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Vol. XXVII No. 12, October 1-15, 2017

Speedy completion of Metro necessary for benefits to be seen

by A Cost Analyst

Experience across the world has shown that introduction of a mass rapid transit system can relieve traffic congestion, discourage residential crowding, lessen pollution and widen work opportunities. Chennai too naturally hopes that the Metro would not only make our City look modern, but also more liveable.

For now, just 28 km of Phase One’s 45 km is in use. The experience of this stretch is not enough to estimate the Metro’s impact on completion of the full project. But it is useful as a pilot model to test fare structure and related strategies to achieve high capacity utilisation.

The uppermost aim must be to encourage mass usage. High capacity utilisation is necessary for financial viability and for reaping larger socioeconomic benefits. The absence of an initial surge of commuters taking this mode of travel is disappointing. A 4-bogie train had less than 20 per cent occupancy at about 11:15 hours on a Monday when there was heavy traffic on the roads. Enquiries indicated peak traffic was not substantially larger. Looking down from this elevated train showed that there was, right under the Metro line, a seething traffic of cars, autos and two-wheelers. Erroneous understanding of “off-peak” hours obscures recognition of real factors that impede higher occupancy and leads to meek acceptance of unsatisfactory situations as being inevitable.

Currently, owning a motorised vehicle or taking an auto is necessary, with its consequent cost and inconvenience, to access a Metro station. There is need for mini-bus feeder circuits, on a hop-on-hop-off basis, covering the hinterland of each station, ensuring that a short walk is enough to hop on to a mini. Ideally, such a facility should be at a single standard charge, preferably as a part of an integrated Metro rate and ticket. Circuit operators on contract with Metro could get compensated by a sum per circuit. If connectivity is available, the parking facility at each station need not be large. Hinterland connectivity is critical for the Metro to expect mass adoption.

Further, the largest segment of present commuting modes should be matched for cost by Metro with some allowance for better values offered in terms of comfort, speed and dependability. This is necessary, to establish user addiction. To examine this further, as a ready method, informed guesses of comparative costs are used. Within the short span of an article, they are good enough for appreciating the problem and suggesting possible solutions.

At present, the effective cost by Metro from Alandur for about 8 km away (assumed as the average distance a commuter makes to reach the work spot) works out to Rs. 24 per trip (Rs. 3 per km compared to Rs. 0.5-1.5 range in Delhi) after a 20 per cent discount for a monthly pass. Including return trip for 26 days, this comes to Rs. 1248 per month. To the cost of the pass must be added the cost of parking a motor cycle Rs. 15 per day of nine hours for 26 days, i.e., Rs. 390, and the cost of four connections at boarding and destination points, say, a total of Rs. 20 per day for 26 days which is Rs. 520. Thus, the cost door-to-door for office is Rs. 2158 per month.

Cost for a car owner going to work would be fuel at 12 km/litre, for a return distance of 20 km, Rs. 120 per day or Rs. 3120 per month of 26 working days plus parking charge of Rs. 780. To him, the Metro, is a substantial saving.
However, car owners are of different categories – the elite would never switch to the Metro and the nouveau executive class may consider the car as a status symbol. It is the junior and middle level executives and business persons who are likely to take to the Metro. Among them, couples working in the same office or nearby locations would find the car more economical. Allowing for these factors, only about 10-15 per cent of car users seem to constitute a potential segment for the Metro.

The auto fare by meter is Rs. 100 for the same journey, but the auto drivers I spoke to, said that they would not go for less than Rs. 150. They prefer localised trips to maximise payload ratio. The auto-user is unlikely to be a habitual user for going to work. He is a casual traveller depending on work exigency, reach and urgency.
The bus is only Rs. 15 for the journey, but takes more than an hour, including several stops, whereas the Metro takes just 13 minutes for the same journey; the class of bus users would find the Metro way out of reach. Bus users are not an immediate potential market for the Metro.

A motorcycle, at an efficiency of about 36 km/litre, is Rs. 2/km for 20 km, Rs. 40 per day, Rs. 1040 for 26 days. There is no parking cost. (8 km plus distance to station assumed as 2 km to and fro at boarding side and same at destination side.) To this, interest of Rs. 300 on the motor cycle loan, payable monthly, must be added, adding up to Rs. 1340. The saving in time, air-conditioned comfort and pollution-free and punctual travel might induce motor cycle users to spend another 10 per cent over their cost. Adding 10 per cent to the cost of Rs. 1340 converts to Rs. 1474 which is the Metro affordability threshold.

The present cost of Metro is Rs. 2158 and needs to be brought down by Rs. 684. Reducing the parking charge per day from Rs. 15 to Rs. 10 would help to reduce Metro cost by Rs. 130 per month. The balance Rs. 554 per month or Rs. 21 for return trip or Rs. 10 per single trip is about the reduction needed – from the present fare of Rs. 24 to Rs. 14 per trip. That reduction by 40 per cent may appear large, but after the proposed reduction the rate of Rs. 14 is still nearly Rs. 2 per km higher than Delhi’s throw-away price that is eroding the financial viability of the organisation. A substantial part of the motor cycle traffic, say as much as 75 per cent, is ripe for transfer to the Metro, if the fare is rationalised.

In 2013, the total vehicle population of Chennai was 39 lakh of which 31 lakh were two- wheelers. The total went up rapidly to 48 lakh by 2016. The focus should be on winning over the growing motor cycle segment for the Metro to thrive and for the city atmosphere to improve.

But then, would not fare reduction decrease revenue and result in revenue loss? Being a public utility, the Metro cannot shut down for a few hours, days or weeks to save costs just because the traffic volume is low. Operation goes on and costs are incurred irrespective of the traffic volume. As such, Metro has only costs that are of a fixed nature and not varying with production to meet varying volumes of demand. Any fare income is contribution to this fixed cost. Therefore, it makes sense to try and increase traffic volume to augment the contribution to fixed cost. The surge in total revenue, when fare is lowered, would be higher as the price elasticity of demand for Metro travel is likely to be high. Thus, it makes sense to lower the fare to match or get closer to the motor cycle commuter’s cost. That would only increase total revenue and higher asset utilisation.

While Delhi Metro may be the cheapest, it may not be the ideal model, as the low rates have led to huge losses of the order of Rs. 466 crore annually – and growing year after year. With better last mile connectivity and comprehensive network coverage, it may not be necessary to offer such low fares in Chennai. People are desperate for relief from the suffocating congestion and may be willing to pay reasonably more than what it costs them now.

It is not possible to feel the benefits of the Metro proportionately as and when the mileage increases. Only when the project is complete, or if the total mileage attains a critical mass, can the benefits be felt. Investment made up to now, therefore, is yet unready to yield returns. On these counts, therefore, speedy completion is crucial.

With all sanctions now scheduled for release in tranches, with much of the specifications for components standardised and with a larger proportion of underground in the remaining phase – to avoid time-consuming land use permissions for overhead and surface tracks – speedier execution is possible, necessary and must be rigorously monitored.

Owing to high traffic density, average bus speed in our city in 2014 was 18 kilometres per hour. Over the next five years it is expected to come down to 12 km per hour. That is the sound of opportunity. Chennai Metro must be implemented quickly and mass usage encouraged to derive the expected benefits.

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