It's a loss! There is only one profit in the 29-city subway, and it is the turn of the subway to increase the price?

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2024-05-24 11:46Published in Guangdong

It's really a loss, 29 city subways, there is only one profit, and the other 28 are all losses, is it the turn of the subway to increase prices?

Up to now, 29 city subways have announced their 2023 financial reports, and after deducting government subsidies, only Fuzhou Metro has made a profit, and even the most profitable Shenzhen Metro, Wuhan Metro, has suffered losses.

In 2022, the epidemic has not yet been released, and there are 5 cities with subways that year that year. After the epidemic is released in 2023, the number of rail transit trips across the country has increased by 52.66%, and there are more loss-making city subways, what is going on?

Judging from the published financial reports, the revenue of subway companies in 29 cities, only three cities, Wuhan, Qingdao and Shaoxing, have declined, and the other 26 cities have achieved growth. For example, the Beijing subway increased by 6.7 billion yuan, the Ningbo subway increased by 5.7 billion yuan, and the Chengdu subway increased by 4 billion yuan.

Generally speaking, when revenue increases, profits will also rise. Compared with 2022, there should be more profitable urban subways, but no.

Among the subways in 29 cities, after deducting subsidies, only Fuzhou earned 100 million yuan, and all the others lost money. Wuhan Metro, the most profitable in 2022, will lose 560 million yuan. Shenzhen Metro, Changzhou Metro, and Jinan Metro, which were profitable that year, lost 180 million yuan, 530 million yuan, and 4.77 billion yuan respectively.

The Beijing subway is still the most loss-making city, with a loss of 22.94 billion yuan. Cities such as Chongqing, Qingdao, Ningbo, and Chengdu are still big losers, with a loss of 6 or 7 billion yuan a year.

I carefully compared the data, and in 2023, 21 of the 29 urban metro companies have seen an increase in government subsidies. For example, Qingdao Metro received a subsidy of 8.39 billion yuan, an increase of 1.784 billion yuan over 2022. Ningbo Metro increased by 1.665 billion yuan, and Chengdu Metro increased by 773 million yuan.

More government subsidies mean more losses. This is even more unreasonable, where is the money lost?

We all know that the subway relies on ticketing revenue, and it is definitely not profitable. Therefore, many subway companies make money by selling advertisements, collecting rents from properties, and even selling houses.

In the past, the subway companies that could make money basically developed through the model of "rail + property", which is often referred to as TOD. For example, the Shenzhen Metro Company has taken a lot of land and worked with other real estate developers to develop commercial housing, making a lot of money.

However, this is not the same as in the past, real estate has entered a new cycle, and the TOD model may not be able to play anymore, especially in some cities where commercial housing is saturated. In 2023, Wuhan Metro's resource development revenue plummeted by 97%, and even Shenzhen's metro fell by 8.3%.

There is less money to be made, but not less money to spend, and it may even increase. The construction cost of the subway is very high, ranging from 500 million to 600 million yuan/kilometer to more than 1 billion yuan, and it takes billions or tens of billions to build a line. The money is all through loans, with interest paid every year.

For example, in 2023, the Beijing subway will pay 13.1 billion yuan in interest, and the interest subsidy given by the government will be as high as 9.98 billion yuan.

The operating cost is not low, a large number of security personnel in each subway station, and there are also repair costs, electricity costs, etc., which are very costly. Beijing Metro Operation Co., Ltd. has released data that the operating cost in 2022 will be as high as 12.365 billion yuan. The labor cost alone reached 6.059 billion yuan, accounting for almost half, and the annual security inspection cost was 1.3 billion yuan.

Therefore, when the real estate industry is down, it is difficult for the subway company to make money, the losses are even more serious, and the subsidies need more. It is difficult to sustain itself by relying on high government subsidies for a long time, especially now that local governments have heavy debts and financial pressures, and subsidies in many public service industries are decreasing.

So how to solve it? Raising prices is the best way to go. Last year, Guangzhou canceled a long-standing plan to get a six-percent discount on 15 bus and subway rides a month. For the new plan, many netizens called it a secret poke and price increase. In addition, according to a report by the Beijing News, in 2024, Beijing subway fares may usher in a cycle of "five years and one major adjustment", and they may also rise.

Water, electricity, high-speed rail, buses, many places have adjusted their prices, and it is not impossible for some places to adjust the price of subways.

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