We pride ourselves on our collaborative and flexible appoach

The Importance of Ramp Up

  • October 11th, 2010

Once again, a major new transport scheme appears to have struggled to forecast demand during its first twelve months.

In May, Southeastern announced that it was to remove 18 carriages from the new High Speed Domestic Services between London and Kent due to a lack of demand. Worse news followed in September when Go-Ahead, part owner of the Southeastern franchise, announced a £17m loss on the service in the first six months of 2010.

This slow build up in demand caused many to question the service, and indeed some went so far as to use it as a rationale for questioning the further development of high speed rail in the UK.

However, new figures released by the DfT are more positive, showing the high speed services capturing a impressive and growing market share – 72% from Canterbury West, 56% from Ashford and 58% from Folkstone. Services from the Medway Towns and the North Kent coast have performed less well, but have still captured over a third of demand from most stations.

The extent to which high the slow start to high speed services is due to underlying factors, or simply that demand is taking longer to come on stream than originally anticipated remains to be seen. However, what it does highlight once again is the thorny issue of accurately predicting how demand for new services and infrastructure will build up in the first months of operation.

The continued uncertainty in the science of forecasting “ramp up” represents a major risk to securing private investment in future transport schemes

For as the Government looks to leverage more private investment in transport schemes, one should expect the issue of “ramp up” to become the hot topic in both transport planning and infrastructure finance circles.

Across the life of a 30 – 50 year asset, small misjudgements in passenger forecasting in the first year may be negligible. But for private investors, looking for an early return on investment and a sound trading history to support refinancing, such errors could be disastrous.