Heathrow Airport congestion charge

As part of aviation policy, the UK government set up an independent commission to examine the need for additional UK airport capacity and recommend to government how this can be met in the short, medium and long term.

Whilst I don't want to go into details about that process (the website for the Commission is here) what has come out of it so far is that a shortlist of options have been selected by the Commission for more detailed work.  One of them is construction of a third runway at Heathrow Airport, and within that proposal is a surface access proposition that includes a congestion charge for road traffic accessing the airport.  

Heathrow Airport Limited has produced its own documentation about its proposal on this website with downloads available here.   Media comment has been on the BBC and Daily Telegraph among other media outlets.

I'm not going to comment on the proposal at all here, as my sole interest in placing it on this blog is for the interest of readers regarding road pricing, and because I am myself undertaking work for the Airports Commission.  As such I am neither expressing a view about the proposal for a congestion charge, nor any of the airport expansion proposals (which for the purposes of completeness include proposals from Gatwick Airport Limited and Heathrow Hub, with a separate investigation into the idea of a new Thames Estuary Airport).  Heathrow's proposal is the only one so far to refer to road pricing and is mentioned as a post-2040 implementation.  Certainly I don't believe there are any such charges applied at airports elsewhere in the world, although parking charges may sometimes be used to partially address this.

Key statements regarding the charge are as follows, from Volume 1 of the submission (PDF):

Beyond 2030, once our comprehensive network of public transport services is in place, we believe there is a case for introducing a new congestion charge zone to further reduce vehicle journeys to Heathrow. Revenues could be ring-fenced to fund major rail, London Underground and road infrastructure improvements. It could also be used to fund sustainable travel initiatives, public transport service improvements and local community projects. If expansion were to proceed we would work with local people and relevant authorities to define how such a zone would be applied. These public transport improvements will enable Heathrow to deliver more flights, without increasing airport related traffic on the road.

We believe there may be a case for introducing a congestion charge zone at Heathrow, once public transport improvements are in place. This would provide an opportunity to manage airport traffic levels and emissions by charging those with the biggest impact. We would wish to consult on many issues to ensure any such proposal is appropriate and fair, such as exemptions that could be offered to blue badge holders, low emission vehicles, local residents and licensed taxis. A charging zone will provide an opportunity to ring-fence revenue (in the form of an enhanced ‘Super’ Public Transport Levy fund). This could be used to support funding of major surface access schemes, and to fund sustainable transport projects in the wider area to benefit local communities.

Certainly this is one option to address traffic congestion at major airports.  The final report of the Airports Commission will not be released until mid 2015, which is expected to recommend a preferred airport expansion option.  It is not clear whether that will include any comment on the congestion charge element of the Heathrow proposal, whether or not Heathrow's airport expansion proposal is recommended by the Commission for adoption by government.

Big (tolled) dig for London?

The biggest tolled urban highway tunnel in the world?  Well certainly the most expensive if it were ever to be built.

That's what has been proposed for London - yes London, according to the Evening Standard. Now there isn't money to finance it, nor planning permission or any details.  It is, at best, a vision of what might be a good idea, primarily to get ring road traffic off of the at street level connected series of streets that currently form the congestion charge zone, and into tunnels.

The cost is mooted at around £30 billion (US$50.5 billion), which is eye-wateringly high, but reflects deep-bored tunnels and likely very expensive sites for entrance and exit points.  However, let's think about how it might work:

- Tolls 24/7 at revenue optimising levels. Should be little real concern about monopoly pricing here;
- Extend the London congestion charge zone out to the boundaries of this road, hypothecating net revenue to the new road (and charging by distance and time of day);
- Reallocating road space from parts of the inner ring road for other road users, but also parking and commercial use, raising more revenue;
- Recovering part of the increase in value from properties along existing roads seeing a significant reduction in traffic;
- Dedicating the tunnels to ultra low emission vehicles operating in semi-automatic formations, so that capacity is doubled;
- Using the tunnels to facilitate express bus services as well (London has few of those);
- Replacing fuel duty on London roads with a distance based charge reflecting capacity and demand.

I believe the idea has some merit, and I think arguments about local air quality may well have significantly dropped due to technology by the time this sort of road might be completed, but also technology will have significantly increased capacity on existing roads.  Claims it will just fill up with traffic would be countered by tolling, and given that central London traffic is growing again with the congestion charge, it may simply be that London road users would be willing to pay for a faster road at levels not seen in other cities.

It is certainly worth some more detailed scrutiny and a range of scenario modelling exercises, but I suspect it will be some years before this will come to any fruition.  Perhaps more realistic might be parts of the plan or a few strategically located tunnels to bypass major bottlenecks (from point 9 to 7 on the map for example, or 6 to 5).  It is radical for a city that has had no major new road capacity built since the 1990s with the controversial East Cross Route.

It's important to think about several dimensions to the idea which should mean thinking about it differently from past proposals, such as the previous ringway ideas for London.

- Fully electronic free flow tolling means that such a road can be priced to avoid inducing demand that exceeds capacity.  Indeed such tolling should enable higher charging of parallel routes, so that through traffic is taken off of existing streets.
- Ever lower emission vehicles should help address environmental concerns.  Having such a road provide discounts for such vehicles can help accelerate this.
-  Greater automation of vehicles, allowing more capacity on existing roads, but also increasing capacity of new roads enhancing their utility and closing the gap between rail and road based transport for urban capacity.

All of this is not in the short term, but plans for major highway projects like this are far from short term, and so should be developed with an eye to that sort of future and given the scarcity of land in London, identifying locations for entrance points to tunnels should be the priority because acquiring such land and gaining planning permission to use it for that purpose is going to be the number one issue (it isn't money that people will protest about).

Below is the network (in blue) of motorways/major arterial highways London would have got had plans in the 1960s been completed, which was for four ring highways to be built.  This is superimposed on what exists, as the only one that was built was the M25, combining parts of the third and fourth ringway.  It wold have meant an inner ring motorway, a second ringway taking the North Circular and extending it, and a third ringway linking up with the M25 at the northwest and the southeast, plus a few other new motorways (notably the M23 to the south, M12 to the east and M1 extended south).  Had it been built as planned, it would have had a brutalist impact upon the city in many locations, but the counter is that many town centres are blighted now by high levels of arterial traffic that would otherwise have bypassed them.

London, has the entire ringway motorway plans come to pass with a few additional radial routes.

Compared to that grand plan, below is what was actually built, besides the M25, only parts of other roads were completed, notably much of the North Circular was upgraded, the East Cross Route built to connect the Blackwall Tunnels to the North Circular and A2, and the infamous Westway and stub of a West Cross Route.  Much more detail can be found out about London Ringways on these websites, CBRD and Pathetic Motorways.  Of course the result of this is that it's far easier to get across north London than south London by road, and there is a dearth of river crossings east of Tower Bridge.

M25, A406, A12, A312, A40 - what little of London ringways that was actually built

The new London inner toll tunnel ring would look something like this, below, in addition to the current network.

London's main highways with a mooted inner city tunnel highway

So it would be different from what was originally planned, would feed off of existing arterials from the east and west, but is specifically designed to enable the existing street level ring road to be substantially altered in parts to accommodate more pedestrians, cyclists and buses, whereas previous plans were to add capacity primarily to relieve congestion, rather than also reallocate road space.

From a road pricing point of view, it represents perhaps a very expensive and grand version of what has already been done in Oslo.  Can pricing, the rise of ultra low emission vehicles and modern tunnelling create new roads in central London that enhance the environment and mobility?

I think it's worth looking at, but given I am resident here I've written a bit more background on the idea, since it is not entirely new.

Australian infrastructure lobbying group and motoring clubs call for radical reform

I reported on 27 March that Infrastructure Partnerships Australia had published a discussion paper called "Road Pricing and Transport Infrastructure Funding" which has essentially recommended a move from ownership and fuel taxes to distance based charges for road use, including mass, location and time of day components.

I have since had a chance to read the report, so that I can now give a more detailed review of the paper.  It's worth reading in its own right, at least because the way it is presented and structures the key issues is both accessible and logical.

It's notable for being a report commissioned not only by contracting sector lobby groups (who would traditionally be expected to endorse more construction), but also motoring clubs (who would traditionally be expected to endorse more construction and resist user charging).  This report is not pushing construction, and openly admits that big cities are unable to "build themselves out" of congestion, although there will be an ongoing need for new road capital investment.  It does support road pricing, and it also supports using some road pricing revenue to enhance public transport.  That is fairly revolutionary in thinking from these sorts of entities, and is to be applauded.  

It is important to note that not all Australian motoring clubs are parties to this report, but many key ones are.  It indicates a level of analytical rigour and honesty to admit that the future will be improved by measures that, on the face of it, many if not most motorists will be sceptical about.  There are plenty of motoring clubs worldwide that simply oppose user charges and call for more road construction to fix major problems, hopefully this report will catalyse some to apply some more economic rigour.

 

The report has a number of key things going for it:

- The key limitations of existing forms of motoring taxation are outlined.  Taxing ownership and fuel has major issues of equity, sustainability and lack of flexibility, which are not compensated for by simplicity.

- The benefits of user charging are made clear around network efficiency and addressing congestion.

- A range of options are looked at, and assessed at a strategic level according to some clear objectives

- A pathway of small steps to go forward with is presented.

- It has the endorsement of a number of several (although not all) motoring clubs in Australia.  Getting support from this lobby is crucial and important, given how influential it is.

It is worth reading in its own right, but I thought it would worthwhile providing a brief synopsis of the main points.   I have also included some graphics from the report, which is blatant plagiarism, but help to explain some key points.

Belgian road pricing tender goes to preferred bidder status

The T-Systems led consortium has been selected as the preferred bidder for Belgium's distance based truck tolling system across main roads according to various media sources (e.g. Wirtschafts Blatt Austria in German).  

The consortium comprises T-Systems (76%) and Strabag (24%), with Belgacom as telecommunications partner.

Strabag subsidiary Efkon will provide the enforcement software and system technology, T-Systems will provide the communications and charging technology.  The contract is expected to be an availability charge basis.  Finalisation of contract is expected in July 2014 with 18 months for testing and implementation, with tolling starting in 2016.   The contract for construction and operation would be until 2027.

The contract will include 40 fixed enforcement sites and 40 mobile enforcement units.

There is no news as to whether any charging system for cars is also to be established.

Of course what's particularly peculiar about this piece of news is that it is not the Belgian Government doing this.  It is the three regional governments of Belgium operating in unison (Flanders, Walloon and Brussels).

UK Government to convert Highways Agency into a state owned company, but no change to road taxation

Whilst it is not strictly about road pricing, reform of management of the national highway network in England is of relevance, if only because of the profound absence of any discussion about how charging might be linked to the funding and management of roads.

What has been announced is the corporatisation of the Highways Agency, the executive agency of the Department for Transport that currently manages England's strategic road network.  What this means is that the new Highways company (let's call it England Highways Ltd.)  will no longer be a government agency, but will act as an autonomous company owned by the state.

Details of the reform are in this document, which is the government response to consultation on its plans and summarised in this press release.

Key components of the reform

-  A new company is to be established, with the Secretary of State for Transport listed as sole shareholder, to vest the contracts, property and staff of the Highways Agency;

- It will be empowered to manage, operate and maintain the strategic road network;

- The framework for governance will comprise Legislation, a Licence, a Framework Agreement, a Road Investment Strategy and Articles of Association;

- A Road Investment Strategy with a "long-term funding guarantee, a performance specification and a defined funding and investment plan" will be established.   This means there will be a commitment of funding over a set number of years (approximately seven years);

- There will be environmental performance responsibilities and incentives to improve environmental performance;

- The company will be required to co-operate with local authorities, emergency services and "other stakeholders";

- The public transport users' representative quango "Passenger Focus" will include a "Road User Focus" unit, and the Office of Rail Regulation will include a "Strategic Road Network Monitor" to ensure the new company  "delivers its commitments efficiently and effectively";

-  Legislation will amend planning powers to make the new company a statutory consultee for relevant planning applications.

There will be no powers for the new company to toll, as it will be funded from central government through its Road Investment Strategy guaranteeing state funding for a set number of years.  From that the company will implement the strategy, but its role in informing the strategy will be advisory.  So whilst it has independence and accountability, the decisions on what gets funded will still be undertaken external to the company.   Indeed, no mention has been made of private finance, indicating no push for PPP based financing, but rather a more traditional Pay As You Go model.

US Federal Government to allow tolling of existing Interstate Highway capacity

In the United States, the Interstate Highway network has long been a source of pride.  One of the few really grand Federal Government projects that didn't involve defence or space that large numbers of average Americans regularly use.

Whilst it is an interstate network, unlike national highway networks seen in other countries, it is not managed by a single agency.  The name "Federal Highways Administration" (FHWA)  sounds like a body that would undertake this role, but rather the states take responsibility for looking after the parts of the Interstate network within their jurisdiction.  The FHWA oversees the allocation of Federal funds for this purpose, as well as Federal funds for other highways within states.  The FHWA also sets standards for highways, sponsoring research on highways and transport management.

Funding comes from the Highway Trust Fund, which is itself funded from hypothecated Federal fuel taxes, currently US$0.184 per gallon (US$0.048 per litre) for petrol and US$0.22 per gallon (US$0.064 per litre) for diesel.  It also receives tax revenue from a tax on tyres, a sales tax on trucks over a certain size and annual heavy vehicle tax.

It is well known that given that the fuel taxes have not been increased in 21 years, a combination of inflation and increasing fuel efficiency has eroded revenues to the Highway Trust Fund in real terms.  The shortfall is over US$10 billion a year, so that general Federal funding has been to subsidise plug the gap.  The approach being to use Federal legislation to authorise spending, and then worry about the revenue afterwards.

Of course, the Federal Government has reflected problems at the state level, with some states facing similar deficits on their own highways, they have chosen to use tolls to assist with funding highways.  Texas and Florida are notable for this, but many other states have done so too.  

Tolls on Interstate Highways were restricted to new capacity, being brand new roads or additional lanes on existing ones.  Now The Hill reports that the Obama Administration is willing to allow states to toll existing lanes to help fund projects.  The Transportation Bill that has been introduced into Congress would remove that blanket restriction, meaning that states may be able to charge existing roads as long as there are improvements to the highway corridor.

Associated Press reports:

The administration plan would let states toll interstates to pay for repair or replacement of the highways. Many interstates, built to last 50 years, are past their life expectancy and in need of more substantial repairs than simple repaving. States would also be allowed to introduce "variable tolling, tolls that change according to the time of day or traffic conditions. The tolls are designed to encourage more drivers to carpool or use public transit in an effort to relieve congestion.

So it appears that large-scale maintenance/renewals and improvements can all be justification for tolling, and on top of that tolling that varies by time of day to reflect demand.  This is a significant step forward and represents perhaps the single most worthwhile transportation policy measure that the Obama Administration has introduced.

The IBTTA has understandably applauded the move in a press release.  It should mean more tolling, and as such tolling where it can work.  That means places where the traffic volume can generate enough revenue, and the alternative untolled routes are significantly inferior, so tolls wouldn't divert traffic onto them (I can assume State DOTs can get the modelling for that right)

Is it enough?

Finland's path to road pricing raises some big questions

I wrote on 27 March that the a Finnish Government Working Group had recommended that the country move away from fixed taxation of motor vehicles towards a distance based approach.  I've now had a chance to read the full report (in English) of the Working Group and to digest its analysis and approach, and it demonstrates the one rule of thumb I've often seen in road pricing studies across the world - every country has considerably different contexts, but many common issues.

To read the report yourself, it is available here as a pdf.   

For those who don't want to dive into the detail, I'll summarise my key thoughts and views first, and then put down some more detailed reflections afterwards.  It's particularly pertinent given the upcoming ITS Europe Congress in June, being held in Helsinki.

Finland, most of the population is along the southern coast

On 3 February 2012 a working group was established to explore how Finland could move towards "fairer and smarter transport systems and study long term strategies to introduce road pricing systems, with a specific mandate to assess the feasibility of GPS road pricing".   The focus was on looking at global experience, what objectives road pricing could serve, what technical solutions could be viable, what impacts would arise and how and over what timescale it could be introduced.  The working group was also to look at privacy and whether any other services could be provided using the GPS platform.

This follows previous investigations into congestion pricing for Helsinki alone, which came to the conclusion that the best approach would be some form of distance based charging that varies by time and place.

Summary

The key points from the study are as follows:

- Existing fixed taxes for cars should be replaced with a distance based tax.  Those taxes include car tax (paid on first registration of vehicles in Finland) and annual vehicle tax and vehicle motive force tax.

- The tax considered for the purposes of the study would be €0.033/km (US$0.074/mile) on all cars with another €0.02/km (US$0.045/mile) for non-petrol cars to offset the lower diesel tax.   Some variants on this were tested based on a regional differentiation.

- The distance tax would not replace fuel tax.  Finland's fuel tax rates are €0.6729/l (US$3.52/gallon) for petrol and €0.4966/l (US$2.60/gallon) for diesel, compared to the EU legal minimum rates of €0.359/l for petrol (about US$1.89/gallon) and €0.33 (US$1.72/gallon) for diesel.  (note these are US Gallons for the sake of comparison, not imperial).

- Motoring taxes in Finland already recover more than five times the state spending on road maintenance, with none of the money hypothecated for roads, so the argument for distance tax was not based on revenue generation or protection,  but rather dynamic improvements in economic and environmental outcomes.  By law, such a charge can currently only be a tax in Finland.

- Shifting from fixed taxes to fuel taxes was considered, but ruled out because it would not offer the potential to target congestion and environmental impacts by location and time of day.

-  The distance tax would not apply to buses and coaches because no fixed taxes apply to them.

-  The distance tax would also not apply to HGVs because the fixed taxes that apply to them could not be reduced sufficiently to make the tax work, as the rates are not far above EU minimum rates.

- The net impact of a shift to distance tax by 2025 is estimated as being a 30 million reduction in annual car trips, with a 4% drop in CO2 emissions from cars and around the same proportionate drop in serious car accidents.

Change in passenger km estimated in 2025 from introducing distance charging in Finland

- Most car users would pay less, with commuters in cities and high usage rural users paying more.  The net effect is to reduce barriers to car ownership, but encourage car usage when and where alternatives are not available.

- The estimated capital costs for such a system, for 3.5 million cars, were €89m-133m (US$123m-US$183m) (which I believe to be far too low), but operating costs were estimated at between €116m-133m (US$161m-US$183m) per annum.  The report indicated more scrutiny is needed over these costs.

- However, these higher costs compared to the current tax system would be recovered by the reduced costs to the economy of fewer accidents and emissions.  The savings from reduced congestion were not calculated, but given evidence from previous studies ought to deliver substantially higher economic gains, even if charges did not vary by time of day or location.

- It was considered that the primary benefit from the change would be to allow for charging by specific road and time of day, so congestion charging could be introduced equitably, targeting congestion and locations where there are reasonable public transport alternatives.

- It was strongly recommended that any distance tax have strong privacy protection, so that all data on specific trips be kept with the on board unit and in the possession of the vehicle owner, with only charging data released.  Other data could only be accessed if the owner wished to query the tax calculation or if there is suspicion of systematic fraud.

- There could be industry development potential in allowing such a system, as it would encourage local business to develop complementary systems and potential applications to use alongside the distance tax.

So, Finland is considering a car only based distance tax to replace taxes on owning cars.  That's interesting and revolutionary, but I also think it is missing some key points, which I come to below.  These are:

- Fuel tax ought to be included down to EU minimum rates;

- By including fuel tax, all other vehicles should be taxed by distance and mass;

- The rates of distance tax should reflect, at a minimum, infrastructure costs;

- By shifting to distance tax Finland cannot evade a strong case for partial hypothecation of revenues, in which case it may be wise to consider part of the charge not being a tax, legally speaking;

- The capital and operating costs need far closer scrutiny;

-  The benefits of shifting to distance based charging may be overstated around accidents, due to technology around automation, but understated by excluding the deadweight costs of existing taxes.

Fair tolling for New York? Not perfect, but a step in the right direction

Let's start out by not painting a picture of utopia.

Congestion in New York City is not going to be solved by tolling a few of the East River Bridges or putting a cordon to the north of 60th Street.

Move NY fair tolling plan

There are going to be some distortions in economic activity because of the placement of the cordon on 60th Street, and by the adding of tolls on some crossings.

Roads aren't going to be better managed, nor is public transit going to be better managed just because New York City gets some more money from motorists.  There are more fundamental governance, incentive and management issues with all of that infrastructure.

However, on balance the plan by Move NY called "Fair Tolling" will make a positive difference.  It will reduce congestion, it will encourage more use of public transit, walking and cycling, it will improve mobility to those locations to the east with higher tolls, and will improve air quality.

No other single policy measure can have such a positive difference on New York transport and the environment, whilst also having positive impacts on the economy.  It wont be sufficient, but it will be a very positive change indeed.  There will be less car use around downtown Manhatten, and possibly a little more on the periphery where tolls will reduce.  There will be more efficient use of crossings, as some motorists don't divert to avoid tolls.  Buses, trucks and taxis should have much easier trips, and there will be more public transit usage.  There may even be more cycling if the infrastructure is up to it.

There will, of course, be more money to spend on transport infrastructure, but it will take some convincing for enough people to be willing to pay for something they don't pay for now.  That's what needs to happen in the coming years.  Years I say, because it takes patience and time, and for it to be known that this isn't going to go away.  There may be one or two more failed attempts politically at pursuing similar reforms, but the logic about doing so is difficult to undermine completely.  At best opponents don't like it because they don't believe they can convince voters to like it.

So let's go through some of the key issues.

Germany expands road pricing: Part 2 light vehicle vignettes

As I reported around a week ago, Germany is taking two significant steps forward in expanding charging of road vehicles, on both motorways and major federal highways.   I wrote previously about the changes to the truck toll system, this article is not as long as much less detail is available, but this time it focuses on the introduction of a new time-based charge for light vehicles, otherwise known as a vignette that will

 predominantly apply to cars.   The term for that in German is PKW-Maut (effectively "passenger car toll").  However, it is not a toll, either in conventional parlance nor under European law (which counts it as a "road user charge" although it applies regardless of how frequently you use the charged road during the period of te vignette).

What vehicles?

Germany expands road pricing: Part 1 distance based truck tolling

As I reported around a week ago, Germany is taking two significant steps forward in expanding charging of road vehicles, on both motorways and major federal highways.  

1.  Expansion of scope of the LKW Maut truck toll to cover trucks from 7.5-12 tonnes, and to toll over 1,000km more of previously untolled Federal Highways.

2. Introduction of a vignette (pre-paid time based charge) for light vehicles across the autobahn network

It follows from nearly 10 years of operation of the ground-breaking, and initially fraught ridden LKW Maut truck toll system.  This is the first of a two part post about the major changes happening to road charging in Germany, and covers the expansion of the scope of the existing truck toll system.

Terminology in this sector is often troublesome, so let me very clear about the dimensions of the LKW Maut.