The economics of traffic congestion favor a private sector solution.
The economic savings that QwikLane makes possible can be favorably shared among investors, system users, other commuters and local governments. System users will save on fuel consumption and vehicle wear in an amount that will exceed the cost to use the system; in addition, their overall commute time will be reduced, more productive and safer. Other commuters and truckers will benefit to the extent system use reduces congestion and shortens trips. Local governments benefit by receiving right-of-way fees (and savings from reduced need for highway expansion); these
fees can be redirected to highway maintenance, mass transit support, general needs or tax reduction. They can also claim political success in reducing traffic congestion, pollution and greenhouse gas emissions, and for improving average fuel consumption and highway safety.
The economics of QwikLane compare favorably with recent experience with toll roads. By providing a cost-effective means to avoid traffic, QwikLane makes possible huge savings in congestion-related costs and a substantial portion of this savings can be realized by investors. Recent experience with toll roads has shown that over 30% of commuters in heavily congested areas are willing to pay over $0.25 per mile to avoid delays. If just 5% of commuters use the QwikLane in a typical transit district at average prices of $0.15 per mile, the cash flow forecast is positive after debt service. The annual revenue at this level of usage is 25% to 33% of the system cost. Lenders have shown a willingness to issue debt for toll systems at a level of 10 to 12 times annual revenues; since the cost of the QwikLane is projected at only 5 times annual revenue (where 5% of commuters are accommodated), the potential for substantial debt financing is promising.
The potential returns rise rapidly with greater system participation. Since 5% participation would not even keep up with the added growth in commuters over the coming years, the incentive will remain strong for non-participants to acquire conforming vehicles over time to gain access to the system. Participation could rise to the 25-40% range before non-system congestion is largely eliminated. Yet at this level the system would be far from its peak load capacity. Since the operating costs of the system are low and the marginal cost of each additional participant trip is near zero, higher levels of usage could be very profitable.