Abstract:
In December 1999 Skytrain, the first rail mass transit line to be financed, built and operated by a private company in at least 50 years, opened in Bangkok, Thailand. Skytrain's owners had a concession from the Bangkok metropolitan government to build and operate the line for 30 years. Opening the US$1.3 billion line had required Skytrain and the government to overcome many obstacles. But several months after the opening, the line was carrying only one-third the ridership projected and the owners were in serious financial difficulty.
Learning Objective:
The case is designed to stimulate a discussion of what types of public services are most suitable for private provision and what to do when a private project encounters difficulties. Skytrain was an extraordinarily risky project from the point of view of investors, and many of the risks were beyond their control. The government had a large stake in Skytrain's success, but it was not in a good position to help the investors with many key problems.
