Outlook: Why the railways could yet prove to be Labour's Waterloo

BA off course; Driving test

However fraught the journey back into work was yesterday, console yourself with the knowledge that Richard Bowker's return to the office was probably a lot worse. The chairman of the Strategic Rail Authority has come back to an in-tray positively overflowing with problems. Mr Bowker's train set is not working, a fact that 80,000 Waterloo commuters were painfully reminded of once again yesterday, and he has run out of money to fix it. Fares are going up by twice the rate of inflation but there is no improvement in services to match. In fact, performance is so poor on some of the country's busiest suburban and intercity routes that Network Rail cheerfully admits it will take the rest of the decade to get back to pre-privatisation levels of punctuality.

Mr Bowker and the train operators would like at least to have eased the discomfort of passengers by introducing more hi-tech, air-conditioned rolling stock. But someone forgot to tell Network Rail that this would require an upgrade of the power supply in the southern half of the country.

As for a 140 mph train service to Glasgow, or even a 125mph one for that matter, making the airline shuttle a poor second to rail as it quickly became in France, forget it for another five years.

In short, the "quick wins" that Mr Bowker promised when he took over at the SRA from Sir Alastair Morton two years ago look few and far between while the long-term plan looks even more elusive.

Mr Bowker and His Master's Voice, the SRA's irrepressible director of communications Ceri Evans, have not gone out of their way to win friends and curry favour, describing the Rail Regulator Tom Winsor as a supermarket price checker, Network Rail as an alcoholic and the country's second biggest train operator as second-rate.

But at least Mr Bowker had the support of those who mattered, his political bosses. Not, perhaps, for much longer. The Transport Secretary Alistair Darling appears to have tired of Mr Bowker's sticking-plaster approach to the railways and has decided to take matters into how own hands. The SRA has been banned from issuing its annual plan, which makes it look like a strategic authority without a strategy.

It is all ominously reminiscent of the collapse in relations between Mr Bowker's predecessor and the last Transport Secretary and, if history is any form guide, then Mr Bowker may not have much longer in the job.

Whether Mr Darling and his civil servants are any better qualified to run the railways than Mr Bowker and his officials is a moot point. But what it demonstrates is how desperate the Government is becoming as another election looms. Transport may yet prove Labour's Achilles' heel as it reaches the poll. Mr Darling might respond that fewer than one in ten of us travels by train but that it is not the point. A Government which cannot operate an efficient railway looks like one which cannot run anything properly.

Seven years on, it is no longer good enough to blame a botched Tory privatisation for the mess which the railways have become. Since then, Labour has had its own revolution, replacing Railtrack with a state-run network operator and turning half the passenger franchises into management contracts. The experiment has not worked and it is not good enough to shoot the messenger in the shape of Mr Bowker.

BA off course

This is your captain speaking. British Airways flight 223 from Heathrow to Washington has finally taken off. Unfortunately, there has been a further delay in our financial recovery. Rod Eddington must sometimes feel like he is starring in the airline version of Groundhog Day. Every time BA's chief executive announces another bumper year for cost savings, along comes one more piece of bad news to send him back to where he began. First it was September 11 followed by economic stagnation. After that came Sars and war in Iraq and now it is back to terrorism.

Since two hi-jacked jets struck the twin towers and changed aviation for ever, BA has taken £1.7bn out of its costs but it has lost £1.9bn in revenues at the same time. In so much as it will have an impact, the latest terrorist scare is bound to make passengers less inclined to fly, if only those whose travel is discretionary. Armed sky marshals are likely to deter as many people as they reassure.

Further out, who can say what effect greater bureaucracy, longer check-in times and more elaborate safety procedures will have on our willingness to fly as opposed to taking some other form of transport.

BA's latest cost reduction programme, to be unveiled later this month, will be more modest than those which have gone before, if only because the easy cuts have already been made. Nor will it be accompanied by the same root and branch review that preceded the Future Shape and Size Programme.

In some ways, this is a missed opportunity. Although BA has shed more than 12,000 staff in the past two years, it still employs more people at its Waterside headquarters alone than the whole of Ryanair and easyJet put together. And while it is safely back in the FTSE 100 after one of the more aggressive restructurings among European flag-carriers, Ryanair is worth 40 per cent more.

BA claims to have taken the fight to its low-cost rivals, but it has been a half-hearted affair. The proportion of short-haul economy passengers booking through the web with BA is half that of the no-frills airlines.

Faced with an endemically loss-making European network, the remorseless rise of the budget carriers and the promise of a recovery on transatlantic routes, where it is truly a competitor to be reckoned with, BA has an historic opportunity to transform itself into a premium-class long-haul airline. The fact that Heathrow will not have a third runway until at least 2015, making its slots even more valuable, provides the incentive. An airline which was once called BOAC provides the example.

Driving test

Test drive one, get one free. Well. Not quite. But General Motors' giveaway of 1,000 cars to anyone who walks into a US dealership and is lucky enough to press the right button is a good indication of how keen the world's biggest motor manufacturer is to recapture lost ground in its back yard.

The Japanese manufacturers Toyota, Honda and Nissan have crept into the US market and eaten the lunch of the big three American car makers while they have been obsessed with developing sports utility vehicles and pick-ups. Foreign marques now account for four in ten cars sold in the US, compared with less than a quarter 20 years ago. Hence GM's latest marketing promotion and the tonne of new metal on display from the likes of Ford and Chrysler at this year's Detroit Motor Show.

But if the latest annual survey of the world automotive industry by KPMG is any guide, the Japanese are not about to be driven out of town easily. The increasing importance of product quality as opposed to styling and ride characteristics plays into Japanese hands. And their US transplant factories do not carry the same amount of baggage as established American manufacturers in the shape of ageing workforces, higher pension costs and increased healthcare liabilities.

Not only are the big three US makers being outmanoeuvred in their home market, but the rejuvenation of Nissan and the continued superiority of Toyota mean that Asian car makers are likely to take a bigger share too of non-US sales.

If there is a glimmer of hope for America's big three, it lies in the burgeoning Chinese market with its expanding middle class and nascent credit culture. This offers them the opportunity to wipe the slate clean and escape from the rut they find themselves in at home. What's good for General Motors is good for China? Somehow, it doesn't have quite the same ring.

michael.harrison@independent.co.uk