Ferronales 2.0: Are Passenger Trains Returning to Mexico?

Ferronales 2.0: Are Passenger Trains Returning to Mexico?

Autor: Alemán Castilla, Benjamín; Rodríguez Pueblita, José Carlos

Área Académica: Entorno Económico

Clave: EE-24-eC-02

Formato: PDF

Tipo: Caso

Año de publicación: 2024

Idioma: Inglés

Tema: Investment and Feasibility Challenges

Número de páginas: 11

Fecha de revisión: May 2024

Origen: IPADE

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This case examines the Mexican government's initiative to reintroduce passenger train service, highlighting its economic impact and the associated challenges for freight rail concessionaires. Through the November 2023 presidential decree, these companies are encouraged to submit proposals for the implementation of passenger services on specific routes. The analysis focuses on the financial viability of adapting existing infrastructure for dual use without guarantees of state financial support. This scenario poses significant dilemmas in terms of initial investment, operation and maintenance costs, and potential effects on the profitability of existing operations. The possibility of military intervention or entry of new players if existing companies do not adequately respond to government demands is also discussed. The case uses a cost-benefit analysis approach to assess the economic implications of this policy and its alignment with national development and sustainability objectives.