End of the Line

Transportation Minister Wolfgang Tiefensee announced the decision after a crisis meeting in Berlin on Thursday, March 27, at which industry representatives reportedly revealed that costs had risen from 1.85 billion euros ($2.9 billion) to well over 3 billion euros.

"The federal government is not prepared to increase its contribution," Tiefensee said. "We had to conclude that it is not possible to finance this project."

Death knell for mag-lev technology?

Industry observers say that without a showcase project in Germany for one of the world's fastest trains, the technology devised by engineers at Siemens and ThyssenKrupp is unlikely to have much success abroad.

The Transrapid technology has currently only been used commercially in China. Another plan to build a magnetic-levitation monorail link between Hamburg and Berlin has already been scrapped. A crash that led to 23 deaths on a test stretch in 2006 was caused by human error, but it was clearly a severe PR setback for Transrapid.

Mutual blame game for the failure of the project

The firms involved in the Munich project have blamed each other for the runaway costs. Siemens CEO Peter Loescher indirectly attributed it to construction industry partners Hochtief, saying that his company and ThyssenKrupp had kept to the guidelines. Thyssenkrupp officials said they were not "responsible" for Hochtief's figures.

Hochtief rebutted these accusations, saying it had not been involved in the 2004 estimate.

"This is the first time that we have had a proper overview of the cost situation," a company spokesman said.

He added that the company had ascertained that it was not possible to implement the project for 1.85 billion euros.

The German government had agreed to bear half the cost for the train line, but up to a maximum of 925 million euros. The state of Bavaria had earmarked 500 million euros -- with German state railways Deutsche Bahn, the airport, the European Union and the two companies involved making up the remainder.

Bavaria's pride and joy

The project was announced last year by then Bavarian Premier Edmund Stoiber just before he stood down as head of the southern state's conservative party in September and many observers saw it as a "parting present" from Angela Merkel's Christian Democrats to the CSU, the CDU's Bavarian sister party.

Bavarian Premier Guenter Beckstein said he had lobbied hard to persuade the federal government to increase its contribution, but to no avail.

"This is a bad day for Germany's image as the home of high-tech industry," Beckstein said.

The Transrapid project would have trimmed the current 40 minute journey from Munich to the airport down to 10 minutes -- and had been billed by many as a coup for the prosperous southern German city.