Commuters who work in offices have a deep impression of the daily squeeze of the subway during morning and evening rush hours,especially in first-tier cities like Beijing.
The subway is packed with people,and as a commuter,just being able to squeeze on is already satisfying,without the luxury of expecting a seat.However,even these city subways that are overcrowded every day are still in a state of loss.
According to reports,Beijing's subway loses as much as 24 billion yuan a year,and this phenomenon is considered normal nationwide.
Out of nearly a hundred cities that have opened subway operations,only five cities have made a profit.I have also searched repeatedly to confirm that this is official news.
It may also be because of this situation that the country has stopped the craze of building subways in the past two years.Do you know why the overcrowded subway is always losing money?
First,from the frenzy to the calm of subway construction
Many people's first memory of seeing a large-scale subway dates back to the 2008 Beijing Olympics.
In order to welcome the Olympics,Beijing can be said to have undergone a major renovation from inside to outside.In just a few years,several subway lines were quickly added,and for a while,the subway became the new trend in urban public transportation.In fact,the construction of our country's subway started much earlier than this time.As early as 1965,Beijing began the construction of its first phase of the subway system.At that time,the construction of China's subways truly started from scratch,taking about four years to complete the first phase of 21 kilometers of subway construction.
Entering the 1990s,with the advent of development,cities in the south like Guangzhou and Shenzhen,in the north like Shenyang and Tianjin,and in the central region like Wuhan also began to build their own subways one after another.
At this time,China's subways were still in a state of exploration,with each city having its own style,lacking unified standards and specifications.
With the completion of multiple subway lines in Beijing for the Olympics and the robust growth of China's economy,
subways are no longer the exclusive domain of large cities,and China's subways have entered a rapid development era of blossoming everywhere.Each city has presented its own subway planning maps and construction plans,and for a while,the subway began an era of vigorous construction.
However,not every city needs so many subway lines,and not every city's subway can achieve profitability.The hastily launched subway projects have become vanity projects,incurring losses every year.
In light of this situation,in 2018,the state introduced new policies,pouring a bucket of cold water on the subway fever,and putting the brakes on this trend.According to national statistical data,even in a big city like Beijing,the subway is in a state of loss.Only the subways in Shanghai,Wuhan,Jinan,Shenzhen,and Changzhou are in a profitable state.Why can the crowded subway in Beijing still be in a loss?
II.Why is the capital subway in a loss?
The most common way for the subway to make a profit is through subway tickets.
It should be that the Beijing subway has such a large passenger flow every day,and the ticket money is not small,so how can it be in a loss?This has to be said about the huge expenses of building the subway.First of all,it is the huge cost of subway construction.Subway construction requires a large amount of land,manpower,materials,and funds,and the subway is not something that can be built in a day.The longer the construction period,the more the cost.
In a place like Beijing,where land is very expensive and labor costs are so high,
the cost of subway construction is naturally outrageously high.The cost of Beijing subway construction per kilometer far exceeds that of ordinary cities.According to statistics,in recent years,the average construction cost of Beijing subway has broken through 1 billion yuan per kilometer,and some complex lines are even higher.
In addition,with so many people in Beijing and such a large area,there are naturally many subway lines,so the total investment in Beijing subway is undoubtedly an astronomical figure.
The high construction cost makes it a huge challenge for the subway to recover profits.In addition to the huge construction cost,the rest is the ever-increasing operating cost.Taking Beijing subway as an example again,the subway is underground,and the electricity cost for daily lighting and air conditioning is astronomical.Moreover,taking the subway naturally requires a comfortable environment,with air conditioning in the summer and heating in the winter.To ensure the safety and comfort of passengers,subway companies also need to continuously invest funds in technological transformation and equipment upgrades.
The operational and maintenance costs of Beijing's subway are also high,with an average annual cost of more than 10 million yuan per kilometer.This figure will continue to grow with the increase in the number of years the subway has been in operation.From these expenses,it is not difficult to see that the income from subway tickets is just a drop in the ocean.
Furthermore,the construction of subways in our country is more for the benefit of the people,
to facilitate everyone's travel.Therefore,whether it is in Beijing or elsewhere,the subway ticket prices are relatively affordable,in order to make it accessible to everyone.Otherwise,after the subway is built,it would be a waste if it just runs empty.At the same time,to promote green travel,subways in various places also have many preferential policies,such as student cards,senior cards,and various marketing activities.
The high construction and operational costs,coupled with low ticket prices,naturally make it difficult for subways to be profitable.As a result,many local governments have to subsidize the operation of subways.
However,this is not a long-term solution.Cities with abundant finances like Beijing are fine,but small cities may struggle to cover the costs.
Many cities that were initially determined to build subways have instead become a burden on their economies,so the construction of subways must be approached with caution,which is also the reason why the country has put a brake on this trend.
III.Why These Five Cities Stand OutIt is reasonable to say that the situation of Beijing's subway operating at a loss is common in most cities.So why can Shanghai,Wuhan,Jinan,Shenzhen,and Changzhou be the exceptions?This requires us to discuss separately,as the situations in these five cities are also different.
Shanghai,for instance,relies on its open economic development ideas,and its subway has long implemented a diversified business model.In addition to the most basic subway ticket revenue,Shanghai's subway also generates income through commercial development along the subway lines,advertising solicitation,property leasing,and other methods.
Moreover,in addition to the income brought by the land and its own operations,Shanghai's subway has also leveraged its brand advantages to develop a series of subway cultural and creative products.These cultural and creative products are the latest trend,and this income has enabled Shanghai's subway to achieve profitability.
As one of the earliest developed cities,
Shenzhen is also extremely skilled in capital operations.In subway operations,Shenzhen's subway has also used capital methods,reducing the construction and operation costs of Shenzhen's subway by issuing bonds and introducing social capital.Moreover,Shenzhen and Shanghai,as economically developed coastal cities,have attracted countless migrant workers and foreign populations.The traffic brought by these populations has also made a significant contribution to the profitability of Shenzhen and Shanghai's subways.
As a major transportation hub in the central region,Wuhan's subway,from the beginning of its construction,has linked the subway stations with the development of surrounding land.
It is important to know that land in big cities is extremely valuable,especially land under the influence of subway stations.Wuhan's model has provided a steady and continuous income for the subway.Shenzhen,Shanghai,and Wuhan can be considered three major cities,while Jinan and Changzhou are relatively underdeveloped.
Their profits are more dependent on planning and design.During the initial construction of these two places' subways,they focused on cost control,significantly reducing construction costs and unnecessary expenses through advanced design and planning of station lines.
Moreover,due to the smaller size of these cities,the subway line planning is also shorter,resulting in relatively lower operating costs.The reduction in operating costs naturally makes it easier to balance the costs and ultimately achieve profitability.
Whether it is a large city or a small city,each has its own actual situation.Only by designing plans and profit models according to their own circumstances can they ultimately achieve profitability.
IV.Where is the way out for the subway?
From the income and expenditure of the subway,it is not difficult to see that the most significant expenditure of the subway is the operating cost.This operating cost is partly the operation of hardware equipment,which is a fixed cost.On the other hand,
it is the labor operating cost,which has a lot of room for improvement.Nowadays,AI and intelligent systems are so advanced that subways can also introduce them.For example,by introducing an intelligent scheduling system,it optimizes the train operation plan,reduces the empty running rate,and improves operational efficiency,which naturally reduces the cost.The most precious assets of the subway,apart from the appreciation of the surrounding real estate,are the huge number of people it attracts.The rise in housing prices around subway stations is inevitable.The development rights of subway stations and surrounding plots can be bundled for commercial development,thus providing the subway company with substantial profits.
In terms of passenger flow,it can bring endless advertising revenue.With such a large number of people using the subway,and many of them being workers with considerable purchasing power,the subway company can place advertisements in the platforms and carriages to obtain considerable advertising income.
The subway company can develop more peripheral services,such as convenience stores,restaurants,and rest areas,to provide convenient services to passengers while increasing sources of income.
They can also provide value-added services such as Wi-Fi,charging facilities,and tourism information consultation to enhance passengers' travel experience and increase sources of income.
In addition to these methods of increasing revenue,cost control is also essential from the initial design and construction of the subway.
For example,the construction cost of a single station line in Beijing requires hundreds of millions of yuan.Therefore,when building the subway,the stations must be reasonably planned,and the money saved can sustain operations for a long time.
Conclusion:
The huge losses of Beijing's subway are not an isolated case,but a common problem faced by subway systems nationwide and around the world.However,the subway in China is more of a public service,so the approach of increasing ticket prices like in some foreign countries is not advisable.
Therefore,the subway in China needs to find its own path.Reducing costs,increasing revenue,and operating with distinctive features have become inevitable choices.We believe that through continuous innovation and reform,and by better leveraging the value of the subway,the subway system in China will eventually turn losses into profits and become profitable.
With the examples of these five cities,we believe this day is not far off.
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