As Losses Mount, CEO’s Strategy for Privatized VA Beltway Toll Lanes Depends on Congestion

Press Release
February 18, 2019
The Australian owner of northern Virginia's privatized highways is intentionally raising tolls to push traffic onto the “free” lanes, the company's CEO revealed last week in a conference call with investors.
Despite higher tolls, the pre-tax financial loss on the Beltway toll lanes—touted by Maryland officials as the model for Governor Hogan's toll lane plans—grew to 27% of revenue in the six months ended in December from 21% a year earlier.
If you look at just the Greater Washington Area, it's about revenue and EBITDA* growth, not about the traffic growth because we're trying to maximize the tolls, Transurban chief executive Scott Charlton said on a February 11 conference call. [Audio available]
Anyone who drives on the Virginia Beltway knows that the toll lanes are mostly empty, commented Maryland Transit Opportunities Coalition chair Ben Ross. Now we hearstraight from the horse's mouth that keeping the free lanes crowded is a deliberate strategy. That's what motivates drivers to pay sky-high tolls on the express lanes. The owners make more money by pushing most commuters onto the untolled lanes. The worse the traffic jams are there, the higher the tolls a small minority of wealthy drivers are willing to pay.
Claims that building privatized toll lanes here will bring traffic relief are extravagant and overblown. Is Virginia’s toll-lane scheme the model Maryland should be following?” added MTOC vice-chair Gary Hodge. "Only investment in an expanded, fast, safe and accessible rail transit network will bring our commuters real relief—and build the foundation for Maryland’s future economic growth and competitiveness.”
Ross and Hodge are calling on the General Assembly to pass HB 102/SB 442. This bill would check the Administration’s power to sign long-term contracts with private companies to build and operate new toll highway and bridge projects without the “express consent” of the affected counties—extending the same authority to all Maryland counties that was granted to the nine Eastern Shore counties by the legislature in 1978.
*EBITDA = earnings before interest, taxes, depreciation and amortization