In this section, you will learn: 

• Why is an economic evaluation of rail services conducted? 

• How was the commercial potential of rail services verified? 

The main purpose of the economic evaluation is to categorize rail routes into those requiring subsidies from the transport authority and those that can operate fully commercially without financial support. These results are a critical output of the project and will be shared with potential train operators during the market consultation phase. Additionally, the evaluation will help determine the level of compensation for services expected to be launched under a Public Service Contract (PSC). Data for the economic evaluation of rail services are sourced from the Passenger Transport Model. 

1. Basic Indicators 

a) Number of Passengers

In transport, passengers as a unit of measure represent the number of people traveling on a specific train route (from origin to destination) within a given time period (e.g., daily or annually) without making transfers. 

b) Transport performance or Revenue Passenger Kilometers (RPK) 

Revenue Passenger Kilometers (RPK) is a key metric in passenger transport, calculated as the total distance traveled by all revenue-generating passengers. This measurement can be reported for a single train or across the entire network. 

c) Operational performance or Train–Kilometers

Operational work is a key metric in rail services, often measured in train-kilometers or vehicle-kilometers, indicating the total extent of operational activities. 

2. Supply-Related Indicators 

a) Number of Seats

The number of seats is a measure of supply capacity, representing the total seating available for sale on a single train, across an entire route, or throughout the rail network. 

b) Available Seat Kilometers (ASK) 

Available Seat Kilometres (ASK) is the product of the number of seats in a train and the distance travelled by that train. It is a basic efficiency metric in both rail and air transport and is often presented in relation to the total supply, whether it be a specific route or the entire network. 

c) Seat Factor (SF) and Load Factor (LF)

Seat occupancy can be measured in two ways. The first is the Seat Factor (SF), which is the ratio of the number of passengers travelling on a specific section to the total number of seats available. However, this measure is not very representative since a seat may be used more than once on a single journey. To obtain a more objective measure of the relationship between demand and supply, the Load Factor (LF) is used. The Load Factor is the ratio of Revenue Passenger Kilometres (RPK) to Available Seat Kilometres (ASK). 

d) Average Number of Passengers per Train 

This is the average number of passengers on a train. It is calculated by dividing the total Revenue Passenger Kilometres (RPK) by the total kilometres travelled by the train (RPK/train kilometres). This metric can be presented for a single train or across the entire network. 

3. Cost-Related Indicators 

a) Train Operating Cost

The cost of operating a train is the product of the cost per train kilometre and the number of train kilometres operated within a specified period. This cost has been calculated for each planned train route. 

b) Cost per Available Seat Kilometer (CASK) and Revenue per Available Seat Kilometer (RASK) 

The Cost per Available Seat Kilometre (CASK) is a key economic cost indicator. It is calculated by dividing the cost of operating a train by the number of available seat kilometres for that train, train route, or all services offered by a train operator. In subsequent stages of the Horizontal Timetable project, this indicator will be compared with the Revenue per Available Seat Kilometre (RASK) to assess the profitability of an entire route or a specific train on a route. 

c) Yield

Average amount of revenue generated per paying passenger who travelled one kilometre. Calculated as passenger revenue/RPK. 

d) Minimum Ticket Price (Break-Even Price) 

The minimum ticket price is calculated by dividing the train operating cost by the number of passengers carried. This gives a hypothetical average ticket price that each passenger would need to pay to cover the costs. Although a lower price is preferable, this measure is not always entirely objective. From a passenger’s perspective, shorter routes may inherently require cheaper tickets due to the reduced distance and travel time. However, from an operational standpoint, shorter routes can still incur significant costs. Pricing strategies must consider various factors beyond route length, such as operational costs, demand, and competitive pricing. Therefore, while lower prices for shorter routes are generally expected and preferable for passengers, they do not always reflect the full economic picture for train operators. 

e) Cost per Kilometer

One way to address the issue above is to introduce a cost per kilometre indicator, which is the ratio of the break-even price to the length of the train route. Similar to the previous indicator, a lower value is preferable. However, this indicator may be significantly understated for very long-distance routes. 

f) Cost Efficiency 

Cost efficiency is the ratio of the minimum ticket price to the average number of passengers per train. This indicator provides an estimate of profitability—the lower the value, the higher the likelihood of covering costs.