In Spain, government-backed trains overtake planes

Courtesy: Bonaventura

Tucked in a quiet corner of Barcelona’s Sants train station on a recent afternoon, Ima Cruzado pages through email messages amidst a symphony of conversation and rolling suitcase wheels. Even though the six-hour travel time was more than double that of a flight, her employer had decided to send her from Málaga on a high-speed train because the ticket was less expensive. Plus, Cruzado adds, airports are time-consuming and irritating.

“It’s a better trip [in a train] because it’s more direct,” she says. “You have to do more for the plane.”

Cruzado is not alone. This year in Spain, which has the largest high-speed train network in Europe, the number of passengers boarding long distance and high-speed trains has surpassed those taking domestic flights.

Spain’s most recent rail boom began in February 2013, when a new management team at the national train company RENFE cut tourist fares by 11% and offered ticket discounts as large as 70%. The number of passengers on its long distance trains and high-speed AVE lines jumped from some 22 million in 2012 to over 25 million last year; those numbers are up another 18% so far in 2014, says Félix Martín, who runs RENFE passenger services in northeast Spain.

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As a comparison, Martín notes, overall domestic passenger travel — including trains, planes and buses — was down 16% in Spain last year.

“We’ve managed to bring the AVE closer to the mobility needs of the people,” says Martín.

In terms of passenger comfort and costs and CO2 emissions, Spain’s move from cars, buses, and planes to trains is a positive sign. But in the context of Spain’s ongoing economic crisis, some economists ask if the money spent on high-speed rail could be put to better use.

“There’s no doubt that the user wins. But it’s a total mess in terms of using public resources,” says Xavier Fageda, a professor of economic policy at the University of Barcelona.

Fageda estimates that the high-speed network cost 40 billion euros to build and receives 300 to 400 million euros in annual subsidies.

“It’s extremely expensive infrastructure with high maintenance costs that at the end has achieved its success at a high cost, because the demand in no way justified an investment that large,” he says.

Critics argue that the money could have helped more riders if it had been devoted to the country’s dilapidated regional and urban rail systems, which people use to get to work, or into achieving a more humble 200 kilometer per hour (about 125 mph) on long-distance trains instead of the more expensive 300 kilometer per hour AVE lines it now has.

“I think it would have been cheaper if they’d been flying people around in helicopters. It’s a very expensive toy, and Spain has other priorities,” says Fede Sabrià, a professor of operations management at the IESE Business School in Barcelona. “What do we do for the people who have to take the train 30 kilometers to work every day? That’s the big problem.”

There is also an issue of unfair competition. In 2010, Fenebús, a bus company trade association, won a complaint it filed against the Spanish government. The European Commission ruled that the government subsidies RENFE used to cut long-distance and high-speed train prices to compete with bus and airline companies were illegal. It gave the government six months to eliminate those subsidies. (Perhaps worried about a repeat, RENFE decided not to lower its high-speed ticket prices this year.)

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At RENFE’s office in Barcelona’s Sants station, Félix Martín argues that the government train operator is now competing fairly. He says the high-speed AVE network is profitable and that those profits subsidize long-distance routes that lose money; the government money RENFE receives goes to regional and local commuter trains, he says.

“The high-speed and long-distance trains receive no subsidies. We are absolutely inside the market dynamic,” he says. “We pay infrastructure usage rights, maintenance, energy costs, and salaries at the market rate, and our income comes from what we sell in the market.”

While the high-speed trains may now be profitable, determining whether those profits justify the construction costs is another matter. Accounting for who is paying for what became more challenging in 2005, when the national train system was split into RENFE, which operates the trains, and Adif, which controls the infrastructure and charges RENFE a user fee.

“The high-speed trains have achieved competitive prices via infrastructure subsidies, which are exclusively paid by the public sector,” says Fageda. “If you take into account infrastructure costs, all the AVE lines in Spain are absolutely ruinous.”

At Sants station, the passengers seem less worried about infrastructure financing than about travelling cheaply and in comfort. Just returned from Madrid on the 620-kilometer AVE high-speed route, local sportscaster Bernat Soler explains why the railway is beating the airport.

“You avoid all the mess of the airports. The stations are more central. You don’t have to go so early. The trip is longer, but at the end, it’s more comfortable,” he says. “Since the high-speed train to Madrid has existed, I haven’t taken a plane.”

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