Russia's rail network gets by only with subsidies

A modest rise in revenues from ticket sales last year was not enough to cover a surge in operating expenses, the country's Railway Ministry announced.

In all, revenues from passenger operations were sufficient to cover only 45% of expenses.

As a result, 15% of the revenues from still-buoyant cargo traffic were being diverted to patch up holes in the passenger budget, the ministry said.

In the meantime, the ministry is struggling with slow-moving plans to put the gigantic system onto a more free-market footing.

Driving ambitions

Although rail fares have risen sharply since the Soviet period, Russian rail passengers are still subsidised by the state.

But in recent years, deteriorating rail service and competition from other forms of transport has started to erode the train's once-universal popularity.

Cars now account for almost as great a share of Russian travel as trains, and the emergence of cheap air fares has made plane travel more competitive for long-distance journeys.

Short of investment to upgrade all but the most needy parts of its network, the ministry has presided over a sharp decline in once-perfect standards - especially in hard-pressed suburban services.

Power struggle

Things may get worse before they get better, the ministry admits.

Civilised, but most people prefer the car

Although a rise in ticket sales is predicted this year, especially on the busy Moscow-St Petersburg service, expenses will be swollen by difficulties in securing supplies of electricity.

An increasing proportion of Russian tracks are now electrified, and UES, the power generation monopoly, is planning to raise its prices in many regions next year.

The ministry is trimming back its investment programme, but says it can spare no more freight revenues to prop up passenger performance.

Good news, bad news

Meanwhile, the ministry is under increasing pressure to eliminate its reliance on subsidies, something it has periodically promised since at least the mid-1990s.

Investment will have to be trimmed this year

This is almost certain to mean higher rail fares, and possibly the elimination or reduction of certain routes, focusing more on boosting short-distance travel around big cities.

By way of compensation, the ministry has promised to begin upgrading shabby third-class coaches, including the introduction of heating and air conditioning.

Some two-fifths of rolling stock is regarded as defunct.