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When Cities are bigger and trains faster, passenger lines will earn good enough profit.
You can also help the train line by connecting bus stations from smaller cities directly to the train terminal in the larger cities. This will increase the total population with direct access to the train line.
Be careful with circular routes. Since payment is based on straight line distance from where the passenger gets on and off, not on the distance the train travels, riders will skip stations. This can prevent new riders from getting on.
Train maintenance costs are fixed, so you want your trains to do as many revenue trips as possible to cover that and get some profit. That means eventually double tracking and converting tracks to high speed (including the old bridges to newer ones) and straightening tracks as much as possible, even if it means building tunnels and bridges.
Now, faster trains are more expensive to maintain, and take longer to take advantage of their maximum speeds, so you will want to have stations further apart, especially for high speed trains such as the Shinkansen.
Usually, the most profitable and efficient way to design lines is point-to-point.
Sequential lines with multiple stations can work and can be profitable, but they often suffer from low ridership at the ends, and overcrowding in the middle sections, plus passenger bouncing (going to the terminal and then backtracking), which does reduce revenue. Same for other "realistic" setups such as one track lines, elaborate station approaches and junctions, etc.
Very long bus routes (inside 1 city) ALWAYS lose money and ALWAYS have a stop that is overcrowded,
Overcrowded stops harm city growth, the longer the route the more vehicles you will need to combat the overcrowding, this leads to many buses running near empty for most of the route and full for a very small part of it.
A 10-15 stop route may need an extra 5 buses to cope with that 1 hot-spot ... a 4-6 stop route will be okay with maybe an extra 1 or 2
Bus stops to be no more than 2-3 road segment apart.
Routes should only run in one direction, (unless they are point A to point B for example, City centre to city centre,) 1 route clockwise 1 route counter clockwise.
INTERCITY ROUTES :- Trains or buses should only have a maximum of 3 cities.
Some cities are bigger than others and some grow more or some have better access to the bus or train station, so the demand can vary greatly.
routes should be like so :- A-B-C : C-D-E : E-F-G : G-H-J ECT.
This allows you to target your resources to where the demand is, and only to where it is needed most.
Hope this was helpful, if it was please say so, thank you for reading
The longer answer is that you can make local lines somewhat profitable, at least sometimes and on lower difficulties, but it's probably not worth the trouble because a local line at best might - might - net a few hundred thousand with late-game vehicles (and at that probably only on lower difficulties) whereas a halfway decent intercity line is probably bringing in at least an order of magnitude more money, and even on Medium and maybe Small maps your best line could be at least another order of magnitude beyond that, so what goes on with the local lines is probably trivially insignificant.
Regardless, if you want to try making local lines turn a profit, it's the same basic rules as for intercity routes, except with much tighter margins and lower gross income. Create fast, direct routes between stops; match line capacity to demand as well as you can (local lines, especially in larger cities, will often benefit significantly from being set up as point-to-point shuttles rather than as multi-stop routes); spread the stops out as much as you can while still covering everything you want to serve and without making walking time great enough to render public transit unattractive.
It also bears mentioning that intercity lines can create something of a feast-and-famine cycle for intracity lines, particularly if your intercity lines lean more towards high-capacity low-frequency setups, and this can be deceptive if you're judging whether or not your local services have sufficient capacity by the number of passengers you see waiting or whether or not they're in profit when you do a spot-check.
In the final analysis...
TF2 SUX!
Get railway empire. Much more fun. Makes more sense.
TF2 bites!
Make sure lines operate full and use lanes to give your vehicles priority.
Losses or profits are in general small, and usually it does not pay off to spend too much time designing such lines, due to that and continuous city growth. They are first and foremost feeders to long distance lines.
Touche'
To answer your question: It doesn't it's a railroad sim hence the name.
TF2 no matter how hard it tries to be a Transport game (not even close to a sim) what it's real focus is is railroads and it utterly fails at that IMO.
It does however (to give it its due) do a fairly good job with trucking, ships, and airplanes. Unfortunately I didn't buy TF2 to fiddle around with trucks, ships and planes I bought it for trains. Trains are well done; however, the economic model they operate in is utter nonsense.
According to one of your older posts, you uninstalled this game? Not sure why you waste your time here if you do not like the game and do not play it anymore and only have negative things to say about it.
And in any case, while the objective is the same, the gameplay between the two is very different.
Railway Empire focuses on the golden age of trains only. As per the post above, TpF 2 has quite a bit more to offer in regards to transportation. Add to that a much better and in-depth building tools and, of course, mod support, which enables this game to be also played as a rail modeller and/or city builder.
If performance issues are a concern, use fewer cities, population reducing mods, and/or the No Town Development mod.
The few advantages of RE over TpF is a simpler and quicker game to play, no agent driven system so if your computer is a potato I do suppose it would be easier to build huge developed systems there, subsidiaries and technologies, and AI competition.
How is it much different and "worse" than RE in regards to railways?
Large stations in RE are nothing to talk about. You can design pretty flexible (and very tiny all the way to monstrous) setups in TpF 2.
RE tracks are simpler to build, but much less flexible.
The only thing it has going to it are water tower stops and the occasional train breakdown. And (horrendous) crew management, which I could not care less anyway.
Also, RE has no mod support. It does have a decent amount of vanilla trains, but that is it, and given its gameplay ends at 1930, as mentioned, they are all steam trains and a few early diesel locomotives, not even modern conteporary trains to begin with.
Go back and read some of my older posts about my thoughts on the economic model and you will be enlightened.
I have uninstalled TF2 after about 150 hours of play time hoping that the devs would fix it and actually create a decent Tycoon style railroad company game. Alas they haven't and never will probably.
As to why I visit the forum - see above - I still have hope that someday the devs will replace the current economic model with something that actually makes sense. The best way to find out if the model has been updated to a semblance of something that makes sense is to visit the forum.
I do also want quite a more features in that regard, something more akin to A-Train (which has the best economic model of a railway sim, IMO) though, instead of RE.
As per the developers, I am not sure if posts like "TpF 2 sux" would catch their attention, in a good way.