Adelaide’s rail and tram services are to be transferred back to the South Australian government, scuttling the previous government’s privatisation plans.

The government said on Monday that train operator Keolis Downer Adelaide (KDA) and tram operator Torrens Connect (AMO) will hand back operational functions by January 2025 and July 2025 respectively

The former government privatised tram services in 2020 and train services in 2021 under separate contracts, each for an initial eight-year term with an option to extend to 10 and 12 years respectively.

The government will invest some $15 million a year under an ‘alliance model’ over the next two years as it gears up for full operational control of the train fleet, along with around $3 million in transitional arrangements for tram services.

“There is no requirement under these arrangements to pay termination costs to the operators – who indicated that under an immediate termination scenario they would seek immediate compensation costs totalling more than $94 million,” the government said.

Agreement reached

Public transport operator KDA, which was awarded a $2.14 billion management contract for Metro Rail in January 2021, confirmed over the weekend it had reached an agreement with the state government paving the way for the Adelaide Metro Passenger Rail Network (AMPRN) to return to public hands.

Under the agreement, operational functions for drivers, operations control, network and timetable planning will return to the government by January 31 2025, with customer service and security management to go back by June 2027.

Keolis Downer will continue to manage fleet and infrastructure until June 2027 and it will continue to advise the government on customer services and network innovations on an ongoing basis.

Torrens Connect, which will continue to provide tram fleet and track maintenance services until 2035, will return tram operations, including drivers, operations control, customer service, network and timetable planning to government hands by 31 July 2025.

Transport minister Tom Koutsanonis told reporters that instead of delivering $118 million in savings, the privatisation of the metro rail network would have cost up to $120 million over its term

He said this was largely because more than 130 rail staff who didn’t transition to the private sector remained on the public payroll.

Partnership to continue in different form

KDA’s partnership with the government wasn’t ending but would continue in a different form, Keolis Downer CEO Julien Dehornoy said.

“As a public transport operator, our objective will always be to partner with governments to provide services that are safe, performant and deliver a positive passenger experience,” Mr Dehornoy said in a statement.

This agreement did not reflect on the performance of Keolis Downer Adelaide (KDA) under its existing rail contract, the company said.

Keolis Downer also operates Yarra Trams, the Gold Coast light rail network and more than 1,300 buses across NSW, WA, SA and Queensland, as well as on demand services between Newcastle and Lake Macquarie.

Adelaide Metro Rail carries 15 million passengers every year and services 89 stations.

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