VA 495 Express Lanes traffic "below expectations, adjustments needed" operator tells shareholders
2013-02-04: Transurban, principal shareholder and operator of the 495 toll express lanes on the Capital Beltway has told shareholders in Melbourne Australia that initial traffic is below expectations and that adjustment to traffic patterns and motorist preferences will be required. In the 6-week period to the end of 2012 they report revenues of $1.0 million ($800k tolls, $200k other revenues), operating costs of $3.2m, depreciation of $2.1m, and financing costs of $7m for a net loss of $11.3m.
Transurban and its partner US-based Kiewit spent $1.53 billion on reconstruction to create 2x2 toll express lanes on 12 miles of the Capital Beltway between the Springfield Interchange and Tysons Corner that involved rebuilding interchanges and the free lanes. The toll lanes only opened November 17, so it is early days.
After six weeks operation they said in a report here January 11 that they were getting about 24,000 vehicles workdays up 60% from the initial 15,000 and that 93% were tollpayers and 7% carpoolers entitled to free trips. Revenue was running at an annual rate of $7m we estimated. ($s are Australian dollars similar in value to US$s.)
A traffic and revenue study by Vollmer/Stantec finalized in February 2007 when the companies were committing to finance the project forecast average weekday trips over the first full year of operations at 66,132 and revenue of $46.1m. After four years operations they forecast 117k/weekday trips and annual revenue of $79m.
The forecasts couldn't have foreseen the depth of the financial crisis of later 2007 and 2008 or the length of the recession that resulted. And perhaps they have underestimated a dampener on peakhours' traffic from the internet and greater worktime flexibility.
The statement made to the Australian Stock Exchange says the 495 Express Lanes toll systems and operations are "functioning well". Critically, the toll system adjusts toll rates to volumes in the lanes rising to deter some motorists from entering when traffic levels threaten to slow traffic speeds and prevent them delivering on their 'express' trip promise.
Six months more will tell
The stock exchange release says that "the required adjustments to local traffic patterns are expected to take time to occur."
They add: "A more complete picture of the asset’s performance will take at least six months to emerge."
The Capital Beltway is a small part of Transurban's operations which produced revenues of $492m and a net profit of $81m in the six months to December 31 2012. Melbourne CityLink tollroad produced half the company's revenue at $267m and five Sydney tollroads nearly another half at $261m while the Pocahotnas Parkway in Richmond VA garnered $7.4m in the half-year. (Some of these are less than fully owned by Transurban so the totals of facility revenues don't add.)
Speaking of the overall position of the company CEO Scott Charlton says: "Transurban is well positioned, anchored by a strong portfolio of assets that continues to deliver growth in free cash for our security (share) holders."
"We have made good progress on key development projects during the period and are now focused on completing the Hills M2 upgrade so that we can see the full benefit of that project flow through all of our northern Sydney assets."
"Our strategic network positions in our markets are integral to the cities they serve and significantly contribute to the economies of those markets. As governments and communities look for answers to growing issues in transport networks, we are well positioned to play a leading role in the development of unique transport solutions and unlock further value in our networks."
VA95 toll lanes a quarter done
Shareholders were told that the 95 Express Lanes that went into construction in Virginia south of the Springfield Interchange a year ago is now 23% complete.
Transurban last year bought up the north Sydney Lane Cove Tunnel which had sent its developers broke. The company reports it is consolidating the toll Tunnel into the adjacent and profitable M2 Hills Motorway.
The company operates over half the toll facilities in the Sydney metro area, and the largest in Melbourne, the country's second city.
presentation to shareholders:
stock exchange release:
on first report in US: