6.3 - Service provider revenue

Basis

This section describes the revenue information to be included in a financial analysis where a proposal generates revenue. The processes for calculating revenue of an improved service is different from that for a new service. The processes are given below.

GST

All revenue shall be exclusive of GST.

Existing services

Where there is an existing service, it is the increase in service provider revenue that is used in calculating the funding gap, as the funding request to Land Transport NZ will be to facilitate the improved service rather than to fund the existing service.

Using the demand estimate information generated in chapter 4, calculate the change in service provider revenue.

Change in service provider revenue  =  (Q_new x P_new )  − (Q₁ x P₁)

where:

P₁ = base average user charge

P_new = proposed average user charge

Q₁ = current annual patronage

Q_new = projected annual patronage

New services

For a new service, the projected number of new users is multiplied by the proposed average user charge to give the expected annual service provider revenue from a new service.

Using the demand estimate information generated in chapter 4, calculate the annual service provider revenue.

Annual service provider revenue  =  (Q_new x P_new )

where:

P_new = proposed average user charge

Q_new = projected annual patronage