Subway Productivity, Profitability, and Performance

Abstract

Detailed comparative analyses of New York City subways and four Southeast Asian transit systems revealed that Hong Kong's subways are profitable because of high asset productivity resulting from a strategic “prudent commercial” design for high utilization and traffic density. Hong Kong subways also have a land-grant financing framework, a relatively high degree of commercial freedom, and relatively low overhead costs and asset replacement needs. Conversely, Singapore and Taipei, Taiwan, subways are operated by concessioned carriers (akin to New York's historic Interborough Rapid Transit and Brooklyn–Manhattan Transit) and are not profitable when government-provided initial capital construction funds are accounted for at typical government bond interest rates. Infrastructure ownership was separated to attract investors and allow government-controlled carriers to function as quasi-private entities. Network design choices with consequences for density and use explain the higher productivity in Asia. New York's system was not designed for maximum capital and operating cost efficiency or productivity but to provide high coverage and service levels at lower traffic densities in a socially conscious and inclusive approach, whereas the Taiwan and Singapore governments made design decisions and chose governance structures that enabled higher productivity. Asian systems operate more reliably than New York's 100-year-old subway because of modern design parameters, advanced technology, and different legal frameworks and management processes. State-of-good-repair issues that plagued 1970s New York have yet to surface in Asia. Direct comparisons in performance, profitability, and productivity should be avoided unless care is taken to analyze effects of governance, social contexts, design criteria, and reasons for their differences. Nonetheless, comparisons and benchmarking can yield valuable insights for operations improvement under prevailing local constraints.