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Is Private Rail the Future for Regional Routes?


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#21 jis

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Posted 07 February 2017 - 12:01 PM

redacted


Edited by jis, 07 February 2017 - 12:22 PM.


#22 Metra Electric Rider

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Posted 07 February 2017 - 05:39 PM

If private operators could make money running trains, wouldn't they already be doing so? Obviously some might still have been had there not been the general downtrend in the post WWII era, but I tend to think not for a variety of reasons.

 

Question for JIS: weren't the early railroad lines in the US (and much of the London Underground) on a similar business model to FEC, i.e. increasing value of their properties?


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#23 jis

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Posted 07 February 2017 - 05:49 PM

If private operators could make money running trains, wouldn't they already be doing so? Obviously some might still have been had there not been the general downtrend in the post WWII era, but I tend to think not for a variety of reasons.

 

Question for JIS: weren't the early railroad lines in the US (and much of the London Underground) on a similar business model to FEC, i.e. increasing value of their properties?

Yep, and a lot of the Japanese private railroads too. Theoretically even the early NYC IRT and BMT systems were for developing properties in the outer reaches, which were unpopulated suburbia at that time, and then so was LIRR.

 

Railraods were initially built for one of two reasons or a combination thereof - Property and Commerce development or perceived needs of Defense and Security.

 

Remember, even our Interstate highway system was justified by needs of National Defense.



#24 Philly Amtrak Fan

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Posted 07 February 2017 - 07:07 PM

There are three possible outcomes as to who pays:

 

1) Federal/State government pays and passes the bill onto taxpayers.

2) Private enterprise pays.

3) No one pays and the trains disappear.

 

I will never be convinced that #2 isn't the best option of the three. Certainly you can argue #2 isn't plausible and our "real" outcomes are #1 and #3. But if the government can encourage #2 I think we're better off. I'm not going to just say spend more of our tax money until the cows come home unless there is a future "payoff" (use your own judgment as to what qualifies as a payoff).


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#25 Carolina Special

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Posted 07 February 2017 - 07:32 PM

If government is substantially paying for part of your income for a "private" service, I would argue that is no longer private rail. The business has to be able to pay for itself with minimal government support. Otherwise the businessman is subject to whatever changes the government makes to the contractual terms when the winds of politics change, which happens fairly frequently. In a business with high fixed costs, like passenger rail, that is a recipe for disaster.

So I can't see private rail working except under rare circumstances that are not repeatable around the whole country.

#26 neroden

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Posted 07 February 2017 - 07:43 PM

We have historical evidence.  If government doesn't subsidize *any* form of transportation, private railroads make a profit on passenger service.  (A fellow showed me the P&L statements from some of the railroads in 1900).  But as long as government is subsidizing the competition -- namely, roads -- it becomes impossible for private railroads to make a profit on passenger service.

 

So you have two options if you want railroads:

(1) Government pays for railroads

(2) Government stops paying for roads

 

Personally I'm fine with either, but I think (2) is not politically practical and hasn't been practical for 100 years, perhaps longer.  The private turnpikes were bailed out and nationalized during the latter half of the 19th century; road subsidies have continuously increased since then, with the "Good Roads" program (which paved Route 66 as an early accomplishment) and then the Interstates. 

 

My Dad remembers the time before they paved Route 66 and the other roads.  His parents driving with a trailer across dirt roads from Los Angeles to San Diego.  The roads were horrible.  No doubt it is better for commerce to have these government-subsidized paved roads, but it's only fair to subsidize the railroads too (something which is also good for commerce).


Edited by neroden, 07 February 2017 - 07:50 PM.

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#27 jebr

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Posted 07 February 2017 - 07:52 PM

How does government encourage private companies to deliver rail travel without spending any money on it? If we can get the same or better level of service from a private rail company as through Amtrak (same fares, same worker compensation, same equipment, same service, or better on any of those) and not have to subsidize it, I'm all ears. But I don't think that's possible by a long shot.

 

I don't buy the premise that using a private company to deliver a government service, subsidizing the private company in the process, is inherently better than having the government run it directly. There may be reasons that it's better to contract it out to a private company, but it would need to be justified, not just assumed that it would automatically be better.



#28 cirdan

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Posted 08 February 2017 - 08:42 AM

 

 

I don't buy the premise that using a private company to deliver a government service, subsidizing the private company in the process, is inherently better than having the government run it directly. There may be reasons that it's better to contract it out to a private company, but it would need to be justified, not just assumed that it would automatically be better.

 

One strong argument for private companies taking subsidies to run a public service lies in the ability to compare.

 

So say company A is running a train on route 1, and company B is running a train on route 2, and both routes are broadly comparable in terms of length, traffic potential, etc.

 

The government is interested in the service being as good as possible, but also in keeping costs down. So there is a trade-off between the two.

 

Now say company A comes up with some innovative way of making the service more attractive. They get down and do some smart marketing for example, or they improve catering, but all in a way that is cost neutral overall. At the same time company B says that doing that would be impossible. Now when the contracts come up for renewal, company B may well lose out and A gets both routes. So the competition situation forces both companies to be on their toes.

 

So effectively you have introduced competition where there wasn't any before. Not because the companies are competing for passengers (they aren't as the two routes are different) but they are competing to be seen as delivering the best value for money.

 

When you have a quasi monopoly, there is a tendency to rest and leave things as they are as there isn't really any direct reward for making small things better..


Edited by cirdan, 08 February 2017 - 08:43 AM.


#29 A Voice

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Posted 08 February 2017 - 10:46 AM

There are three possible outcomes as to who pays:

 

1) Federal/State government pays and passes the bill onto taxpayers.

2) Private enterprise pays.

3) No one pays and the trains disappear.

 

I will never be convinced that #2 isn't the best option of the three. Certainly you can argue #2 isn't plausible and our "real" outcomes are #1 and #3. But if the government can encourage #2 I think we're better off. I'm not going to just say spend more of our tax money until the cows come home unless there is a future "payoff" (use your own judgment as to what qualifies as a payoff).

 

How can the government "encourage" option #2?  Certainly you can contract-out operation of a service for which a subsidy is provided, but that still leaves the taxpayer as the one who's paying.  What possible incentive could a private company have for willingly providing ("paying for") a service on which they lose money?  

 

The "future payoff" lies in providing a public transportation service, much as done for schools, libraries, parks, and other services and facilities which create better, more livable communities but are not things which (generally) are done on a "for profit" basis.  

 

 

 

 

I don't buy the premise that using a private company to deliver a government service, subsidizing the private company in the process, is inherently better than having the government run it directly. There may be reasons that it's better to contract it out to a private company, but it would need to be justified, not just assumed that it would automatically be better.

 

One strong argument for private companies taking subsidies to run a public service lies in the ability to compare.

 

So say company A is running a train on route 1, and company B is running a train on route 2, and both routes are broadly comparable in terms of length, traffic potential, etc.

 

The government is interested in the service being as good as possible, but also in keeping costs down. So there is a trade-off between the two.

 

Now say company A comes up with some innovative way of making the service more attractive. They get down and do some smart marketing for example, or they improve catering, but all in a way that is cost neutral overall. At the same time company B says that doing that would be impossible. Now when the contracts come up for renewal, company B may well lose out and A gets both routes. So the competition situation forces both companies to be on their toes.

 

So effectively you have introduced competition where there wasn't any before. Not because the companies are competing for passengers (they aren't as the two routes are different) but they are competing to be seen as delivering the best value for money.

 

When you have a quasi monopoly, there is a tendency to rest and leave things as they are as there isn't really any direct reward for making small things better..

 

 

Certainly competition can drive innovation and a quest for excellence.  However, for a service which is provided on a subsidized basis is the cost structure really going to be significantly different than it is under a public-run entity such as Amtrak?  As Iowa Pacific has demonstrated the hard way, an improved and upgraded service will attract more passengers but implementing such innovations is hardly "cost neutral".  It requires more money, and thus a greater subsidy.  Assuming the status quo, the cost for private industry to provide the same level of service as Amtrak is also likely to be similar - but the private company expects a profit margin on top of the expenses.  



#30 Metra Electric Rider

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Posted 08 February 2017 - 05:38 PM

I'm not as familiar with European rail construction or Latin America, but certainly in the US the initial railway boom wasn't exactly what would be considered a totally un-subsidized process with land grants, franchises and such.


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#31 dlagrua

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Posted 09 February 2017 - 11:03 AM

I completely understand all the arguments made BUT if Amtrak is the continued solution for providing passenger rail, then the problem of an ever shrinking Superliner fleet must be addressed. Look back at the last 10 years and all of the rolling stock lost to accidents. Point is that there will come a point in the next few years when insufficient equipment to meet demand comes to fruition. Will Amtrak be funded to replace Superliner equipment or will the government turn to private industry to take over some routes?  I believe that it is highly likely that government will turn to the private freight railroads that already own the tracks. Its just a theory but again focus on a severe shortage of equipment and what the solution will be.



#32 jis

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Posted 09 February 2017 - 11:19 AM

I completely understand all the arguments made BUT if Amtrak is the continued solution for providing passenger rail, then the problem of an ever shrinking Superliner fleet must be addressed. Look back at the last 10 years and all of the rolling stock lost to accidents. Point is that there will come a point in the next few years when insufficient equipment to meet demand comes to fruition. Will Amtrak be funded to replace Superliner equipment or will the government turn to private industry to take over some routes?  I believe that it is highly likely that government will turn to the private freight railroads that already own the tracks. Its just a theory but again focus on a severe shortage of equipment and what the solution will be.

I think your base assumption that the Superliner fleet is shrinking over the last ten years is bogus, considering the number of Superliners that were repaired with various Obama instigated funding schemes over that period.

 

Government cannot get out of the need for it to fund LD passenger rail by merely turning to private industry. There is no private industry that will self fund a scheme for losing money hand over fist, unless some other entity underwrites the expected losses. It is a theory based on faulty assumptions so it is a useless theory.



#33 A Voice

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Posted 09 February 2017 - 12:06 PM

Look back at the last 10 years and all of the rolling stock lost to accidents. Point is that there will come a point in the next few years when insufficient equipment to meet demand comes to fruition. 

 

In September 2007, 180 Superliner II cars were in service.  Today, February 2017, 185 Superliner Ii cars are serviceable.

 

In September 2007 there were 239 Superliner I cars available.  Today there are 242.  

 

The number of available singe-level long-distance cars is also expanding slightly with Viewliner II deliveries.  

 

This doesn't exactly support your contention that the car supply is shrinking and will soon be inadequate to meet demand.  



#34 west point

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Posted 09 February 2017 - 02:40 PM

This doesn't exactly support your contention that the car supply is shrinking and will soon be inadequate to meet demand.


You are looking only at the supply side. Let us look at the demand side. Some who has the figures can give us the number of revenue passenger miles for 2007 compared with the 2016. Also the population numbers for all the served areas in 2007 and 2016 ?

Edited by west point, 09 February 2017 - 02:41 PM.


#35 jis

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Posted 09 February 2017 - 03:06 PM

Unless the demand side manages to get their politicians to step upto the plate nothing will change. There is not enough willingness to pay the true cost of providing service without judicious subsidy of required infrastructure in much of the demand side.

 

If passenger rail can be brought on the same footing as roads and air, in terms of subsidizing of infrastructure and core facilities then there is some hope. Not otherwise. And said subsidy is not going to come from the private sector, since they are no charity, but has to come from the public sector, or perhaps from some other country that is sitting on piles of Eurodollars and don;t know what to do with them. Money from public sector or other governments can be leveraged to release significant support from the private sector perhaps, but that is just another form of subsidy. So let us not kid ourselves. Absent that commitment from the government sector, we are where we are w and will remain there.



#36 jebr

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Posted 09 February 2017 - 03:09 PM

There's also not a lot of private companies that own a large stock of passenger rail equipment. I also don't think a private company would buy or refurbish a large number of coaches without a very strong and rather long contract to essentially guarantee they'll have the business for a long enough time to pay for the equipment.

 

Most of the contracting out is for crew only, at least that I've seen. As but one example, Metro Transit (technically the Metropolitan Council) still owns the equipment used on the Northstar line, despite the operating crew being contracted out to BNSF.



#37 A Voice

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Posted 09 February 2017 - 03:21 PM

 

This doesn't exactly support your contention that the car supply is shrinking and will soon be inadequate to meet demand.


You are looking only at the supply side. Let us look at the demand side. Some who has the figures can give us the number of revenue passenger miles for 2007 compared with the 2016. Also the population numbers for all the served areas in 2007 and 2016 ?

 

 

While an interesting statistic, that's not directly relevant to the topic at hand.  The point I was refuting was that Amtrak's car roster is shrinking.  It is not.  

 

Nobody is claiming Amtrak has an abundance of rolling stock; The car supply has been limited since the 1970's and that's unlikely to change.  Even where greater demand exists, there is still generally the same supply of equipment for about the same size train as ten tor twenty years ago.  With (increasing) variations, Amtrak generally has long run long-distance trains with a "standard consist" of 3-5 (often four) coaches and 2-3 (often two) sleepers.  Again, the car supply is not shrinking but stable; There is no looming shortage of cars and locomotives to operate the long-distance network as it currently exists.  


Edited by A Voice, 09 February 2017 - 03:25 PM.


#38 jis

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Posted 09 February 2017 - 03:31 PM

I would say that the NEC has seen significant infusion of equipment in the last 20 year timeframe, with the Amfleet stock remaining about the same, the electric engines (serviceable) going up slightly, and 20 additional Acela sets. This will be further augmented by the Acela II sets in the next 5 or so years.

 

Also, California has added significant rolling stock in the last 20 years as has the Cascade Corridor.

 

Situation remains pretty static in the LD sector and Midwest, pending the deployment of the new diesels and bi-levels whenever that might happen, and of course the much awaited Viewliner IIs too. The Baggage Cars were essentially one for one replacement, as will be most of the Diners (net 5 or so addition AFAICT). The Sleepers and Bag Dorms will be net add.

 

NEC has also added and renewed massive amount of rolling stock through the Commuter Agencies over the last two decades, as has California and to some extent Chicago.


Edited by jis, 09 February 2017 - 03:32 PM.


#39 A Voice

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Posted 09 February 2017 - 03:47 PM

I would say that the NEC has seen significant infusion of equipment in the last 20 year timeframe, with the Amfleet stock remaining about the same, the electric engines (serviceable) going up slightly, and 20 additional Acela sets. This will be further augmented by the Acela II sets in the next 5 or so years.

 

Also, California has added significant rolling stock in the last 20 years as has the Cascade Corridor.

 

Situation remains pretty static in the LD sector and Midwest, pending the deployment of the new diesels and bi-levels whenever that might happen, and of course the much awaited Viewliner IIs too. The Baggage Cars were essentially one for one replacement, as will be most of the Diners (net 5 or so addition AFAICT). The Sleepers and Bag Dorms will be net add.

 

Interesting thing about the Viewliner II order is that the "net add" cars still just get us back closer to the numbers before most of the Heritage fleet was withdrawn (much without direct replacement) in the 90's.  Amtrak had, off the of of my head, about 85 10-6 Heritage sleepers replaced by just fifty Viewliners; At least we'll get back to 75.  The single-level baggage-dorms were retired years ago, replaced by Heritage sleepers, then removed altogether without replacement.  So we get ten back, for two trains.  

 

More new equipment to meet increasing demand (and offer new services, etc.) would be wonderful, but the discussion we need to be having is not what could be, what we'd like to see happen, or even what we fear could occur.  The discussion that needs to happen is specifically and in detail exactly how we get Congress to pay for fleet expansion.  



#40 jis

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Posted 09 February 2017 - 04:15 PM

Exactly. I completely agree with you. And as you can see above, my concern is that the more time we spend on fantasies about private industry paying for the whole shebang the less we talk about the reality of what needs to happen tog et more equipment.






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