This was actually the stated *INTENT* of refusing to allow them to increase fares in the case of New York City, but it seems to have been more of an accident in some other cases.

Hell yeah.

“Why don’t private rail companies succeed? It does’t make sense. ”
Government-subsidized competition. If all the better-than-dirt roads were private toll roads paying for *all* their own costs, private passenger railroads would be quite successful and profitable, and this was proven in the 19th century.

We seem to have come to a consensus in most countries that transportation is a public good, and that government should therefore fund roads, airports, etc. In most countries they include rail in that; only in the US and a few others does it get disparate treatment.

The rail carriers were burdened with legacy costs and could not by law abandon underperforming lines without getting ICC approval. They couldn’t even merge without an approval process, which often took years. The PRR and NYC wanted to merge in 1958; with governmental red tape, they merged in 1967. The railroads that had enough freight business to subsidize money-losing passenger rail, like ATSF or Seaboard, survived until Amtrak took over the money-losing part. The ones that didn’t, like the PRR, went bankrupt.

Airline deregulation has allowed for a large number of airlines to run continuously on the brink of bankruptcy, and a large number of airline bailouts. Even the “low cost airlines” routinely go bankrupt. Warren Buffett famously said that if the Wright Brothers’ plane had been shot down, it would have saved investors a fortune.

Southwest and Jetblue haven’t gone bankrupt, and neither have Easyjet and Ryanair. They may do so in the future, though – even before deregulation, airlines were marginally profitable. For example, Howard Hughes needed his Hollywood money to fund his aviation hobby.

The Big Government company Amtrak by the way, has a better on-time performance than any airline and has the least bit of hassle when it comes to refunds, frequent traveler points, and cheaper cocktails.

I think the underlying argument for privatisation is that the pursuit of profit will streamline a company. The money will go to the most efficient places, especially if there is competition. If the demand for the service is too low and the cost of the infrastructure is too high, no company can do a good job and will eventually need to be bailed out.

The argument for public operation is that a well and properly funded agency with good management can accomplish amazing things. Intelligence and money are not exactly always aligned in the government. More often than not, a government bureacrat’s main job is not to get fired, and they are given just enough money to maintain things in a mediocre but passable way.

What opportunities are there to maximize public control and investment with private greed?

Perhaps the post could have analyzed the following situations, or something similar, and provided a more nuanced view:
1) fully public: infrastructure is owned, operated and maintained entirely by a department of the government.
2) mostly public: most everything is owned by the government, but government grants a monopoly to operate to a heavily regulated company. this is the UK system, right?
3) half public half private: public ownership of basic infrastructure, private company pays a fee to run trains on the track. Any company can bid for the right.
4) mostly private: government uses its unique powers to support or provides a subsidy for a company that builds, operates, and maintains rail transit. In many ways, this was the case in the 19th century US as the major railroad companies were granted land in the west for free.
5) totally private: I don’t think this even exists, except maybe in the case of US freight. Government always has to get involved in transportation somehow, even if it is just in ROW acquisition.

My first thought on reading the article is to ask “What does success look like?”. Since privatisation the number of passenger miles travelled has increased by 50%. In the previous 45 years the number of passenger miles was roughly constant. The number of train services has increased. The railway has become even safer. The cost to the Treasury of running the service has increased a lot.

The Train Operating Companies (TOCs) bid for a franchise in which the Government specified a minimum level of service, restrictions on fare increases and agreed a fixed contract price. This meant that the TOCs took the risk on revenue. If they increased passenger traffic and reduced costs they made more money. They responded to these incentives by trying to carry more people; for example, by making more use of their rolling stock to improve timetables.

Railtrack had the job of maintaining the infrastructure and selling capacity to train operators (passenger and freight). They were the company who would decide whether or not to open lines or electrify existing ones.

Since privatisation there have been many changes in the franchising regime. The current model has short franchise lengths and more direct Government management than in the days of British Rail.

I have some thoughts on the franchise model.
The private sector will normally do what it has incentives to do. The result is more train services and more passenger traffic. There has been one particular TOC with a twenty year franchise. That TOC has invested in doubling single line routes and building new stations and routes because they can see the benefit within their franchise life. Conversely Railtrack had no great incentive to electrify because the return on investment took longer to arrive than its contracts were expected to last.

To me the history shows that you need to get the basic structure right by giving each party an incentive to do what will result in the best total outcome. I think that does not require the rail industry to be all public or all private but it probably does require the Government to have a clear idea of what that outcome should look like.

The most recent franchise failures illustrate the “winner’s curse”. In order to win a franchise bid you have to pay more than the opposition. Consequently you end up paying more than the franchise is worth. In a boom you get away with it. In a recession you do not.

All these are my personal views only.