GRT Financial Viability

Contents

• Profitability of GRT
• Public investment
• Private investment

Profitability of GRT

The potential profitability of the system is an important consideration, because this will determine how much the government can realistically expect the private sector to invest in the new system.

One of the major benefits of a BRT system in Guangzhou would be the profitability of the system. Guangzhou's favourable conditions for BRT – high demand corridors, significant existing congestion, and adequate road space – should enable a high quality service to cover all operating costs including bus depreciation and the installation, operation and maintenance of a fare collection system. On Zhongshan Av the BRT system would return a profit to the operators at a fare comparable to the existing fare paid in Guangzhou for air-conditioned buses.

A BRT system on Zhongshan Av with an operational model as outlined in this report would have an all day average of more than 7.3 passenger boardings per BRT bus-kilometre inside the BRT corridor. This level of passenger boarding along the corridor is more than in other highly profitable BRT systems including TransMilenio in Bogota. Assuming a BRT operational cost of around 8 yuan per bus-kilometre (including the depreciation cost of the BRT vehicles), a profit of around 6.4 yuan per BRT-vehicle kilometre inside the BRT corridor is estimated. This level of profit should be very attractive to BRT operating companies. Furthermore, BRT operation on the weekend on Zhongshan Avenue will be even more profitable, as off peak passenger boardings on the weekend are more than 15% higher than on weekdays, with similar peak volumes.

Public investment

The public (government) investment required in the BRT system is estimated to be approximately 15 million yuan per kilometre. This cost per kilometre of a BRT system in Guangzhou is compared to the cost per kilometre of the Guangzhou Metro in the figure below.

To place the costs and benefits of the project in perspective, including all of the public and private investments required for a Zhongshan Av BRT system, the entire 23 km BRT system cost including infrastructure, BRT vehicles and fare collection system will cost less than the infrastructure cost of 1.5 km of the Guangzhou Metro.

Furthermore, the BRT system could be expected to fully cover costs of rolling stock and be highly profitable without any subsidies.

Private investment

The BRT will be sufficiently profitable for the bus operators to pay for BRT vehicles on Zhongshan Avevnue, as well as for the fare collection system.