Privatize Amtrak

Discussion in 'Amtrak Rail Discussion' started by TWA904, May 29, 2011.

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  1. May 29, 2011 #1

    TWA904

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    I wish I had the the means to purchase Amtrak. I believe it can be run at a profit.

    Just for starters New York would have to pay for the trains they receive like Virginia and several states do. They can either pay their share or lose service. On the NEC anything less than a 30% load factor gets cut. No airline would continue a flight with a 30% LF.

    I got some great ideas for the LD trains, but I wont give them away here. The only thing I'll

    say about LD plans is I'd return the SL to daily status and run ith to either Tampa or Miami.
     
  2. May 29, 2011 #2

    Devil's Advocate

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    Is this belief based on anything in particular? To my knowledge no large scale passenger rail network has ever run at a true profit. From what I've read if you expected airlines to pay their own way (airports, guidance and positioning systems, air traffic control, etc.) or trucks to pay their own way (highways, bridges, overpasses etc.) then none of them would have ever operated at a true profit either.

    From what I understand trying to bully states into paying Amtrak for current service hasn't turned out so well thus far. Amtrak still isn't in the black and several states have lost service they once had.

    That would depend on the situation. New service might involve low loads for the first few years. Subsidized flights that end up with a 30% load factor would still be run if the subsidy is high enough or if it's part of a contract that is in a net positive overall.

    I don't see how an LD plan that's designed to make money would waste any of it on the Sunset Limited. Union Pacific will have a lot more clout than whatever you can cobble together from Amtrak's remnants and they will continue to hold your for-profit trains hostage to their freight traffic. All you'll be able to do it watch them get away with it.
     
  3. May 29, 2011 #3

    rrdude

    rrdude

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    C'mon! "....Give your LD ideas..." away here, we don't have any plans of our own, and really want yours!In fact, I'll pay you 100 AGR points, so you won't have to give them away. You are killing us by keeping these pearls of wisdom to yourself. Please share.....
     
    Last edited by a moderator: May 29, 2011
  4. May 29, 2011 #4

    had8ley

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    We can run the numbers anyway you want but realistically just who wants the responsibility , not to mention liability, for the heaviest traveled part of Amtrak. If there's a profit there it will be well earned at the expense of the pax~ "carry-ons are now $50 for the first piece and bicycles are $75 a piece." Don't think we want that mentality on the rails.
     
  5. May 29, 2011 #5

    MikefromCrete

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    Come on, give your ideas for LD trains. I mean it's not likely you'll be able to purchase Amtrak and actually put your ideas into operation. Let us chew thing around and make those ideas even better.
     
  6. May 29, 2011 #6

    transit54

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    If Amtrak could be run at a profit, a private corporation would step in and do it. To my knowledge, Amtrak has no monopoly over passenger rail service in the US (there are certainly many commuter rail outfits, tourist trains, and the Alaska Railway that run passenger rail without any involvement from Amtrak). If it was profitable to run passenger trains, companies would step in and run them. The problem is, it's not. I don't think there's a single Amtrak route with 30% LF. You can get all these numbers in the Amtrak performance reports, available on their site. If Amtrak was such a poor, inefficient rail operator, why do states select them to run their state-subsudized trains and their commuter railroads? They could easily go elsewhere - Virginia Railway Express switched to a private operator not too long ago (but at the same time, Metrolink switched from a private operator to Amtrak).

    Rep John Mica has a proposal to privatize just the NEC, which is being discussed here. You can also see my blog for a lengthy discussion of why this is a deeply flawed idea, as well as why Amtrak couldn't be run by a private operator.
     
  7. May 29, 2011 #7

    Shanghai

    Shanghai

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    Thank you for an outstanding and informative position paper on Amtrak and

    passenger rail in America. Exceptionally well written with significant

    factual data. I hope Rep. Mica reads and understands it!!
     
  8. May 29, 2011 #8

    Eric S

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    So, under your plan, if New York does not pay up, trains on the NEC would run non-stop from Newark to Bridgeport (assuming NJ & CT also pay)? That will sure do wonders for ridership.
     
  9. May 29, 2011 #9

    AlanB

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    Under the last major legislation enacted by Congress, NY is going to have to step up to the plate in a few years and put their money where their mouth is. They keep applying for fund to improve the Empire Corridor, but within another 2 or 3 years they will have to start covering the losses of the Empire Corridor or watch the train disapear.
     
  10. May 29, 2011 #10

    TWA904

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    RRdude wanted an idea, looking at the schedules, The Adirondack and Mapleleaf leave NYC an

    hour apart, one heading to Montreal and the other to Toronto. I realize Boston is a little further, but why not run one from Boston, meeting in Albany. You open up many new city pairs

    from Boston and western Mass. to Montreal, western NY and Toronto and back to Boston.

    Also, some members of Congress complain because the subsidy to Amtrak works out to about $50

    or so per person. Yet I don't hear anyone complaining when subsidies in the Essential Air Service program work out to $200 per person. When I worked for a regional airline, many of our routes were EAS routes.
     
    Last edited: May 29, 2011
  11. May 29, 2011 #11

    GG-1

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    Aloha

    A perfect example is the Desert Wind between Los Angeles and Los Vegas.
     
  12. May 29, 2011 #12

    Guest

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    Amtrak LD trains can be run with a profit. However the cost to get Amtrak in condition to be profitable is very high.

    If I had $10 Billion, I could make Amtrak profitable.
     
  13. May 30, 2011 #13

    The Journalist

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    I'll leave the specifics as to why privatization is a bad plan to others who are more knowledgeable of the subject (really, the counter argument seems to be well summed up by "look at what happened in Britain") but all this talk has left me wondering: Is there some actual hurdle to someone (some eccentric billionaire or something) or some company buying out Amtrak? Not a business or financial hurdle-obviously there's no good reason to do that as a business plan-but legally and operationally? Who actually owns Amtrak's "stock" as it were, and could somebody buy it and control the company? I'm not suggesting this to be likely or even plausible, but is it even theoretically possible? This is pure curiosity...I'm not suggesting anyone actually try to do this or saying it should be the plan for "privatizing."

    Unrelatedly, I sure say "some" a lot...
     
  14. May 30, 2011 #14

    TWA904

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    From the 2010 Amtrak Report on Internal Control Over Financial Reporting-

    Perferred Stock of $100 par value, 109,396,994 preferred shares authorized and issued as of Sep 30, 2010 owned by the U S Dep. of Transportation.

    Common Stock $10 par value, 10,000,000 shares authorized and 9,385,694 oustanding as of Sep 30, 2010.

    55.8% of the Common stock is owned by American Premier Underwriters, Inc through its corporate

    predecessor Penn Central.
     
  15. May 30, 2011 #15

    Green Maned Lion

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    God help Amtrak if someone used pure load factor as a live or die metric. Low load trains often serve important functiOns such as augmenting the overall health of the system.
     
  16. May 30, 2011 #16

    stntylr

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    Here's a passage from a Congressional Budget Office report which gives some explanation of Amtrak stock

    Ownership. The first claim to any profit that Amtrak might earn is held by the Secretary of Transportation, who owns all preferred stock in Amtrak. Some of today's freight railroads hold common stock certificates, which could be interpreted as giving them nominal ownership of Amtrak. (Those certificates were issued to the railroads as compensation for some of the rolling stock and lines that were used to form Amtrak in 1970.) However, those common shares convey virtually no benefits to the holders. Amtrak does not produce any earnings or dividends and does not convene an annual meeting of shareholders.
     
  17. May 30, 2011 #17

    TVRM610

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    If you ever do have the means to purchase Amtrak I might suggest you try purchasing a profitable freight railway like CSX and then see what it would take to begin passenger operations on desired lines. That would make a bit more sense in my book then trying to turn the entire Amtrak system profitable.
     
  18. May 30, 2011 #18

    D.P. Roberts

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    1) The whole point to privatizing passenger rail in the first place was, as I understand it, to have the government run it precisely BECAUSE the private sector could not turn a profit with it.

    2) The whole point to having a government-run, not-for-profit passenger rail system was supposed to be that it was in our country's best interest to serve as many communities as possible with passenger rail, even if it loses money.
     
  19. May 30, 2011 #19

    George Harris

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    The first thought that comes to mind is, "Fools rush in where angels fear to tread."
     
  20. May 30, 2011 #20

    jphjaxfl

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    Great post, George! My feelings exactly. We both remember what the last few years of privately operated passenger trains was like. While a few railroads, continued to do a good job, many did everything they could to chase passengers away.
     
  21. May 30, 2011 #21

    transit54

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    To this point, I was reading the Amtrak 40th anniversary book, and one of the individuals interviewed mentioned that only two people who were in congress at the time of Amtrak's creation are in congress today. So there's really no institutional memory of when passenger railroads were privatized.

    That being said, I haven't seen any serious proposals that privatize Amtrak, as it exists, in the last few years. Instead, all I've seen is proposals to strip away the NEC, which is just a thinly veiled proposal to isolate Amtrak's northeast constituency in attempt to undermine political support for, and ultimately eliminate, Amtrak.
     
  22. May 30, 2011 #22

    GP35

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    This is how Amtrak could turn a profit.

    Lets take one route for example, EB route.

    I would run 2 trains per day in each direction 12 hours apart. By doing Amtrak could gain short

    family day trips. For Example a family in Whitefish to Spokane and back the same day. I could

    see a lot of this happening between many combination of cities along that route. I would increase

    coach seating by at least 3. I would have 10 sleepers per train and make them slightly more affordable.

    Longer train, more snack lounges.

    These changes might get Amtrak close to breaking even.

    Next Amtrak would need to look outside of trains for revenue. The train station. Of course the traditional waiting

    room structure drains money. So make it profitable. A combination small hotel and restaurant train station owned and

    operated by Amtrak. Inside the hotel station maybe a local pub, a club with live music, a casino. No, I don't mean MGM casino.

    Something small, two dozen machines at most if the state allows it. The point is, even if someone is not riding the train,

    that person could still visit the station and spend money. Some small cities could use a visitors information and gift shop offices.

    Locate it inside the hotel station. Meeting rooms and convention rooms.

    Imagine the EB route with these types of hotel stations along with the family day trips or weekend trips. The EB route would turn a profit. This would work on all LD routes.

    But like I said, it would cost 10 billion to set it up.
     
    Last edited by a moderator: May 30, 2011
  23. May 30, 2011 #23

    had8ley

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    had8ley

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    I think this was a no brainer...the former contractor was the responsible party for the engineer texting and killing those people in Chattsworth, CA I think the people of CA would have boycotted the trains if Metrolink stayed with the offending company.
     
  24. May 30, 2011 #24

    had8ley

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    had8ley

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    Well said my friend. My thinking has the Class 1's standing in the wings, while their lobbyists actively pursue, the demise of the LD train as we know it today. The pittance that it adds to the coffers of these billion dolaar outfits makes Amtrak seem like a mosquito that won't go away. Perhaps shedding the heaviest ridden part will make the rest just fall apart and fall by the wayside. I do know there are some who are sweating bullets on just how to pay for the current car order. Might be great ammunition for the nay-sayers if Amtrak welches on some of the orders...
     
  25. May 30, 2011 #25

    transit54

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    Oh, no doubt they had to ditch Connex. But they could have brought in Veolia or a different private operator or taken over the operation themselves if Amtrak wasn't an appealing choice.
     

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