Third-party LD operation RFPs

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Re: Third-party LD operation RFPs

Postby AMTK822401 » Mon Aug 07, 2017 2:48 pm

I don't understand the whole push for privatization. I thought it was common knowledge that passenger trains don't make money and have rarely if ever did so even under the fallen flags. Why not just stop fighting over the subsides and actually let Amtrak invest in and improve in its services?
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Re: Third-party LD operation RFPs

Postby mtuandrew » Mon Aug 07, 2017 3:36 pm

Tadman wrote:But that's why Indiana went shopping on the Hoosier. Amtrak rents out cars and power and their market rate, which is based on a proportion of the cost of a new train car. Amtrak has no other options other than new cars. Iowa Pacific rented out cars at a proportion of the cost of used train cars. The nature of their operation means they will only likely buy used train cars. Given the age of the midwest corridor fleet, you could say the Horizon and IP cars are in roughly the same shape, but the Horizons probably rent out for double/triple.

I didn't say it was worth a private operator's time, just Amtrak's :wink:
AMTK822401 wrote:I don't understand the whole push for privatization. I thought it was common knowledge that passenger trains don't make money and have rarely if ever did so even under the fallen flags. Why not just stop fighting over the subsides and actually let Amtrak invest in and improve in its services?

Winner winner chicken dinner! The better capitalised Amtrak is, the less percentage of subsidy it needs per passenger. Union Pacific doesn't invest millions in the Sunset Route and expect it to make money with six trains total per week, so why would you expect it of Amtrak?
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Re: Third-party LD operation RFPs

Postby Tadman » Mon Aug 07, 2017 4:15 pm

But there's no incentive if Amtrak is the only provider, ever, of service.

Think about it:

A. If a private operator arrives at a new rolling stock configuration (IE herringbone-like business class, commuter-density-on-corridor, etc...), they could see a significant increase in revenue per subsidy dollar.

B. If a private operator arrives at a better service model, they could see a significant increase in revenue per subsidy dollar. This might include changing the pre-train and post-train experience, which have recently improved under Amtrak auspices but from 1971-2015 were basically of the Penn Central model (IE shut up, do what we tell you, and don't get yer hopes up). It might also include a private concession on-train or off-train for foodservice.

C. If a private operator arrives at a new technology solution (IE better apps, ticketing sales, specific seat reservation, etc...) the could see an increase in revenue per subsidy dollar.

The real bonus: If Amtrak likes the innovation, they can license it and use it. If they don't, the R&D tab goes to the private sector. Further, the private sector operator may license the innovation not just to Amtrak, but commuter carriers, VIA, Europeans...

If we think of this opportunity just as "competing for the same routes by the same methods under a different brand" it's of course going to fail. But that's not what it is. Iowa Pacific showed that a dome car with awful seats as "business class" and hot food significantly raised ticketing. The failure of that model was in regard to the revenue split vis-a-vis timekeeping, not onboard costs.
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Re: Third-party LD operation RFPs

Postby Greg Moore » Mon Aug 07, 2017 4:38 pm

AMTK822401 wrote:I don't understand the whole push for privatization. I thought it was common knowledge that passenger trains don't make money and have rarely if ever did so even under the fallen flags. Why not just stop fighting over the subsides and actually let Amtrak invest in and improve in its services?


Because there are those who don't want Amtrak in any capacity so this is their attempt to prove that "Amtrak is a waste of money. If private industry can't do it, why should we do it at all?"
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Re: Third-party LD operation RFPs

Postby SouthernRailway » Mon Aug 07, 2017 4:50 pm

AMTK822401 wrote:I don't understand the whole push for privatization. I thought it was common knowledge that passenger trains don't make money and have rarely if ever did so even under the fallen flags. Why not just stop fighting over the subsides and actually let Amtrak invest in and improve in its services?


Congress (except for a few fanatics) understands that passenger trains lose money, and it has funded Amtrak this year in amounts roughly consistent with prior funding amounts. However, Congress also wants tax dollars to be used efficiently. Congress sees that nearly every other Western country has added private sector aspects to its publicly-funded passenger system (the UK in particular has allowed private operators that are subsidized, although other EU member states have as well), and so the US is, at long last, just following trends.

As long as Congress is clear that whoever operates passenger trains needs some type of government funding, it's fine by me to contract out operations.

I am not saying that a private operator will necessarily be more cost-effective, or better in any way, than Amtrak. A private operator might be, though.
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Re: Third-party LD operation RFPs

Postby mtuandrew » Mon Aug 07, 2017 5:45 pm

Noted re: IPH's Great Dome and hot food; Amtrak has either been unwilling or unable to fulfill the potential of its food service and non-revenue cars. We've also thrown around some interesting ideas about sleeper accommodationa and different seat pitches for different travel classes.

However, regardless of whether Amtrak has competition on the rails, it most definitely has competition from air, bus, and car travel. All of you are right when you say that Congress won't accept Amtrak being an indefinite money pit, so it has to at least try to catch up to the curve. I suppose we have Iowa Pacific to thank for prodding Amtrak, and I'd be okay with hiring IPH to consult on improving the above services.
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Re: Third-party LD operation RFPs

Postby MBTA3247 » Mon Aug 07, 2017 11:01 pm

SouthernRailway wrote:
AMTK822401 wrote:I don't understand the whole push for privatization. I thought it was common knowledge that passenger trains don't make money and have rarely if ever did so even under the fallen flags. Why not just stop fighting over the subsides and actually let Amtrak invest in and improve in its services?


Congress (except for a few fanatics) understands that passenger trains lose money, and it has funded Amtrak this year in amounts roughly consistent with prior funding amounts. However, Congress also wants tax dollars to be used efficiently. Congress sees that nearly every other Western country has added private sector aspects to its publicly-funded passenger system (the UK in particular has allowed private operators that are subsidized, although other EU member states have as well), and so the US is, at long last, just following trends.

As long as Congress is clear that whoever operates passenger trains needs some type of government funding, it's fine by me to contract out operations.

I am not saying that a private operator will necessarily be more cost-effective, or better in any way, than Amtrak. A private operator might be, though.

In the UK, the trains are all operated by private companies. The infrastructure is almost entirely (with the exception, IIRC, of 3 stations) owned by the national government through Network Rail, which is the company that actually receives the government subsidies. Many of the trains themselves are actually owned by financial institutions, which makes funding them much easier (if one operator is denied a contract renewal, its successor will likely lease the same equipment).

I doubt a variant of the UK model would work here, though. The annual appropriations nonsense in Congress injects too much risk into the system for private operators to get involved; they need guarantees that adequate subsidies will be available for a decade or longer.
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Re: Third-party LD operation RFPs

Postby Bob Roberts » Mon Aug 07, 2017 11:21 pm

MBTA3247 wrote:In the UK, the trains are all operated by private companies.


I doubt you could find 10 regular commuters in the UK who feel like this system works well. Fares are the highest in Europe (quite possibly the world) and service quality is significantly worse than you would find in the remainder of Western Europe. Its quite likely that UK rail will be completely renationalized over the next five years as existing franchise agreements expire.
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Re: Third-party LD operation RFPs

Postby Nasadowsk » Tue Aug 08, 2017 5:46 am

The UK system is far from wonderful, but:

* Ridership has gone up significantly since privatization. Actually, I think it's better than doubled.

* BR, best as I can tell, was the butt of jokes anyway. Certainly, the equipment they were buying, with few exceptions, was class trailing and almost as pathetic as US equipment still is.

* When I was over there, one of my trains (Virgin on the ECML) was delayed 40 minutes. I got a refund. I didn't have to argue over it, they GAVE ME the info to get it as I got off the train at Kings Cross. Try getting a refund from Amtrak for a 40 minute late train. Hell, try getting a refund from Amtrak for anything.

* The biggest component in my delays (and oh boy, did we get delayed...) was...Network Rail. So much for the government doing it better/cheaper. It seems to be run more as a jobs program than anything else anyway...

* The Underground sucked and the Overground wasn't much better. And expensive as hell. Neither are privately run.

* For all the moaning about the Southern, other than the dumpy BR-era equipment (though if you like 40's vintage NVH in 80's vintage equipment, I guess it's ok), my trains went smoothly.

Honestly, if the re-nationalize the system, I fully expect whatever progress they've made will be basically erased within 10 years. A quick search on youtube results in a lot of BBC documentaries from various eras on just how bad it was in the BR days. It's pretty telling how bad things are when even the government says the government can't get it right....

FWIW, there's plenty of private operators on the continent, and the world hasn't ended. In Germany, other than the logo on the train, you barely notice the difference, since they have common ticketing and every ticket machine sells every ticket...
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Re: Third-party LD operation RFPs

Postby John_Perkowski » Tue Aug 08, 2017 8:57 am

Admin note:

Please remember to bring your discussions about international passenger railroading back to the matter of Amtrak asking for someone to operate 3 long distance routes.

Thank you.
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Re: Third-party LD operation RFPs

Postby Mackensen » Tue Aug 08, 2017 9:45 am

It's worth taking a second look at Iowa Pacific's reply during the notice-and-comment period last year: https://www.regulations.gov/document?D=FRA-2016-0023-0011. I found it unrealistic, but it provides a basis for discussion. Note that Ed Ellis, who ought to know, flatly ruled out the idea that any Class I would want to enter the passenger market. The private companies submitting comments were Iowa Pacific, the Association of Independent Passenger Rail Operators (First Transit, Herzog Transit, Keolis and Transdev), Florida East Coast Railway, and Corridor Capital. Iowa Pacific was the only one to submit a detailed proposal during that period.
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Re: Third-party LD operation RFPs

Postby mdvle » Tue Aug 08, 2017 12:56 pm

Nasadowsk wrote:The UK system is far from wonderful, but:


The UK system is considered an example of how not to do things.

Instead of eliminating subsidies the government cost has about doubled (after factoring in inflation) while fare have also gone up dramatically (and would have gone up higher except for government interference in preventing higher increases).

Nasadowsk wrote:* Ridership has gone up significantly since privatization. Actually, I think it's better than doubled.


And has nothing to do with privatization.

Ridership is a reflection mainly in the growth of London and some other areas of the economy, the growth in population, the congestion charge, the overcrowding of the road network, etc.

Nasadowsk wrote:* BR, best as I can tell, was the butt of jokes anyway. Certainly, the equipment they were buying, with few exceptions, was class trailing and almost as pathetic as US equipment still is.


Which explains why 60% of the UK wants the return of British Rail.

Nasadowsk wrote:* When I was over there, one of my trains (Virgin on the ECML) was delayed 40 minutes. I got a refund. I didn't have to argue over it, they GAVE ME the info to get it as I got off the train at Kings Cross. Try getting a refund from Amtrak for a 40 minute late train. Hell, try getting a refund from Amtrak for anything.


Nothing to do with privatization. The rail operators are legally required to provide refunds for delays.

Nasadowsk wrote:* The biggest component in my delays (and oh boy, did we get delayed...) was...Network Rail. So much for the government doing it better/cheaper. It seems to be run more as a jobs program than anything else anyway...


Two points:

1) much like the freight operators here Network Rail subcontracts out much of its work to private companies

2) Network Rail is a government company because the private operator - Railtrack - failed and the government had to step in.

Nasadowsk wrote:* The Underground sucked and the Overground wasn't much better. And expensive as hell. Neither are privately run.


Except London Overground is operated by Arriva Trains.

And yes, London is expensive, nothing to do with government or private.

Nasadowsk wrote:* For all the moaning about the Southern, other than the dumpy BR-era equipment (though if you like 40's vintage NVH in 80's vintage equipment, I guess it's ok), my trains went smoothly.


The private operator has upgraded/refurbished said equipment, and chosen to continue to operator it despite BR being gone or 20+ years, so not the fault of BR.

Nasadowsk wrote:Honestly, if the re-nationalize the system, I fully expect whatever progress they've made will be basically erased within 10 years. A quick search on youtube results in a lot of BBC documentaries from various eras on just how bad it was in the BR days. It's pretty telling how bad things are when even the government says the government can't get it right....


The UK rail system is already re-nationalized for all intents and purposes. The UK government micromanages the franchises and is even now the one to specify and order rolling stock. The next step apparently has the government eliminating first class.

Not to mention that over half the passenger moved on the UK system are done by the German, French, Dutch, Spanish, Netherland, China governments.

Nasadowsk wrote:FWIW, there's plenty of private operators on the continent, and the world hasn't ended. In Germany, other than the logo on the train, you barely notice the difference, since they have common ticketing and every ticket machine sells every ticket...


Because Europe didn't follow the UK model.

Private operations or government operation, neither is inherently good or bad.

What they all have in common though is a requirement for good and competent government behind the scenes given that passenger rail (at least as a method of being an affordable way of moving people) required subsidies.

To bring this back to Amtrak, we can learn that a private operator may provide better service or may not depending on how things are structured by the government. Experience in the UK indicates a franchise needs to be for 15 to 20 years for effective results as that it the necessary time period to justify the costs of infrastructure improvements - primarily the cost of new equipment. Without that time period somebody, usually government, needs to step in and either directly purchase or guarantee to a bank the future use of the rolling stock given the need to finance the purchase over an extended period (unless the private operator is willing to take on that debt commitment on their own).

Beyond that it is difficult to make much of a comparison as Europe doesn't have long haul rail, and soon (if not already) won't have sleeper services*.

* so far the UK seems committed to spending the money on their 2 sleeper services, but they require subsidies more substantial than regular passenger services do.
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Re: Third-party LD operation RFPs

Postby mdvle » Tue Aug 08, 2017 1:20 pm

Mackensen wrote:It's worth taking a second look at Iowa Pacific's reply during the notice-and-comment period last year: https://www.regulations.gov/document?D=FRA-2016-0023-0011. I found it unrealistic, but it provides a basis for discussion. Note that Ed Ellis, who ought to know, flatly ruled out the idea that any Class I would want to enter the passenger market. The private companies submitting comments were Iowa Pacific, the Association of Independent Passenger Rail Operators (First Transit, Herzog Transit, Keolis and Transdev), Florida East Coast Railway, and Corridor Capital. Iowa Pacific was the only one to submit a detailed proposal during that period.


The linked document notes that it is partially based on "IPH’s experience in the UK".

For those unfamiliar, their UK operations consist of a minor freight operator and 2 heritage railways and a (so far) unsuccessful attempt to be an open access operator.

I don't think that would bring much experience in operating a long distance Amtrak service.

Also, Keolis is basically the French Government (being 70% owned by SNCF).
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Re: Third-party LD operation RFPs

Postby mtuandrew » Tue Aug 08, 2017 1:29 pm

mdvle wrote:
Nasadowsk wrote:* When I was over there, one of my trains (Virgin on the ECML) was delayed 40 minutes. I got a refund. I didn't have to argue over it, they GAVE ME the info to get it as I got off the train at Kings Cross. Try getting a refund from Amtrak for a 40 minute late train. Hell, try getting a refund from Amtrak for anything.


Nothing to do with privatization. The rail operators are legally required to provide refunds for delays.

I've actually had pretty good luck getting partial refunds (vouchers) from Amtrak for late trains, at least when they've caused me to miss a connection. However, that's in off-Corridor one-train-a-day territory, so your mileage may vary.

Iowa Pacific is still out there winning freight contracts (see the Shortline, Industrial, and Military forum), so it isn't entirely unreasonable that they try bidding and get a serious look. When I said before that EEE would undercut anyone to be able to operate the City of New Orleans, I perceive such a personal attachment to him that he would sell off assets and equipment, take out loans, and even guarantee IPH profits (at a small loss to himself) in order to run his chocolate-and-brown cars.
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Re: Third-party LD operation RFPs

Postby Gilbert B Norman » Tue Aug 08, 2017 2:41 pm

Mackensen wrote:It's worth taking a second look at Iowa Pacific's reply during the notice-and-comment period last year: https://www.regulations.gov/document?D=FRA-2016-0023-0011. I found it unrealistic, but it provides a basis for discussion.


This is off topic of sorts, but on reviewing IPH's 23 page "Coloring Book", I could not fail to note the attachment of an IC memo from 1961 relating to the City of Miami winter consists. Within such, it is noted that ALL assigned equipment was to be liveried in IC colors.
"I was there" a little later, and from what I saw at Champaign, that was the "letter and spirit of the law".

Otherwise, all too much of the coloring book was assailing Amtrak for protecting their own interests - and less there be doubt, so long as there are LD routes, it's in Amtrak's interest to keep running them.

Likely Amtrak is "not happy" that all too many of the Locally funded trains have their own identities. But the local jurisdictions are paying for the service - and $$$ talk.
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