THE ARLANDA AIRPORT RAIL LINK – LESSONS LEARNED FROM A SWEDISH PPP CONSTRUCTION PROJECT

The Stockholm – Arlanda airport rail link is a public-private build-operate-transfer project (sometimes referred to as PPP), opened for traffic in late 1999. At the time of decision in 1993, the project was seen as a role model for funding rail infrastructure; it infused private money into the sector, with a hope of improving cost efficiency performance; it broke up the train service monopoly of the national railway company; and it opened up the sector for ideas and impulses from a new actor. <p> The paper seeks to identify the costs and benefits of providing a private company with a monopoly franchise over one particular section of the network. It also highlights tradeoffs present in public-private partnerships and in creating facility-based competition within the railroad industry without ex ante regulation of access. Evidence indicates that losses of allocative efficiency, due to that the number of passengers is far below expectations, are substantial. Since available information about construction costs, due to commercial secrecy, is scarce it is not possible to say whether the overall result of this particular PPP project is efficiency enhancing or not. Our best guess is, however, that a radical change in the present pricing strategy may not mean a financial disaster and would boost the prospective of ex post efficiency.