Economics of new stations in Melbourne

[Peter Berrett VK3PZ <pberrett@tbsa.com.au>]

Hi all


Further to my earlier posting about possible new sites for stations in
Melbourne I thought it might be worthwhile to start some discussion
about the economics of starting a new station and its
cost-effectiveness. 

I will start with the following assumption. Namely that the earthworks,
ticket machine and other costs of a new station would cost around
$250,000. I have no idea what the correct figure would be - maybe
somebody has a better idea.

Assuming a payback period of 5 years and current interest rates one
would want revenue of around $375,000 over 5 years to hit break even.
These are rough calculations of course. This equates to annual revenue
of $75,000 which in term equates to a weekly average of around $1500.
Assuming a outer suburban weekly ticket costs an average of say $6 (this
takes into account those people who travel only 1 zone and those who
travel through several zones), the new station would require 250
passengers at these fares per week. Leaving aside weekends and assuming
a 5 day working week, that is about 50 people a day going to and from
work. 

Now there are a host of other variables that come in to play here such
as additional marketing costs, costs of trains making the extra stop,
planning etc but it does seem that one does not need a huge instant
patronage to make the establishment of a new station viable. 

Of course some people will have previously have travelled from one of
the nearby stations and they must be disregarded for revenue purposes as
no extra revenue is generated from them. Really what we are talking
about here is people who otherwise would have chosen or have been forced
to drive or use other transport arrangements
to get to work ie 'new entrants' to the system. 

There could be some argument that some people from other stations could
be dissuaded from using the service because of the additional train stop
but I think there are other arrangements such as express trains that can
be used to counter this problem. For example if a new station was to be
built between Croydon and Mooroolbark I think city bound passengers
would be more than happy to put up with the extra stop if there were a
few extra services that ran express Ringwood to Box Hill, Box Hill to
the city. [I dream of such a service for the Belgrave line.]

So what do people think about the above sums? Are they realistic and if
so do readers agree that there is some scope for the cost-effective
establshment of a number of new unstaffed stations around Melbourne?

cheers Peter