Dan Andrews right to ditch airport rail tunnel

Two years ago, the AirRail Melbourne consortium – which includes the owner of Southern Cross Station and part owner of Melbourne Airport, IFM Investors – offered to contribute $5 billion (on top of the state and federal government’s $10 billion) to own and operate the Airport Rail Link tunnel, with the service slated to “deliver a ‘reliable’ 20-minute travel time from the CBD to the airport for $20” and the consortium to “keep the ticket revenue”.

In November 2018, the federal government approved the project, pledging $5 billion towards the project (on top of the State Government’s $5 billion). And in March 2019, both the Federal and Victorian Governments signed a “heads of agreement” for the project.

Former ACCC boss, Graeme Samuel, slammed the project, claiming it would “entrench a monopoly arrangement”, leading to passengers getting ripped-off:

[Samuel] says Melbourne Airport already has total control of access to its terminals by private cars, taxis, Ubers and other ride shares as well as private bus services and even off-site parking providers.

“You’re entrenching the monopoly arrangement, in that all means of access to the airport are controlled by the airport itself and that’s not really a satisfactory way of dealing with customer needs”…

“I do hope that the rail line is built, but that we don’t end up with the result that the consumers pay an excessive price that is marginally below that of a taxi, an Uber or a rideshare”…

“We’ve got to learn from history and…ensure the right oversight is put in place to ensure that the consumer doesn’t get ripped off.”

Thankfully, Victorian Premier Daniel Andrews has ditched the airport rail tunnel proposal:

Train services to the airport will take half-an-hour or less and run every 10 minutes via a long-awaited route announced by the Premier and Prime Minister Scott Morrison on Saturday…

But the state government has abandoned plans for a dedicated six-kilometre rail tunnel…

Under the final route, airport trains will run along fresh tracks from the airport to Sunshine and continue beneath the city via the new $11 billion Metro Tunnel and onto the south-eastern suburbs via the Cranbourne and Pakenham lines…

Mr Andrews said the chosen option would be cheaper to build, delivered faster and was backed by transport and financial experts.

“You’ve got to work through these things in a really painstaking way … the fact of the matter is … what the PM and I have agreed to build will be less cost to the taxpayer, I think greater value, it will be done much faster and it allows us to take people where they want to go…

“The difference in the cost to Australian and Victorian taxpayers is well more than $7 billion”…

Under the current plan, airport train services will cost about the same as SkyBus tickets ($19.50) and be paid for on a myki card. The government will run new high capacity metro trains to the airport. Construction will start in 2022 and is due to finish in 2029…

The airport rail project comes without a business case, or supporting evidence about its benefits, costs or the impacts it could have on train services from Melbourne’s western suburbs that may be sacrificed in favour of running airport trains through the Metro Tunnel.

The project’s business case, originally due for completion this year, will now be delivered in 2021.

The lack of business case is, nevertheless, a red flag.

Stopping at existing stations would mean these airport trains would compete with the existing congested commuter network, making them both slow and crowded.

Meanwhile, the existing SkyBus service – which costs taxpayers nothing – already achieves similar travel times at the same projected ticket cost.

Other than tourists and those living in the CBD, I cannot envisage many locals actually using an airport rail link. Why? Because they would still need to get to the CBD, where the cost of parking is equally exorbitant as the airport. This means passengers would either have to carry luggage on the public transport network, or catch a cab. In which case, why not just go directly to the airport and avoid the changeover hassles?

Regardless, this project should have been first subjected to a rigorous business case and cost-benefit analysis before funding was committed, not after the fact. That the reverse is true shows just how busted Australia’s infrastructure system is.

Unconventional Economist
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