URPA Newsletter

[MrFSS]

This Week at Amtrak

Companion Publication to The Business and Politics of Passenger Rail

By D&D Carleton

 

Proofreading: Black Bear Wordsmiths ([email protected])

Volume 8, Number 10

​

From the Editors…

With the same assurance as the sun setting in the West, once again all of Amtrak's perpetual financial woes are blamed on its long-distance trains.

Oh, really?

"Ducking this issue calls for real leadership." - Springfield Mayor "Diamond" Joe Quimby, The Simpsons

Passenger rail ridership is up, of this there may be no doubt. Using the rudimentary yet flawed number of "riders," Amtrak carried 28.7 million people in fiscal year 2010. This year should be even higher. Of course, now-a-days Amtrak never discusses "passenger miles" or "revenue per passenger mile" but this was not always the case.

Even so, when questioned by Congress as to why increasing "ridership" did not correlate to a drop in losses, the standard chestnut was brought out one more time, "It's the long-distance trains," said Amtrak President Joe Boardman. "They're all unprofitable." Oh, really? We have all heard this before, but how long will this broken record continue to play?

For many, the long-distance trains are the perceived final connection to an earlier era. Many a parent has packed up his family for an overnight trip with the proud exclamation, "We're going to 'Travel in Pullman Safety and Comfort' like our grandparents did." Obviously, there are no more open sections or drawing rooms. If there is an observation car it is privately owned. Oh, and when was the last time someone shined your shoes for you whilst you slept? Today's long-distance train is a mere shadow of the former glory that once was the grand conveyance. Whereas average citizens could not afford fine linens, china, and silver service, these were commonplace for all who frequented the dining car; it was their chance to live like royalty, if only for a few hundred miles. Do today's trains even come close to emulating such an emotion? Alas, such only exists for those who remember when, or who have studied the subject.

Things behind the scenes have changed, as well. Even into the early Amtrak days, long-distance reservations still used the old tried-and-true drum system. Dozens of agents sat around a rotating metal carousel with compartments containing train accommodation diagrams, while talking to customers or agents by phone. Today all of this is computerized. The ragtag collection of locomotives and rolling stock has been replaced by standard designs. Locomotive fuel economy has never been higher. Steam heating has been replaced by electric. Operating crew districts are no longer 100 miles. Bases for maintenance have been consolidated and centralized. Yet with all of these changes, which should have led to better economies, the long-distance trains still "lose money." How can this be?

The Vision from 20 Years Ago

 

For Amtrak's 20th anniversary, then-Amtrak-president Graham Claytor boasted of its cost control:

"Amtrak is determined to continue to improve bottom line through better service and controlled cost until 100 percent of operating costs are covered by earned revenues. At close to 80 percent in 1991, we are nearing that goal." - All Aboard Amtrak 1971-1991, Railpace Publications

At no time in any of the historical records has it been found where Mr. Claytor blamed any of Amtrak's financial woes on just the long-distance trains. Mr. Claytor was a railroad executive starting with a career at Southern Railway in 1963. He knew the numbers and, more importantly, knew what they meant:

"A year before Amtrak, railroads carried intercity passengers 4.9 billion passenger-miles and lost the 1991 equivalent of $1.5 billion doing it. In Fiscal Year 1990, Amtrak carried its 22.2 million intercity passengers 6.1 billion passenger miles and pared operating losses to about $330 million." - All Aboard Amtrak 1971-1991, Railpace Publications

Mr. Claytor understood that the true measure of output is "passenger-miles" and revenue per passenger-mile, not the mere number of tickets sold. Tickets sold is the measure of the number of transactions, but ten $1 tickets are not as valuable as one $20 ticket. To this end, it must be noted that during the last five years the long-distance trains have averaged a growth rate of 3.7 percent, with no years of negative growth; something not even the regional or corridor trains can claim. Even more surprising is that the LD trains showed any growth at all, since they were statistically almost sold-out to begin with, and over the last 15 years (post-Claytor), their aggregate capacity (measured in "available seat miles" or even just "car miles") has declined. This is growth in a product line defined as distance of 750 miles or greater on trains that have not seen any additional equipment in over a decade. Even so, this growth in patronage should correlate to higher revenue. What went wrong?

Since the passing of Mr. Claytor, there has not been a seasoned railroad executive at the helm of Amtrak. As a result Amtrak, a ward of the state, has reverted to a function of government; a workfare/basic transportation/federal entity charged with placating the public while twisting in the political winds. As a result it finds itself stuck between the dichotomous mandates of affordable transit and covering debts. The July/August 1974 edition of the Official Railway Guide lists the one-way coach fare between Chicago and Los Angeles at $113.50; corrected to 2011 dollars, this would be $514.47. Today's fare is one-half to one-third the inflation-corrected fare. After checking coach fares between numerous city pairs, today's fare is one-half or less than that of 35 years ago (when corrected for inflation). Remarkably, sleeper fares are on par to then, when correlated. The result of this has, in effect, reduced Amtrak's trains (long distance in particular) to Greyhound buses on rails. Was this always the plan? Not according to Mr. Claytor:

"They [fares] are going to increase just as fast as competitive factors permit… Because our service has been improving, and more and more people have been willing to ride, and as long as more and more people are willing to ride, and pay higher fares, the fares are going up. This is not new. This is the policy that we have been following for at least 10 years." - Interview with Graham Claytor, Trains magazine, June 1991

Today there appear to be "more and more people willing to ride," yet in the last 20 years Amtrak ticket sales have gone from 22.2 million to 28.7 million. Just 6.5 million more riders per year in 20 years? This is hardly anything to crow about. During the same period, as aggregate intercity travel has increased (and air traffic has quadrupled), Amtrak's aggregate national market share has declined. How, after all this time, could ridership remain so paltry? Perhaps no one at Amtrak knows how to grow ridership and increase output. Mr. Claytor knew how to do both. When asked about service expansion and the goal of full cost recovery:

"That is one of the ways we hope to reach it and to get additional equipment in order to increase our revenues faster than our costs. That spread is what counts. With the new order for locomotives already in [to General Electric], and with the orders for new Superliner cars we hope to make this year, these would give us the additional capacity to increase our revenues. We are up against the stops on many ways, because many times of the year we can't carry more people. We have more people wanting to go than we can carry, because we do not have the capacity. The first priority is to get more capacity on the routes we serve. The second priority will be to start new routes that we think have a good possibility of working." - Interview with Graham Claytor, Trains magazine, June 1991

Mr. Claytor's "first priority" fell by the wayside after his passing. Instead, focus shifted and intensified on the corporation-owned Northeast Corridor (NEC). This would culminate in the extension of electrification from New Haven, Connecticut to Boston and the notorious Acela trainsets. While these are demonstrative improvements in infrastructure and passenger amenities, it is still a short corridor, and as such offers limited potential for passenger-mile revenue growth. While total NEC ridership has grown, Amtrak's overall market share has declined sharply, and is less than 1.5%; all of this is hardly enough to offset the costs of infrastructure maintenance, and the high maintenance and power consumption of the Acela trainsets.

Ultimately, passenger railroading in America has been held hostage by misconceptions. In the 1950s, hucksters such as Robert Young convinced people that the only future for passenger rail was the short-haul train; conveniently, short-haul trainsets were what he was attempting to sell. The outcome of a 1958 Interstate Commerce Commission investigation has been dubbed the "Hosmer Report," after ICC examiner Howard Hosmer, wherein:

"This examiner's proposed report included an oft-quoted speculative conclusion that railway passenger coaches would likely soon become museum pieces along with stagecoaches, sidewheelers, and steam locomotives. Such language was not adopted in the subsequent formal ICC decision." - Amtrak's Long-Distance Service, Can it be Made Viable?, Gordon Gill

Today's weary chant of "the long-distance passenger trains are a money drain" is nothing more than a continuation of the "junk science" formulated over 50 years ago by those lobbying for their own agendas. The public at large blithely accepted that junk science as fact, since passenger trains, for the most part, were not germane to everyday life. As growth in passenger rail with long-distance trains, in particular, has shown, junk science no longer cuts the mustard for today's savvy travelers. Amtrak had better find a new mantra.

Past is Prologue

 

Recently, someone was nice enough to publicly post a picture of a train gate at Chicago Union Station from 1964, showing the makeup of that day's South Wind: http://www.rrpicture...aspx?id=2487104 Even at this late date, seven years before Amtrak, notice there are eight sleeping cars assigned to this train along with five coaches. On today's trains, if the number of sleepers is equal to the coaches, it is a miracle; in the East, the sleepers are outnumbered by coaches. Moreover, Amtrak does not have an adequate supply of spare equipment to increase train length to match fluctuating demand. If Amtrak had kept the proper ratio, at least the income from the First Class section of the train would still be the same as 35 years ago.

Is it rational to expect Amtrak to provide "First Class" amenities? Does Amtrak really provide a First Class Service? Is the provision of a mattress enough to be classified as "First Class?" If so, try to remember that, the next time Motel 6 leaves the light on for you.

Even though Graham Claytor believed it was possible, perhaps Amtrak is not capable of providing the equipment, let alone the proper business acumen/model for overnight service. It should be remembered that for most of the history of American passenger railroading, overnight rolling stock, sleepers, and diners were provided by a third party: The Pullman Company. Pullman was a private enterprise employed by the private railroads to provide a service. For most of its life, Pullman made money. Relieving Amtrak of this chore should allow it to concentrate on its core business; the equivalent of buses on rails.

​

 

[Anderson]

A lot of what went wrong is that Amtrak had to throw away their entire Heritage sleeper fleet, which left us with a bunch of Viewliner sleepers and nothing else. If I had to guess, that decimated the sleeper end of things. Of course, the lack of appropriations for cars (and the fact that Amtrak can't count on steady enough funding to place some sort of "continuing order") has also played a role. I don't think it's entirely Amtrak to blame here...a lot of the blame lies with what cards they've been dealt.

 

[MrFSS]

The Business and Politics of Passenger Rail; June 15, 2011

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A Companion Digest of Events, Opinions, and Forecasts to

This Week at Amtrak

By J. Bruce Richardson

 

United Rail Passenger Alliance, Inc.

America's foremost passenger rail policy institute

Jacksonville, Florida • United States of America

Telephone 904-636-7739, Electronic Mail [email protected] • http://www.unitedrail.org

Volume 1, Number 8

​

Founded 35 years ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other locations. For more detailed information, along with a variety of position papers and other documents and a compendium of This Week at Amtrak, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

1) If you're going to be in the passenger rail business, then you have to think like you're in the passenger rail business, which pretty much means anything that Amtrak does, you want to do differently.

There has been a false concept for years – undoubtedly fueled by silly comparisons between airline travel and passenger train travel – passengers will only take the train if it has few stops between terminals. EXPRESS TRAINS is the hue and cry of those who simply don't understand the realities of passenger rail.

Those ignorant of the passenger rail business believe end point to end point trains – which also mean big city terminal to big city terminal trains – will fill simply on the premise "build them and they will come."

Nah, that's just more junk science promoted by those who think they know more than the rest of us.

The matrix theory of passenger transportation, as developed by the late Adrian Herzog, Ph.D. tells us the more city pairs there are on any given single route or easy connecting route, the more attractive that route will be to travelers.

There is one indisputable fact: travelers like choice and convenience.

Just because travelers are forced to use airports in large cities due to the huge land mass airports must have and the overwhelming costs of operating airports and everything else related to air travel, doesn't mean passenger rail has to adopt the same model.

There is also a belief host railroads don't like passenger trains to stop at multiple intermediate stations because it slows down the velocity of the train, and, thus the velocity of all trains operating on the same tracks.

While there is some small validity to that argument, when you look at it globally, it's like agreeing to build a store on a busy street, but agreeing not to put any doors for customers to come in the store because the sidewalks will be too crowded at certain points.

If you are going to have successful passenger trains, you have to have convenient, intermediate station stops.

For years, Amtrak has been loathe to stop a train anywhere less than 25 miles away from a current station stop, citing the belief in the mobility of Americans and their private passenger vehicles to get them to stations. "Why, people are content to drive up to 50 miles to reach an airport, so why won't they drive 50 miles to reach a train station?"

The answer to that idiotic question is, in many cases, passengers having to drive an hour to reach a train station often will just stay in their private vehicles and drive all the way to their destination. It's called "one seat service," whether that seat is on a train or in an SUV or sedan.

Another false argument is the cost of intermediate/smaller stations. We will look at two such stations in North Carolina; Southern Pines, which is on the route of Amtrak's Silver Star, and Rocky Mount, which sees daily visits by the Silver Meteor, Silver Star, Palmetto, and Carolinian.

To understand the Silver Star for Fiscal Year 2010, the Star had total revenue of $30,321,000, and ridership of 393,600 passengers which generated 206,699,000 revenue passenger miles and a load factor of 62.9%. The average length of trip per passenger was 525.1 miles, and each train carried an average of 186.2 passenger per train mile. The average revenue per passenger was just under 15 cents per passenger mile.

The northbound Star arrives in Southern Pines, North Carolina at 7:06 A.M., and Southern Pines is a crew change point for train and engine crews. The southbound Star calls at Southern Pines at 10:39 P.M. The station is unmanned except for a caretaker which opens the waiting room for both trains. No tickets are sold, and no baggage is handled.

Southern Pines, on the former Seaboard Air Line Railroad route of today's CSX, is the closest stop for the Pinehurst Resort, and the area is famous for golf. There are 43 golf courses within a 15 mile radius of Southern Pines. The town itself has a population of around 11,000 souls.

If you are a pure bean counter, you would look at the Southern Pines numbers and say it's hardly worth stopping the Silver Star – the only passenger train service in the town – beyond the fact it's a crew change point.

But, Amtrak reports in FY 2010, 6,392 passengers used the Southern Pines station. That breaks down to 17.51 passenger a day, or 8.75 passengers entraining or detraining every time the Star stops in Southern Pines.

It costs somewhere south of $75 to stop a full size passenger train such as the Silver Star. Those costs are mostly fuel costs for what it takes for a fully stopped train to get up to full, mainline speed.

Let's say the associated costs of keeping up the Southern Pines station, such as electricity, routine maintenance, insurance, and the caretaker who opens and closes the station every day comes in at $5,000 a month (that's a generous figure). In the morning for the northbound train, the station opens at 6:00 A.M. and closes at 8:15 A.M. In the evenings, it opens at 9:30 P.M. and closes at 11:45 P.M., a total of four and a half hours a day, seven days a week.

Since the average passenger on the Star travels 525.1 miles per trip, at a rate of .1467 cents per revenue passenger mile, each passenger on and off at Southern Pines generates an average of $77.03 in ticket revenue, plus what is spent onboard in the diner and lounge car.

Take our $5,000 monthly station cost and divide that by 60 (in each month, there are 60 trains in and out of Southern Pines, 30 northbound and 30 southbound) for a per departure cost of $83.33. Add the cost of diesel fuel of $75 per departure, for a total of $158.33 to stop each train in Southern Pines, with the added benefit of being a crew base.

Multiply an average of 8.75 passengers per departure by the income each generates, which gives us 8.75 x $77.03 = $674.01 of revenue for each passenger, whether they are entraining or detraining.

Monthly cost: 60 departures x $158.33 = $9,499.80.

Monthly revenue: 60 departures x $674.01 = $40,440.60.

Difference (profit) between Southern Pines station costs and revenue generated because Southern Pines is a station: $30,940.80 each month, or an annual total of $371,289.60. Not bad for an unmanned station in a town of 11,000 people.

Is it worth stopping the Silver Star at Southern Pines, North Carolina? Absolutely. All of this is generated with close to zero advertising and marketing at difficult marketing times. The surrounding countryside, while full of resorts and golf courses, is sparsely populated farm country. Yet, there is an obvious, financially rewarding demand for passenger rail service. Imagine if someone actually told someone there was a train serving Southern Pine, and ridership (Gasp!) doubled.

The ridership at Southern Pines requires no additional coaches, sleepers, diners or lounges on the Star. Obviously, since there is no ticket agent and no baggage service, this is a minimal-service and minimal-cost station. People just want to ride the train, and do so at great inconvenience.

If Southern Pines was eliminated from the Star's city pair matrix, a third of a million dollars per year would be lost in net revenue, money which would have to come from somewhere else, such as the federal treasury to make up the shortfall.

Isn't it a good idea to keep stations such as Southern Pines?

To the east of Southern Pines, on the old Atlantic Coast Line route also of CSX, is Rocky Mount, North Carolina.

Compared to Southern Pines, Rocky Mount is a happening place, with a "metropolitan" area of 145,596 residents. Rocky Mount is the extreme eastern end of North Carolina's Research Triangle.

In FY 2010, Rocky Mount's station served 52,959 passengers entraining and detraining four Amtrak trains, for a total of eight departures a day.

The station, recently handsomely rebuilt, is open 24 hours a day. To be generous, let's assume a station staff of seven at Amtrak's ticket office clerk pay of $18.60 per hour, plus 42% which Amtrak uses for benefits and other related employee costs. That puts us at $26.41 per hour for each employee. (Yes, someone is the station manager at a higher rate, and some are more senior employees at a higher rate, but, for simplicity of our example, we will use this number.)

Seven employees x 23 work days a month x 8 hours a day = 1,288 hours a month x $26.41 = $34,016.08 a month in employee costs.

Add $10,000 a month for station expenses such as electricity, routine maintenance, etc.

Eight departures a day x 30 days = 240 departures a month.

$10,000 divided by 240 departures = $41.66 station costs per departure.

$34,016.08 divided by 240 departures = $141.73 in employee costs per departure.

$75 to stop/start each train x 240 departures = $18,000 per month.

For each train stopping at Rocky Mount, the costs per departure are

$41.66 + $141.73 + $75 = $258.39.

The average revenue per passenger mile for all trains stopping at Rocky Mount is 16.81 cents per mile.

The average length of trip per passenger for all trains stopping at Rocky Mount is 474.65 miles.

Each departure, 18.13 passengers entrain or detrain at Rocky Mount.

Each passenger generates $79.79 of ticket revenue in Rocky Mount.

Ticket revenue of $79.79 x 18.13 passenger per departure = $1,446.59 of revenue per train departure, plus what is generated onboard in dining and lounge cars.

Revenue of $1,446.59 – per departure station costs of $258.39 = a net of $1,188.20 per departure.

$1,188.20 x 8 departure a day = $9,505.60 in net revenue a day to Amtrak which wouldn't exist without stopping at Rocky Mount, North Carolina. That totals $285,168 in revenue per month, and $3,422,016 in annual revenue generated by Rocky Mount, after station costs are deducted.

It's clearly to Amtrak's advantage to stop at Rocky Mount, North Carolina. Imagine (Gasp!) what that figure would be if business doubled to 36.26 passengers per departure; not unrealistic if Amtrak didn't remain America's Best Kept Secret.

The crucial bottom line is smaller, intermediate station stops do make a difference. What may appear to be high station costs are actually relatively low in comparison to the amount of business generated.

To carry the argument further, talk to local city fathers about what that relatively small amount of business does for local economic impact on other businesses.

Passenger trains mean money, and not just money to host railroads, as paltry as that sum may be in the overall scheme of railroad finances.

If you're in the mood to do a lot of research and math, take a look at the percentage of population at small stations which use passenger trains in comparison to the percentage of population of large urban areas, such as Miami, Florida or Columbia, South Carolina which use passenger trains. Since passenger trains are often the only means of common carriage for smaller cities and towns as the intercity bus service map shrinks nearly daily, the impact of passenger trains grows considerably.

And, one last thought.

Amtrak corporately thinks a single station in a large urban area is enough for the "convenience of everybody." It's not uncommon in a large urban area for potential passengers to have to drive 30 miles in the opposite direction of their intended travel to catch a train to go in their real travel direction. This maddening concept keeps many passengers from using passenger trains. Small, suburban stations – some manned, some unmanned – can make a huge difference in ridership in and out of large urban areas. One is not enough; sometimes two is barely adequate. Three or four may be best. The decisions on how many suburban and intermediate stations for passenger trains should be based on passenger demand, not the convenience of the railroad's operating department.

Any passenger rail operator of the future which doesn't understand this concept will not only be "leaving money on the table," but will be grossly under-serving its potential passenger base.

Gil Carmichael, former FRA Administrator during the Bush I years, and former Chairman of the Amtrak Reform Council, as well as the Founding Chairman of the Board of Directors of the Intermodal Transportation Institute at the University of Denver has started a new series of reports, entitled the Gil Carmichael Report, Investing in Interstate 2.0. The reports are free, informative, and a must read for anyone serious about the future of railroads in the United States.

 

[MrFSS]

The Business and Politics of Passenger Rail; June 17, 2011

​

A Companion Digest of Events, Opinions, and Forecasts to

This Week at Amtrak

By J. Bruce Richardson

 

United Rail Passenger Alliance, Inc.

America's foremost passenger rail policy institute

Jacksonville, Florida • United States of America

Telephone 904-636-7739, Electronic Mail [email protected] • http://www.unitedrail.org

​

Volume 1, Number 9

​

Founded 35 years ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other locations. For more detailed information, along with a variety of position papers and other documents and a compendium of This Week at Amtrak, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

1) Not a moment too soon, here's the latest press release from United States House of Representatives Committee on Transportation and Infrastructure Chairman John Mica of Florida.

[begin quote]

For Immediate Release

June 15, 2011

Contact: Justin Harclerode

(202) 226-8767

Mica, Shuster Roll Out High-Speed & Intercity Passenger Rail Plan

Washington, DC – A dramatic new direction that focuses on bringing competition to high-speed and intercity passenger rail service across the country was presented today during a national briefing by Committee leaders. The plan incorporates competitive bidding and private sector involvement to bring high-speed rail to the Northeast Corridor and improve intercity passenger rail service nationwide.

U.S. Rep. John L. Mica (R-Fla.), Chairman of the House Transportation and Infrastructure Committee, and U.S. Rep. Bill Shuster (R-Pa.), Chairman of the Railroads, Pipelines and Hazardous Materials Subcommittee, presented their new direction for U.S. passenger rail service to national and state transportation officials and passenger rail stakeholders across the country, and enable their participation via webcast and teleconference. The Mica/Shuster initiative is called the "Competition for Intercity Passenger Rail in America Act."

"After 40 years of costly and wasteful Soviet-style operations under Amtrak, this proposal encourages private sector competition, investment and operations in U.S. passenger rail service," Mica said. "Competition in high-speed and intercity passenger rail will cut taxpayer subsidies, improve service, and bring our nation into the 21st century of passenger rail transportation.

"Our plan will create jobs by finally bringing real high-speed rail to the one region of the country where it makes the most sense – the Northeast Corridor – and do so in a dramatically shorter time than Amtrak's 30-year plan, at a fraction of their proposed $117 billion cost," Mica said.

"Amtrak has repeatedly bungled development and operations in the Northeast Corridor, and their new long-term, expensive plan to try to improve the corridor is simply unacceptable," Mica continued. "The nation cannot afford to continue throwing money away on this highly subsidized, ineffective disaster.

"It is time for a new direction. Around the world, other nations and the private sector have successfully competed to develop high-speed and passenger rail service," Mica said. "There is no reason we cannot do the same in our most densely populated and congested region. By giving the private sector the opportunity to bring its resources and expertise to the table, we can lower costs, increase efficiency, and improve high-speed and intercity passenger rail service across the country."

The Mica/Shuster proposal will also give states greater control and authority over their intercity passenger rail services, currently operated by Amtrak. Ridership on state-supported routes has increased significantly over the last 15 years, and incentivizing private sector competition for rail services on these routes will ensure states and taxpayers get the best possible deal and the best possible service. The initiative will also open up other Amtrak long-distance money-losing routes to competition, allowing the private sector the opportunity to bid on any intercity route and potentially improve service.

"It is time to deregulate America's passenger rail system, and give intercity passenger rail the same opportunity for success that the freight rail and commercial truck industry have benefited from" Shuster said. "We must look for more effective and innovative approaches to providing modern and efficient passenger rail service by focusing on projects that make sense, leveraging private sector investment, increasing competition, and opening the door to public-private partnerships.

"Both around the world and right here in the United States we have seen that competition works," Shuster continued. "When Virgin Rail began operating the West Coast Line in Britain, the company doubled the corridor's ridership in six years and turned a profit. Here at home, in an open bid process, Veolia won over Amtrak for Florida's Tri-Rail South commuter line at $97 million to Amtrak's $162 million. Success and cost savings like this can happen here if we end the Amtrak monopoly on intercity passenger rail and open it to competition. Done right, what in the past has been a liability can become an asset, generating jobs, economic development, and value for hardworking taxpayers."

Northeast Corridor Competition

The Mica/Shuster initiative will bring real high-speed rail to the nation's Northeast Corridor (NEC) between Washington, DC, New York City and Boston. The NEC is the region of the country where high-speed rail offers the greatest chance of success and the most national benefits. The corridor is already owned almost in its entirety by Amtrak. It is the most densely populated and congested area of the United States, and has the essential transit connections necessary for a successful high-speed system. Unfortunately, Amtrak's Acela currently averages only 83 mph between Washington and New York, and just 65 mph between New York and Boston. The Mica/Shuster initiative will:

End the Amtrak Monopoly

• Separates the NEC from Amtrak, spinning it off as a separate business unit

• Transfers the title for the NEC to US DOT, including all assets, property and trains

• US DOT enters into 99-year lease with Northeast Corridor Executive Committee

• Executive Committee manages NEC infrastructure and operations

Bring Private Sector Expertise and Financing to the Table

• Requires a competitive bidding process for development of high-speed rail on the NEC

• Allows private sector to recommend best PPP framework

• Establishes performance standards for competitive bidding process:

– Real high-speed rail on NEC – less than 2 hours between WDC and NYC

– Double total intercity rail traffic on NEC

– Highest level of private sector participation and financing

– Lowest level of federal funding

– Full implementation in 10 years or less

• Winning bids selected by NEC Executive Committee

Protect the Public Interest

• 5-member NEC Executive Committee represents federal and state interests

• All current commuter and freight operations on NEC are protected

The Time is Now

• NEC high-speed rail in one-third of the time as Amtrak's proposal, with firm deadlines

• Within 20 months of enactment, the NEC will transition from Amtrak monopoly to PPP

Create and Protect Jobs

• New jobs for rail construction and operations

• New jobs associated with development around rail stations

• Hiring preference to any displaced Amtrak employees

Intercity Passenger Rail Competition

Fifteen states around the country currently pay Amtrak to operate intercity passenger rail. Unlike the Northeast Corridor, most state-supported routes run on track owned by freight railroads. The Mica/Shuster proposal encourages private companies to compete on these state-supported intercity routes. Because these routes still require federal subsidy, and because they are operated by Amtrak, there is significant room for improvement in service quality and financial performance. The Mica/Shuster initiative will:

Create Competition and Improve Service

• Promotes competition by encouraging states to initiate a competitive procurement process for a menu of services

• Incentivizes competition by redirecting funds from Amtrak to state DOTs

• Establishes an expert panel for recommending competitive best practices

Save Taxpayer Dollars

• Allows states to keep money saved through competitive bid process

• Saves federal taxpayer dollars by requiring a new allocation process in 2020 to reflect cost savings achieved through competition

Protect Freight Railroad Interests

• Involves host freight railroads through market-driven access negotiations

Create and Protect Jobs

• Requires states to maintain current levels of service

• Creates private sector jobs

• Provides hiring preference to any displaced Amtrak employees

Long-Distance Passenger Rail Competition

This initiative will finally allow for competition to Amtrak's least successful lines in an effort to reduce federal subsidies and improve service. Amtrak's long-distance routes are subsidized at an incredible $117.84 per passenger on average. For example, the Sunset Limited, traveling between New Orleans and Los Angeles, lost $407.92 per passenger in 2010. Amtrak's failing long-distance routes need to be opened to competition to reduce the burden on taxpayers and improve service for the traveling public. The Mica/Shuster initiative will:

Create Competition and Improve Service

• Promotes competition by allowing private sector operators to compete with Amtrak to operate long-distance routes

• Requires winning bids to be selected based upon the lowest possible level of federal support

• Allows private sector operators to make a profit, incentivizing improved service and ridership growth

Save Taxpayer Dollars

• Mandates that operating subsidies for contracted long-distance services be lower than Amtrak subsidies

Protect Freight Railroad Interests

• Involves host freight railroads through market-driven access negotiations

Create and Protect Jobs

• Creates private sector jobs

• Provides hiring preference to any displaced Amtrak employees

[End quote]

To absolutely no one's surprise, Democrats and Amtrak officials took exception to the concept put forth by Mr. Mica and Mrs. Shuster.

Democratic Congresswoman Corrine Brown, the ranking member on the Railroad Subcommittee of the House Transportation and Infrastructure Committee had this to say in an article by reporter Larry Hannan of The Florida Times-Union daily newspaper here in Jacksonville, Florida on June 16th:

[begin quote]

"While Congressman Mica refuses to focus on critical infrastructure issues, he is bent on destroying Amtrak," Brown said. At the very time that we should be working together to solve the problems plaguing this nation's transportation infrastructure, Chairman Mica is introducing divisive legislation that is dead on arrival in the Senate."

[End quote]

Mr. Mica addressed a timeline for passage of the bill in his opening remarks, saying it could take up to 36 months for the bill to become law. If it did take that long, that would be after the November 2012 elections and a new Congress would be in session, with perhaps a Republican majority in the Senate as well as the House, and possibly a new occupant of the White House.

Congresswoman Brown, great lover of higher taxes and who never met a government program she didn't like and wants to spend other people's money on, and usually instantly dislikes anything proposed by anyone who is a Republican, represents a district which directly abuts the district of Congressman Mica in Northeast and Central Florida.

Amtrak President and CEO Joseph Boardman wasn't a big fan of the proposal, either. Immediately after Wednesday's announcement, he had this to say to reporters on a conference call and included in The Hill's Transportation Blog of June 15th:

[begin quote]

"This is broader than the northeast at this point," Boardman said on a conference call with reporters. "This is the Privatize Passenger Rail for America Act. The overall impact is this takes Amtrak apart, from an infrastructure standpoint, and replaces it with a government entity."

[End quote]

Mr. Boardman's statement is somewhat odd, since Amtrak is a government entity, especially when it wants to be so it can feed at the public trough and have direct access to the federal treasury.

All the rhetoric aside, here's what will frost the shorts of anyone with an ounce of common sense.

As reported by David and Daniel Carleton in the June 3, 2011 edition of This Week at Amtrak, the company claims most of its financial woes are due to allegedly unprofitable long distance trains. If only the world could see that future of passenger rail in America lies in the success of the Northeast Corridor and other services such as the Pacific Surfliner trains in California, there would be no more problems so Amtrak and its various supporters constantly lament.

Except, of course, the great majority of Americans would be completely cut off from even minimal passenger train services.

Here is what the Mica/Shuster report showed as Amtrak results for its long distance service ending in FY 2010:

[begin quote]

Silver Star, New York - Miami: $46,500,000 annual loss

Cardinal, Chicago - New York: $15,200,000 annual loss

Silver Meteor, New York – Miami: $39,100,000 annual loss

Empire Builder, Seattle – Chicago: $56,200,000 annual loss

Capitol Limited, Chicago - Washington D.C.: $20,600,000 annual loss

California Zephyr, San Francisco – Chicago: $52,100,000 annual loss

Southwest Chief, Los Angeles – Chicago: $57,700,000 annual loss

City of New Orleans, Chicago - New Orleans: $21,800,000 annual loss

Texas Eagle, Chicago - Los Angeles: $27,100,000 annual loss

Sunset Limited, Los Angeles – Orlando: $37,400,000 annual loss

Coast Starlight, Seattle - Los Angeles: $47,100,000 annual loss

Lake Shore Limited, Chicago - New York/Boston: $35,000,000 annual loss

Palmetto, New York – Savannah: $13,800,000 annual loss

Crescent, New York – New Orleans: $40,200,000 annual loss

AutoTrain, Lorton, Va. – Sanford, Fla.: $18,500,000 annual loss

TOTAL – $527,300,000 annual loss

[End quote]

Since Amtrak often declines to publish useful financial information, it can sometimes be difficult to understand how it reaches the conclusions it does for the numbers it publishes reluctantly.

But, here are some other numbers Amtrak did publish in its annual reports:

Federal operating grants (FY 1998 through FY 2009, companywide grants for all trains)

FY 1998 – $202 million

FY 1999 – None

FY 2000 – None

FY 2001 – None

FY 2002 – $205 million

FY 2003 – $519 million

FY 2004 – $756 million

FY 2005 – $711 million

FY 2006 – $485 million

FY 2007 – $485 million

FY 2008 – $475 million

FY 2009 – $550 million

Hmmmmm ... In FY 1998 there was a small $202 million operating grant which covered the entire system. In FY 1999 through FY 2001 there were no grants, but that was in the "Acela will save the world" years when Amtrak went on a borrowing spree and hocked just about every asset the company has, thinking when Acela finally was operating the world would be perfect. But, we know how that worked out, because by FY 2004, the federal operating grant ballooned to $756 million, dropped down to $475 million in FY 2008, but now is on the upswing again, with Amtrak saying its long distance routes needed a federal operating subsidy of $527,300,000, plus what was needed from state supported trains.

Doesn't all of this exactly prove the point of Congressmen Mica and Shuster?

For whatever reason anyone chooses, Amtrak seems incapable of running an efficient system, and constantly blames its problems on any handy excuse, including the dog ate its homework.

During all of these years of ballooning subsidies, Amtrak hasn't hesitated to trumpet the increases in ridership it has recorded – specifically – for the long distance trains.

In the real, non-Amtrak world, when you have an increase in volume, you have a decrease in costs due to natural laws of efficiency.

As Congressman Mica pointed out in his remarks at the beginning of the presentation, in the past decade, Amtrak has shed 10,000 employees, going from 29,000 employees to 19,000 employees today.

It has reported increases in ridership while its train consists have been constantly shrinking, thus its operating costs should be shrinking, too.

So, why are costs going up, when in every real world scenario, they should be going down? Amtrak even has good fuel costs because it buys diesel in bulk on long term contracts.

While new, much overdue union contracts raised employee wages, Amtrak was shedding employees at the same time.

What's going on here?

How is Amtrak cooking the books to make the long distance trains look bad?

One favorite train for everyone to criticize is the beleaguered – but lovable – Sunset Limited, currently operating on its "temporarily shortened" route of Los Angeles to New Orleans, instead of its authorized route of Los Angles to New Orleans to Orlando, Florida.

Politicians and critics alike love to quote an exceptionally high loss per passenger figure for the Sunset Limited.

But, few ever ask why that alleged loss figure is so high over the 1,995 mile route. The answer is because the train only operates three days a week in each direction, the single most inefficient way to operate passenger train service. The station costs are the same, the management structure costs are the same, and the marketing costs are the same for a tri-weekly train as a daily train. Yet, the income potential is only a fraction of that of a daily train because there are so few travel choices for tri-weekly trains.

The same holds true for Amtrak's only other tri-weekly train, the Cardinal, operating between Chicago and New York City via Indianapolis and Cincinnati.

There is a very good reason the new entrepreneurs looking at privatized passenger train service are looking at daily service instead of non-daily service. "Build it and they will come" does not apply to passenger trains which operate on inconvenient schedules.

The conversation started over the past few weeks by Congressmen Mica and Shuster which escalated yesterday with their formal announcement of legislation only strengthens the hand of the members of the Association of Independent Passenger Rail Operators and anyone else considering or planning independent passenger train service.

Once this legislation passes, many more opportunities for competition will be available.

Why does ANYONE think competition is a bad idea?

Why does ANYONE think only government can run a passenger train?

Why does ANYONE think Amtrak is ever the right answer?

Look at what yesterday's presentation made note of on the commuter rail front: Here in Florida, the Tri-Rail commuter system which operates between West Palm Beach and Miami now uses Veolia Transportation as its operator. Veolia took over the service in 2007 and has a contract in place until 2014 with some additional time options. Veolia's bid for the contract was $97 million; Amtrak's bid for the same contract was $162 million, a difference of $65 million. Over the last five years, there has been an average annual increase of 10.8% in ridership ever year (In the commuter world, ridership is an acceptable measure of success, but not in the non-commuter rail passenger train world.).

Why was Amtrak's bid so very high?

For the Virginia Railway Express service, operating between Washington Union Station and south on two routes into the far exurbs of Washington in Northern Virginia, Keolis replaced Amtrak as the system operator about a year ago, coming with a bid of $1 million less than Amtrak for a five year contract. Amtrak fought hard to keep the contract, but VRE stewards said they had to go with the lowest bid for the benefit of the taxpayers of the Commonwealth of Virginia. VRE has enjoyed an annual increase of 1.43% in ridership over the past five years.

Amtrak was close, but couldn't bridge the final $1 million gap to win the contract on its home turf.

Other private operators (all AIPRO members) in Massachusetts, Texas, and Washington State have all successfully operated commuter systems which have constantly sustained growth.

It is important to note that Amtrak took away a contract from Veolia in Los Angeles for the operation of Metrolink commuter trains after the Chatsworth crash, and one of Amtrak's very best managers is running that operation today.

But, the overall point is competition is good; Amtrak as a mostly public entity is expensive because it has little reason to be lean and efficient. Whenever money troubles arise, it's always much too easy to just go to Congress and ask for a supplemental appropriation. That's a strategy that has never failed in Amtrak's 40 year history.

The future of passenger rail will be some combination of private and public operators. If Amtrak cleans up its act, it can be one of those public operators. If it doesn't, with the momentum started, the members of AIPRO have a much brighter future than Amtrak.

 

[MrFSS]

The Business and Politics of Passenger Rail; June 24, 2011

 

A Companion Digest of Events, Opinions, and Forecasts to

This Week at Amtrak

By J. Bruce Richardson

 

United Rail Passenger Alliance, Inc.

America's foremost passenger rail policy institute

Jacksonville, Florida • United States of America

Telephone 904-636-7739, Electronic Mail [email protected] • http://www.unitedrail.org

Volume 1, Number 10

​

Founded 35 years ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other locations. For more detailed information, along with a variety of position papers and other documents and a compendium of This Week at Amtrak, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

1) The usual suspects are aghast at the prospect of Amtrak not owning the Northeast Corridor in the future. Good heavens! How will the Republic survive without Amtrak owning the NEC and it being under "private" ownership? Actually, quite well, thank you, because the proposal of the Chairman of the United States House of Representatives Transportation and Infrastructure Committee simply wants to transfer ownership from one government entity to another – from Amtrak to the United States Department of Transportation. It's tough to see anywhere in there private ownership comes into play.

A somewhat sometimes lazy local and national news media, instead of gathering information on its own, relies on misinformation from others and has bought into this misconception. Many in the news media doesn't seem to be in much of a hurry to correct the bad information.

The other really silly debate arising from this proposal is that "privatization of the NEC and some of the routes would bankrupt Amtrak."

Hmmm ... how do you bankrupt a company which is in every way – except technically by going through a federal court procedure – already bankrupt?

Since Amtrak does little to help itself earn revenue in many instances and instead is often content to live off the largess of free money from the federal trough, how could anyone declare Amtrak isn't already bankrupt in just about every sense?

If its general financial state doesn't impress you, take a look at the auditor's statement in each Amtrak annual report. Every one is a "qualified statement," which means without its annual subsidy income from the government, it couldn't continue operations.

And, the third guffaw coming out of this much needed discussion about the future of the NEC and Amtrak in general: The tired, old saw (especially from pols in the Northeast) "just give Amtrak the money it needs instead of keeping it on a starvation diet and it will be fine; a healthy company serving millions."

Uh, huh. And, the Easter Bunny looked particularly attractive this year, too, hopping down the bunny trail. Plus, don't forget to write you letter to Santa Claus early this year to avoid the rush.

Committee Chairman John Mica's presentation more than precisely lays out all of the reasons why Amtrak can't be trusted by any reasonable soul to improve itself just because it receives more money. For all of the tens of billions it has received in the past, seldom has it done much to improve its lot in life, other than spend the money and ask for more.

As new entrepreneurs in the passenger rail business look at workable business models, the Amtrak model is the one closely studied to make sure any new entrepreneur doesn't do things the Amtrak way.

2) Happily so, readers of The Business and Politics of Passenger Rail are not shy about sending letters with their reaction to various subjects raised in any column.

All letters, pro or con are always welcomed and encouraged.

Here is a sampling of recent letters. When used, the letter writer's name is used with permission.

In Volume 1, Number 7, there was a discussion of why Seaboard Coast Line Railroad was running such long, full passenger trains immediately prior to the start of Amtrak operations. A list of railroads which didn't join Amtrak was included for reference, but the mention of the Rock Island railroad without the reason why it didn't join Amtrak brought this letter from Gary Widell, a former officer of the Chicago, Rock Island and Pacific Railroad.

[begin quote]

I always enjoy reading every issue of [The Business and Politics of Passenger Rail] with its food for thought.

There is one item in this week's edition on which I want to comment. Some people might take the reference to the Rock Island's not joining Amtrak as an indication that they were making

money on their passenger trains. Since I was an officer of the Rock Island from 1965 to

1975, I can tell you that was not the case.

The formula for determining the cost of membership in Amtrak was constructed in such a

way as to penalize the Rock Island, since it was based primarily on losses on passenger

trains that had been discontinued. The Rock Island determined that, on an out-of-pocket

basis, there was no way we would lose as much money by continuing to operate the Peoria

Rocket and the Quad Cities Rocket for the mandated five-year period as it would cost to join

Amtrak, and we would be free to seek discontinuance after five years.

That decision pleased me, of course, because those trains remained OUR trains. From the

time Amtrak was created, I always felt a better course would have been to identify the

passenger services that were considered indispensable and pay the railroads the amount

required to continue their operation (together with a reasonable profit). It would have been

more cost-effective, and the individual railroads would still have their pride in their passenger

trains.

One only had to look at what happened to the Super Chief after Amtrak's takeover for

vindication of this position. When it was the Santa Fe's train, everyone on the railroad took

great pride in it and operated it accordingly. When Amtrak took it over, Santa Fe personnel

no longer cared.

Keep up the good work!

– Gary Widell

[End quote]

The formula used by the Rail Passenger Service Act of 1970 (as enacted by Congress) included the participating railroad pay Amtrak an amount equal to half of that railroad's losses from intercity passenger service during 1969 and provide Amtrak with the use of tracks, facilities and services. A participating railroad could elect to receive either a tax deduction or common stock of Amtrak in an amount equal to its payment.

This letter arrived from Texas:

[begin quote]

I read with interest your ideas and description of Florida passenger service before Amtrak. However, per Amtrak FY 2010 reports these four trains, the Meteor, Star, Palmetto and Auto Train lost over 125 million dollars last year. There is no way CSX or anyone else would take on something like that. The freight railroads want no part of passenger trains or the resulting liabilities and exposure. They may be willing to sell track space if they have any or take Government subsidies to increase track capacity to handle them, but operate them ... no way. Personally, I see no reason why the Florida service can't be a success and at least cover it's operating costs. It's just poor management on the part of Amtrak. Similar routes exist as in New York to Chicago or Atlanta to New York, etc. As for the western long distance trains, the reason for their existence died with the interstate highway system and the jet plane. They can only be sold as a luxury land cruise for vacationers and tourist as VIA does the Canadian. Their usefulness as a transportation system just doesn't exist. It takes five or more sets of equipment worth millions of dollars just to transport basically one plane load of people a day. Just not practical unless you think people are going to desert the airlines in droves and we can run multiple trains on the routes. Here in Houston, Hobby airport handles something like 10 million passengers a year, Bush intercontinental handles something like 40 million. Amtrak around 15 thousand.

As for Amtrak, after 40 years of ineptitude it's time for it to go. Contract out the NEC operation to a private operator, put the track and property ownership and maintenance under the DOT and handle rest of the system as part of the interstate and US highway system funded by the fuel tax. At least then the country might get some balance in the system and take Congress and the states out of the loop.

[End quote]

Most likely the various passenger railroad entrepreneurs would dispute much of the suppositions in this heartfelt letter. Much of what the letter writer said has been held as Holy Writ for the past 40 years, but is becoming out of date.

As to the transportation utility of the western long distance trains, in Fiscal Year 2010 the California Zephyr carried 377,900 passengers, the Empire Builder 533,500 passengers, the Southwest Chief 342,400 passengers, the Texas Eagle 287,200 passengers, and the tri-weekly Sunset Limited 91,700 passengers. The Coast Starlight carried 444,200 passengers. The transportation output of these trains is tremendous, with robust business at almost every intermediate station, large or small. For all of Amtrak's long distance trains, the average length of trip was 625.5 miles, and the load factor 61.4%.

Every departure of the California Zephyr carries an average of 517 passengers on a too short consist.

VIA's Canadian is also considered vital transportation to the intermediate stations it serves between Toronto and Vancouver with only tri-weekly service.

Because Amtrak chooses not to provide a full domestic system of transportation in cities like Houston does not mean there is not unfilled demand for passenger rail transportation.

As far as taking money from the federal fuel tax to pay for passenger rail, instead of that, how about just expanding Amtrak or allowing a competitor to Amtrak to be created and pay for passenger rail out of income instead of subsidy?

Here is a letter we were honored to receive regarding using Southern Pines, North Carolina as an example for a small intermediate station stop for the Silver Star. When writing the piece, there was a belief on the part of this writer the information about the Southern Pines area was well researched. Oops! Bad assumption. Thanks for Kevin McKinney for the update and other thoughts.

[begin quote]

Dear Mr. Richardson: I read with interest your commentary in the June 15th Digest, regarding the value of intermediate station stops. For the past 11 years I have been a resident of Pinehurst and have utilized Nos. 91-92, the Silver Star, on a number of occasions using the Southern Pines station. There are always passengers boarding and detraining at Southern Pines and there are times when a double stop is made (unnecessarily, I believe) for coach and sleeping car patrons. There could be substantially more usage of the service if capacity was expanded and service offerings improved.

First, a quick overview of this market. Once upon a time, Southern Pines, Pinehurst and Aberdeen were three towns each about five miles apart. Picture a "V" shape, with Aberdeen at the bottom of the V, Pinehurst at the upper left and Southern Pines at the upper right. Today each town's downtown area retains its charm and each is unique in its own way. In between the towns and surrounding them, population has developed along with more typically American retail strips, so we now have Walmart, Best Buy and most of the usual retail players. Fused into one small metro area, Pinehurst/Southern Pines/Aberdeen and "suburbs" claim about 40,000 residents. The rest of Moore County is largely rural and the county has a total population of 90,000. Many of the 40,000 residents in our "metro" area are affluent retirees who travel and receive visits from friends and family. Fort Bragg, in Fayetteville (on the ex-Atlantic Coast Line route of the Silver Meteor and Palmetto) has expanded considerably in recent years and many of the military families have chosen to live in this area and commute 30 miles or so to the Base. In addition, this area is a popular tourist destination, with (as you pointed out) dozens of golf courses, including those of the famous Pinehurst Resort. So this would seem to be a natural market for good intercity transportation.

However, that is not the case. We had four US Airways Express flights a day from our local airport to Charlotte until 2002 or 2003, when they were discontinued. Delta was persuaded (along with some cash) to enter the market a few years ago. They came in with one flight a day between here and Atlanta. It was always late and people missed their connections at ATL, getting stranded for hours, or worse, so before long the service ended. (One flight a day is much like a tri-weekly train, inconvenient and absurd.) Now the only way to fly here is to have your own airplane, or charter one. A number of affluent golfers do just that. (The alternative is to drive 70 miles, or use an expensive limo service, to and from Raleigh-Durham Airport.) There was Greyhound service here at one time, up and down US-1 which runs through Aberdeen and Southern Pines. By the time I found out where it went and where it stopped, it too was withdrawn. So our county of 90,000 affluent retirees, military people and "regular folk" plus tens of thousands of visiting tourists have no choice but to drive... except for our only remaining intercity public transportation, Amtrak. The planes are gone, the buses are gone, but the Silver Star remains.

As you pointed out, the train is well used. But here is my experience: Whenever I ride it (mostly north to Washington or beyond), the load factor appears to be between 98% and 102%. If two people board it is difficult to get a seat together, although that can get sorted out in Raleigh (if you have a cooperative coach attendant), where usually 60 or more people detrain and an equal or larger number board. Once we boarded as a family group of seven; five of the group (two parents and three children) could not be seated together, ending up a few rows apart, while my lady friend (who loves to travel by train) and I, without any seats available at all, headed to the dining car for breakfast. That is the typical experience, if you can even get a reservation. Often seats are not available. Daytime sleeping car space (also seldom available) is out of the question price-wise. My lady friend has recommended the train to several of her friends, and some have taken her advice. Unfortunately, they have said "never again", the reasons generally being a) crowded b) dirty c) unfriendly personnel and d) too slow. The dining car does get some positive mention, however.

I know I am focusing on the "micro" of our little area, instead of the larger picture. But all of our little areas, and the larger areas, do in fact make up the larger picture. Here are some suggestions that could make Amtrak a service here worth taking and worth recommending to others.

1. Find a way to add a least one coach to the consist. It would probably sell out immediately (two would be even better). Even at peak holiday times, the Silver Star has four coaches. Only on extremely rare occasions I have seen a fifth coach.

2. There must be some way to actually assign seats when a reservation is made. It is hard to believe that in this day and age we have to rely on a coach attendant's back-of-the-envelope scribbling to assign seats.

3. Collect the tickets on the train, while it is moving, like they used to do. Even when the train is late, more minutes are consumed as the crew checks tickets prior to boarding. Are they afraid someone is going to get on the wrong train? If someone gets on without a ticket and without any money (an unlikely situation) the worst-case scenario is they get a free ride to Cary, the next station up the line.

4. If seats were assigned, some of the coach attendant positions could be converted to cleaning crew positions – picking up the trash and making sure the bathrooms are as pleasant as can be.

5. Advertise the food service: Often the diner and the snack-lounge cars are half-empty or worse. Could it be that some of 300 passengers are unaware of the existence of the food cars or what is available and at what price?

6. Hire friendly, service-oriented people, or better train the ones that are hired. I have encountered some great employees on No. 91 and No. 92 (and elsewhere on Amtrak), especially in the dining cars. Some of the employees, unfortunately, are rude, indifferent, lazy, incompetent, or all of the above. That can ruin an otherwise OK trip.

7. Longer term, Amtrak needs to find a way to reach the big market it is not reaching. If the consist could eventually include a business class coach, or a parlor car (as offered on Illinois Central, Burlington and other long distance trains pre-Amtrak), passengers boarding at Southern Pines or Raleigh heading to Washington and the Northeast could enjoy a more pleasant daytime business-like atmosphere, instead of entering a crowded, trashy coach filled with sprawling, sleeping, snoring passengers.

8. Also longer term, develop the Next Generation Slumbercoach, an affordable sleeping car. I continue to be amazed at Amtrak's stratospheric sleeping car prices and the fact that people are paying that kind of money, especially given the level of service provided. If they are turning away passengers at these prices, imagine what kind of business they could do offering a mix of quality premium and economy sleeping accommodations.

9. Once there is a product worth advertising, advertise it. Unlike the Greyhound service we once had that almost no one knew existed even when we had it, most people around here do know there is a passenger train through here every day (two actually, one north, one south) and the charming depot in Southern Pines, restored by the state of North Carolina a few years ago, is the center-piece of that community. But few people know any details about the train. They ask me, where does it go? Where does it come from? How much does it cost? How fast is it?

Develop a quality service, provide the capacity, then advertise it in the local media, and those ridership figures you quoted will skyrocket.

Until then, at least some of us are grateful that we have one way out of town other than driving.

– Kevin McKinney, Passenger Train Journal Founder and Contributing Editor

[End quote]

Amen.

And, this additional note with updated information:

[begin quote]

Southern Pines is not a crew change point for 91/92. Raleigh and Jacksonville based crews change out at Hamlet, North Carolina.

[End quote]

It's always good to have updated information, even on the small stuff.

One final letter for this issue:

[begin quote]

This is in the nature of commentary on This Week at Amtrak Vol. 8 No. 8 [Regarding the separation of the NEC from Amtrak.].

RE the last two or three paragraphs of same. The more and more I think about it the more convinced I become that real, major reform of Amtrak would require, in addition to a separation off of the Northeast Corridor and reform of the Board of Directors, the moving away from Washington DC and the Northeast of its corporate headquarters and operational nerve center to somewhere in the great middle of the country. Only a government/Congressional liaison office and operational facilities principally or solely connected with the NEC should remain.

While perhaps this could be sold as seeking to lower overhead costs by moving to a location with lower rents and other office costs then are the case in DC the real object would be to escape from the inside-the-Beltway mindset and go somewhere that will permit the absorption of private enterprise/entrepreneurial ideas, beliefs and attitudes. Get management out to where they will breath fresh air and clean out the intellectual cobwebs within the organization that have developed from being WAY too long in DC, around too many government bureaucrats, going to too many DC cocktail parties, being infected with too much Beltway attitude.

And if some don't want to make the move; would rather leave Amtrak to stay in DC and get into some comfortable government sinecure in which to coast to retirement, that might not be a bad thing either.

Where to move to? At least a couple hours one-way travel time away from either coast. West of Buffalo and Pittsburgh, Salt Lake City/Ogden on east. Chicago has traditionally been the railroad capital; or maybe consider an online suburb such as Naperville or Glenview. Or perhaps look to one of the better run more entrepreneurial Class 1's to sublease space and absorb free-enterprise expansionist ideas.

Then again, there's Indianapolis and Beech Grove. Perhaps there are underutilized buildings there that might be redeveloped as a new headquarters. Replant the heart of the organization smack in the middle of the great neglected middle of the nation, so maybe they'll pay more attention to it.

Will it work? I don't have a familiarity with corporate histories that would enable me to say whether a corporate headquarters move has succeeded in changing a dysfunctional corporate culture; perhaps someone in your organization does.

Thanks for letting me rant.

[End quote]

District of Columbia Congressional Delegate Eleanor Holmes Norton most likely would take great exception to this excellent suggestion, since she is primarily focused on keeping as many high paying jobs as possible in Washington. But, that aside, what rational person could argue with the scenario the letter writer above lays out?

There are a number of other letters to come, but for this issue, we are out of space. Join us next issue for more letters and commentary and other issues. And, thanks again to each and every letter writer, pro or con. Your time, effort, and thoughts are much appreciated.

Gil Carmichael, former FRA Administrator during the Bush I years, and former Chairman of the Amtrak Reform Council, as well as the Founding Chairman of the Board of Directors of the Intermodal Transportation Institute at the University of Denver has started a new series of reports, entitled the Gil Carmichael Report, Investing in Interstate 2.0. The reports are free, informative, and a must read for anyone serious about the future of railroads in the United States. Contact the report distributor at [email protected] for your very own copy.

 

[jis]

I actually wholeheartedly agree with kevin McKinney's 9 points. They also appear in his article in the latest PTJ.

 

[MrFSS]

The Business and Politics of Passenger Rail; June 28, 2011

 

A Companion Digest of Events, Opinions, and Forecasts to

This Week at Amtrak

By J. Bruce Richardson

 

United Rail Passenger Alliance, Inc.

America's foremost passenger rail policy institute

Jacksonville, Florida • United States of America

Telephone 904-636-7739, Electronic Mail [email protected] • http://www.unitedrail.org

Volume 1, Number 11

​

Founded 35 years ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other locations. For more detailed information, along with a variety of position papers and other documents and a compendium of This Week at Amtrak, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

When is a passenger train like a jet airplane?

Never.

When is a passenger train like a cruise ship?

Never.

When is a passenger train like a bus?

Never.

When is a passenger train like an automobile, SUV, pickup truck, or passenger van?

Never.

When is a passenger train like a dirigible?

Never.

When is a passenger train like a passenger train?

Always.

Passenger trains are unique forms of conveyance. While a passenger train may take on certain attributes of other forms of transportation, a passenger train will always in the end still be a passenger train.

Because passenger trains are unique, the fare pricing for passenger trains should be unique, too. A passenger train can easily be more than transportation – it can be a saleable experience.

Entrepreneurial passenger train operators will price offerings to the traveling public at competitive prices for the services offered, and not price tickets at grossly under market prices as Amtrak does today. Amtrak sells sleeping car space at stratospheric prices, but gives away coach seats.

"Aha!" you shout, "But, Amtrak is a governmental agency, and, therefore, MUST sell coach seats at fares "fair" to all.

Hogwash.

"Well, gee," you whine. "Trains take so long to get there, they aren't competitive with driving or flying, so people aren't going to be willing to pay a realistic fare to travel on a train.

Amtrak MUST discount fares to attract business."

More, but not new and improved, hogwash.

If the uniqueness of sleeping car space on a train, priced today well above any comparable market rates can sell out months in advance of departure, then why should coach space be given away?

"Well," you continued totally unabashed, "Sleeping cars are so expensive to operate, Amtrak has to charge outrageous fares to pay for them. After all, maybe Amtrak shouldn't be in the sleeping car business because it only serves wealthy travelers who can afford to travel that way, and that's unfair to the rest of us. Maybe Amtrak is trying to start class warfare, and shouldn't do that because it is a governmental agency."

One can only believe those folks who think that also have a strong, abiding belief in the Great Pumpkin.

The reality is, passengers who choose to travel by train do so because of the desirability and uniqueness of the train and whether or not there are other convenient travel choices. For coach seating, price is often not in the top two or three reasons for travel.

Passengers can do things on a train which can't be done elsewhere, such as move around at will, choose where and when to eat or seek between-meal refreshments, and sleep in a freshly made bed in an utterly private space.

In most instances, passenger trains often provide city-or-town-center to city-or-town-center travel, not far suburb to far suburb travel as is found using airplanes and airports.

There is no reason for any operator to apologize for train travel, especially in the form of low fares. There are too many benefits to train travel to downplay its significance in a modern society.

In 1965, when train travel was still a broad public form of travel and competitively priced for the marketplace, a typical long distance coach fare was three cents a revenue passenger mile. Adjusted for inflation (1965 to 2010), that fare today would be 21 cents.

In 2010, other than the unique Auto Train, none of Amtrak's long distance trains earned anywhere close to 21 cents a revenue passenger mile. Coach travel on every long distance route was grossly under priced; not even keeping close to inflation.

Here's the breakdown of FY 2010 fares from Amtrak:

Silver Star – 14.67 cents per revenue passenger mile

Silver Meteor – 16.25 cents per revenue passenger mile

Cardinal – 14.80 cents per revenue passenger mile

Empire Builder – 15.22 cents per revenue passenger mile

Capitol Limited – 17.55 per revenue passenger mile

California Zephyr – 14.74 cents per revenue passenger mile

Southwest Chief – 13.26 cents per revenue passenger mile

City of New Orleans – 16.20 cents per revenue passenger mile

Texas Eagle – 13.63 cents per revenue passenger mile

Sunset Limited – 12.74 cents per revenue passenger mile

Coast Starlight – 16.67 cents per revenue passenger mile

Lake Shore Limited – 14.78 cents per revenue passenger mile

Palmetto – 18.01 cents per revenue passenger mile

Crescent – 17.48 cents per revenue passenger mile

Auto Train – 29.02 cents per revenue passenger mile

None of the long distance trains are running empty, either, precluding a call for discount fares to stimulate ridership. Most of these load factors have been achieved with near zero advertising, marketing, or public relations campaigns. Load factors are:

Silver Star – 62.9%

Silver Meteor – 63.8%

Cardinal – 55.3%

Empire Builder – 59.5%

Capitol Limited – 67.5%

California Zephyr – 60.0%

Southwest Chief – 66.6%

City of New Orleans – 61.5%

Texas Eagle – 69.8%

Sunset Limited – 47.2%

Coast Starlight – 62.5%

Lake Shore Limited – 60.4%

Palmetto – 52.4%

Crescent – 55.7%

Auto Train – 65.1%

With the exception of the Auto Train, which has no intermediate station stops, any train with a load factor of 65% or greater could easily fill another car. As a rule of thumb, because of on/offs at intermediate stations, a train with a 65% load factor is generally full and at some point in the route peaks out with no seats available.

It is a mystery why Amtrak chooses to charge so little for long distance train travel when it bitterly complains to Congress and the news media the majority of the company's losses are due to the forced operation of allegedly money-losing long distance trains.

It appears these are "money-losing long distance trains" by design and manipulation. The only regulation for Amtrak fares is free market pressure; no government entity dictates to Amtrak the amount it charges for tickets on long distance trains.

Are these trains intentionally underpriced to make them less financially desirable?

In Amtrak's early days in the 1970s, the then-current management of Greyhound Lines, Inc. was a bitter foe of Amtrak and the subsidies it received. Greyhound held itself out as a last bastion of public travel, and it corporately screamed to the high heavens Amtrak was unfair competition because it received government subsidies while Greyhound received none.

It's interesting to note in the 40 years since Amtrak was created, Greyhound's main competitor, Trailways Transportation System, has slunk into near oblivion, and Greyhound itself has abandoned a myriad of routes and cities and towns it once served. In many instances, Amtrak has emerged as a sole common carrier in many smaller cities and towns which no longer have any common carrier bus service.

The definition of predatory pricing is, according to www.wikipedia.org: "In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly, and hypothetically could then raise prices above what the market would otherwise bear."

Well, we're waiting for Amtrak to raise prices, because it doesn't seem to be in a hurry to do so if predatory pricing is its business plan.

If Amtrak charged long distance fares consistent with inflation at 21 cents a revenue passenger mile instead of an average of 16.29 cents per revenue passenger mile, it would collect an additional $131,937,710 in long distance fares based on FY 2010 business results.

There is one area of Amtrak business where fares have kept up with inflation: state supported routes and corridors. These fares for FY 2010 averaged 21.27 cents per revenue passenger mile. But, the average load factor on state supported trains is a full 20% lower than on long distance trains, with state trains averaging a load factor of 41.6% while long distance trains have an average load factor of 61.4%.

What would happen if Amtrak charged for state supported route coach fares what it charges for Northeast Corridor fares? NEC Northeast Regional trains average 41.80 cents a revenue passenger mile for nearly identical services provided on state supported trains.

The FY 2010 state supported route gross revenue would go from $386,439,600 to $759,401,082, most likely eliminating the need for any state subsidies.

But, with mouths open and a look of total anguish on faces, many will say, "how in the world could fares be raised that much and anyone still ride?"

The answer is fares could not reasonably be doubled in a single stroke; most likely fare hikes would have to be phased in over a six to 36 month period. Still, this would be a classic study of fare elasticity – how much could fares be raised and still attract the same or nearly same amount of riders?

There is a burning question of why, if fares averaging 41.80 cents a revenue passenger mile are sustainable in a high population area like the Northeast Corridor, would those same fares not be sustainable on the Pacific Surfliners in Southern California, where the cost of living is not that different from anywhere in the Northeast? Or, in Illinois; is the cost of living in Illinois that much different than in Wilmington, Delaware?

According to Bankrate.com, a cost of living comparison calculator, anyone making $50,000 a year in Wilmington, Delaware needs $64,775 a year to have an equivalent lifestyle in Los Angeles, California. That same $50,000 a year in Wilmington needs only 2.83% less a year in Chicago to live the same lifestyle, so there is little difference between Chicago and Wilmington.

Yet, residents of Los Angeles pay 23.08 cents per revenue passenger mile to ride a Pacific Surfliner train (with, it is important to note, in most instances newer and nicer equipment than the older Amfleet equipment used on Northeast Regional trains), and 23.19 cents to ride a Hiawatha service train between Chicago and Milwaukee, Wisconsin. If it costs considerably more to live in Los Angeles and nearly the same to live in Chicago, why are those residents paying nearly half what residents of the Northeast are paying to ride a state supported passenger train?

While Amtrak does charge higher fares on state supported trains than it does on long distance trains, most likely it is because it has to answer to state departments of transportation and state legislatures. But, still, why does it underprice fares? State supported trains have an average load factor of 41.6%, and Northeast Regional trains have an average load factor of 45%, 3.4% higher, with fares that are nearly twice as high. How is this explained? Population density is not the answer – it's as tough to find a grassy open space in Chicago or Los Angeles as it is in the Northeast.

It must be noted Amtrak claims the Acela service on the NEC makes money, but the Northeast Regional trains do not. This strange concept, since both services use identical stations, reservations systems, commissaries, infrastructure, etc., dictates someone, somewhere is doing some creative accounting. Because Acela trains actually travel faster than Northeast Regional trains, it costs more to maintain track infrastructure for Acela than it does for slower Northeast Regional trains, so Northeast Regional trains should technically be cheaper to operate. Plus, the regional trains have older equipment overall (some locomotives are newer, but many of them are shop queens) than Acela, so regional equipment should be further depreciated, and Acela equipment should be held at a higher book value for depreciation.

The argument can come down to one of demographics.

Does Amtrak believe it has a "better" class of traveler on the NEC, and, therefore can charge a higher fare with impunity? Does Amtrak believe the typical coach passenger on a state train in flyover country or – even more so – a typical coach passenger on a long distance train is poorer and less willing or able to pay for a coach ticket than the average NEC coach passenger? Yet, we still see exceptionally high sleeping car prices which sell out months in advance, even on Eastern routes where the travel is for transportation purposes as much as recreation purposes as found on some Western routes in warm weather months.

So, the question returns: does Amtrak scorn its passenger base, and think it can't attract the same financially viable passengers nationwide as found on Northeast Regional trains? Is there any proof Pacific Surfliner passengers are any less viable as a group than NEC passengers? Probably the opposite is true.

What priority does Amtrak have? Generate enough income to run the company effectively, or keep fares artificially low so the federal government in its present reduced financial state, can keep shoveling money into the company?

More importantly, does Amtrak WANT to succeed financially? Do Amtrak managers have enough faith in themselves and their product to start pricing services at fair market value?

At this point, someone inevitably brings up the point Amtrak doesn't have enough equipment to do the job. More distilled hogwash. On so many routes the load factor is so low, even a 15% to 20% load factor increase would not call for more equipment, but would have a tremendous financial benefit.

And, if Amtrak wants new equipment, why doesn't it do like every other common carrier in the world, and lease the equipment? There is no law which says Amtrak must outright purchase new equipment; plenty of lessors would be happy to make Amtrak a good deal on new equipment.

What are state department of transportation managers doing about this? Are they happy to pay Amtrak large sums of money every year from state public treasuries without investigating fare elasticity?

Amtrak received a large amount of stimulus money to upgrade its information technology, and much has already been put in place. How sophisticated is Amtrak's yield management system? Surfing through the reservations system comparing fares, while many elements of a yield management system are apparent, one has to wonder how deep down the system digs; for instance, does it manage by route, or by city pair? What type of limits have been set for producing revenue from selling day space in sleeping cars? Are there enough programmers and managers in place to monitor the whole system constantly, tweaking and updating fares for optimal yield management?

Let's review for a moment.

United States House of Representatives Transportation and Infrastructure Committee Chairman John Mica in June published the Fiscal Year 2010 losses Amtrak claims to have endured on its long distance route network.

Here is what we learned:

[begin quote]

Silver Star, New York - Miami: $46,500,000 annual loss

Cardinal, Chicago - New York: $15,200,000 annual loss

Silver Meteor, New York – Miami: $39,100,000 annual loss

Empire Builder, Seattle – Chicago: $56,200,000 annual loss

Capitol Limited, Chicago - Washington D.C.: $20,600,000 annual loss

California Zephyr, San Francisco – Chicago: $52,100,000 annual loss

Southwest Chief, Los Angeles – Chicago: $57,700,000 annual loss

City of New Orleans, Chicago - New Orleans: $21,800,000 annual loss

Texas Eagle, Chicago - Los Angeles: $27,100,000 annual loss

Sunset Limited, Los Angeles – Orlando: $37,400,000 annual loss

Coast Starlight, Seattle - Los Angeles: $47,100,000 annual loss

Lake Shore Limited, Chicago - New York/Boston: $35,000,000 annual loss

Palmetto, New York – Savannah: $13,800,000 annual loss

Crescent, New York – New Orleans: $40,200,000 annual loss

AutoTrain, Lorton, Va. – Sanford, Fla.: $18,500,000 annual loss

TOTAL – $527,300,000 annual loss

[End quote]

Focus on the Palmetto.

The Palmetto has a route length of 829 miles between New York Pennsylvania Station and Savannah, Georgia via Washington, Richmond, Rocky Mount, and Florence.

It is an undistinguished long distance train which requires only two sets of equipment. Southbound, it departs New York Penn every morning at 6:15 A.M. and arrives in Savannah at 9:03 P.M. Northbound, the Palmetto departs Savannah at 8:20 A.M. and arrives in New York Penn at 11:47 P.M.

The consist is one locomotive, one Heritage baggage car, one Amfleet I Club-Dinette, and four Amfleet II coaches. Only two trainsets are required for this service. The maintenance and crew bases are Sunnyside yards in New York City, with turn maintenance (cleaning) and a crew base at the Amtrak Savannah train station.

Between Savannah and Rocky Mount, North Carolina, the Palmetto shares stations with the Silver Meteor. The Silver Star also shares the stations in Rocky Mount and Savannah.

Between Rocky Mount and Richmond, Virginia, the Palmetto shares stations with the Silver Meteor, Silver Star, and Carolinian.

Between Richmond and Washington, the Palmetto shares stations with an additional six Northeast Corridor trains, plus shares Alexandria, Virginia with the Crescent, Cardinal, and the new Lynchburg, Virginia train.

From Washington to New York City, the Palmetto shares stations with an additional 41 trains of the NEC and Keystone services and whatever regional commuter services make use of the same stations.

Add all of that up, and in some combination, the Palmetto shares its stations with 53 other trains plus commuter trains. There are no stations exclusive to the Palmetto. The only exclusive service the Palmetto requires is the cleaning/turn maintenance crew in Savannah and the Savannah crew base.

The Palmetto requires two employees in the locomotive on some of the route and just one on most parts, one conductor, one assistant conductor, one lead service attendant in the lounge/dinette, and two coach attendants for a total crew of six on the train the majority of the time.

The annual passenger count is 189,500, and the average length of trip is 450.2 miles. Total revenue for the Palmetto is $15,366,600, and annually, 85,309,000 revenue passenger miles are generated.

The Palmetto travels 584,000 train miles each year, carrying 146.1 passengers in an average mile, each generating 18.01 cents per revenue passenger mile. There is an annual load factor of 52.4% on 162,751,277 seat miles available.

Remember, Amtrak says it loses $13,800,000 a year on the Palmetto. It's a Plain Jane train, with the only upgrade of business class service available, which consists of a free newspaper and free soft beverages in the lounge car as actual cost items. It's an all-reserved train with baggage service.

If Amtrak loses $13,800,000 a year on the Palmetto, that means the train, which makes 730 terminal departures a year (one in each direction every day of the year), loses $18,904 every time it leaves New York Penn or Savannah.

Since the Palmetto carries an average of 146.1 passenger every train mile at 18 cents per revenue passenger mile, the train generates $26.30 every train mile in fares. This does not include what it generates in the lounge car or for excess baggage in the baggage car.

If the Palmetto loses $18,904 every departure as Amtrak claims, that means it loses $22.80 every train mile above what is collected in ticket revenue.

But – and this is the big but – it only costs just a little less than $28.00 a train mile to operate the Palmetto, including host railroad (with on time performance bonus), crew (with full benefits and employee costs allocated), maintenance, depreciation, insurance, reservations, fuel, and every other cost – other than headquarters overhead and whatever extraordinary allocated costs may be assigned to each train such as corporate debt reduction. Station costs are not included; but, considering the Palmetto has no exclusive stations, the cost per departure are very low specifically for the Palmetto.

So, to be completely generous, let's say it costs $29 a train mile to run the Palmetto every day over the 829 route miles (including the 225 miles of the Northeast Corridor Amtrak owns and pays itself for use), for a cost of $24,041 every departure.

$21,803 in ticket revenue generated every departure.

$24,041 in expenses generated every departure.

A difference of $2,238 (loss) every departure, or $4,476 a day, plus station costs. That works out to a loss of $2.70 a train mile.

Amtrak says it loses $18,904 every departure, or $37,808 a day.

Harrumph. At the most, the Palmetto's daily share of station costs is well under $1,000. There are no avoidable station costs directly tied to the Palmetto because of the time of day it operates. Each station would be open and staffed for other trains whether or not the Palmetto existed.

Is Amtrak corporate and divisional headquarters eating up that much in subsidy costs?

Or, is Amtrak just assigning a huge amount of corporate costs to the long distance trains so the trains it wants to look good (Acela) look better?

Here's another bit of ironic cheer: The Palmetto only both entrains and detrains revenue passengers for 604 of its route miles. North of Washington on the NEC, southbound trains only entrain passengers; no local business is allowed. Northbound, the same thing; no new passengers north of Alexandria, Virginia (a Washington suburb).

So, if you wanted to erase some of that deficit, add in food service revenues, and excess baggage revenues That would help some, but not completely. The food service revenues would erase the cost of the lead service attendant in the lounge car, however. And, since the Palmetto's load factor is only 52.4%, pushing up that load factor with a small amount of marketing and advertising effort would quickly erase any real deficit. The Palmetto only needs an additional 15 passengers per train mile to break even under this formula. If the load factor bumped to the 78.7% load factor the Carolinian does on much of the same route, the Palmetto would be a cash cow. If the Palmetto was allowed to take on local passengers between New York Penn and Washington, that deficit would be quickly erased.

What about local business between New York Penn and Washington?

Here's the odd thing about that. During the Christmas holiday season, Amtrak opens up the long distance trains to local business between Washington and New York. There is no government rule or regulation or union deal prohibiting that from happening.

There isn't much difference between the Palmetto and any Northeast Regional train running on the NEC. The equipment is the same, the employees are the same, the stations are the same. Really, the only significant difference is the Palmetto carries a baggage car, a service most likely many NEC passengers would covet if they were allowed to use it.

But, the Palmetto generates only 18 cents per revenue passenger mile over its entire 829 mile route, INCLUDING the 225 miles it travels over the NEC trackage.

Northeast Regional trains – over the identical tracks, using the identical equipment, identical stations, etc., etc., etc. – generate 41.8 cents per revenue passenger mile over the 225 miles of the NEC. Acela trains generate 72.14 cents per revenue passenger mile.

The question is, why do long distance route Palmetto passengers pay 18.01 cents per mile, while Northeast Regional passengers pay 41.8 cents for the identical service, less the desirable option of checked baggage?

Can anyone explain why that is different? Please?

Can anyone explain why on the NEC, where there is a myriad of travel choices, including multiple long distance bus services and competition is high for passengers, why the cost is more than south of Washington, where there are fewer travel choices, yet the cost is less than half?

Isn't a lack of competition supposed to drive prices up, not down?

If Amtrak is going to blame all of its losses on the long distance trains, why does it charge so much less for long distance trains than NEC trains?

Long distance trains, other than the short times operating over the NEC, travel exclusively on tracks of host railroads, where a per train mile cost for use of the tracks and dispatching is paid. On the NEC, Amtrak is responsible for track and infrastructure maintenance. Is it possible the Acela service is allegedly profitable because Amtrak charges something close to a real market price for the service to cover actual costs (even though tens of millions of dollars of annual capital costs to keep and upgrade the NEC annually are never figured into the real costs of operating the Acela service)?

Is Amtrak's true opinion of the long distance trains such that it doesn't care about them and literally gives away the coach seats because it doesn't matter how much income the trains generate? Do long distance trains – as full as they are – only exist for political benefit to Amtrak?

We've looked at only the Palmetto because it's the closest in comparison to NEC trains. When looked at closely, other long distance trains with sleepers and full diners perform even better than the Palmetto because of the stratospheric sleeping car fares, even with station costs assigned to only one train service.

When the new generation of passenger rail entrepreneurs calculate proposed fares to start creating profit and loss and balance sheets, none of Amtrak's formulas will be used.

Instead, real market pricing will be the norm, such as "what will the market bear?" and what will passengers be willing to pay for the experience of riding the train? Remember, a passenger train offers options and services not found on any other type of land transportation, and reaches cities and town not served by other modes of common carriers. These are real, tangible benefits of train travel which are worth something in the marketplace, and the worth of these benefits should be reflected in ticket pricing.

Good yield management always plays a part, too. Three to four fare buckets for each city pair, based on demand and space availability are paramount for a good financial result. The airlines and cruise lines discovered this decades ago, and, Amtrak today uses yield management. One of Amtrak's problems is it just uses too low of base fares for the yield management to have any significant impact beyond the high rates charged for sleeping car accommodations.

Here is one final example of pricing gone completely wrong, and the only consequence is the American taxpayer has to cough up more and more subsidies for Amtrak. This example was based on prices at the time of compilation, June 18th, for travel on Monday, August 22, 2011.

New Orleans to Chicago

– Amtrak offers one coach fare, $112, for a trip of 19 hours and 15 minutes on the City of New Orleans, a full service train.

– Greyhound offers service in 20 hours and 20 minutes, with two transfers. Greyhound offers four fares, web only – $123.30, months in advance purchase – $89.00, standard fare – $137.00, and refundable fare – $154.00

– Southwest Airlines, should you enjoy a 17" wide coach seat, also offers the same city pairs, flying into Chicago Midway. Travel time of 2 hours 15 minutes. Web only, non-refundable – $156.00, anytime fare – $348.00, business select – $368. There are seven travel choices of varying length of travel, none over 4 hours 10 minutes.

– Should you choose to drive a private vehicle, at 51 cents for 926 miles over a period of 14 hours and 52 minutes, the cost allowed by the Internal Revenue Service is $472.26 for however many souls you can cram into a private vehicle for that period of time. [Note: As of Thursday, June 23rd, the IRS raised the standard mileage rate for the last half of the year to 55.5 cents per mile.]

Amtrak's standard fare is less than Greyhound's discount quick travel fare, and Amtrak is offering a full service train with complete dining and lounge car services, baggage handling and a shorter trip than Greyhound, plus no transfers. What is wrong with this picture?

Oh, and the lovable but beleaguered Sunset Limited, the long distance train everyone loves to complain about because it allegedly loses more money per passenger than any other long distance train, well, look at its pricing. The Sunset's revenue per passenger mile is only 12.74 cents, the lowest per mile fare of all of the long distance trains. Amtrak says the Sunset loses $37,400,000 per year, or, as many love to say, $408 per passenger. It's no surprise the Sunset is the biggest loser because its revenue passenger mile income is the lowest, and its operating characteristics are the worst – only tri-weekly service over a route which serves major cities such as Los Angeles, Tucson, El Paso, San Antonio, Houston, and New Orleans. It would take a miracle to make the Sunset Limited look good under these circumstances. If the Sunset was given half a chance and priced accordingly and put on any schedule but a tri-weekly schedule, it would no longer be the worst performing train.

It should be noted the new entrepreneurs will never have the opportunity to say, "I can't make this work because a stingy Congress doesn't give me enough money to be successful!"

None of the problems outlined above about below market pricing that never kept up with inflation has anything to do with how much free federal money flows from the public treasury to Amtrak. These problems are a direct result of poor decisions made expressly by Amtrak's management cadre that doesn't look internally to solve its problems, but constantly to the taxpayer to keep erasing the results of their poor decisions so they have the opportunity to make the same mistakes again and again and again.

For anyone in business, if there are no consequences to their actions, there is no accountability. Amtrak rarely faces any permanent consequences for its actions and poor decisions. The same people who scream for the heads of anyone on or connected to Wall Street that make these types of poor decisions for some unknown reason are completely silent about the same type of decisions at Amtrak. These same people fear the privatization of some Amtrak routes because of the unknown future under private operation. But, could any private business make as bad of decisions as Amtrak's pricing decisions and not be held accountable one way or the other? Either everyone has to be held accountable, or no one held accountably. Anything in between is just an exercise in hypocrisy.

The Miami Herald ran a headline Monday, June 27th proclaiming "Privatization's unspoken risk: corruption." The accompany story was about building private toll roads in South Florida. As is often with the media, there was much gnashing of teeth and fretting over what potentially evil entrepreneurs would do to poor, innocent citizens given the chance to fleece them for the sake of allegedly evil profits. Considering what Amtrak has done to the American taxpayer for the past 40 years and continues to do today with irresponsible fare pricing, it's safe to say there is plenty of corruption one way or the other in the public sector under the color of monopolistic government programs, too.

The new passenger railroad entrepreneurs know their business model rests on the best of the far past and the innovation of the future. No part of the business model – other than what NOT to do – rests on any business model in use for the past 40 years.

Gil Carmichael, former FRA Administrator during the Bush I years, and former Chairman of the Amtrak Reform Council, as well as the Founding Chairman of the Board of Directors of the Intermodal Transportation Institute at the University of Denver has started a new series of reports, entitled the Gil Carmichael Report, Investing in Interstate 2.0. The reports are free, informative, and a must read for anyone serious about the future of railroads in the United States. Contact the report distributor at [email protected] for your very own copy.

 

[AlanB]

You'd think that after all the investigating to find all those other numbers that Mr. Richardson would at least investigate long enough to find out that those low fares he laments about on the Pacific Surfliner's aren't set by Amtrak. They're set by California.

In fact, that why that route remains unreserved because that's what California wants, not Amtrak.

 

[stntylr]

Also he complains about the Sunset Limited only being three days a week. I know that's not Amtrak's choice either.

 

[jis]

Also remember that Mr. Richardson is yet to succeed in starting his privately operated service to Las Vegas. He does not seem to mention that ever anymore.

 

[AlanB]

Also remember that Mr. Richardson is yet to succeed in starting his privately operated service to Las Vegas. He does not seem to mention that ever anymore.

I'm guessing, but I suspect that his return to writing the column is do to the failure of that company.

 

[bretton88]

Believe me, if fares weren't this low on the LD coaches, I probably would be flying everywhere. Because if all was equal, time equals money, so for example the 26hrs on the train versus 6hrs on a flight for Omaha-Salt Lake City (the flight is 4hrs, I'm giving 2hrs for security, etc...). That extra 20 hrs is worth real value, whether business or time with friends. But, when the coach fare on Amtrak is 100$ lower than the flights, that's worth the 20hrs I lost on the train in addition to some scenery considerations. I don't consider Greyhound in this discussion, equal travel times, much less comfortable. I do note that he conveniently ignored Greyhound's advanced purchase fare, which a lot of people use in travel planning, its the same with flights. But Amtrak has to keep the fares low in coach. Otherwise, we're flying. That time is valuable.

 

[haolerider]

Also remember that Mr. Richardson is yet to succeed in starting his privately operated service to Las Vegas. He does not seem to mention that ever anymore.

I'm guessing, but I suspect that his return to writing the column is do to the failure of that company.

I am quite sure that is why he has returned to the URPA world in an active role. Bruce has never been the same since he did a brief "marketing" job for Amtrak that he viewed as a success and Amtrak viewed as a failure. He had several proposals for various projects, but Amtrak turned him down. His views are biased, short-sighted and he tends to ignore facts that do not support his case. I have always been curious as to how he supports himself.

 

[MrFSS]

This Week at Amtrak

​

Companion Publication to The Business and Politics of Passenger Rail

By D&D Carleton

 

Proofreading: Black Bear Wordsmiths ([email protected])

Volume 8, Number 12

​

July 11, 2011

​

A digest of events, opinions, and forecasts from

​

​

United Rail Passenger Alliance, Inc.

​

America's foremost passenger rail policy institute

​

​

Jacksonville, Florida USA

​

Telephone 904-636-7739, Electronic Mail [email protected] •

http://www.unitedrail.org​

​

From the Editors…

 

Recently a prominent state rail advocacy group signed on accepting the ultimatum of a major railroad. What does this portend for the rest of the country?

 

Cannot Predict HSR Speed? How About a Happy Medium…

 

"A thousand miles seems pretty far, But they've got planes and trains and cars, I'd walk to you if I had no other way…" Hey There Delilah - Plain White T's

 

Back in January of 2008, not long before the most recent resurgence and subsequent retreat of American High-Speed Rail, Rick Harnish of the Midwest High Speed Rail Association was one of the highlighted speakers at the Carmichael Conference held in St. Louis, Missouri. An interesting anecdote during his lecture told of the public's reaction to plans for high-speed trains: "How do we get the trains we already have to run on time," and "How do we keep the bathrooms clean." This may lead one to wonder: Are the public's expectations low or just realistic?

 

It should be noted, all hyperbole aside, that there are currently no high-speed trains in operation anywhere on the North American continent. The true definition of HSR by those who actually operate it is 250 kph (155 mph), so Amtrak's Acela does not quite make it. But that's okay here in the USA where our motto is, "If you don't like what you see, lower your expectations." Therefore, the American definition of HSR is anything faster than a bicycle going downhill. As a result there are projects ongoing to raise certain corridors up to top speeds of 90 mph or greater. The freight railroads which own the track in those corridors have their own ideas pertaining to "high speed."

 

As has already been covered by This Week, Norfolk Southern's CEO, Wick Moorman, made it clear that for his railroad "passenger train" means 79 mph, maybe 90 mph in certain circumstances. Ergo, the extension of regional trains in the Commonwealth of Virginia to Norfolk will top out at 90 mph. CSX has the same vision for passenger trains. In upstate New York, CSX has stipulated that 90 mph be the top speed for the current service running from Albany-Rensselaer to Buffalo. The government of New York State sees things quite differently, pushing to raise those train speeds to 110 mph. This is where perception meets reality; the former New York Central main line, the storied Water Level Route, is the property of Jacksonville, Florida-based CSX.

 

In a move to help settle this impasse, the Empire State Passenger Association agreed with CSX:

 

"The Empire State Passengers Association (ESPA) has endorsed 90 miles per hour as the near-term maximum speed for Amtrak's Empire Corridor passenger trains operating on CSX's busy freight mainline across upstate New York from west of the Capital District to the Buffalo region."

 

To be sure, the ultimate goal of ESPA is to realize 110 mph trains in New York State. Still, they have wisely determined that half a loaf, paid for by someone else, is better than none. They must also be keenly aware that time is of the essence. As per the Passenger Rail Investment and Improvement Act of 2008, specifically Section 209, it is expected that individual states will be held responsible for the operating losses for such trains. If everything had gone as per the language in the PRIIA, then in October, 2013 New York State would have to buy the cow because the milk will no longer be free.

 

Asleep at the Switch

 

Speaking of the Passenger Rail Investment and Improvement Act of 2008, formally known as Public Law 110-432/Division B, it may well be described as a train wreck in no motion. By law enacted October 16, 2008, Amtrak was required per Section 209 to "develop and implement a single, nationwide standardized methodology for establishing and allocating the operating and capitol costs among the States and Amtrak" for routes under 750 miles by October 16, 2010. Now some nine months later, no such "methodology" has been brought forward by Amtrak, although negotiations with the states are ongoing. Even so, the law is clear as to what was supposed to happen following the deadline and no agreement:

 

"If Amtrak and the States (including the District of Columbia) in which Amtrak operates such routes do not voluntarily adopt and implement the methodology developed under subsection (a) in allocating costs and determining compensation for the provision of service in accordance with the date established therein, the Surface Transportation Board shall determine the appropriate methodology required under subsection (a) for such services in accordance with the procedures and procedural schedule applicable to a proceeding under section 24904© of title 49, United States Code, and require the full implementation of this methodology with regards to the provision of such service within 1 year after the Board's determination of the appropriate methodology."

In other words, with no negotiated agreement in place by October 2010 there should have been accelerated implementation deadline for the Surface Transportation Board-issued standards. Instead of five years from enactment if the schedule had been followed, with the STB involved, it was supposed to be two years (the missed deadline) + 120 days (the STB decision) + one year = three years and four months vice five years. The STB was required to issue standards by mid-February 2011, to become effective and binding one year later.

 

To be certain, the Surface Transportation Board has more than enough on its plate these days, what with every utility in the land seemingly attempting to re-regulate the railroad industry. As such, they are more than content to sit back and watch the negotiations from afar, and will only intervene if a dispute arises between the states and Amtrak.

 

This is nothing we have not seen before, here at This Week. We fully expect Amtrak to come into the STB waving a tardy "agreement," and then the STB to take the path of least resistance by adopting it. The inherent danger of such after-the-bell acceptance would be the serious legal questions about the validity of any cost standards thus generated. Any other operator seeking to bid on any route negotiated with this agreement will be free to challenge said standards simply on the basis of missing the October 2010 deadline, and the STB's subsequent failure to promulgate standards unilaterally as specified in the PRIIA when that happened.

 

The Future of American Passenger Rail Corridors?

 

No matter how you slice it, the costs of transportation, all transportation, are going to be reallocated such that the states will have a more direct financial responsibility. The Passenger Rail Investment and Improvement Act of 2008, specifically Section 209, has a goal of establishing a uniform strategy for determining those costs of train routes 750 miles and under and then passing the bill along to the states. Translation: The federal government is getting out of the corridor business. Eventually we will see the same scenario with the Northeast Corridor.

 

Learning from the British experiment, the physical in-place plant should belong to a public entity; in the case of the NEC, perhaps a compact of those states. The legal foundation for such a compact already exists:

"Consent to Compacts.--Congress grants consent to States with an interest in a specific form, route, or corridor of intercity passenger rail service (including high speed rail service) to enter into interstate compacts to promote the provision of the service…" - The Amtrak Reform and Accountability Act of 1997, Section 410

Connecticut and Massachusetts already own all or a substantial portion of their intrastate section of the route. The states already have the bureaucratic machinery in place for their commuter services. The maintenance needs of the NEC are roughly $500 million per year, which comes out roughly to $1 million per mile. New Jersey would have the largest stake, at 58 miles. But they also have the largest NEC demand: NJ Transit. Is it any wonder that New Jersey politicians are fighting tooth and nail to keep the status quo?

 

The next logical step would be to bid out the premium services. If, say, an entity such as Sir Richard Branson's Virgin Trains wins the bid, they purchase and maintain their own equipment; they pay an access fee, and the public gets to ride in the same manner as it would if it had flown. The private entity now has room to innovate within the bounds of its own equipment and on its own dime, far from the scrutiny of the budget hawks. In the real world of HSR, this is becoming a reality. In 2013 German Rail (DB) will commence HSR Intercity Express (ICE) service from Frankfurt and Amsterdam to London. The existing HSR services on the lines will continue to run. Although DB is a public entity it is improvising like a private company. This also demonstrates that HSR can be done over someone else's infrastructure, and that competing HSR services can coexist. That is about the practical extent of "privatization" in the corridor world.

​

If you are reading someone else's copy of This Week at Amtrak, you can receive your own free copy each edition by sending your e-mail address to

[email protected]

You MUST include your name, preferred e-mail address, and city and state where you live. If you have filters or firewalls placed on your Internet connection, set your e-mail to receive incoming mail from [email protected]; we are unable to go through any approvals processes for individuals. This mailing list is kept strictly confidential and is not shared or used for any purposes other than distribution of This Week at Amtrak or related URPA materials. Subscribers to This Week at Amtrak are automatically subscribed to The Business and Politics of Passenger Rail, the companion URPA publication to This Week at Amtrak. Neither publication may be subscribed to exclusively.

All other correspondence, including requests to unsubscribe should be addressed to

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Copies of This Week at Amtrak are archived on URPA's web site, www.unitedrail.org

URPA leadership members are available for speaking engagements.

 

[MrFSS]

The Business and Politics of Passenger Rail; July 19, 2011

 

A Companion Digest of Events, Opinions, and Forecasts to

This Week at Amtrak

By J. Bruce Richardson

 

United Rail Passenger Alliance, Inc.

America's foremost passenger rail policy institute

Jacksonville, Florida • United States of America

Telephone 904-636-7739, Electronic Mail [email protected] • http://www.unitedrail.org

Volume 1, Number 12

​

Founded 35 years ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other locations. For more detailed information, along with a variety of position papers and other documents and a compendium of This Week at Amtrak, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

Hot off the Internet presses, the latest from Gil Carmichael, undoubtedly the wisest man in the railroad world today.

[begin quote]

Gil Carmichael Reports – Investing in Interstate 2.0, Volume 2; July 19, 2011

Fixing the Transportation Infrastructure: A Simple Public Works Project

There has never been a greater degree of conversation and talk over our nation's transportation problems than exists today. Ideas range from the rational to the irrational as ideas flow from the left and right. But to date, no comprehensive plan has been put forth that would create a 21st century intermodal transportation infrastructure to meet growing economic demands, as well as improve passenger and freight movement. The Obama administration has proposed an intercity rail passenger vision that would help address the crumbling infrastructure and create a large public works project; but takers have been too few. We are still thinking in a single mode only manner.

Lost in all the rhetoric about how to update the nation's dysfunctional transportation infrastructure is a single, cogent plan that can solve our problems of congestion, connectivity and fuel efficiency in a challenging global economy. The fact is however, that as a nation, we have already successfully dealt with a similar dilemma once before – in the 19th century! Today's solution should draw from and expand upon that lesson. We need only look to the building of the U.S. Transcontinental Railroad network that began in 1863 and continued to develop for decades, to see how a 21st century intermodal passenger and freight transportation solution can be achieved. Supported by Congress, this historic "steel wheel on steel rail" system ultimately connected the coasts for the first time, built vast cities in the west, greatly reduced passenger and freight travel time and created great economic vitality. It was a massive, yet simple economic plan much better than Eisenhower's Interstate Highway program of the 1950s.

As we continue to argue over freight versus passenger rail movement, we should remember that by 1912, when all of our center cities and ports were developing due to railroad expansion, approximately 80 percent of intercity passengers were riding the trains. So was 80-90 percent of the nation's freight. It was a shared rail system. And it worked beautifully! Following the building of Eisenhower's Interstate Highway System, by the 1970s, however, our growing population became an increasingly mobile society, enjoying cheap gas and diesel prices for private vehicular travel. Highways became the darling of not only the social order, but the federal and state governments, and freight and passenger transportation segued from the railroads, to the nation's highways and airports. Unfortunately, we built a mobility system based on individual transportation modes with a finite, largely foreign, fossil fuel source that at that time was funded on "increasing consumption."

We all know that is no longer the case. Nearly 150 years after we began to build this great railroad system, we live in a vastly more complex and technological global economy. Fossil fuel sources have been re-priced to very high levels; and our highways are congested, expensive and deteriorating. We have failed to invest intelligently in a seamless, modern intermodal North American transportation infrastructure policy which has the railroads as its key element.

Transportation in today's high-tech global economy must be an intermodal/internet-based process that moves goods, people, energy and information. For most goods, this requires international containerized movement by ships, trucks and railroads; for people it means air travel and intercity rail. With today's technology, such as digital communications, Intelligent Rail Systems (IRS), GPS and Positive Train control (PTC), we could safely increase passenger rail speeds to 110-125 MPH, and freight speeds up to 90 MPH. We could do so while creating great efficiencies, reducing congestion, and cutting highway fatalities by as much as 50 percent. It would also drastically reduce the wear and tear and cost of maintaining highways – thus extending their life.

While we talk incessantly, we are staring at a simple solution to this 21st century problem. We have a fairly wide 240,000-mile rail ROW network in North America that is already paid for. In most cases, this rail network connects all of our major "center cities" and ports, but sadly not any major airports. The rail network, however, after years of downsizing, is currently operating at only 20-25 percent of its real capacity. But, by double- or triple-tracking at least 30,000-40,000 miles of the railroads' main lines, with grade separations, we can create an ethical and fuel-efficient, rail-based, transportation system that will transform our transportation landscape into a modern, shared intermodal system. This would meet today's challenges by allowing freight and passenger trains to share the same system once again, while permitting the fast container movement of freight on a global basis and permitting the development of a new North American intercity high-speed rail system. It's a win-win policy.

With proper planning and investment, this holistic approach to a North American "Interstate 2.0," will be an ethical, fuel-efficient, intercity, rail freight and passenger transportation system. It will be seamless in nature, connect our center cities, ports, airports, and bus and transit lines, without destroying any green fields. It is a simple, but logical public works project – one that will require a working partnership between state agencies the private sector. This large public works project will also play a major role in restoring badly needed jobs and creating much needed economic prosperity. Done properly, it can be accomplished in 20 years. It's a simple, sensible fix.

__________________________________________

Gil Carmichael, a leading Southern Republican spokesperson on transportation issues, is Founding Chairman of the Board of Directors of the Intermodal Transportation Institute at the University of Denver, a former Federal Railroad Administrator, and former Chairman of the Amtrak Reform Council. Mr. Carmichael can be reached at: [email protected].

[End quote]

Gil Carmichael, former FRA Administrator during the Bush I years, and former Chairman of the Amtrak Reform Council, as well as the Founding Chairman of the Board of Directors of the Intermodal Transportation Institute at the University of Denver has started a new series of reports, entitled the Gil Carmichael Report, Investing in Interstate 2.0. The reports are free, informative, and a must read for anyone serious about the future of railroads in the United States. Contact the report distributor at [email protected] for your very own copy.

 

[MrFSS]

The Business and Politics of Passenger Rail; July 29, 2011

 

A Companion Digest of Events, Opinions, and Forecasts to

This Week at Amtrak

By J. Bruce Richardson

 

United Rail Passenger Alliance, Inc.

America's foremost passenger rail policy institute

Jacksonville, Florida • United States of America

Telephone 904-636-7739, Electronic Mail [email protected] • http://www.unitedrail.org

Volume 1, Number 13

​

Founded 35 years ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other locations. For more detailed information, along with a variety of position papers and other documents and a compendium of This Week at Amtrak, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

There are about a dozen projects in the pipeline for private passenger rail in the United States, and the first one is out of the planning stages and into actual operation.

Iowa Pacific Holdings' Saratoga and North Creek Railway had its inaugural last Saturday, July 23rd, and is officially open for business. This is a new railroad for general passenger transportation and a resort component in upper New York state. The route is a former branch line of the Delaware and Hudson Railroad, and the Saratoga and North Creek Railway frequencies make connections with Amtrak's Ethan Allen Express Service.

In brief, here is how Ed Ellis, president of Iowa Pacific Holdings described the new service:

[begin quote]

This is a fully-compliant passenger railroad. We make a good connection with the [Amtrak] Ethan Allen in both directions, and we lease the two station tracks from Canadian Pacific. Amtrak stops on the controlled siding.

Present equipment is full-length Budd dome cars and bi-level coaches built by Toyku Car for the Long Island Rail Road. Full dining service is available in dome class.

It's not quite a year round operation. We operate Thursday through Monday (no trains on Tuesday or Wednesday), two round trips a day, one oriented to residents, one oriented to connections. This schedule runs through October 30th. There is a ski train late December through March, and there are special event trains in the gaps. North Creek is a summer and winter market, but there is a shoulder season that is pretty quiet.

The ski train will be an early morning departure from Saratoga to provide a full day of skiing at Gore Mountain which is adjacent to North Creek.

[End quote]

You can learn more about the new, private-for-profit operation at www.sncrr.com or visit the web site of the parent company, Iowa Pacific Holdings at www.iowapacific.com.

Iowa Pacific Holdings is privately owned, with 10 owners, is profitable, and has reinvested all earnings, plus tax credits, plus RRIF loan proceeds into infrastructure over the years. Iowa Pacific has extensive holdings in short line freight operations, car repair, and infrastructure maintenance, as well as passenger tourist and excursion operations in the United States and Great Britain.

As for expansion, Mr. Ellis said:

[begin quote]

We will run additional trains for ridership demand, or if one or more units of government will pay for additional trains. As you may know, New York State DOT is paying for a second track on the CP at Ballston Spa (about two miles, connects two long sidings yielding maybe five miles of double track) and between Albany and Schenectady. It's no secret they would like to have two more pairs of trains between Albany and Saratoga. We would be willing to consider operating trains such as those under contract, and would be willing to add whatever qualifications and insurance that would be necessary to do so. That could also yield a year-round operation to North Creek.

I should point out that unlike many contract commuter operators, we are "soup to nuts," and maintain track and equipment, take reservations, provide onboard services and do our own marketing. So we are not like, for example, Herzog running the RailRunner. We are more like Amtrak running the Heartland Flyer, except there is no subsidy, we take the risk, and we expect

to make a profit.

[End quote]

The Saratoga and North Creek serves nine cities and towns, with full stations in North Creek and Saratoga, and seven flag stops in between. Each trip takes about two hours and 15 minutes for a trip just under 60 miles. Fares are from $19 for coach seating, one way.

For historians fond of Theodore Roosevelt, it was the North Creek railroad station where he boarded a special train after learning President William McKinley has died at the hands of an assassin, and vacationing Vice President Theodore Roosevelt became President Roosevelt.

Keep your eyes open for more to come from other successful railroaders outside of the government realm.

____________________________________________

We need to have a discussion about intellectual honesty and funding for Amtrak and various proposed high speed rail projects. Most rational people know the federal government is broke and is struggling to meet its obligations. Some want higher taxes to accomplish the goal of meeting past and current obligations, other, more rational beings, simply want lower levels of spending and a redefining of government as a smaller entity.

Just about everything – as it should be – is on the table for discussion in Washington. Leaders of every description are seeking ways to improve various things, and, as often happens, this leads to seismic shifts in how government programs survive, either in whole or part.

The cries of unabashed full funding for Amtrak and high speed rail in the current Washington environment are not only not helpful, but cheapen the cause for improved passenger rail transportation.

The proper cry is for full productivity by Amtrak and increased self-reliance, and, for high speed rail, the biggest bang for the smallest buck. This is a time to be making friends by demonstrating worth, not alienating large populations which may be necessary for future gain.

Amtrak's various Amen Corner support organizations need to be working to help Amtrak achieve recognizable goals, not demanding others do without funding to prop up an organization which always seems to lurch from one budget year to the next without a defined plan for permanent success. In this time of financial crisis, it's hard to shed any tears for those who don't help themselves, first, and ask the help of others after their own resources are exhausted.

The goal of more trains to more places is achievable by clever people with a clear purpose and a clearly defined path. Anything less just creates problems for the future.

____________________________________________

Most readers know of the devastating high speed train wreck over a week ago in China. This is the first major wreck for the new Chinese system, and it took the lives of nearly 40 people. There is lots of finger pointing going on at the moment, and good information is slow coming out of a country which has been tight-lipped for centuries. What we do know is the major accident slows down considerably any other countries which may have been listening to the siren song of the Chinese, hoping to export their high speed rail technology outside of their own country. In their haste for a world showcase, apparently they forgot one critical component – safety comes first.

______________________________________________

The ever thinking William Lindley of Scottsdale, Arizona passed along these thoughts after the final landing of NASA's Space Shuttle recently.

[begin quote]

The final Shuttle flight raises the question: What does Amtrak have in common with the Space Shuttle?

Both cost far too much, did far too little, and led their industry to atrophy. Our space program and our intercity passenger train network today lie shriveled and sunken, in need of a new and vibrant life.

The Space Shuttle was envisioned as an inexpensive way of transporting men and machines, with quick turn-around times on the ground and weekly launches. Yet, somewhere between concept and execution, the program became burdened with supporting so many different objectives, becoming so heavy and complex, that in reality each launch cost over a billion dollars – a hundred times the original budget – and across the 30 years the program averaged 11.5 weeks per launch – ten times longer than desired. According to the Boston Globe, the Shuttle program ran up a total budget $196 billion. Other than the Hubble Telescope and a few other major successes, the Shuttle program resulted in relatively little new science, at the cost of the loss of all crew on mission numbers 51 and 107.

Contrast this with the two highly successful and scientifically valuable Mars Rovers whose total budget to date is somewhere around one billion dollars. Yet, NASA, which has an effective monopoly on space exploration, has barely been able to build and operate programs like the Rovers, with the Shuttle devouring so much time, manpower, and money.

The net result across three decades was that few scientists and engineers were inspired to pursue space careers, and few new businesses were formed. How far ahead we would be if there were a hundred Burt Rutans competing to build spacecraft to the stars! Instead, our space program lies mired in bureaucratic muck.

Amtrak, too, came out of this eggs-in-one-basket approach. Like the centrally-planned NASA, there was one way to do things and Congress held all the purse-strings. Like NASA, almost everyone at Amtrak believed in their mission and their product, but the organization's structure permitted little dissent or imagination.

Both Amtrak and the Shuttle were monstrous, ponderous programs that discouraged competition and co-operation.

I shed no tears for the Space Shuttle which drained the adventure and vitality from the Space Age I envisioned as a child watching the Moon Landing, and I shall shed no tears at whatever befalls Amtrak. – William Lindley

[End quote]

_______________________________________________

Trains of Discovery: Railroads and the Legacy of Our National Parks by Alfred Runte has been issued in its updated, fifth edition.

It's a book chocked full of colorful railroad photos, posters, and illustrations, focusing on how our nation's national park system was promoted and grown by the passenger railroads of the 19th and 20th centuries. The book has been updated to include parks east of the Mississippi River.

Al Runte is a hardcore conservationist and his work reflects that. He's obviously in love with passenger trains, and his work reflects that, too. His books are a combination of excellent history about passenger trains and his passion for conservation. Whether you read the book for trains, or read the book so you can enjoy hugging the next tree you see, either way, you will spend an enjoyable time with the writing of Al Runte. The book also contains full color photos of many of his extensive railroad collectibles and many illustrations by J. Craig Thorpe.

The book is published by Roberts Rinehart is available in both hard and soft covers. It was released this month.

Gil Carmichael, former FRA Administrator during the Bush I years, and former Chairman of the Amtrak Reform Council, as well as the Founding Chairman of the Board of Directors of the Intermodal Transportation Institute at the University of Denver has started a new series of reports, entitled the Gil Carmichael Report, Investing in Interstate 2.0. The reports are free, informative, and a must read for anyone serious about the future of railroads in the United States. Contact the report distributor at [email protected] for your very own copy.

Useful links for the passenger train world (New links have been added since the last edition):

www.passengerrail.org – Association of Independent Passenger Rail Operators

www.herzogcompanies.com – Herzog Transit Services, Inc.

www.keolis.com – Keolis Rail Services/America

www.railamerica.com – RailAmerica, Inc.

www.ratpdev.com – Ratp Dev

www.veoliatransportation.com – Veolia Transportation

www.spartansolutions.org – Spartan Solutions LLC

www.durangotrain.com – Durango & Silverton Narrow Gauge Railroad

www.cumbrestoltec.com – Cumbres and Toltec Scenic Railroad

www.rockymountaineer.com – Rocky Mountaineer Railtours

www.viarail.ca – VIA Rail Canada

www.tampaunionstation.com – Friends of Tampa (Florida) Union Station

www.larail.com – Private passenger railcars for individual hire in Southern California

www.americanrail.com – American Rail Excursions, Inc.

www.newrivertrain.com – New River Train Excursions/Collis P. Huntington Railroad Historical Society

www.scottishthistle.com – Scottish Thistle private passenger rail car

www.bombardier.com – Bombardier, Inc.

www.hamilton-associates.com – Hamilton & Associates, Inc.

www.iowapacific.com – Iowa Pacific Holdings, LLC

www.sncrr.com – Saratoga and North Creek Railway

www.rhbohannan.net – R.H. Bohannan & Associates, LLC

www.tgaassoc.com – Thompson, Galenson and Associates

www.worldbank.org – World Bank

www.aar.org – Association of American Railroads

www.du.edu/transportation – Intermodal Transportation Institute, University of Denver

www.amtrak.com – Amtrak

www.dot.gov – United States Department of Transportation

www.volpe.dot.gov – Volpe Center

www.fra.dot.gov – Federal Railroad Administration

www.unitedrail.org – United Rail Passenger Alliance, Inc.

www.APRHF.org – American Passenger Rail Heritage Foundation

www.azrail.org – Arizona Passenger Rail Association

www.colorail.org – Colorado Rail Passenger Association

www.railpac.org – Rail Passenger Association of California & Nevada

www.fcrprail.org – Florida Coalition of Rail Passengers

www.nmrails.org – Rails, Inc., New Mexico passenger rail advocacy group

www.railvermont.org – Vermont Rail Action Network

www.texasbytrain.org – Texas Coalition

www.texasrailadvocates.org – Texas Rail Advocates

www.TXARP.org – Texas Association of Rail Passengers

www.dot.ca.gov – Caltrans/California Department of Transportation

www.dot.state.fl.us – Florida Department of Transportation

www.dot.state.il.us – Illinois Department of Transportation

www.bytrain.org – North Carolina Department of Transportation, Rail Division

www.virginiadot.org – Virginia Department of Transportation

www.railroaddata.com – Railroad Internet web site information consolidator

www.trainweb.com – Railroad Internet web site information consolidator

www.usa-by-rail.com – Informative route guide paperback book for the Amtrak system

If you would like to have your company or organization's Internet web site link listed here, submit it for consideration to [email protected]. Inclusion will be at the sole discretion of the publisher, and the publisher reserves the right to exclude any company or organization for any purpose. This list is not intended to be a complete list.

Subscribers to This Week at Amtrak automatically receive a subscription to The Business and Politics of Passenger Rail; subscriber lists are maintained simultaneously for both publications, and neither publication can be subscribed to exclusively.

If you are reading someone else's copy of The Business and Politics of Passenger Rail, you can receive your own free copy each edition by sending your e-mail address to

[email protected]

You MUST include your name, preferred e-mail address, and city and state where you live. If you have filters or firewalls placed on your Internet connection, set your e-mail to receive incoming mail from [email protected]; we are unable to go through any approvals processes for individuals. This mailing list is kept strictly confidential and is not shared or used for any purposes other than distribution of The Business and Politics of Passenger Rail, This Week at Amtrak, or related URPA materials.

All other correspondence, including requests to unsubscribe should be addressed to

[email protected]

Copies of The Business and Politics of Passenger Rail and This Week at Amtrak are archived on URPA's web site, www.unitedrail.org and also on www.todaywithjb.blogspot.com where other rail-related writings of Bruce Richardson may also be found.

URPA leadership members are available for speaking engagements.

J. Bruce Richardson

President

United Rail Passenger Alliance, Inc.

Jacksonville, Florida USA

Telephone 904-636-7739

[email protected]

http://www.unitedrail.org

 

[MrFSS]

By D&D Carleton

 

Volume 8, Number 13

From the Editors…

​

One cannot discuss Amtrak without at least a basic knowledge of the Northeast Corridor. What exactly is the NEC? In this first installment of a two-part series we examine the rise and fall of the NEC.

In the beginning

"While the mighty Pennsylvania boasted of having pushed its steel tentacles into some of the nation's most populous cities, it could not make that claim with regard to New York City. Throughout the last years of the nineteenth century, the PRR struggled in vain to conquer the great natural barrier--the Hudson River--which lay between it and America's largest metropolis." - Michael Bezilla, Electric Traction on the Pennsylvania Railroad 1895-1968, Pennsylvania State University Press

To understand the United States, one must contemplate the challenges of those earliest days of the Republic. The two largest cities on the East coast, New York and Philadelphia, were a six-day journey by horse and boat for the founding fathers. Yet as early as 1811, Colonel John Stevens, the father of American railroading, petitioned the New Jersey Legislature to charter a railroad between Trenton and New Brunswick. His request was denied. His sons would build the storied Camden & Amboy Railroad in 1834 from a ferry connection in Philadelphia to a boat dock on the Raritan River in South Amboy, New Jersey. The Philadelphia & Trenton Railroad was built and fully operational in 1835. The Camden & Amboy completed a branch between Trenton and New Brunswick in 1839. That same year, the New Jersey Railroad completed its line between Jersey City and a connection with the C&A at New Brunswick, and initiated through service from the New York City area to Philadelphia. A journey that had taken six days a quarter-century before could now be completed in a matter of hours.

A similar story can be told south of Philadelphia. In 1832, the New Castle & Frenchtown Railroad commenced operation in Delaware. After numerous charters and a few false starts, numerous smaller roads were consolidated into the Philadelphia, Wilmington & Baltimore Railroad in 1836. Through service between Philadelphia and Baltimore began in 1838. By 1851, it was possible to travel from New York to Washington, DC in 12 hours via a connection with the Baltimore & Ohio Railroad.

Following the American Civil War, railroads began their transformation from local concerns to national institutions. By and large it was these ideals that were at the heart of the war, itself. The Pennsylvania Railroad acquired control of the C&A, P&T and NJRR roads in 1871. After a battle for control with the B&O, the Pennsylvania Railroad gained control of the PW&B in 1881. As a result, the B&O would build its own line from Baltimore to Philadelphia.

What followed is a lesson in corporate overreach. There had been a proposal in the 1860s to build a "National Air Line" railroad between New York and Washington. It was supported by the then-upstart PRR, and opposed by the established B&O, which already had a line between Baltimore and Washington. After the B&O successfully fought off the "Air Line" repeatedly, it then found that the PRR was buying up the other railroads with which the B&O had been connecting for traffic between New York and Washington (the Baltimore and Potomac was the last piece, and then the B&O would be cut out). So the B&O built its own line to Philadelphia, at a time when the original B&O, and particularly the West End, were still unimproved and badly in need of investment; thus perpetuating its slide from the first-place East-West trunk line to third-place behind the PRR and NYC.

The story of the Baltimore & Potomac Railroad is somewhat more colorful. Originally chartered as a regional road to connect the farms of southern Maryland to the ports in Baltimore, it was purchased by a group of associates of the PRR in 1866. A "branch" was built in 1872 between Bowie, Maryland, and Washington, DC. In 1873, tunnels were completed in Baltimore, allowing connection between the PRR-owned B&P and the PRR-friendly PW&B. Within a decade, the PRR would control its own railroad in what was considered the most valuable stretch of real estate in the country.

North of New York the tale is equally as complex and historic. The first link was the Boston & Providence Railroad, which began operation between its namesake cities in 1835. The New York, Providence & Boston Railroad began through operation in 1837 between Providence and Stonington, Connecticut. In 1848 the New York & New Haven Railroad completed its line between New Haven, Connecticut and a connection with the Harlem Railroad to access New York. In 1858 the New Haven, New London & Stonington Railroad completed the last link, and by 1859 an all-rail route with two ferry crossings was possible between Boston and New York via four railroads. The NYP&B purchased the NHNL&S in 1864.

In 1872, the New York & New Haven combined with the Hartford & New Haven Railroad to become the New York, New Haven & Hartford Railroad; thus began an insatiable quest for consolidation in Southern New England. Germane to the Northeast Corridor, the NYNH&H, better known simply as the New Haven, acquired the NYP&B in 1892. The Old Colony, which had leased the B&P in 1888, was itself leased in its entirety by the New Haven in 1893. With all of its acquisitions, the New Haven controlled all rail traffic in Southern New England and in so doing then possessed three separate routes between New Haven and Boston: The Inland route via Hartford, the "Air Line" which avoided all major cities as well as the State of Rhode Island, and the Shore Line route which hugs the northern banks of Long Island Sound. Sometimes holding all the cards means control of one's destiny; and sometimes it means too much of a good thing.

Let there be light

The New Haven was a pioneer of electric traction utilizing low-voltage direct-current applications as far back as 1895 on many branch lines. The New Haven connection to New York was then part of the New York Central System, and as a result of a horrific accident on the NYC in 1902, steam locomotives were banned by city ordinance after 1908. The New Haven would use the NYC third rail system into the city, but had much more ambitious plans for the rest of its main line. In April 1907, the first high-voltage overhead catenary was energized between the end of third-rail territory and the power plant at Cos Cob, Connecticut. By the end of that year, wires had been extended east to Stamford. In 1914, electrification had reached New Haven. Numerous branch lines for freight and passenger service were also electrified. Had economic conditions not worsened, the electrification program would have continued, possibly to Boston.

For the PRR, of course, owning the premier transportation system in the country had its own responsibilities. As the final years of the 19th Century wound down, traffic on the PRR continued to grow. Even so, terminating at Harsimus Cove, like so many other roads on the Hudson River, did not meet the expectations of the "Standard Railroad of the World." After much consideration, a plan of attack was reached in 1901 wherein the PRR would access New York and beyond. Tunneling beneath the solid rock of New Jersey's Bergen Hill and then slogging through the muck that is the river bottom, the PRR would not just enter Manhattan, but would make the grandest statement in passenger railroading travel: Pennsylvania Station New York. It would not stop there. Working in conjunction with the New Haven and PRR subsidiary Long Island Railroad, four tunnels would connect Manhattan to the Borough of Queens and then a spectacular connection to New England via a bridge over the East River at Hell Gate.

Upon its completion in 1910, the new electric division from Manhattan Transfer, New Jersey to Sunnyside Yard in the city Borough of Queens was powered by low-voltage third-rail DC electricity as the result of the city ordinance banning steam locomotives. Even then the PRR was contemplating electrification of the railroad in a manner without the restrictions of low-voltage DC, high-voltage overhead catenary. In 1915, it electrified the Main Line between Philadelphia and Paoli. This was followed by extensions north to Trenton and south to Wilmington. In 1928, the PRR announced its intention to electrify north to New York, replacing the original third-rail system except for what was needed by the LIRR (the New Haven had extended its overhead electrification to Sunnyside Yard in 1917). Despite the Stock Market crash of 1929 and Great Depression of the 1930s, the expansion continued with plans to electrify to Washington and Harrisburg. Service to New York began in 1933, to Washington in 1935, and to Harrisburg in 1938. Much of this was underwritten by Federal loans of some $107.5 million.

It should be noted that the improvement to what would later be called the Northeast Corridor was not the only PRR plan for massive improvement. In 1905, the PRR incorporated the Pennsylvania & Newark Railroad, to build a parallel freight route from the yard at Morrisville, just south of Trenton, north; connecting to a freight yard in Newark. Work was suspended in 1916 due to wartime scarcities, and never restarted. The PRR had also planned building an entirely new mainline to the Midwest running west from Lewistown, Pennsylvania, across Ohio, and well into Indiana. This new low-grade line would have given the PRR the shortest and fastest link between New York and Chicago. For reasons left to speculation, the PRR decided to improve its line between Washington and New York. This would unwittingly set the stage for passenger railroading in the later decades of the 20th Century.

The darkest hour

By the mid 1960s, America's railroads were in trouble. Not only was the once-mighty PRR not exempt from this pain, but in many ways was its full embodiment. The radical improvement of the 1930s which made the PRR the paragon of transportation now weighed like a millstone around its neck. Overly-burdensome regulation from early in the 20th Century had ended the PRR program of continuous self improvement. This was followed by the post-war largess manifested in the Interstate Highway program; an open-access network of asphalt and concrete, underwritten and maintained at the expense of the American taxpayer. Passenger trains had always been guaranteed enough cross revenue from freight through the rates set by the Interstate Commerce Commission. Now with freight (especially the premium carloads) leaving for the subsidized highways, there was no longer enough to go around.

For the New Haven, things were even worse. Having a dense regional railroad in a small industrial area of the country made sense before the age of subsidized roadways. With the coming of the Connecticut Turnpike and New England Thruway, the New Haven did not stand a chance.

Sowing the seeds of socialized rail transportation

In the decade of the 1960s, the economy of the country was running like a well-oiled machine. Every corner of business was garnering its share of the national largess with one notable exception: The railroads. Increase in business revenue correlated with an increase in internal revenue, and much of this went to the railroads' new competition: Socialized transportation in the form of interstate highways and airports. Meanwhile, Japan was continuing to rebuild its infrastructure. As it did not enjoy national largess, it was imperative to make the most of what it did have by rebuilding and improving on existing technology. Thus, after rebuilding its railroads, Japan took the next logical technological step of speeding up its railroads. Its 125 mph "Bullet Trains" captured the imagination of the world, and the imagination of at least one person in the U.S. Senate. After all, that money in the U.S. Treasury was not going to spend itself.

Claiborne de Borda Pell served in the U.S. Senate representing the people of Rhode Island for six terms starting in 1961. He will always be best known as the father of the Pell Grant, which offers tuition aid for college students. Immediately following his election, he turned his attention to the possibility of high-speed trains in the Northeast. He aroused then-President Kennedy's enthusiasm for the idea, and this led to the initiation of feasibility reports by the Commerce Department. But how to pay for it?

"Where will the money come from to build a high-speed rail line in the northeast corridor? A federal subsidy only as a last resort, said the Senator. What he favors is the creation of a public authority which could guarantee bond issues. But there are other possibilities, too: 'I am by no means exclusively wedded to the public authority approach…one alternative which has been discussed is the formation of a public corporation…'" - Railway Age, October 12, 1964

Apparently, all the other possible options were discarded rather quickly. Following the release of the Commerce Department corridor studies in 1964, Senator Pell introduced (and Congress passed) the High Speed Ground Transportation Act of 1965. Signed into law by President Johnson, the Act authorized in 1965 an expenditure of $20 million, and $35 million the next year. These funds went to upgrades to the railroad right-of-way between New York and Washington, DC, as well as to the purchase of the now famous Metroliners; 50 multiple-unit cars capable of 120 mph speeds, from the Budd Company.

This was the era of "The Great Society" where all the nation's woes could be cured with copious quantities of public money. Sadly, such was the mindset of the age of avarice; throwing money at problems was much easier than solving problems. All around the country, the railroads were losing traffic to government-subsidized competition. This atrophy of traffic led to the mistaken notion that parallel railroad mergers would equate to survival, thus leading the PRR to merge with its long time rival, the New York Central, in 1968. Part of the PRR's agreement to allow its property between New York and Washington to become a guinea pig for an imperious immediacy of political interest was the hope of a favorable decision to grant its merger. Unfortunately, in less than two years this misbegotten union called Penn Central became the single largest corporate bankruptcy in history up to that time.

Instead of addressing the continuing failing fortunes of the nation's railroads, elected leaders of the day concentrated on one symptom: Passenger rail losses. It has been said that Americans operate in only the two modes of complacency and panic. Complacency was no longer an option. Millions of public dollars invested in the NEC faced the possibility of liquidation in bankruptcy court. Politically, this was untenable. A key reason for the 1971 formation of the National Railroad Passenger Corporation, or Amtrak, was to protect America's investment. America's passenger trains were now in the hands of Senator Pell's suggested "public corporation."

How has this public corporation fared in its governance of the NEC? This will be addressed in our next installment.

 

[jis]

The NEC infrastructure was not given to Amtrak in '71. In '71 Amtrak was a purely Train Operating Company. It was in '76 when Penn Central failed that parts of the NEC was handed over to Amtrak to offload that cost from the new Conrail's books. Simultaneously parts of Penn Central was also handed over to NJ-DOT. By all accounts that maneuver has been a partial success since Conrail has been effectively privatized and the government made money on that deal. The problems of NEC are at least as much a collective political problem as anything else. Using it to beat up on Amtrak and nothing else smacks of a single minded agenda and not a cogent analysis.

 

[MrFSS]

This Week at Amtrak

​

By D&D Carleton

Volume 8, Number 14

​

 

From the Editors…

 

In this issue, the conclusion of our two-part series where we look at the modern-day history and contemplate the future of the NEC.

 

Amtrak's Northeast Corridor

 

"It will remain for the future to show how that institution can be preserved, and the way provided for its continued progress in usefulness and effectiveness for the public, for its employees, and for its owners." - Martin W. Clement, President of the Pennsylvania Railroad Company, forward to Centennial History of the Pennsylvania Railroad Company 1846-1946

 

The first six years of Amtrak operations on the NEC could be described as "business as usual." From coast to coast, Amtrak was taking responsibility for all remaining passenger services, thus the NEC was just another piece of railroad. Operating crews, conductors and engineers, were still provided by the host railroads. Federal monies were made available to prop up the failing railroad infrastructure of the Northeast, including the NEC, until a permanent fix could be agreed upon. For more than five years between May 1, 1971 and sometime in 1976 Amtrak, itself, governed all of its local and long distance trains in the NEC as a tenant of Penn Central. (This is still the case almost everywhere else in the U.S. on other host railroad properties.) PC was still responsible for the dispatching of their freight trains and the many, many commuter trains that PC continued to operate over the NEC facility. It was during this brief but bright moment that the 1973 oil embargo hit the country, and suddenly the population began to take notice that there were still passenger trains running.

 

The Railroad Revitalization and Regulatory Reform Act (4R Act),signed into law on February 5, 1976, would forever change the NEC and domestic passenger railroading. In the fire sale that was the end of Penn Central, the NEC south of New Rochelle, New York and between New Haven, Connecticut and the Rhode Island/Massachusetts state line was ceded from the newly-formed ConRail to Amtrak as per the 4R Act on April 1, 1976; the remainder went to State agencies. Transfer of ownership of the NEC to Amtrak in 1976 was orchestrated by the United States Railway Association not because of the magic of Amtrak owning its own railroad, but in order to get the financial albatross of NEC ownership off the back of the brand-new ConRail, and onto Amtrak's books, where the presumed continuing flow of free public money to sustain it would be more appropriate. Also, with the 4R Act came the Northeast Corridor Improvement Project (NECIP) and $1.75 billion in Federal funds, with the goals of achieving New York-Washington running times of two hours forty minutes, and Boston-New York running times of three hours forty minutes. The pitfalls and temptations of government money were all too soon apparent:

 

"A highlight of the first year of the NECIP was a three-inch-thick Environmental Impact Statement, which came to the startling conclusion that there would be no environmental damage from continuing to run trains where trains had been running for over a hundred years." - Tom Nelligan and Scott Hartley, Trains of the Northeast Corridor, Quadrant Press, Inc, 1982

 

At one point, the FBI was summoned to investigate a $16 million discrepancy between material purchased and material on hand. By 1979 Congress knew what to do: Increase the NECIP budget to $2.4 billion and extend the deadline for completion from 1981 to 1985. In 1981, the Reagan Administration cut $600 million from the NECIP, and the plan to extend electrification to Boston would have to wait.

 

The wait ended January 31, 2000 when regular electrified service commenced to Boston's South Station. The four-year $2.4 billion project had its own drama, with FBI raids of contractors' offices. But the biggest fraud would be the Acela Express trainsets; an untested, one-of-a-kind fleet of heavy energy users, dubiously procured and never to be repeated.

 

Today, the maintenance needs of the NEC are about a half billion dollars per year. Yet, due to its nature, the bulk of patronage was not, nor would ever be, Amtrak ticket-paying customers. Even so, prior to direct State assumption of commuter rail services in 1983, Amtrak would be called upon to subsidize those local needs. New amendments to Amtrak's governing laws in the early 1980s assured that the "formulas" contained therein would never allow Amtrak to recover the huge costs of subsidizing massive commuter rail operations. Unfortunately, that situation still has not changed:

 

"We are paying a lot of money not needed to operate rail passenger service. We are also cross-subsidizing some of the commuter operations in the Northeast Corridor. That's a matter of policy, and we are not urging that be changed. But the fact is, it's not an operating cost of intercity rail passenger travel service. [Cross subsidization] is about $47 million a year." - Interview with Graham Claytor, Trains magazine, June 1991

 

Asking those states which utilize the corridor to ante up would bring Amtrak closer to solvency. Doing so, however, would mean ceding some degree of control to those states. Repeal of the commuter subsidy "formulas" was attempted in the original version of what became the 1997 Amtrak reform law, but the political clout of the NEC states on both sides of the aisle proved too strong. As of this writing, ceding any jurisdiction of the NEC to anyone other than itself is anathema to Amtrak. Emboldened by shear ownership, the NEC has taken on a life of itself; it is no longer a part of the Amtrak network but rather the core of Amtrak, to which all other lines of service must cede.

 

Amtrak is a political animal, and as such, political expediency will always come before business acumen. Amtrak currently touts its "market share" in the Northeast as 52% between Boston and New York, and 65% between New York and Washington. These numbers, however, are strictly a modal split, as between Amtrak and the air shuttle carriers. Using U.S. DOT Bureau of Transportation Statistics data for intercity travel (non-commuter trips over 100 miles), you get a true "market share" value for rail of somewhere under 2%, and Amtrak itself reports its own paltry load factors. Mobility in the Northeast is just as important as anywhere else in the country, but are these results of a thus-far $30 billion investment worth it?

 

Breaking the cycle of [Federal] dependency

 

Whereas the 2008 economic downturn was characterized as a failure of business, the 2011 economic malaise has been defined as a failure of government. The populous will spend the rest of the decade, if not longer, asking and answering some very deep and basic questions regarding who pays for what and how much.

 

To this end, U.S. Representative John L. Mica of Florida, Chairman of the House Transportation and Infrastructure Committee, and U.S. Representative Bill Shuster of Pennsylvania, Chairman of the Railroads, Pipelines and Hazardous Materials Subcommittee, presented a new initiative called the "Competition for Intercity Passenger Rail in America Act." The press release of June 15, 2011 reads in part:

 

"After 40 years of costly and wasteful Soviet-style operations under Amtrak, this proposal encourages private sector competition, investment and operations in U.S. passenger rail service," Mica said. "Competition in high-speed and intercity passenger rail will cut taxpayer subsidies, improve service, and bring our nation into the 21st century of passenger rail transportation."

 

"Amtrak has repeatedly bungled development and operations in the Northeast Corridor, and their new long-term, expensive plan to try to improve the corridor is simply unacceptable," Mica continued. "The nation cannot afford to continue throwing money away on this highly subsidized, ineffective disaster.

 

"It is time for a new direction. Around the world, other nations and the private sector have successfully competed to develop high-speed and passenger rail service," Mica said. "There is no reason we cannot do the same in our most densely populated and congested region. By giving the private sector the opportunity to bring its resources and expertise to the table, we can lower costs, increase efficiency, and improve high-speed and intercity passenger rail service across the country."

 

The intent is to transfer title of the NEC from Amtrak to the U.S. DOT or some other organization to allow for more flexibility in operations and investment. It should be noted that relieving Amtrak of the NEC property (and its attendant endless capital needs) is something that has been recommended by members of the United Rail Passenger Alliance for over a quarter century:

 

"But Amtrak need not own the NEC. It can be sold and its costs of ownership eliminated without adverse effect on train operations…"

 

"Shared ownership is not unprecedented. It simply treats the NEC as a large terminal district; many hotly competitive railroads jointly and profitably own feeder lines, terminal districts, and union stations…"

 

"Structuring the buyer of the NEC as a limited partnership (the customary means of syndicating large real estate projects) would enable Amtrak to be the general partner, retaining needed day-to-day operational control. The limited partners would be allocated the tax and other financial benefits of ownership." - Andrew C. Selden (URPA Vice President Law and Policy), How to get Amtrak out of the woods, Trains Magazine, January 1986

 

On the international railroad scene, this is already a reality. In Great Britain, the national network of track is owned by Network Rail, a government-created "not for dividend" company. Network Rail's customers are separate and for the most part private-sector "train operating companies" (passenger) and "freight operating companies" who operate under periodically-renewed franchise contracts. An interesting exception to the private-sector passenger operations is the East Coast Main Line: London-York-Edinburgh. The through trains are currently being operated by another government-created company, Directly Operated Railways, because the last for-profit franchise holder, National Express, bailed out in dramatic fashion after discovering it was losing its shirt running trains even over subsidized tracks. Numerous companies, fast passenger and slower freight, operate over Network Rail and have learned how to play well together over somebody else's infrastructure. The British experience did not come without its fair share of unpleasantries, but in the end the nationalized British Railways were successfully weaned off the public dole, and succeeded by multiple entities; private where profitable, public where warranted. This was not just to keep the trains running, but to grow and continuously improve national rail transportation. Its progeny now have a chance to learn from this experience.

 

The Mica-Shuster initiative was immediately castigated as total "privatization" and declared dead-on-arrival by those who may be on the losing end of this potential transaction. One amusing erudition emanating from this fracas involves invoking the final phrase of the Fifth Amendment, "nor shall private property be taken for public use, without just compensation." The NEC was "private property" which was ceded by Penn Central to public ownership upon its exodus from the transportation business. Amtrak, a "quasi-public corporation," does have preferred and common stockholders. All of the preferred stock is held by the U.S. DOT. The common stock is held by the successors of the original Amtrak-participating railroads who accepted stock in lieu of tax credits that would not aid their fiscal malaise. Today this class includes a financial group and three class-one railroads. The Amtrak Reform and Accountability Act of 1997 "required Amtrak to redeem at fair market value the shares of common stock outstanding as of December 2, 1997, by the end of fiscal year 2002." Despite this being law, it has not come to pass. If, indeed, the NEC is property of Amtrak and therefore property of the stockholders, then that stock may be worth more than wallpaper, after all.

 

The other side of the "taking" coin, however, is that Amtrak received the NEC in 1976 subject to a 999-year balloon mortgage, held by U.S. DOT, who holds the mortgage on the NEC property as security on billions of dollars of debt owed back to U.S. DOT by Amtrak; which they cannot repay. All of this is laid out in Amtrak's annual report. Thus, it is not a question of a "taking," but one of foreclosure on a lien that has existed for 35 years, is in default, and is callable whenever U.S. DOT chooses. That is a matter of political and commercial will, not constitutional rights. Extinguishing the mortgage in return for a title transfer to U.S. DOT could also eliminate the constitutional objection. Moreover, current law [49 U.S.C. 24907©] already immunizes and indemnifies Amtrak and its board of directors from liability regarding any transaction "related to" the mortgage.

 

Also, a foreclosure would not necessarily directly impact Amtrak's operating rights, except to the extent that U.S. DOT or its successor might choose to price access to the infrastructure at levels closer to actual cost recovery. Even that would not change anything, except to make the actual accounting losses of the NEC (especially Acela) a lot more visible.

 

Separating the NEC from Amtrak with all its legal gyrations will take a few years. Even then it is highly unlikely the property will be in the hands of one or more private companies. More likely is a compact of those Northeast states that will hold and become responsible for the whole corridor. (Congress pre-approved such interstate compacts for passenger rail service in the 1997 Amtrak reform law.) Today there are five state commuter agencies operating under the wire of the NEC. Add to this Amtrak and limited freight operations. Yet, once upon a time this was all under the banner of one railroad. Will we ever make it back to one operator?

 

The Baltimore & Ohio's overreach of the late 19th Century bears out a pertinent object lesson for us today. The B&O concentrated its resources on a short-haul piece of railroad due to its location in what was believed to be the most valuable stretch of real estate in the country. As a result of neglecting their long-haul routes to the west, however, the railroad would become an "also ran." The B&O would be controlled at various times by various railroads including the PRR. Ultimately the B&O found security as a lesser partner of the Chesapeake & Ohio. Today there are no major railroads headquartered in Baltimore. This is the purposeful outcome of the free market.

 

Today Amtrak, self-described as "America's Railroad," pours the lion's share of its meager resources into the NEC to the detriment of the national network. Unfortunately, as a public entity, the laws of the free market are not allowed to be applied. Amtrak points to sheer passenger counts, opposed to passenger-miles, as justification for this aberration. With government deficits growing and public patience waning, this dichotomy cannot continue indefinitely. The longer the decision is forestalled, the fewer resources will be left available to

​

 

[yarrow]

i wonder how many au members read this newsletter? i enjoy riding amtrak(for the most part)and don't have the knowledge to analyze the arguments presented in the urpa newsletter but on a superficial reading many of the arguments made appear, to me, cogent.

 

[NE933]

I would like to see the leaders of URPA, NARP, and National Corridors Initiative conduct a three day forum with Amtrak management participating and ansering to challenges, with the public invited to take part in the discourse.

UPRA seems to have an out of norm orbit in its view of Amtrak and passenger rail. I know people have different ideas, and I want to squeeze the juice out of each of these, to see which arguments stand or fall, and whether a blended solution of all the entities is the answer. Otherwise this newsletter screams of dredging up the same muck at the bottom of the lake only to dump it back, and re-pick it up.

UPRA often goes after NARP in its writtings to challenge it's roll and ethics in posturing itself as America's voice to stand up for passenger trains. I want NARP's Ross Capon to respond, damn it. If one's claims are false, you reprimand the author of such moldy hubris for the charlatan he or she is. If they're true, explain why.

Stop these panty-skirt squabbles for once and all, as these distractions are taking the time, money, and energy out of work to solve some of these issues.

 

[jis]

UPRA often goes after NARP in its writtings to challenge it's roll and ethics in posturing itself as America's voice to stand up for passenger trains. I want NARP's Ross Capon to respond, damn it. If one's claims are false, you reprimand the author of such moldy hubris for the charlatan he or she is. If they're true, explain why.

Stop these panty-skirt squabbles for once and all, as these distractions are taking the time, money, and energy out of work to solve some of these issues.

Interesting! On the one hand you want to stop the "panty-skirt squabbles" and on the other hand you complain because someone other than URPA declines to participate in such? Until NARP membership asks NARP management to deal with URPA, I don't see why NARP should bother. If you happen to be a NARP member have you sent an email to Ross? What was the result? If you are not a member why would anyone in NARP care what you think NARP should do?

URPA is not a membership organization by their own admission. It is a few people expressing their opinions, and that's a good thing, if done logically and rationally. But IMHO (and I am allowed at least one ) there appears to be too much of gratuitous sniping that comes out which does not add to the credibility of the discussion.

I bet if NARP members clamor for something or it starts losing membership, they'd do something about it. But until then..... life goes on. While NARP claims to be a National Organization, I doubt that any such can legitimately claim exclusivity, and doubt that they do. Contrary to popular misunderstanding, none of the State ARPs have any formal organizational relationship with NARP. They exist on their own and choose to collaborate and cooperate with NARP as they see fit. The one that I am active in aligns with NARP on certain issues and disagrees with them on certain other ones, but without getting into a name-calling match. It is true that many in the leadership of various state ARPs also play a role in the NARP Council formally as individuals, not as representatives of the state ARPs. But that is all that the relationship is limited to.

 

[NE933]

Until NARP membership asks NARP management to deal with URPA, I don't see why NARP should bother. If you happen to be a NARP member have you sent an email to Ross? What was the result? If you are not a member why would anyone in NARP care what you think NARP should do?
I bet if NARP members clamor for something or it starts losing membership, they'd do something about it. But until then..... life goes on.

Well, I am currently in a dispute over my membership status: they claim the money I sent was for an 'extra gift during extraordinary times', I claim it was a renewal. Tit tat, back forth, it's going nowhere. This, plus two years ago I did speak with Mr. Ross Capon over the phone and admonished the organization's complacent and total lack of force in persuading Amtrak to do something about procuring new equipment, besides just writing about it. Trains Magazine writer Don Phillips has treated this issue several times, and even now during two or three major purchases in progress, laments of a certain 'missed the chance to jump on the horse' sort of thing. Ross' response was that I should rachet up the amount of letter writting to Congress, the President, my mayor, etc. I shot back that while communications are invaluable, we need to be trying something else besides letters and emails. Something out of the box, that would posture us as a force to be reckoned with.

As both you and myself sort of concede to, NARP is like church. All the good deed doers want to go but never do. NARP's strategy of reciting endless statistics of fuel consumption, ridership, funding efficiency, is like playing a chamber music concert when the crowd wants to hear rock and roll. NARP practically abdicates its roll in any leadership that would change the perception of itself, and of Amtrak, to a player that knows what it needs to do and then to do it. There are times in life you must take the offense tactic, not all the time, but certainly when your survival is at stake if all your moves are going to be reactions to the adversary then the game is over in a matter of time.

Except for that phone conversation, in which Mr. Capon was cleary caught off guard with long pauses, "eee ahh ee ohh uhh"'s, I have not made any letter by mail to him. Given the time that has passed, along with my membership in dispute status, fruition has blossomed into flower and, I'm just waiting for when the right words come to mind, courtesy and respectful but appropriataly reprimanding as well, for lack of fixing my files (as a customer), then, to debate our ideology of interacting with Amtrak's equipment affairs. If I can't do that, then the purpose of my contributions to such organization should be up to my review and final decision.

Now, UPRA's missives are witty, intelligent and insightful, long, and loaded with plot holes. Without going into more paragraphs, it's recent news release states that the Northeast Corridor would have more transparent accounting if it were conferred over to the U.S. DOT; Amtrak's stewardship of it has worsened a perception of favoritism in the rail network.

I believe the accuseation of favoritism is a true one, though not to the extent others have orated. Besides though, giving the NEC to the U.S DOT, another federal agency that is large and facing its own budget hiccups, will do nothing in the way of remedy.

Also, UPRA cites the lavish subsidies of highways and oil well nations as a cause of rail's decline, which is correct. So then why doesn't UPRA assign blame to this money laundering as a direct cause for much of the woes of the long distance fleet? The fact that Superliner I cars are over 30 yrs old and are begging for an overhaul, like the Viewliner I's are, has less of a corelation of covering the Northeast Corridor financially and more to do with letting the highway and oil lobbies making us their b--ch.

Why should we care? Well, if NARP and UPRA got more guerilla like, with direct campaigns of the kind that blew up the adult tobacco market, now we got something worthwhile going on.

*sigh* I'm now going to brush my teeth.

 

[MrFSS]

The Business and Politics of Passenger Rail; August 24, 2011

A Companion Digest of Events, Opinions, and Forecasts to

This Week at Amtrak

By J. Bruce Richardson

 

United Rail Passenger Alliance, Inc.

America's foremost passenger rail policy institute

Jacksonville, Florida • United States of America

Telephone 904-636-7739, Electronic Mail [email protected] • http://www.unitedrail.org

Volume 1, Number 14

​

Founded 35 years ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other locations. For more detailed information, along with a variety of position papers and other documents and a compendium of This Week at Amtrak, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

"Vice President – Passenger Services" is a title which may be returning to the corporate roster at Florida East Coast Railway. Yet another major railroad is more than flirting with the idea of operating passenger trains; this time, South Florida commuter services for Tri-Rail between West Palm Beach and Miami, and possibly northward along the Florida coast above West Palm Beach.

The Palm Beach Post reported in today's editions officials with the FEC and the Florida Department of Transportation have been talking in secret – so secret, even members of the Tri-Rail board of directors were unaware of the talks.

Tri-Rail, currently operated under contract by Veolia Transportation between West Palm Beach and Miami, is routed over former Seaboard Air Line Railroad/CSX tracks which run parallel to the FEC tracks, but to the west in suburban areas parallel to mega-laned Interstate 95. The FEC tracks were the original railroad tracks in South Florida, opening South Florida for development early in the 20th Century. In those pre-historic, pre-air conditioning days, the vast majority of development in Florida was along the coasts, taking advantage of refreshing ocean breezes for relief from the broiling heat. The Seaboard didn't arrive until the 1920s during the Florida Land Boom.

If Tri-Rail abandoned the former CSX suburban area tracks in favor of FEC's tracks which go directly through a number of downtown cities such as West Palm Beach, Fort Lauderdale, and Miami, it is likely the federal government would demand repayment of a $275 million federal grant which paid for adding a second set of tracks in 2006. A longtime proposal on the table has been for maintaining the current former CSX trackage, but adding the FEC trackage and simultaneously expanding Tri-Rail northward on the FEC to reach coastal counties north of Palm Beach County and areas such as the town of Jupiter. The expanded system would form an upside down "Y" in shape, with West Palm Beach being the only interchange between the two legs of the system.

The Palm Beach Post story says it is likely legislation will be introduced in the next session of the Florida legislature when it meets in early 2012 to allow private firms to bid on the entire operation of Tri-Rail, perhaps completely usurping the current structure. As part of the awarding of the bid to run an expanded system, the winning company would have to agree to operate the system at a price below the current taxpayer contribution.

The cost of operating Tri-Rail has been in the news the past three years on two fronts. There has never been a dedicated source of state funding for Tri-Rail; the system has been operating on a combination of contributions from the federal government, state government, and three local county governments which host the system. Farebox revenue is only about $11 million a year. Contributions from the three counties total $13 million, the State of Florida kicks in $30 million a year, and the balance comes from the federal treasury. Typically for a mass transit/commuter system, farebox revenues are a low contributor to operating costs. Numerous attempts to fund Tri-Rail through a local $2.00 tax on rental vehicles in Palm Beach, Broward, and Miami-Dade counties have repeatedly failed.

The second thing shoving Tri-Rail in the spotlight has been the attempt by Florida Governor Rick Scott to use Tri-Rail as an example of everything wrong about passenger rail commuter systems, citing the cost of Tri-Rail as an excuse not to go forward with Central Florida's SunRail system. That argument eventually failed, and SunRail is now in a development phase, with the system scheduled to be up and running at the end of 2013.

Can one, single, proven, private operator run an expanded Tri-Rail better than a governmental-run system? Tri-Rail says it already has privatized 80% of its operations by bringing in Veolia Transportation to run the system for a seven year, $64 million contract, and Bombardier Transportation to take care of rolling stock maintenance, also on a seven year contract, for $90 million. Tri-Rail itself is overseen by the South Florida Regional Transportation Authority, a governmental body.

The FEC is part of RailAmerica, owned by Fortress Investment Group, which manages $44 billion in investments. The FEC, which runs 351 miles down the Florida coast from Jacksonville to Miami via St. Augustine, Daytona Beach, Titusville, Cocoa, Melbourne, and Stuart, has struggled with profitability during the past months. Overall, however, it is part of a rock-solid entity which counts its money in billions, not millions. Even before being acquired by RailAmerica, the FEC for decades has been considered to be a well-run and profitable railroad with good operating ratios and savvy management. It interchanges in Jacksonville with both Norfolk Southern Railway and CSX Transportation.

Politics in Florida for years have skewed towards privatizing as many state functions as possible, and the possible privatization of the operation of Tri-Rail fits the mold Governor Rick Scott is trying to use for many areas of public entities. The governor, elected in November 2010, had never held political office before his election and holds very few political allegiances, even within his own Republican Party. He has constantly confounded politicians and voters of both parties in Florida with his autocratic style of governing and outward disdain for the news media and public opinion since his inauguration in January of this year.

FEC tracks are the only tracks available northward from West Palm Beach for future Tri-Rail expansion into the heavily populated coastal area. CSX tracks north from West Palm Beach take a sharp westward turn, skirting the north short of Lake Okeechobee, and then head up the middle of the state. The Palm Beach Post article says if Tri-Rail expands to the FEC, plans call for the FEC to add two new tracks to its existing 100 foot wide right-of-way to accommodate Tri-Rail operations. The FEC is currently expanding its South Florida footprint through enhanced intermodal and yard facilities to accommodate expected larger freight loads from the wider ships which will be transiting the soon-to-be-completed, newly enlarged, Panama Canal.

An interesting note is both Veolia Transportation, current contract holder and operator of Tri-Rail, and RailAmerica, the parent company of the FEC, are members of the Association of Independent Passenger Rail Operators, the Washington-based lobbying group formed to promote private operation of passenger trains.

Would, perhaps, the FEC, recognizing the professional body of knowledge held and used by Veolia, simply subcontract the actual operations to Veolia, as Veolia now operates the existing part of Tri-Rail, and the FEC find its profits elsewhere? There have been no passenger rail operations over the FEC since before Amtrak Day on May 1, 1971, and, as professional as the management of the FEC and RailAmerica is constantly shown, it's doubtful a completely new area of expertise would be ramped up from scratch.

The Palm Beach Post article pointedly refers to the huge opportunities in real estate profits the FEC would accrue by running new Tri-Rail trains down its tracks. A lucrative part of the FEC before its purchase by RailAmerica was its real estate operations, often tied directly to railroad right of way. That real estate has been transferred in most part to another part of RailAmerica, but is still in the corporate family. It's a given real estate values boom around commuter rail stations, and FEC/RailAmerica/Fortress could make several new fortunes exploiting real estate along the commuter rail route.

When railroads think globally, often passenger rail can fit into an overall investment/planning strategy which fully exploits all facets of the business, as the FEC is demonstrating with this exercise.

The hostility of the past demonstrated by freight railroaders not wanting any interference in the operations of freight trains and hotshot intermodal trains is being tamed by a new generation of senior railroad managers focused on making profits from every possible source as opposed to protecting the freight railroad franchise at any cost. While the freight railroaders are still extracting a high and specific price for operating passenger trains on their right of way, including restrictions on high speed passenger trains, they are not ignoring the potential profits of passenger trains while balancing the benefits against the headaches.

And, one final note. The proposed expansion of Amtrak up and down the FEC is not a dead issue. The State of Florida has committed the requisite millions of dollars to make this expansion happen; the hold-up is the federal government share. Considering these crisis economic times, it may be a while before that much-needed expansion takes place. Perhaps, when a more robust economy returns to Florida, that state may be able to fund all of the FEC expansion, without help from the federal government. Of course, at that point, it may be an all-FEC passenger operation, with interchange and connections in Jacksonville with Amtrak.

Gil Carmichael, former FRA Administrator during the Bush I years, and former Chairman of the Amtrak Reform Council, as well as the Founding Chairman of the Board of Directors of the Intermodal Transportation Institute at the University of Denver has started a new series of reports, entitled the Gil Carmichael Report, Investing in Interstate 2.0. The reports are free, informative, and a must read for anyone serious about the future of railroads in the United States. Contact the report distributor at [email protected] for your very own copy.

 

___________________________________________________

 

J. Craig Thorpe, noted Amtrak and railroad illustrator is available for all railroads, railroad-related companies, and organizations for his dramatic illustrations on a custom basis. Mr. Thorpe's impressive gallery of work and contacts for engagement may be viewed on his web site, which is listed below.

Useful links for the passenger train world (New links have been added since the last edition):

www.passengerrail.org – Association of Independent Passenger Rail Operators

www.herzogcompanies.com – Herzog Transit Services, Inc.

www.keolis.com – Keolis Rail Services/America

www.railamerica.com – RailAmerica, Inc.

www.ratpdev.com – Ratp Dev

www.veoliatransportation.com – Veolia Transportation

www.spartansolutions.org – Spartan Solutions LLC

www.durangotrain.com – Durango & Silverton Narrow Gauge Railroad

www.cumbrestoltec.com – Cumbres and Toltec Scenic Railroad

www.rockymountaineer.com – Rocky Mountaineer Railtours

www.viarail.ca – VIA Rail Canada

www.tampaunionstation.com – Friends of Tampa (Florida) Union Station

www.larail.com – Private passenger railcars for individual hire in Southern California

www.americanrail.com – American Rail Excursions, Inc.

www.newrivertrain.com – New River Train Excursions/Collis P. Huntington Railroad Historical Society

www.bombardier.com – Bombardier, Inc.

www.hamilton-associates.com – Hamilton & Associates, Inc.

www.iowapacific.com – Iowa Pacific Holdings, LLC

www.rhbohannan.net – R.H. Bohannan & Associates, LLC

www.tgaassoc.com – Thompson, Galenson and Associates

www.worldbank.org – World Bank

www.aar.org – Association of American Railroads

www.du.edu/transportation – Intermodal Transportation Institute, University of Denver

www.amtrak.com – Amtrak

www.dot.gov – United States Department of Transportation

www.volpe.dot.gov – Volpe Center

www.fra.dot.gov – Federal Railroad Administration

www.unitedrail.org – United Rail Passenger Alliance, Inc.

www.APRHF.org – American Passenger Rail Heritage Foundation

www.azrail.org – Arizona Passenger Rail Association

www.colorail.org – Colorado Rail Passenger Association

www.railpac.org – Rail Passenger Association of California & Nevada

www.fcrprail.org – Florida Coalition of Rail Passengers

www.nmrails.org – Rails, Inc., New Mexico passenger rail advocacy group

www.railvermont.org – Vermont Rail Action Network

www.texasbytrain.org – Texas Coalition

www.texasrailadvocates.org – Texas Rail Advocates

www.TXARP.org – Texas Association of Rail Passengers

www.dot.ca.gov – Caltrans/California Department of Transportation

www.dot.state.fl.us – Florida Department of Transportation

www.dot.state.il.us – Illinois Department of Transportation

www.bytrain.org – North Carolina Department of Transportation, Rail Division

www.virginiadot.org – Virginia Department of Transportation

www.railroaddata.com – Railroad Internet web site information consolidator

www.trainweb.com – Railroad Internet web site information consolidator

www.usa-by-rail.com – Informative route guide paperback book for the Amtrak system

www.jcraigthorpe.com – Noted Amtrak and railroad illustrator and artist J. Craig Thorpe

If you would like to have your company or organization's Internet web site link listed here, submit it for consideration to [email protected]. Inclusion will be at the sole discretion of the publisher, and the publisher reserves the right to exclude any company or organization for any purpose. This list is not intended to be a complete list.

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Copies of The Business and Politics of Passenger Rail and This Week at Amtrak are archived on URPA's web site, www.unitedrail.org and also on www.todaywithjb.blogspot.com where other rail-related writings of Bruce Richardson may also be found.

URPA leadership members are available for speaking engagements.

J. Bruce Richardson

President

United Rail Passenger Alliance, Inc.

Jacksonville, Florida USA

Telephone 904-636-7739

[email protected]

http://www.unitedrail.org

 

[AlanB]

I guess Bruce was away in Las Vegas for too long and missed the news that Florida finally did approve that rental car tax last year to help fund Tri-Rail.