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Is a train between Keflavik Airport and the centre of Reykjavik a feasible option?. Reykjavík Express . Ráðgjöf og verkefnastjórnun Runólfur Ágústsson. Project objectives.
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Is a train between Keflavik Airport and the centre of Reykjavik a feasible option? Reykjavík Express Ráðgjöf og verkefnastjórnun Runólfur Ágústsson
Project objectives • To carry out a preliminary feasibility study on constructing and operating a private enterprise high-speed rail between Keflavik Airport and the centre of Reykjavik. • To evaluate and outline the benefits of such a project for society. • Reports to be published within 10 days. • Findings presented today not final and confidential until published.
Project participants • The City of Reykjavík • Municipalities in the Sudurnes area • Efla (Consulting engineers) • Kadeco - The Keflavik Airport Development Corporation • Landsbankinn (largest commercial bank in Iceland) • Isavia (national airport and navigation service provider ) • Istak(prime contracting firm) • Reitir (real estate company)
Project stages 1 October 2013: Preliminary study, gathering information, analysis and first assessment. Possible business partners view study. 2 November 2013: A work group is established. 3 November 2013 - June 2014: Proposals and analysis on possible routes and technologies. Initial engineering analysis and financial evaluation. A business plan. Results are presented to possible investors. I feedback is positive an SPV would be established to further development the project. 4 2015-2018: Preparations. Environmental impact assessment. Work on design and organization. 5 6 2018-2024: Construction.
Reykjavík Express- route • Two parallel tracks from Keflavik to Hafnarfjordur. • Single track through a tunnel from Straumsvik to the centre of Reykjavik. • The route is 47 km, thereof 12 km inside the tunnel. • Average speed around 180 km/h, maximum speed 250 km/h • Four trains that can initially carry up to 1.000 passengers an hour in each direction with an option to double the capacity in future years.
Train stations • Surface terminal at the airport connected to the airport terminal • Underground station in southern part of Reykjavik • Underground terminal at the end of the tunnel in the center of Reykjavík.
Estimated construction cost • +/- 20% • Estimated construction cost 14 million EUR per km
Estimated number of passengers • Four different groups: • Foreign tourists travelling to and from the country • Domestic tourists travelling to and from the country • Transit passengers • Regular domestic passengers e.g. commuting passengers and students
Estimated number of passengerstravelling through KEF Airport
Estimated percentage of air passengers travelling through KEF Airport using train as transport modeComparison with Oslo Airport
Revenue generation Estimated average price of tickets • Price range from 800 to 3.800 ISK • Average price 2.600 ISK / 17,4 EUR
Estimated operational cost • Estimated operational cost is based on information from North Star Consultancy and FlytogetAS. • Operational cost includes: • Infrastructure cost EUR 11 million • Operating cost of rolling stock EUR 26,5 million • Total operational cost is estimated EUR 37,5 million
Funding and profitability • Private funding with no direct public funding • Equity ratio 20% • 30 year IRR 9,9% • Real interest rates • 4,7% during construction • 3,5% long term
Sensitivity analysisInvestment cost and number of passengers – effects on IRR
Sensitivity analysisLong term growth of passengers through KEF airport- effects on IRR
Theeconomiccase • The standard approach to economic appraisal of new transport projects: Cost benefit analysis • Is society benefiting from the efficiency provided by train transport between Reykjavík and Keflavík airport? • Should be read in conjunction with the strategic case for a private investment, which summarizes the full rationale for the scheme • The analysis is carried out in line with standard cost-benefit analysis of road infrastructure according to framework set out by the Danish Ministry of Transport
Theeconomiccase • Monetized impacts: • User benefits – the value of time and net expenditures - Valuation of time savings; business or leisure - Net costs: train ticket vs prior outlays • Societal benefits – the value of safety and environmental impacts - Pollution: noise and air - Accidents: Decrease in accident rate. • Geographically limited: The user benefits are comprised of Icelanders only. • Differs from traditional cost-benefit analysis: Not funded by taxpayers! Therefore we seek to assess user- and societal benefits only, i.e. benefits are not weighed against the net costs. • We assume that there is not an excess return on a similarly risky investment in the private sector.
Results • Horizon: 30 years • Required rate of return: 5% • Benefits in the order of €250 – €375 million over 30 years
Wider economic impacts • However, the economic case of cost benefit analyses can only ever provide part of the overall picture, and there are many other factors that can and should be taken into account. • We try to assess the additional factors – the wider economic impacts: • Local economic growth in the communities affected • Impact on real estate prices and investment • Impact on general wage level and productivity
Wider economic impacts • The scope of the analysis at this point does not allow for a intricate assessment of wider economic impacts. We therefore only mention likely impacts. • Avoid double counting! • Not likely to influence local economic growth significantly. Only applicable if the community is heavily constrained by existing transport infrastructure. • Likely to have a positive effect on local employment – the joining of two areas, Keflavík and Reykjavík. Mobility of the workforce • Likely to influence real estate prices and wage level.
