TAIWAN Railway Administration (TRA), the island's inter-city and regional operator, like many of its ilk around the world, is facing a stark reality: attempting to reduce losses without raising passenger fares.
TRA, which operates on 1093km of 1067mm-gauge track across the island, celebrates its 127th year of operation in 2014 and is currently engaged in a programme of significant network developments intended to get people on to its trains and into its stations to maximise opportunities to generate revenue.
TRA reported a loss of $NT 4.2bn ($US 140m) from revenues of $NT 24bn in 2013. Dr Joe Chou, the company's director general who took on the role in April, says that it has been 18 years since TRA was last able to increase fares and as a result it is restricted in the level of revenues it is able to raise.
"Unfortunately fares must stay in line with the government's policy so we are unable to increase prices freely," Chou says. "At the moment from our branch lines we suffer a loss of around $NT 600m, and we also lose about $NT 800m from discounted tickets for the disabled and the elderly, which adds up to nearly $NT 1.5bn every year."
Chou says that at present 75% of the company's revenues come from its passenger and freight transport business, 17% from its subsidiaries, primarily land development, and the remaining 18% is from government funding.
"We are aiming to increase our subsidiary business from 17% to 34%, while for passenger and freight transport, which is our main business segment, we are aiming to increase the percentage of inter-city transport," Chou says. "Currently TRA only accounts for 18% of all passenger transport in Taiwan, and with this element so important to our overall revenues, we believe we can increase our share to 36%."
Chou says that TRA currently faces two primary issues in its efforts to boost revenues: restrictions in its service capacity and the quality of its rolling stock.
As a result, backed by the government's "Railways for Living" programme, it is currently exploring the possibility of both upgrading its infrastructure and introducing new trains to enhance services and reduce journey times.
The first stage of this rolling stock procurement initiative is set to be realised by the end of this year when TRA receives the remainder of its order for 39 eight-car series 800 EMUs from Nippon Sharyo, Japan, and Taiwan Rolling Stock Company (TRSC), a subsidiary of Tang Engineering, China Steel, Nippon Sharyo and Japanese trading group Sumitomo.
TRA signed a $NT 15.4bn contract for the trains in 2011, with the first two eight-car sets, which can accommodate 1268 passengers including 352 seated, manufactured by Nippon Sharyo in Japan before construction shifted to TRSC in Taiwan earlier this year. Disputes over braking suppliers held up delivery of the initial batch, but after this was resolved in mid 2013, the first two trains arrived in October 2013 and commissioning was completed earlier this year.
The 140km/h trains, have now been deployed on the 244km East Coast Main Line from Taipei to Taitung. Electrification of the 166.1km section between Hualien and Taitung was completed in June, allowing through operation of electric trains for the first time. The complete upgrade of the line is set to finish in March 2015.
Chou says the new trains will replace outdated equipment used across TRA's network. However, he says this procurement is not sufficient to meet the railway's needs. As a result TRA is currently consulting with the government over initiating the tender process for the second phase of TRA's rolling stock procurement plan with the aim of replacing all of its main line push-pull rolling stock by 2025.
"For the second stage of procurement we have reported to the Executive Yuan but are yet to start the tender procurement process," Chou says. "At present details of what we are looking to procure remains confidential and cannot be disclosed."
Chou says that the procurement plan is likely to include the purchase of EMUs and what he describes as diesel-electric locomotives, which can operate services on the network's five non-electrified branch lines.
He says that purchasing new rolling stock has put extra emphasis on improving the railway's existing infrastructure to accommodate enhanced services.
The eastern electrification programme is a major component of this with the opening of the Hualien - Taitung line to electric traffic a significant milestone.
Work on the $NT 25.4bn upgrade commenced in 2008 and is being carried out by Taiwan's Railway Reconstruction Bureau (RRB). It encompassed electrification at 25kV 60Hz, as well as track-doubling on four sections of the route: Fongtian - Nanping (8.4km), Wanrong - Guangfu (5.7km), Rueisuei - Sanmin (9.2km), and Shanli - Taitung (8km). New double-track tunnels were built at Sikou (3.1km), Guangfu (2.5km), Ziqiang (2.7km), and Shanli (5.3km), while elimination of sharp curves with a radii of less than 800m took place at 16 locations to allow an increase in line speeds. The alignment on the 3.7km Yuemei section was also improved to eliminate curves and three bridges were rebuilt across the Guangfu, Hongye No 2 and Fengping rivers.
Operation at 130km/h is an improvement on the 110km/h achieved previously and has reduced journey times from Hualien to Taitung by 35 minutes, and by approximately one hour on the entire Taipei - Taitung line after eliminating the switch to diesel traction at Hualien, with the fastest journey now taking 3h 30min. In addition to the series 800 EMUs, the line is served by series 500 trains built by Daewoo Heavy Industries in the 1990s, and Puyuma Express tilting EMUs which were built by Sumitomo and began operating in February 2013.
Chou says that the task for TRA now is to intensify passenger use of services on the line and he hopes for future capacity enhancements through the addition of a third and fourth track on certain sections.
With the project nearing completion, he says that attention is now shifting to solve the network's two major bottlenecks: the non-electrified line from Taitung to Pingtung, and a new line from Taipei to Yilan.
Work on the Yilan project is now moving ahead after RRB approved an alignment for a new 53km line from the Nangang district in southeast Taipei to Yilan, in April. During its consultation RRB did consider a more direct alignment between Pinglin in New Taipei City and Toucheng for the route. However, this connection was ruled out because it passes through the water table of the Fetsui reservoir, which provides drinking water to Taipei, as well as abandoned mine workings and six geological faults.
The chosen alignment links New Taipei City, Ruifang and the Pacific coast before rejoining the existing line at Shungxi, and will increase line speeds compared with the existing windy route. Chou says the route should appease concerns about the impact on the water table and that the line will pass through two major tunnels, including a 21.6km link, which will be Taipei's longest when completed.
RRB says it expects completion of the $NT 50bn project in 2026, at which point the fastest Taipei - Yilan journey time will be reduced from 1h 5min to 47 minutes.
RRB is also currently starting preliminary work on a major electrification project in the south of Taiwan, the 123.4km stretch from Taitung to Chaozhou in Pingtung county, the final non-electrified section of the island's circular main line network.
The project requires improvements to 249 bridges, 17 stations and will include elimination of level crossings, as well as new tunnels at 36 mountain locations.
A new 6.8km double-track section from Linbian and Nanzhou will eliminate a problematic bottleneck in this area, and once completed the line will offer a 1h 30min journey time from Taitung to Kaohsiung.
The project was approved by the Taiwanese government's Council for Economic Planning and Development in April 2013 and is budgeted at $NT 27.98bn. Chou expects work to begin in 2015 and for the electrification element to be completed by 2020. The entire project is expected to be finished by 2022.
Signalling improvements are another major priority for the main lines as a means of boosting capacity. While a little further behind the electrification project, Chou says that TRA intends to upgrade its ETCS Level 1 network, the installation of which was completed in 2007, to ETCS Level 2.
"While we are still improving our Level 1 system, we are also establishing a Level 2 system, but this still has some time to go," Chou says. "We believe that in around 2020 we will start testing on the southern section of network. At present we are still estimating the capacity improvements that such an upgrade will provide us."
In addition to main line development, TRA is also engaged in a programme to boost its services in urban areas, which is in line with a desire in these municipalities to introduce elevated railways. Labelled its Rapid Transit Systemisation plan, Chou says the scheme targets TRA's operations in six "capital cities": Taipei, Taoyuan, Taichung, Kaohsiung, Hsinchu, and Tainan.
The aim of the programme is to open up TRA services to more people at more locations by constructing new stations and increasing capacity by adding additional tracks. For example in Taoyuan an eight-year $NT 30.85bn project got underway in 2009 to elevate and excavate 16km of track sections as well as add a three-track section north of Taoyuan station. Taoyuan, Neili, and Zhongli stations are being remodelled as elevated stations, and four commuter stations will be added at Fengming, Guoji Road, Yongfeng Road and Chung Yuan Christian University. Seventeen level crossings will also be eliminated.
A similar programme is taking place in northern Taiwan where the addition of a third track on the Badu to Nangang section is expected to increase traffic on the Keelung - Taipei line from 332 to 381 trains per day, an improvement of 15%. Chou says that in the past decade TRA has added 20 stations as part of the rapid transit systemisation plan, and as more elevation projects are approved by local governments, further stations will continue to be added to the network.
He adds that these developments are presenting TRA with an opportunity to boost its subsidiary business.
"TRA owns lots of land around stations so whenever we are engaged in a renewal project we will attempt to regenerate this land for development," Chou says. "Some of our land is not located near stations so we are in dialogue with local governments about when they may be changing the use of this land for business development or for residential districts. In Japan their subsidiary business usually accounts for around 30% of their revenues and it is similar in some European countries. It is essential then for us if we are to become a profitable enterprise to increase the share from this element of our business."
Turning these stations into commercial hubs and destinations that passengers want to visit is a major element of Chou's plans. In particular, he is encouraging collaboration with local museums to hold exhibitions at TRA stations, which will attract people to visit stations, and spend money.
Plans are also afoot to introduce trains aimed solely at tourists for which TRA is able to set special fares and could be used to boost revenues on the unprofitable branch lines. Partnerships with Grand Central Terminal in New York and a prospective agreement with Tokyo station are also serving as a means of promoting Taiwan as a tourist destination and Chou says there has been a noticeable increase in Japanese tourists recently.
"We hope that this collaboration is not limited to Japan," Chou says. "For example officials from Britain recently made contact about setting up a similar initiative there."
Competition from Taiwan High Speed Railway Corporation since it opened the 345km high-speed line from Taipei to Kaohsiung in 2007 has inevitably impacted TRA's operations, and is certainly another consideration for TRA's efforts to boost traffic and revenues. Chou says that research is currently underway on the extent that this might be the case, but it is his hope that TRA services can increasingly act as an interchange with high-speed in areas where a clear crossover between services already exists.
Certainly with a number of significant projects on the horizon, Chou has reason for optimism about the future of TRA's operations, and is particularly excited about developments over the next 12 months. With the new series 800 EMUs entering service, and several projects set to get off the ground, his hope is that this will provide a springboard for further development so that TRA, and Taiwan, can achieve its goals for its railway network.
"This is a preparation year for TRA," Chou says. "But if all goes to plan, we will be ready to go, starting in 2015."