Result of the EITT Research Group study: “The train to the South of Gran Canaria is neither socially nor financially profitable”

The evaluation estimates that the demand will be 50 to 75% lower than expected in previous studies based on a survey of 500 people.

The project to build a railway line between the capital and the south of the island “is not profitable either for society or for the future train operator”, according to the conclusions of an independent socio-economic evaluation carried out by the University of Las Palmas de Gran Canaria (ULPGC) on the benefits and costs that its implementation would have compared to its non-creation.

The study of the Research Group on the Economy of Infrastructures, Transport and Tourism (EITT) of the ULPGC makes its own estimate of the demand that the train between Santa Catalina and Meloneras would be, through a survey of 500 people, between 50 and 75% lower than those obtained in previous studies.

Compared to previous estimates of demand, the EITT incorporates the preferences of bus and car users based on the times and costs it would take for them to switch to the train. According to Javier Campos, one of the authors of the evaluation, the studies included in the train project “have biases that overestimate demand.” With such numbers, he points out, “it does pay off.”

The evaluation follows the standard methodology of cost-benefit analysis recommended by Europe, assesses the intermediate routes between the 11 stations and the transfers according to the origins and destinations and analyzes the distribution of trips in peak and off-peak hours. The study, carried out in 2019 and which the covid prevented from presenting in 2020, also analyzes the variations in income and costs that the train would entail in transport companies (railway operator and Global) and the collection of taxes and subsidies from the public sector.

The implementation of the railway line, 57.8 kilometers in length and between 35 and 33 minutes of travel time from end to end, is not profitable in any of the three scenarios on user demand that the study raises.

Without assessing the risks of the project, in the first scenario, which assumes that the bus does not lose market share, the results of the social NPV (difference between benefits and costs) show losses of 156 million euros. In which he estimates that the demand will come from users of buses and cars, the losses rise to more than 957 million. In which it provides an intermediate solution, they are close to 524 million.

Thus, those who gain the most from the train would be car users (due to the decongestion of traffic), while it would not be so profitable for those using buses.

Negative financial NPV

The financial NPV is also negative in the three scenarios, oscillating between 1,196 million losses in the first and 1,366 million in the second.

Including in the evaluation the variables with risk (cost overruns, time savings and others), in the best case the probability of achieving a positive NPV does not reach 8%.

Source: Canarias7