THis was the headline in TRAINSNewswire of this date:
“Private bidders hint at interest in running Amtrak routes”
By Bob Johnston
Published: December 15, 2011
FTA "…WASHINGTON — Will private companies seek to operate Amtrak intercity routes when the federal government officially opens them up for bidding? Three companies hinted they might when they asked questions as part of the Federal Railroad Administration’s rulemaking process that will eventually open two routes up for bidding. Congress mandated the pilot program as part of the Passenger Rail Investment and Improvement Act of 2008…"
FTA:"…Two of the three names should be familiar to TRAINS readers: Herzog and Veolia, both of which operate U.S. commuter railroads under contract. The third is RATP Development America, a French company that operates the Paris Metro. Several trade and labor organizations also asked questions as part of the process…"
FTA:“…The rulemaking was supposed to be finalized by Oct. 16, 2009, one year after the legislation was enacted, but the FRA did not issue a request for comments until Sept. 7, 2011, with responses due by Nov. 7. Significantly, no freight railroad submitted written comments, even though they would be the conduit through which any privatized route must originate, presumably in conjunction with a third party operator…”
FTA:"…Once the final rule is effective on Feb. 12, 2012, prospective bidders may apply to operate up to two Amtrak routes, with preference given to Amtrak’s “worst performing” trains, based on their operating and financial perform
Where would this proposal lead, if one of the bidders was a railroad, like, say, BNSF? Who better to understand how to make money on the rails, and who better to know how to work with the freight railroads?
I don’t think there will be any problem with the freight railroads consenting. I assume that the government could mandate that the freight railroads grant access to the private operators. But is it a forgone conclusion that private contractors could make enough profit on these trains to justify the investment of running them? Perhaps the answer is yes, but I doubt it. That is where the practical limitation come into play.
Only in the large markets. Veolia (breaking up, about to exit the bus transit business) and Herzog are opportunists…if the subsidy from gov’t goes away or the liability issue gets dicey, they bail too.
Edit: Don’t try to merge FRA and FTA. Separate and distinctively different. Freight railroads have little to do with FTA. (Most transit agencies chafe at the thought of dealing with FRA/ common carrier rules…separates bus people from real railroaders pretty quick.)
I think that just about anyone will agree that the only way it is going to happen is for the Federal Regulators to mandate access for operators other than a railroad entity to have the ability to run passenger trains in this country(?). Anyone care to jump in and add their thoughts as to private contractors wanting to run trains on AMTRAK’s routes and authorities? Would those contractors be able to get a modicum of cooperation from the ‘hosting’ roads? Is this issue dead legislatively, and practically?
I don’t think there will be any problem with the freight railroads consenting. I assume that the government could mandate that the freight railroads grant access to the private operators. But is it a forgone conclusion that private contractors could make enough profit on these trains to justify the investment of running them? Perhaps the answer is yes, but I doubt it. That is where the practical limitation come into play. <
Through lega contrivance freight railroads were bailed out and away from the pasenger business with the National Passenger Railroad legislation which created Amtrak. There was a formula and format to relieve freight railfoads to rid themselves of the burden of passenger trains and part of that was that they had to accept Amtrak trains if they were already running passenger trains (simplified explanation) othewise they were off the hook. Will or can any legislation be passed today that would force a freight railroad to cooperate and run passenger trains? And, with the understanding and knowledge that passenger services will have to receive some form of government help (call it “subsidy”), why bother handing it off to outsiders when the same money will have to be used? And since there isn’t a people moving business that doesn’t receive subsidies or than hasn’t had frequen bankruptcies, what is to be gained by privatizing Amtrak or any of its lines or services? We are lacking a realistic approach to our transportation system, its infrastructures, its orgainizations, its people, its equipment, its routes, its applications, its financing. Piecemealing and selective supports and assignments are not going to solve any of our problems.
I misunderstood the article to mean that Amtrak would be replaced by private operators for some routes. That interpretation would seem to correlate with the idea that the freight railroads might object or that this would amount to open access.
However, I do not see what either one of those issues have to do with the story if the story is only about Amtrak hiring a subcontractor to operate their trains.
I am sure you are not the only one who thinks they misunderstood anything, only you may realize it when others don’t. Government speak is that way. And I am sure that a lot of the rhetoric is just that, rhetoric which shoots from one’s political hip and not from any sense of moving people or sense of railroading. Are the handing off the service or selling the property? Or both? If both, as one package or seperately. The can of worms has so many choices and chances that more confusion and colusion is sure to occur.
Because it might be less money. Quite a bit less money. There is lots of evidence that Amtrak is not an efficient service provider. Boardman has at least acknowledged this, but making the big corporate culture ocean liner change course is not so simple. Amtrak has 40 year of doing things “this way”. “That way” won’t come easy.
It’s a bit more than a subcontractor. More like what the German’s have done with some of their regional service. It would operate seamlessly as if it was part of the Amtrak network, using Amtrak’s operating authority on the host roads, but the whole operation of the train, would be under the control of a the contractor. The exact structure of this hasn’t made it to the negotiation stage.
Note that Amtrak has lost the last couple of commuter rail contracts, even the Caltrain one they badly wanted to keep? Ever wonder why?
I think that just about anyone will agree that the only way it is going to happen is for the Federal Regulators to mandate access for operators other than a railroad entity to have the ability to run passenger trains in this country(?). Anyone care to jump in and add their thoughts as to private contractors wanting to run trains on AMTRAK’s routes and authorities? Would those contractors be able to get a modicum of cooperation from the ‘hosting’ roads? Is this issue dead legislatively, and practically?
I don’t think there will be any problem with the freight railroads consenting. I assume that the government could mandate that the freight railroads grant access to the private operators. But is it a forgone conclusion that private contractors could make enough profit on these trains to justify the investment of running them? Perhaps the answer is yes, but I doubt it. That is where the practical limitation come into play.
The more I think about this I think it is just the Highway and Oil lobby with support from others opposed to rail passenger service stirring things up so that nothing happens. The only real places Amtrak can be up for grabs is where they own and operate the tracks; and that is a small portion of the total rail milage and a small part of the total Amtrak routes. The deal with the freight roads was that they would be relieved of the passengeer trains and their attending deficits by “joining” and working with Amtrak. I would think any change in that agreement, where Amtrak doesn’t own the tracks, has to be agreed to by the participating freight companies. I also believe Amtrak’s legeslation has been changed so that they don’t have to be the operator of any given rail passenger service, that others can make agreements wiht indifivual railrroads and routes; nobody has stepped forward to offer new routes or take over Amtrak routes. Another problem would be working with commuter agencies who use Amtrak trackage, either totally owned or operated. So what it is is really rhetoric to keep people talking but not taking action of any kind.
I think that somebody needs to write another article explaining the meaning of the article linked to the first post. One thing I would like to know is this: Why is it significant that no freight railroad commented on the proposal?
Falcon48 is correct. To apply one must be a rail carrier that owns infrastructure that ATK uses. The applying RR does not have to own all the infrastructure used to support a route, but has to be in the route.
As to why no rail carrier applictions so far, I think that is the wrong question. The question should be what is in the deal for the underlying rail carrier? The only answer I can see is more overhead to deal with the bureacrats, more bad publicity when something happens, and more liability. If I were a rail carrier President or VP, I would say and do absolutely nothing.
I think the question of why no (freight) railroad has inquired or commented is a good question and the answer is quite clear. One, they believe they were relieved of passenger trains by the legistlation that created Amtrak…doens’t matter that 40 some odd years have passed, that things might be different now, it is just that they feel they are clear of the passenger train question. Second, even if they might be interested, they don’t want to scare away investors who are taught to believe there is no income in passenger trains. Three, it certainly doesn’t stand up agains any political associations they may have at the moment, especially those who might be in power (qualification: either Dem or Rep, local, state, or US government; each mile of track is different). Four, they are not equipped in their operating and marketing departments to deal with passenger trains and passengers, so who there is even thinking about it? Five, passenger trains and infrastructure would take a big investment, money freight rails don’t believe or actually don’t have, so why sticking one’s neck out?
I think that just about anyone will agree that the only way it is going to happen is for the Federal Regulators to mandate access for operators other than a railroad entity to have the ability to run passenger trains in this country(?). Anyone care to jump in and add their thoughts as to private contractors wanting to run trains on AMTRAK’s routes and authorities? Would those contractors be able to get a modicum of cooperation from the ‘hosting’ roads? Is this issue dead legislatively, and practically?
I don’t think there will be any problem with the freight railroads consenting. I assume that the government could mandate that the freight railroads grant access to the private operators. But is it a forgone conclusion that private contractors could make enough profit on these trains to justify the investment of running them? Perhaps the answer is y
"…Falcon48 is correct. To apply one must be a rail carrier that owns infrastructure that ATK uses. The applying RR does not have to own all the infrastructure used to support a route, but has to be in the route.
As to why no rail carrier applictions so far, I think that is the wrong question. The question should be what is in the deal for the underlying rail carrier? The only answer I can see is more overhead to deal with the bureacrats, more bad publicity when something happens, and more liability. If I were a rail carrier President or VP, I would say and do absolutely nothing about this tarbaby…"
Mac McCulloch
[/quote]
To continue on with this ( sorry been away for a few days)
Further from the original posting from TRAINSNewswire:
FTA:"…FRA’s notice of proposed rulemaking, released yesterday, didn’t offer hints as to which routes the companies are interested in operating.
The rulemaking was supposed to be finalized by Oct. 16, 2009, one year after the legislation was enacted, but the FRA did not issue a request for comments until Sept. 7, 2011, with responses due by Nov. 7. Significantly, no freight railroad submitted written comments, even though they would be the conduit through which any privatized route must originate, presumably in conjunction with a third party operator.
To Mac’s point, I think he is probably spot on as to adding more regulatory bureaucracy and an environment of governmental unfunded mandates, which would create more headaches than solutions for the hosting railroad…[2c]
Did the legislation that led to the creation Amtrak relieve the carriers of their money losing passenger trains? Or was it an emotional government response to those few Americans, including who actually rode the trains? By the time the railroads threw in the towel on passenger trains Americans had made it crystal clear that they preferred the car and the airplane for most of their trips.
Had the feds not taken over the operation of intercity passenger trains, a plausible scenario finds the carriers would have sought relief in the courts and prevailed. Government cannot, at least in this country, expropriate property and wealth without due process, which is what they would have been doing if they had forced the railroads to continue running passenger trains that threatened the financial viability of some if not most of the carriers.
Thanks to the Staggers legislation, as well as greatly improved management and employee teams, America’s railroads are doing very well. In 2010 their average return on equity was 12.3 per cent. Actually, if the returns for BNSF and KCS are backed out of the picture, the results would have been even better, i.e. north of 15 per cent, which clearly beats the Fortune 500 average. The returns for the BNSF were depressed because of the costs associated with its absorption by Mr. Buffett, whilst the KCS does not have the earning power of its bigger and better positioned brothers.
Given the excellent performance of the freight carriers, why in the world would they want to take on a passenger franchise, which does not cover its fully allocated expenses anywhere?
Mail contracts (which were being withdrawn or not renewed) and charters kept passenger trains running, even at a loss. Charters reminded railroads they were to operate for the convenience and necessity of the public, not their shareholders. Thus, passenger service was provided at a loss covered by freight profits until the highway system allowed trucks to overtake rail rates. Amtrak was invented to relieve the rairoads of their passenger train operation burden with a given formula that all roads agreed to. Loopholes were that if you didn’t have a passenger train on your railroad, you didn’t have to play; and if you did have a passenger train and didn’t want to turn it over, you had to continue to operate it.
Why passenger trains were and are expensive to operate fills volumes and many blogs. Moving people is a labor intense and equipment intense proposition whether rail, road or air…look at how many transcontinental bus companies exist today and how many airlines have merged or gone bankrupt. And how many freight railroads are in the passenger train business. Many things economic, political, environmental, labor, and fiscal played a part in ending passenger services on individual railroads and the formation of Amtrak at that time.
… Government cannot, at least in this country, expropriate property and wealth without due process, which is what they would have been doing if they had forced the railroads to continue running passenger trains that threatened the financial viability of some if not most of the carriers. …
This may be technically true, but it is not exactly “what they would have been doing if they had forced the railroads to continue running passenger trains”. They would have been regulating in the (perceived) public interest. Whether it is labor laws, safety regulation, pollution control, or requiring that a common carrier provide, as part of its overall franchise, some service which - though perhaps unprofitable - serves a public interest – each of these is an example of regulation which cuts into a company’s profits for the public good. Let us remember that there is no constitutional right to operate a railroad. It is a common carrier government-granted & regulated franchise, subject to operating in the public interest.
… Given the excellent performance of the freight carriers, why in the world would they want to take on a passenger franchise, which does not cover its fully allocated expenses anywhere?
Are we so sure this is such a bad idea? Putting aside for a moment the question of just exactly how much was being lost on passenger operations 40-50-60 years ago (and the documented actions of certain carriers, such as the Southern Pacific, to deliberatey drive passengers away and cause that “loss” to increase), isn’t it possible that enough has changed in the last 40-50-60 years to make profitable passenger service a possibility?
Rail technology is more efficient, aviation is more expense and less “glamorous”, gro