Don, that sounds really cool and actually viable. Anything beats Bush’s proposal. The next question is would they listen to this alternative? They being the policy advisors behind Bush. I’m not sure if Mineta is giving advice on transportation issues, or if some think tank is whispering in Bush’s ear (Rove and Co.???).
I am a proponent of having Amtrak owned in part by the freight carriers over whose tracks they now operate upon.( I have made this point in other areas of discussion in response to the dismissal of David Gunn) With the exceptions of State,Multi-state (Authorities such as the NY/NJ Port Authority)or Municipally owned trackage, The private railroads do not now need the “welfare” Amtrak represents to them. They can afford to “buy out” the federal government and operate Amtrak as an industry/government partnership. The ownership would be based upon a split of all revenues Amtrak has generated upon the freight carriers trackage over the last five years. Under this idea, the greatest revenue generating routes would give the carriers that own the trackage a larger share of Amtrak ownership, than another carrier, with less responsibility for Amtrak service. Yes, that means that the freight carriers would “take over” Amtrak. But, only in propotion to the revenue they generate on a given carrier’s lines. Responsibility for costs of equipment, for example, would be spread out over all of Amtrak’s “owners”.Taxes paid by carriers/partners in Amtrak, would be then directed into Amtrak,rather than into general funds.The taxes will include all federal taxes Amtrak’s owners would pay for fuel, property, and other taxable assets used by Amtrak. Labor costs would be negotiated as now, by Amtrak, since it would continue to exist, just under partial (Dare I suggest majority?)private ownership. The carriers deserve to have greater responsibility for Amtrak’s future, if it has a future,at all. And they need incentives to make Amtrak succeed, not just be a ward of we, the taxpayers.
All the this talk about Freight carriers re-assuming operation of long-haul (non-commuter) passenger service ‘for profit’ overlooks one very critical element.
The Freight Railroads, as their physical plants are configured today are at maximum capacity on their major Origin-Destination routes. The miles of multiple track territory and the passing sidings every 6-8 miles on single track territory are facilities that no longer exist. In the ‘Right Sizing’ and process ‘re-engineering’ that took place on the Class I carriers during the 80’s and 90’s all that ‘EXCESS’ capacity was scrapped…not just left to rust in peace, but had the ties, rail and ballast physiclly removed. What the carriers received $1 in scrap value for during this ‘down-sizing’ would probably cost $1000 to replace today.
Tried to link to the article, but it was taking so long I gave up, so I’ll just wing it.
Freight railroads take over Amtrak? NO! Amtrak must die ASAP (except for Amtrak’s right of access, more on that later).
Freight railroads take back intercity passenger operations? Sure, with more than a few caveats:
- Amtrak’s right of access must be preserved for all time, and be eligible to be transferable to any viable entity willing to give passenger rail a go.
- This right of access should apply to all trackage in the US, not just current Amtrak routes.
- As has been stated, for this to work there will have to be some form of federal support. You know, like the neo-subsidies the freight railroads are getting right now via anti-trust exemption!
- The owning railroad will have the right of first refusal as to whether to run a passenger service in a certain corridor. If they don’t want to, then any outside entity can utilize the right of access to run a passenger operation.
- The feds and states should be responsible for funding passenger terminals, the same as is done with air terminals. Of course, this could mean a tax on train tickets.
- The passenger operator will have to designate whether their operation is tour-oriented or common carrier. Common carrier passenger operations will be limited to shorthaul corridors and 24 hour “overnight” corridors, e.g. no long distance trains. Only tour operators will be allowed LD.
- Routes over multiply-owned rail lines will require third party operation only. No BNSF on UP and vis versa. Well, maybe if they both provide the locos and crews it’ll be okay.
- Passenger operators will be able to offer freight services in conjunction with their passenger operations, as long as it is all hauled in one train.
I can add more but it’s dinner time…
At least the passenger cars might sport cooler paint jobs…
UP Yellow always looked great, CSX grey and blue , I dunno about pumpkin orange BNSF passenger cars, maybe go back to SF stainless steel, but NS black hearses hauling a string of black passenger cars just creeps me out !
It 'd be that country song come to life…“I see a long black train…” Spooky!!!
On the other hand, given the difficulty any of the railroads would have running the trains on time, they will probably use the Amtrak paint scheme/
In his article Frank Wilner cites “the reality that rail passenger service is here to stay.” There is no such reality. Rail passenger service very well may disappear. Sooner rather than later. And except among us railfans, it will not be missed, I’m sorry to say.
The notion that freight railroads are obligated to provide passenger service and should be compelled to do so is wrong. Offer them the opportunity and subsidize it if necessary, but don’t be surprised or offended if they turn it down. Freight railroads have better things to do. And, frankly, I think government can find better ways to spend my tax money. I love passenger trains and I love steam locomotives, too. But both are dead. One of them just doesn’t realize it yet.
tpatrick may be right, but we can advocate taking a chance trying a fresh approach to the problem. Governmental involvement on its current scale will not work for the long or, more importantly, short term anymore.
I think you are all overlooking the cost impact of “making the railroads whole”, which I agree they should be.
As the law now stands Amtrak has the right by statute to use any line that still had passenger service immediately before Amtrak took over and has to pay only “marginal cost” for it. Marginal cost means the cost the freight railroad can specifically tie to that train, which in practice means not much.
Consider this analogy. You own a four bedroom home. Your family occupies three bedrooms. The government says you must provide shelter to a homeless family. The Government will reimburse you for your marginal costs. You say the house is worth $400,000 there are four bedrooms so you say pay me 12% per year on $100,000 plus one quarter of all taxes, utililites and maintenance. Govt says “No way! this is a marginal cost deal which maean we pay nothing toward capital cost”. There goes your first $12,000. "We wont pay for utilities either because you have to heat the place and have the power on anyway. You have to maintain the structure, roof, and property for your use so we will not pay for that either. We will pay to repaint the bedroom once every four years though, aren’t we generous. We wont help with the taxes either. Oh, by the way our guests get first dibs on the kitchen and bathroom and if you don’t treat their visitors right they will complain to us and the press so don’t make them angry.
Would you like this deal?? Not if you are rational. Oh by the way, your daughter, who moved out when the govt made this deal with you, has moved back in with her three kids and it would be really nice to get her old bedroom back from the freeloaders but you can’t have it back. A deal is a deal you know!!!
I doubt that anyone knows how much this marginal cost structure is costing the freight railroads each year. I would guess it would be at least $500 million but can not prove it.
Amtrak is the victium of this marginal cost mentality on t
I think that something has been missed by all here.
After reading the article, the term “TTXing Amtrack” is used several times. Should AMTK be reformed into a passenger version of Trailer Train, it will make a profit for the owning roads.
For those of us that are hyper-ventalating over how to pay for this, please look to the structure of Trailer Train and then understand that any shortfall in revenue would be made up by the various governmental authorities - Fed, State and/or Local.
Perhaps some of our UK members can be more difinitive but from what I understand the private operators are assured an amount of money to cover losses in running passenger trains.
The idea of government subsidy to the freight railroads to operate passenger trains seems like the same thing. Amtrak is given subsidy to cover the loss from operating trains.
So the question becomes does tax money go to a government operated passenger train or does tax money go to a private company to operate passenger trains?
I hold to my earlier contention that the freight railroads are not interested in getting back into the passenger business and they will keep a low profile on that stance. News accounts do indicate they are among those questioning the firing of Gunn. What does that say about their interest in getting back into the passenger business?
An earlier post pointed out that even those railroads which really pushed their passenger service right up to the end couldn’t make money at it and finally had
to give it up.
All this makes for interesting discussion but will probably have very little, if any impact on what is the eventual outcome.
Dale
Yes, the UK Train Operators have franchises varying between 5 and 20 years during which they receive a guaranteed subsidy. Any money they make after they’ve covered their costs is theirs to keep, in order to give them an incentive to grow the business.
Experience with franchising has been mixed. Overall the system now costs us £4.5 billion per annum, which most people regard as too high. By contrast British Rail used to get by on the equivalent of £1 billion per annum. The government is trying to find ways out cutting the cost of the railway network. While many fear this may lead to more line closures there are a number of more hopeful signs:-
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Since Network Rail (the track and infrastructure owner) took most maintenance in-house it has been able to reduce costs.
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Greater competition between Rolling Stock companies and manufacturers should hopefully lead to lower leasing charges. At present some of the Rolling Stock Leasers (ROSCO’s) are getting away with daylight robbery. For instance Wales and BorderS Trains pays the ROSCO it leases the two car class 158 DMU’s fromn £500k per annum. So during its 15 year franchise it will pay £7.5 million for trains which cost British Rail £1million back in 1990/1 (and which would have been deprecated by the 2005/6 financial year as BR used to deprecate diesel trains over a 15 year period (25 years for electric trains). Fortunately one of the ROSCO’s (Porterbrook) has taken the lead in buying new trains before finding an operator to lease them. Given that train builder Adtranz has an 18 month gap in orders perhaps the two will team up in this way again. (They did so a couple of years ago, in order to keep Adtranz’s production line running - the gamble p
[quote]
QUOTE: Originally posted by PNWRMNM
I think you are all overlooking the cost impact of “making the railroads whole”, which I agree they should be.
As the law now stands Amtrak has the right by statute to use any line that still had passenger service immediately before Amtrak took over and has to pay only “marginal cost” for it. Marginal cost means the cost the freight railroad can specifically tie to that train, which in practice means not much.
Consider this analogy. You own a four bedroom home. Your family occupies three bedrooms. The government says you must provide shelter to a homeless family. The Government will reimburse you for your marginal costs. You say the house is worth $400,000 there are four bedrooms so you say pay me 12% per year on $100,000 plus one quarter of all taxes, utililites and maintenance. Govt says “No way! this is a marginal cost deal which maean we pay nothing toward capital cost”. There goes your first $12,000. "We wont pay for utilities either because you have to heat the place and have the power on anyway. You have to maintain the structure, roof, and property for your use so we will not pay for that either. We will pay to repaint the bedroom once every four years though, aren’t we generous. We wont help with the taxes either. Oh, by the way our guests get first dibs on the kitchen and bathroom and if you don’t treat their visitors right they will complain to us and the press so don’t make them angry.
Would you like this deal?? Not if you are rational. Oh by the way, your daughter, who moved out when the govt made this deal with you, has moved back in with her three kids and it would be really nice to get her old bedroom back from the freeloaders but you can’t have it back. A deal is a deal you know!!!
I doubt that anyone knows how much this marginal cost structure is costing the freight railroads each year. I would guess it would be at least $500 million but can not prove it.
The idea that the private sector is more efficient is true where a competitive market place exists, but both railroads and airlines now operate in what economists call monopolistic competition. If allowed to set schedules, routes, or prices, we’d see something similar to the airline pricing policies when traveling from certain cities or controlled hubs. I suspect the airlines would want in on this as well.
The amount of funding would still come from Congress and over time the service providers may face the same type of funding squeeze as programs like Medicare, leading to the same types of overbilling, etc. to recover the actual costs.
IMHO the underlying problem for Amtrak is no one in Congress seems willing to say what it should be or what it’s mission is. Not all Federal operations are inefficient. USPS has a pretty clearly defined mission with good politcal support and they get the job done a lot cheaper than FedEx or UPS.
Regading Metra, I believe at least on some of the lines, a portion of the subsidy is dependent on on-time performance.
Don,
Thank you, but I disagree with your statement about investment, in part. Certainly the railroads would be able to determine the most cost effective capacity investments. If however they are being compelled to operate more trains, then whoever is doing the compelling should fund the capacity impovements, and before the trains are added.
As someone else pointed out, there is little, if any, “excess” track capacity out there. There are lots of unfunded capital investment projects that could be undertaken to enhance current, largely freight, operations. In addition to CREATE in Chicago, go the the Oregon DOT web site. They have identified a few hundred milllion dollars in fixed plant investment in Portland Oregon and Vancouver Washington, alone, that they claim will be required to support freight and passenger traffic growth. I doubt that anyone thinks of Portland as a choke point, but it is.
Makes me wonder about St Louis, Memphis, New Orleans, Atlanta, Seattle, Los Angeles etc., let alone the main lines across the country.
Mac
It would only be a matter of time 'till somebody did a “fleecing of America” kind of report! It comes with the territory. But, if you want to have frt RRs operate passenger trains and give them 1st class treatment, you’d have to set up the game so they could make a 1st class profit.
I agree! And, even now, they’re not saying. Gunn hinted at it in his statement on Tuesday, saying Amtrak could have value in short haul corridors where air/highway capacity is currently constrained. But, still, all the reform is just aimed at “different”. We still don’t know what we’re aiming at, but we’re going to get there “differently”.
Amtrak has performance payments built in to their RR contracts, but the amount is way too small to effect dispatching in many cases.
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Many railroads got their rights of way by eminant domain proceedings and got them because they carried passengers and frieght, not just freight.
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A unified Amtrak maximizes efficiencies in use of equipment and people and connectivity.
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A subsidy directly to Amtrak with good management is the way USA taxpayers get the most for the subsidy, giving back up transportation in time of emergencies, relief of highway congestion in certain corridors, a good face for foreign and domestic tourism, and access for elderly and handicapped for far more of the USA than they would have otherwise.
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While some freight railroads may take the subsidy and do a very honest job in providing the best passsenger service available (BNSF), most will do a Penn Central number by trying to maximize the subsidy while minimizing the expense.
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The difference can be compared with level of commuter service on the ex-NYC and ex-NYNH&H lines when PC and Conrail were subsidized to provide the service (anyone remember those bad old days?) and the very steady improvement that a New York State Government subsidized operation has provided, Metro North. Amtrak may not do quite as fine a job in its area as Metro North does, but it was heading in the right direction and a whale of lot better than what the PC, SP, and some others did in the days before Amtrak.
In the Gunn issue, good management is what the arguments are all about as there is no realistic and binding defination of what ‘good management’ consists of. To Gunn, good mangements was to take the property as it exists and rationalize it business functions, trim all possible costs and raise all possible investment (subsidy0 to have the business remain in operation. To the AMTRAK non-querom board ‘good mangement’ consists of throwing the baby out with the bath water and plundering the property to cherry pick off the most valuable assets and sell the rest a fire sale prices.
Good Management is totally and wholly political and has no defination of success.
As I have mentioned before, and as further comments on this thread indicate, there is no easy way to determine what would be considered as “fair” compensation for railroads operating passenger service on their lines. And, that problem exists with the compensation schedule now in place between Amtrak and the “host” railroads. However, the current compensation is negotiated and is somewhat greater than the cash cost for the host railroads.
That being said, it should be noted that part of the Amtrak reform package presented to Congress by Amtrak suggested that the operation of the regional “short haul” services could be opened to competitive proposal from any entity, Amtrak, the freight railroads or any other entity that wanted to run trains.
Chicago’s Metra Rail service for commuters could suggest a model. Some of the Metra routes are lock, stock and barrel Metra. In other cases, various contract deals are in place for the operation of the suburban routes.
The issue is whether the freight railroads are to be compelled to operate passenger trains or may have the option to provide some part of the service on a contract arrangement. For the former, the Class 1’s are likly to say over my dead body.
Jay
The bad old days! I remember!
Problem was, even with the state subsidy, Conrail lost money. If you want the subsidy game to work, you have to make the business the MOST profitable for the road with incentives to provide good service. The idea of letting them keep a good chunk of the ticket revenue is that incentive. The better the service (clean, fast, on time) the greater chunk of revenue you get - straight to the bottom line.
There are probably other ways to play this game that would work.