Dubai Metro carries hopes of a new icon

source The National

In a couple of weeks, if all goes to plan, Dubai will join a comparatively select band of global cities that possess a metropolitan mass urban transportation system, a metro.
A metro system is one of those symbols of urban status – like a civic centre, a business district or old historic area – which distinguishes a city from a mere town.

All the world’s great cities, from Hong Kong to London to New York, have metro systems that function as essential arteries to the urban body and simultaneously serve as a source of social bonding and, sometimes, civic pride.

Riding the New York subway is part of the “Big Apple” experience; the Paris metro conjures up the romance and style of the French capital; the Tokyo metro typifies the popular hustle and bustle of Japan.

Will the Dubai Metro capture the “spirit” of Dubai in the same way as these great cities? Or will it go the way of Los Angeles, whose controversial metro system is a mere adjunct of the motorised sprawl of southern California?

Above all, will it make money? Of the 200 or so metro systems in the world, probably no more than 20 are profitable, according to Nigel Harris, of the London-based Railway Consultancy, and most of them are in Asia: Hong Kong, Singapore and Taipei are examples he cites. “These cities learned from the experience of the old world, like London and New York, and began from a different starting point,” he says.

Whether Dubai, which also has the examples of those other metro systems before it, can ever repay the initial Dh15 billion (US$4.08bn) capital investment in design, construction, equipping and launch is a crucial question in the current financial climate.
Already the cost of the system is overshooting that original budget, with the final price tag likely to be “several billions” more, according to the head of Dubai’s Roads and Transport Authority, Mattar al Tayer.

It must be stressed that metro systems are not usually built as profit generators. Like many other grand public investment projects, they exist to satisfy urban need and public demand. When big public sector projects are designed with financial considerations as their priority, like the Channel Tunnel between the UK and France, they usually end up as financial disasters.

For example, it would be almost impossible to calculate the return on capital of the London Underground during its 146-year history, but it is pretty certain that it has not, in strict financial terms, covered that outlay.

But, Mr Harris suggests, it is possible to operate a metro system as an ongoing commercial concern, as the Hong Kong example illustrates. Several factors play a part in whether or not the metro will pay for itself, or require endless years of public subsidy.

Richard Anderson, of the railway and transport strategy centre of London’s Imperial College, says the essential element is population and employment density. “It’s a basic question,” he says. “Are there sufficient numbers of people who will use the metro on a regular basis as their principle means of transport to their place of employment, or for social reasons?”

Dubai’s 1.5 million inhabitants obviously cannot compare with Hong Kong or central London, with about 8 million people each. But that might not necessarily be such a disadvantage if potential passengers are concentrated in such a way as to epitomise usage. Dubai, with its linear layout following the coastline of the Gulf, seems to fit this bill.

The second factor is revenue. Metros the world over make money primarily from fares charged for travel. According to Mr Anderson, on a global basis fares account for 80 per cent of metro revenue, but the trick is to fix them at the optimal level to attract passengers.
Moscow, the world’s busiest metro, attracts 7 million passengers per day with cheap fares subsidised by the city authorities. London, on the other hand, has pushed up fares to among the most expensive in the world, but still some 3 million passengers travel by Underground each day.

Dubai’s intended fare structure, with a minimum of 80 fils and a maximum of Dh6.50, is comparatively low down the global fares league.

Other revenue streams are becoming increasingly important. Hong Kong is profitable mainly because it is as much a real estate operation as a transport system. The metro authority owns the land above and adjacent to the lines, and develops and sells this off in a huge, extremely profitable property business.

Most of the land beside the Dubai Metro is Government or private-owned, so revenue is unlikely to come directly back to the RTA as profit. But nonetheless, it all goes to swell the coffers of Dubai Inc.

Dubai has also used other forms of revenue earning such as station sponsorship, advertising and retail spin-offs from the captive market of consumers that will use the system.

“But at the end of the day, it’s all about getting passengers on seats,” says Mr Harris, “and that means enticing them away from other forms of transport.”

Integration of other services – buses, taxis and watercraft – is essential to simply get passengers to the stations and Dubai is comparatively well advanced in this respect, with the RTA’s strategic co-ordination programme. If all goes to plan, passengers will arrive by taxi at Metro stops, or park their cars in the stations’ parking facilities, before transferring to the Metro for the major part of their trip.

The big stumbling block is the easy availability of cheap cars and fuel, and an advanced urban roadway system within the city. The fact that a 12-lane motorway, Sheikh Zayed Road, follows the Metro route for much of its length is a big negative factor, according to Mr Harris.

“That’s a big problem. Successful metros don’t have such significant competition so close,” he says.

Perhaps it is unfair and unrealistic to expect Dubai Metro to pay for itself. The multibillion-dirham investment will probably never be recouped, but a broader cost-benefit analysis suggests other positives, like savings on time lost due to traffic congestion, estimated to cost Dubai Dh4.5bn a year, or the environmental benefits in an acutely energy-sensitive region.

“The main benefit of a metro system is that it allows a city to be more cost-effective. It increases productivity in a way that is not easily quantified, and helps it support a sustainable lifestyle,” says Mr Anderson. It is hard to put a price on those benefits.
fkane@thenational.ae