Why I want to commute in Hong Kong

I live in a major German city and commute to work every day. At some point, I stopped following the official train schedule. Why? It’s because you can hardly rely on the schedule — especially at morning and evening rush hours. Unfortunately, delays and train cancellations are more the rules than the exception, and the passenger information displays on the platform sometimes completely redefine the duration of three minutes. It is worth looking at Asia, in order to understand that things can run differently, and above all, better.

Hong Kong, a commuters’ paradise

In Hong Kong, the rail network is operated by MTR Corporation Ltd. Its largest shareholder is the government of Hong Kong with approximately 77% (a plurality of various financial services and funds, e.g. BlackRock or The Vanguard Group, share a further approximately 33%). Why is this company a role model in terms of infrastructure? Simply put, it not only promises but also delivers excellent service. MTR has already won several awards and is one of the best rail network operators in the world in the categories of safety, reliability, customer service and cost efficiency. Don’t you believe me? Then there are a few facts: from July to September 2017, 99.9% of all trains were on time (with a frequency of only a few minutes). In the same time, there were only 13 delays of more than 20 minutes for the approximately 500 million passengers transported. The trains travel an average of almost 4.5 million km before they cause a delay of more than five minutes due to technical reasons. Escalators and elevators are 99.9% reliable. And the well-being of customers is also taken care of. MTR has dedicated itself to keeping the temperature in the trains constant at 26 degrees Celsius. Of course, this could also be 99.9% guaranteed. Additionally, the trains are cleaned daily on the inside and, on average, every two days on the outside. The customer satisfaction achieved by this quality is impressive: on average, only 1.74 complaints are received per 1 million passengers. Despite enormous maintenance costs, MTR Corporation has been able to pay out a consistently positively increasing return to its shareholders for more than 10 years in a row: in 2014 it was HK$ 2.69 per share.

Germany, a commuters’ nightmare

For commuters, the MTR in Hong Kong is also an excellent means of transport for another reason: MTR Corporation offers various monthly rail passes, e.g. for various subway lines, so that you only pay for the trips that you actually use. All additional trips can be booked and paid for very inexpensively, as needed. By comparison, we are miles away from a similar means of local transport in Germany. The quality of German public transport leaves much to be desired in countless areas. The construction and general conditions of the infrastructure often do not allow operators to establish a satisfactory service. Bearing the blame for this are: complicated licensing procedures, distant owners, official structures, as well as the fact that local transport is seen more as a public interest than a service. Many customers hold the attitude: “Make it as cheap as possible through subsidies, even though it’s all bad anyway.” These factors ultimately result in delayed and overcrowded trains, which are often cancelled without substitution, dirty compartments and railway stations, as well as defective escalators and elevators. Who wants to ride the train in conditions like this? Moreover, in financial terms, German local transport companies are lagging behind Hong Kong: in Germany, there is practically no local transport company that can survive without receiving public funds. With the trains constantly overcrowded, it’s puzzling why the operators are not profitable and sell losses of €90 million as a success. For the operators, it also looks as if the problems can never be solved.

The key to success is not hidden

There are success stories that prove that the MTR model can also be applied to European local transport: the London Overground is a rail network in London, which has been operated by the MTR Corporation since 2007. Since then, the frequency of traffic has tripled, and the number of passengers has increased fivefold. Punctuality has increased from 91% to 96% and customer satisfaction from 69% to 92%. The tunnel railway in Stockholm has been operated by MTR Stockholm, a subsidiary of MTR Corporation, since 2009. Thanks to more efficient maintenance processes, 10% fewer trains can now be used for 10% more passengers, the punctuality of trains has increased from just under 93% to 96%, employee satisfaction increased from 32% to 86%, and customer satisfaction has remained constant at 80% ever since.

These success stories show that modern management of its infrastructure makes it quite possible to improve its performance, and at the same time, operate sustainably and profitably. But how exactly does that work? The answer lies in value-based asset management. The mission statement of value-based asset management is an approach meant to fully align the infrastructure operator with the requirements of stakeholders. MTR Corporation has internalised this principle and maintains a regular and intensive dialogue with its stakeholders, to create sustainable value for the city’s infrastructure. MTR Corporation uses a comprehensive, stringent and strategic asset management plan, whose core elements are condition assessment and analysis of each maintenance task. This approach can be readily recognised from what took place after the takeover of the London Overground. After the acquisition, a lot of money was initially invested in understanding the network and all its components. Every change to its components, every tightening of a screw, were meticulously documented and analysed. If an error occurred, as a result, the question arose as to the cause: was it the screw, a wrong nut, the time of the change or perhaps the wrong tool? The secret of MTR lies precisely within these individual actions.

We still have reasons for optimism

Is this model transferable to German local transport? Yes, absolutely. First, we can’t put the cart before the horse, but need tackle the problems at the root. However, this requires two fundamental changes above all. To begin with, a cultural change must take place among the rail network operators, so that they learn to recognise that they must evolve from a public interest company into a service company. Secondly, operators must be willing to invest in their network to get to know it comprehensively. This is the only way to make the right decisions for the company at all levels. This requires the involvement of all stakeholders — from employees to service providers to customers. On the other hand, more trust must be placed in the companies involved, focusing on public-private partnerships. Just let the companies do it. An example from North Rhine-Westphalia shows how not to go about doing it. When the Rhine-Ruhr Express submitted calls for tender, everything was already specified in the tender regarding operation (particularly maintenance) over the next 30 years. However, this leaves the operators only a little leeway.

How can this important issue be addressed? A wide variety of questions must be asked: Who are my stakeholders? And what do they expect from me as a rail network operator? What value would I like to offer as a rail network operator? And what actions are necessary for achieving this? Since 2011, my company meliorate has been assisting infrastructure owners and operators with these and other questions relating to professional asset management.

 

┬®SilviaBins_6494FURTHER BLOG ENTRIES BY LARS OVERDIEK

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