokaido line. Japan has a compulsory purchase law, but
authorities are often reluctant use it as doing so can be
politically dangerous. Residents have commonly held out
for more compensation, which is often quite generous
in comparison to what is offered in other countries.
Land acquisition issues have also affected the location
of stations. Yokohama, near Tokyo, had to be bypassed
because of land purchase problems, resulting in the
construction of a station far enough from the city centre
to provide a significant disincentive for HSR travel. Efforts
to balance the extreme cost of station construction in
city centres with accessibility requirements have been
handled differently in other cases. In Tokyo, for instance,
the potential decrease in revenue from placing the
station outside the city centre was seen as more costly
than incurring the exorbitant costs of construction in a
more central location.
FINANCING
The cost per kilometre (excluding land costs) for the
Tokyo-Osaka Shinkansen was relatively low (5.4 million
euros in 2005 values), but in all the projects carried out
since, this figure tripled or quadrupled. This is mainly
because whereas the Tokaido line had less than 50% of
its length in tunnels, bridges or elevated track, for the
recent Kyushu line, the combined proportion was nearly
90% (70% in tunnel). Costs have also increased because
of insistence by landowners on more compensation
and because of greater efforts to reduce noise and
vibration as the HSR system expands. Unlike in Europe,
the Japanese public does not instinctively assume
that the state will bear primary responsibility for rail
infrastructure investment. When JNR was restructured
in 1987 in preparation for privatisation, the Shinkansen
Holding Company was created to own the infrastructure
assets of the Shinkansen network. These assets were
operated and maintained by the three main island
companies, which paid lease charges for their use.
However, the lease charges paid by each of the
companies did not reflect the value of the assets
they operated. Lease charges were ‘adjusted’ so that
Japanese Railways (JR) Central, which operated the
profitable Tokaido Shinkansen, paid a much higher
share than JR East and JR West, which operated the
more lightly used and newer Shinkansen lines. The
28 : Invensys | The benefits of high-speed rail in comparative perspective
Shinkansen Holding Company lasted only four years
before it was disbanded and converted into the Railway
Development Fund in 1991. The Shinkansen assets
were then sold to the three companies. New lines are
now being built by the state-owned Japanese Railway
Construction Public Corporation (JRCC) and leased to
the operating companies on completion, again to avoid
burdening the privatised operating companies with too
much debt.
This has enabled unique financing and management
strategies. Federal and local government provide
80% of financing for HSR, and carry risk for
planning, regulation, construction cost and rightof-way
acquisition, reflecting an understanding that
government is best placed to define and manage
these. The operating companies carry infrastructure
maintenance cost risk, as well as rolling stock ownership
and maintenance risks. Demand risk is carried by
JRCC if higher-than-expected demand requires
new infrastructure construction, while the operating
companies carry the demand risk if demand falls below
expectation and rolling stock capacity is too great.
Within this broad financing conception, government
and the private sector have remained flexible in
devising partnerships for the construction of individual
lines. For the extension to Nagano, for instance, a
balance of 50% funding from JR, 35% from central
government and 15% from local government was
used. The funding scheme was revised in 1996 so that
JR would bear the investment cost only to a level that
would ensure minimum profitability.
SAFETY AND TRAINING
Incidents in the 1950s and 1960s raised concerns about
safety while the Tokaido line was under construction.
Rail officials responded quickly to these concerns by
employing a new vibration-reducing bogie design,
which had been identified as the cause of derailments
in the past. Adoption of this new technology combined
with the creation of a rigorous training regimen for
operators and controllers has ensured an exemplary
safety record in subsequent decades.
SIGNALLING
As the first country to construct dedicated highspeed
lines, Japan was a pioneer in addressing the
considerable technological challenges facing signalling
at high speeds. The ATC system developed as part
of the original Shinkansen project in 1964 all but
eliminated safety hazards emanating from driver error
in speed correction, and have played a vital role in
ensuring Japanese HSR’s exemplary safety record. As

ATC has evolved, it has increased average speeds by
automating the braking process for each of the many
rolling stock types employed in Japanese HSR.
Realised benefits
The Shinkansen has been a remarkable technical
success, and has realised the goals of its proponents to
establish Japan as a centre of technological innovation.
By 1992, the journey time between Tokyo and Osaka
had been cut from 6.5 hours to 2.5 hours, and similar
reductions have been achieved on other lines. No
passenger fatalities have been experienced in nearly 50
years of operation, and punctuality is remarkable with
average delays of only 36 seconds.
Shinkansen services carried 295 million passengers
per year in 1993 and 350 million passengers per year
in 2007. While this indicates a relatively slow growth
rate of 1.2% per year, this may be explained by the
slow rate of growth of the Japanese economy over the
period as a whole, as well as a conservative outlook
toward the construction of new lines on less-travelled
routes. The Tokaido line, connecting Japan’s first- and
third-most populous cities, still accounts for nearly half
of Shinkansen passengers. The first high-speed line
between Tokyo and Osaka was also a great commercial
success. In only its third year of operation, its revenue
covered its costs, including interest and depreciation.
The Tokaido Shinkansen originally included twelve
station stops, but due to local pressure and the
willingness of smaller city governments to fund station
construction, the number has now increased to 18.
There are now both through (super express) and
stopping (express) trains to ensure fast journeys over
long distances, maximising the competitive advantage
of HSR over long distances while improving access
between smaller and larger urban areas.
The spectacular growth experienced by Shinkansen
services in Japan during its initial years later slowed
as the market matured and the high-speed network
was extended to smaller communities. This slowing in
growth should not be understood as a failure in its own
right; while the key to commercial success of highspeed
rail is to limit its construction to corridors of high
demand, there may often be economic, social, and
political reasons to build high-speed lines that are not
commercially viable in themselves. This is equally true
for countries such as Japan, in which the private sector
plays a particularly strong role in investment.
The benefits of high-speed rail in comparative perspective | Invensys : 29

China
Key attributes
First year of
operation
2003
Length of track 4,500 kilometres
Top speed 350 km/h
Cost per kilometre 21.4 million euros
Strategies employed > Centralised planning and regulation.
> High maximum speeds for
long distances.
> Strong emphasis on technology
indigenisation.
Key benefits > Freeing capacity for freight transport on
conventional lines.
> Dramatic reduction in journey times.
30 : Invensys | The benefits of high-speed rail in comparative perspective
Context
China’s geography for the most part favours high-speed
rail transport, as it features long corridors throughout
the eastern plains with large urban clusters located
every few hundred kilometres. China also has a high
and growing population density and rapidly increasing
disposable incomes. This growing purchasing power
has increased travel demand, resulting in some of the
most intense inter-city passenger flows in the world.
Increasing disposal income has also led to heavy
demand for suburban and regional travel within larger
conurbations. In recent decades, the average passenger
distance travelled has nearly doubled on the national
railway system, from 275 kilometres per journey in 1990
to 534 kilometres in 2008.
Despite the rapid expansion of the conventional rail
network since the late 1990s, China’s railways remain
under immense pressure. China’s economy depends
heavily upon the transport of minerals, petroleum
products, grain, fertilizers and other bulk products
that are transported most economically by rail, and by
2007, only one-third of demand for rail freight for coal
and other bulk commodities was met. There is also
increasing pressure on passenger capacity, especially
during peak holiday seasons when migrant workers
travel from urban centres to visit their families in
rural areas.

Anticipated benefits
China began serious investment in high-speed rail
in 2003, in order to relieve the extreme capacity
constraints on both passenger and freight transport,
which the government viewed as inhibiting growth.
Chinese investment in high-speed rail also reflects the
newest generation of a long tradition of rail investment
as tool of regional integration -- a perennial challenge
for a massive country with diverse cultures and local
economies. This rationale helped drive the construction
of China’s conventional rail network in the early 20th
century, and its status as an imperative of Chinese
politics is largely responsible for the considerable sway
held historically by the Railways Ministry.
Given the pace of China’s economic expansion, the
government favours investing in infrastructure well in
advance, before resource shortages become more
acute, land acquisition costlier and labour costs
higher. This tendency, combined with existing capacity
constraints, has encouraged investment in HSR
technology at an unprecedented pace.
Like Spain and Japan, the Chinese government has
incorporated the goal of technology indigenisation
into its HSR planning, and has already made strides
in turning its recent investments in HSR into an export
industry that competes with established players in
the field.
In addition, investment in high-speed rail has been
viewed as a means to spur job creation, and the
government has pointed to the 100,000 workers
engaged in construction of the Beijing-Shanghai line.
The government has seen this job creation as a robust
tool for growth; when the global recession hit at the
end of 2008, for instance, China ramped up its highspeed
rail spending -- which doubled each year until
2009, and reached 100 billion dollars in 2010 -- and
brought forward the timetable for completion from
2020 to 2012. Current Chinese HSR planning includes
the construction of 42 additional high-speed rail lines.
High-speed rail network
China currently operates around 4,500 kilometres
of high-speed line, 3,400 of which were constructed
between 2005 and 2010. This is augmented by highspeed
rolling stock operating since 2007 on 6,000
kilometres of conventional line at increased speeds of
around 150 kilometres per hour.
China’s high-speed line is already the world’s largest,
almost double the length of the 2,665 kilometres
of high-speed track in Spain, and is growing at an
unprecedented rate. China expects to lay 13,000 km
of high-speed rail by January 2013 more than the
combined rail network installed across all western
countries over the past half-century. By 2020, 50,000
km of freight and passenger lines are planned, to reach
90% of the population. The network is intended to cover
a wide swath of China’s eastern plains, necessitating a
layout more akin to the German ‘web’ model than to
the Spanish ‘hub and spoke’. Construction has thus far
favoured the creation of direct alignments, enabling
high-speed trains to run at close to maximum speed for
longer periods than is common for HSR in
other countries.
This reflects a general willingness to accept trade-offs
of higher ticket prices and decreased environmental
sustainability in exchange for maximising speed. On
the rail network as a whole between 1990 and 2010,
average passenger speeds increased more than 50
percent. Planners have also favoured the construction
of high-capacity trains to pre-empt future congestion.
In partnership with international manufacturers, the
Chinese rail industry has produced high-speed rolling
stock that sets the global standard for operational
speed. Since January 2010, the 961-kilometre Wuhan
– Guangzhou route has utilised state-of-the-art trains
capable of speeds over 350 kilometres per hour. In
2007, electrical multiple unit (EMU) trains operating
at 200-250 km/h were introduced on several routes.
In August 2008, a 300km/h EMU train service opened
between Beijing and Tianjin.
Cooperation with international manufacturers has
enabled the Chinese rail industry to indigenise cuttingedge
technological knowledge, which planners see as
vital to establishing China as the premier exporter of
rail technology. This includes rolling stock itself, which
China now operates under the ‘China High-Speed Rail’
brand, as well as a suite of infrastructure technologies
ranging from track to signalling.
The benefits of high-speed rail in comparative perspective | Invensys : 31

Challenges
FINANCING
A breakneck pace of construction has resulted
in a rapid accumulation of debt, which has been
exacerbated by significant cost overruns. Each highspeed
line completed has cost far more than initially
estimated. The cost of Beijing-Tainjin line ballooned to
185 million renminbi (29 million dollars) per kilometre,
roughly double what was anticipated. Spending on rail
capacity doubled each year between 2007 and 2009,
and reached 700 billion renminbi last year.
This cost overrun is explained in part by the Railway
Ministry’s premium on achieving the highest-possible
speeds, which both increases the journey time
competitiveness of rail at the longest distances and
serves as a point of national pride. Passenger demand
has also been lower than expected, a reflection of
ticket prices for HSR that are commonly triple the cost
of a standard ticket. While yield management systems
with graduated pricing schemes are said to be under
development, demand for HSR travel in China has
proven highly price elastic, and the current static pricing
structure generally excludes poor travellers from the
benefits of HSR.
Ministry of Railways debt
1000
800
600
400
200
0
2005 2006 2007 2008 2009
Asset-liability ratio (RHS) Long term debt
The effects of an emphasis on speed and depressed
demand are countered somewhat by low labour costs
and the economies of scale enabled by the sheer size
of China’s HSR investment program. HSR investment
has also been said to have freed capacity on some
conventional rail lines for freight transport, though this
has yet to be quantified. Regardless, frustration within
government regarding extreme cost overruns has
compelled the Railway Ministry to lower its targets for
rail investment from 700 billion renminbi to 600 billion
this year.
SIGNALLING
32 : Invensys | The benefits of high-speed rail in comparative perspective
50
40
30
20
10
0
In July 2011, two high-speed trains collided on a viaduct
in the suburbs of Wenzhou, killing 40 people and
injuring 192. Initial findings into the accident highlighted
design flaws in signalling equipment and problems in
safety management.
The Wenzhou accident makes clear the importance
of sufficient investment in quality signalling systems,
which control traffic and serve as the first line of defence
against accidents. The accident also highlights the
importance of adopting sound operational procedures
through the indigenisation of new technology.
The Chinese Rail Traffic System (CRTS) has appeared
more vulnerable to power failure as a result of extreme
weather than its counterparts from Europe and Japan,
which may be reflected in differing levels of both
equipment quality and of investment in lightning rods
and surge protection at key junctures. While CRTS was
developed in cooperation with European and Japanese
firms, the operational issues underline the importance
knowledge transfer and operational experience as much
as the relatively simple transfer of technology.
Another contributing factor in the accident was the
confusion regarding signalling operation procedures,
which in more established systems, such as ERTMS,
incorporate strict protocols for continued operation in
the event of failure.
Ensuring an excellent safety record in HSR relies equally
on sufficient investment in infrastructure development,
contingency planning, and personnel training.
COMPETITIVENESS
At 1,318 kilometres, the Shanghai-Beijing rail link sits
well outside HSR’s competitiveness threshold against
air travel. Low demand for many current Chinese HSR
services indicates that investments in routes such as
these have been made with an eye toward the very
long-term, when the government expects increasing HSR
speeds, growing population, continued urbanisation,
and expanding disposable incomes to change the
prevailing competition dynamics. Negative public and
government reaction to revenue shortfalls within the
Railways Ministry thus far do not bode well for the ability
of HSR planners to run these lines on extreme revenue
shortfalls indefinitely.

Realised benefits
China’s high-speed rail network has resulted in
stark improvements in journey times and reliability
in comparison to the conventional network. On the
longest routes, such as that between Wuhan and
Guangzhou, travel times have been reduced from ten
hours to three. Frequency of services is increasing on
the most popular routes, matching the range of services
per day common on the HSR systems of countries such
as Spain.
Despite the Railways Ministry’s sometimes questionable
investment priorities, the existence of a centralised
institution for planning, investment and regulation of
rail policy has streamlined the HSR development process
drastically in comparison to that of other countries,
enabling construction to proceed quickly when a
damaging capacity constraint on the conventional line
is identified.
Additionally, despite overconfidence in international
manufacturing partnerships, Chinese engineers
have boosted their design experience and technical
knowledge considerably over the last decade. This
has stimulated rapid technological transfer to the
point at which China’s rail technology is now on the
cusp of legitimately competing in developed markets.
Taking advantage of this new capability in international
markets is likely to rely on the cultivation of a strong
Chinese HSR safety record to calm foreign fears about
the quality of indigenous technology.
China’s willingness to invest in future HSR demand
represents a gamble of the sort that is less palatable
to Western policy makers who rely on short-term
returns on investment to ensure political support for
infrastructure spending. While it is impossible to say
whether this gamble will pay off in light of continuing
challenges in safety and persistently high ticket prices,
China’s investment strategy could appear prudent in
retrospect if demographics and disposable incomes
continue to grow in the manner they predict.
The benefits of high-speed rail in comparative perspective | Invensys : 33

Conclusion
Investment in HSR has revolutionised the nature
of transportation in each of the five case studies
above. Reduced travel times on key routes have
facilitated drastic shifts from congested and
polluting road and air networks, meeting growing
transportation demand in a manner that increases
efficiency and furthers the goals of environmental
protection and curbing climate change. The
decreased opportunity costs of travel on HSR
have provided opportunities for growth in large,
mid-sized and small cities with access to the line,
and have helped mitigate economic disparities
between both individual cities and larger regions.
Business and commerce have benefitted from
access to widened labour markets and more
efficient freight transport on both HSR and lesscongested
conventional rail. Aside from creating
jobs related to infrastructure construction and
management, HSR has spurred the development
of national rail industries, creating a competitive
global economy that continues to drive down
prices while further improving travel times and
ensuring safe operations.
34 : Invensys | The benefits of high-speed rail in comparative perspective
None of these benefits has accrued automatically.
Countries that have benefitted significantly from
HSR have done so through careful planning that
views HSR as a vital part of a wider transportation
infrastructure. This means using HSR where it has the
greatest competitive advantage over other modes
of travel, carefully balancing the goal of high speeds
with the imperatives of cost minimisation, and creating
a pricing structure that allows the broadest-possible
demographic to benefit from decreased journey times.
Realising opportunities for economic growth in
mid-sized or small cities relies on coordinating the
goals of federal transportation officials with local
and regional urban planners to ensure that track and
station placement are practiced with an eye toward
local development -- not just the achievement of
highest speeds across the line. Additionally, the most
sustainable implementations of HSR have relied on
PPPs, spreading both the risks and the benefits of HSR
investment and enabling governments to improve
their transportation networks when competing funding
priorities would otherwise make reform impossible.
Debates over new HSR investment have commonly
focused on cases in which best practices have been
abandoned in favour of other priorities. In these
scenarios, the significant costs of HSR have at times
outweighed its benefits. Yet with transportation policy
challenges growing under the weight of global
demographic trends and growing fears over climate
change, the task at hand is to leverage experiences
from the past to ensure that future investment in HSR
maximises the technology’s transformative potential.

About the authors
Invensys Rail
Invensys Rail is a multinational leader in delivering
state of the art railway signalling and control. We
enable the world’s railways to help meet the ever
increasing demand for rail services by providing a
range of solutions that safely increase the capacity of
their networks by increasing frequency and maximising
operational effectiveness.
www.invensysrail.com
Oxford Analytica
Oxford Analytica is a global analysis and advisory firm
which draws on a worldwide network of experts to
advise its clients on their strategy and performance. Our
insights and judgements on global issues enable our
clients to succeed in a world where the nexus of politics
and economics, state and business is critical.
www.oxan.com
The benefits of high-speed rail in comparative perspective | Invensys : 35

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