Rail transport
Financing

The main source of income for railway companies is from ticket revenue (for passenger transport) and shipment fees for cargo. Discounts and monthly passes are sometimes available for frequent travellers (e.g. season ticket and rail pass). Freight revenue may be sold per container slot or for a whole train. Sometimes, the shipper owns the cars and only rents the haulage. For passenger transport, advertisement income can be significant.

Governments may choose to give subsidies to rail operation, since rail transport has fewer externalities than other dominant modes of transport. If the railway company is state-owned, the state may simply provide direct subsidies in exchange for increased production. If operations have been privatised, several options are available. Some countries have a system where the infrastructure is owned by a government agency or company – with open access to the tracks for any company that meets safety requirements. In such cases, the state may choose to provide the tracks free of charge, or for a fee that does not cover all costs. This is seen as analogous to the government providing free access to roads. For passenger operations, a direct subsidy may be paid to a public-owned operator, or public service obligation tender may be held, and a time-limited contract awarded to the lowest bidder. Total EU rail subsidies amounted to €73 billion in 2005.

Via Rail Canada and US passenger rail service Amtrak are private railroad companies chartered by their respective national governments. As private passenger services declined because of competition from cars and airlines, they became shareholders of Amtrak either with a cash entrance fee or relinquishing their locomotives and rolling stock. The government subsidises Amtrak by supplying start-up capital and making up for losses at the end of the fiscal year.
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