Economics
At Line 1's opening, Altram, the operator, was a for-profit company owned by John Laing, Ansaldo, and West Midlands Travel.
Soon after opening it became evident to all three partners that operating revenue would not cover costs. In 2001 Ansaldo decided it was "not prepared to invest further monies in a loss-making venture which showed no prospect of ever becoming profitable". Laing "felt there was no economic future in Altram and that to contribute further funds would only increase its loss in what it believed to be a failing project". In February 2003, The Times reported that the Metro's auditors had refused to sign off its accounts as a going concern. Michael J. Parker, Centro communications chief during the project definition stage — subsequently Director-General of Tyne and Wear Passenger Transport Executive (Nexus) — had stated that Midland Metro would be "highly profitable".
Ansaldo and Laing had ceased practical involvement as early as 2003, but their official exit took place in 2006. Day-to-day operation is in the hands of Travel Midland Metro, with losses largely covered by cross-subsidies from other parts of National Express's business.
The Commission for Integrated Transport (CfIT) gave an overall cost estimate for British systems of £3.79 per light-rail vehicle-kilometre in 2003-2004, compared with £0.94 per bus kilometre in 2002-2003, according to Rapid Transit Monitor 2004. CfIT estimated that the fare required for Midland Metro to break even was twice that of Manchester Metrolink, London Tramlink and the Tyne and Wear Metro.
Read more about this topic: Midland Metro
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