FRA issues proposed rules bidding out Long Distance Routes

From: Trains Newswire

If there was a previous topic on this specific proposal, I couldn't find it.

UPDATE: FRA issues proposed rules on bidding out long-distance Amtrak routes

WASHINGTON — Amtrak’s 45-year near monopoly on overnight passenger trains could end based on a proposal announced today by the Federal Railroad Administration to introduce a pilot program allowing independent entities to run long-distance trains on as many as three routes.
...
Among the key elements of the proposal are:
• The winning bidder would assume the “right and obligation” to operate intercity passenger service over a specific route, and receive an operating subsidy not to exceed 90 percent of that provided to Amtrak for that route during the preceding year. The initial contract for each route would extend for four years, with extension subject to transportation department approval.
• Amtrak would be obligated to provide the new operator with access to its own reservation system, stations, and facilities.
• Employees of a new operator would be subject to laws and regulations governing current similar Amtrak employees, and winning bidders must provide hiring preference to displaced, qualified Amtrak workers.
• If an alternate operator fails to provide service, the transportation department, in collaboration with the Surface Transportation Board, would “take any necessary action consistent with the FAST Act to enforce the contract and to ensure the continued provision of service.”

This could be interesting.

I'm of a mixed mind, but honestly, as long as I can go to ONE website and book an Empire Service train to say Chicago and then a LD to the west coast and just have a single experience, ticket, etc. I might be happy with this.

This could force a little innovation into the market.
And, if I understand it correctly, the bidder is providing their own equipment.
This could free up LD for Amtrak for other routes.

Hmm.

Now we'll have to see if anyone actually bids!

What old equipment is available suitable for long distance services, in the numbers needed to support five or six sets for each train? Ex-Santa Fe High Levels for coaches maybe, but what about sleepers? I strongly believe new equipment will have to be used.
Therefore, is this the future FRA ultimate solution to retire the aging long distance Superliners? Have some one else buy them and take the service over?

Couldn't the FRA look at using this same funding formula to replace the not as old Acela train sets? Or is this a sign that Acela is profitable enough to afford replacing its equipment and that the long distance trains aren't?

Full disclosure: I have an IRA position in UNP.

Not to exceed 90% of the current subsidy, eh?

If I hear UP bidding on any of these routes, my first question to the BOD is "State the business case which makes you a profit."

Oh, really, you cannot get there from here? Mr Chairman of the Board, I nominate the following people to replace the incumbents and discharge your goat smelling butt for misfeasance.

I cannot see a circumstance where an existing railroad can make money. There's a reason RPSA 70 withdrew the "right and obligation" to run passenger service from the investor owned railroads.

I suspect Mr Buffett's managers at BNSF will say the same thing.

Let me be blunt: The equipment to run passenger service by an investor owned railroad is gone. Relatively little of what's available at ozark mountain railcar, mid america railcar, ad infinitum can meet FRA standards as defined by Amtrak's PC-1 and PC-2 inspections.

Last night, I picked up my fiancee from Kansas City, off of 3. It had 4 sleepers and 4 coaches. IIRC, coaches are running 72 seats up and 16 down, or 88. That means 352 coach seats. Sleepers have 14 sections and one handicap room for 30 seats, 1 family room at 4, and 5 Compartments at 2 for 10. That means a current sleeper beds 44.

So to meet the summer lines on 3/4, a bidder needs rolling stock for 352 coach/176 sleeper pax. In single level equipment, using a 48 seat car (an ATSF standard number for a single level coach), a bidder needs 7 low level coaches and 8 sleepers.

Find me 42 coaches, 48 sleepers, 6 diners, and 6 lounges, please.

John_Perkowski wrote:Full disclosure: I have an IRA position in UNP.

Not to exceed 90% of the current subsidy, eh?

If I hear UP bidding on any of these routes, my first question to the BOD is "State the business case which makes you a profit."

Oh, really, you cannot get there from here? Mr Chairman of the Board, I nominate the following people to replace the incumbents and discharge your goat smelling butt for misfeasance.

I cannot see a circumstance where an existing railroad can make money. There's a reason RPSA 70 withdrew the "right and obligation" to run passenger service from the investor owned railroads.

I suspect Mr Buffett's managers at BNSF will say the same thing.

If you re-read the quote in the original post, you'll see that the private companies stepping in wouldn't be expecting to make a profit on the trains themselves - they'd be making a profit on the federal subsidy.

If I understand it correctly, they would receive a subsidy of up to 90% of the subsidy Amtrak received for the route - meaning that if they could provide the service at 85% of what it costs Amtrak to provide it, they could pocket the other 5% as profit. This is essentially how the private train operating companies in countries like Great Britain operate - the trains don't make a profit, but they get to pocket the savings from providing the service for cheaper than the government paid them to as their profit.

Whether or not any company actually could operate these trains for lower cost than Amtrak is up for debate though.

The investor owned railroads got out of the passenger traffic business because they could not make a profit.

Trust me. This is the era of big data. UP, BNSF, CSXT, NS, all know to the fifth decimal place the cost to move a ton of goods from A--->B. They know the manpower costs to run a dining car, they know the manpower costs to staff a Porter or a Lounge Attendant.

If you go back and study the true business model of passenger traffic departments of the investor owned railroads, even under regulation, they made their money on: THE MAIL. They also made some money handling the early crops of fresh produce. When your passenger train is actually 30 very pretty boxcars (and that's really what a storage mail car is, a very pretty box) and a rider coach, you can move it across the line with less manpower cost than running a a bunch of attendants as well.

No. As an investor, UP would have to show me the business case to run passengers again. OBTW, the route is Chicago to Los Angeles. Who tells UP they must serve Newton, KS, or even Albuquerque? UP can go back to the Overland Route if it so desires.

Specifying the route means limiting the bidders. Do you really think Mr Buffett is going to think 5% ROI is worth it????

This is a fools errand.

Which LD routes have the least number of different railroads? Are there some railroads that would benefit by getting the contract and shifting the route onto their line or their mothballed passenger stations? An integrated railroad can share yards, engineers, conductors, theoretically could use the passenger engines to pull freight (are the trucks the same?) Even add priority freight cars to the passenger train.

Commuter railroads could also be interested. Do any freight railroads still operate commuter lines?

Anybody taking over a LD route would possibly face pushback from organized labor.

If I recall correctly, this is the third time since the 2008 PRIIA law that such rules have been proposed. Earlier attempts have drawn no bidders. I suspect this effort will not be different. If any company is interested, the freight railroads will block the effort.

Tony

BNSF owns 3-4, the Southwest Chief, terminal-terminal (??? Tad/GBN ??? There was an internal re-route in IL. Does that involve shifting of roads?) Before Amtrak, it was ATSF's, the same way.

5-6 is shared by BNSF and UP, the point of demarcation being Denver.

UP provides crews for Metra in Chicago, but Metra owns the cars, publishes the timetables, and does the ticketing. In addition, Metra has a huge passenger base, enough to justify movements into La Salle St as busy as anything in the day when it served the NYC.

3-4 switches from ATSF tracks to CB&Q tracks at Galesburg. Both are now part of the BNSF. 7-8 switches to Canadian-Pacific tracks at St. Paul. A BNSF routing would miss Milwaukee. Amtrak also owns the Chicago and New Orleans terminals and could make life difficult on foreign crews just as the Canadians have made life difficult for Amtrak on the CON.

11 and 14 are BNSF north of Portland.

Is it limited to a track-holding company, or can it be an operations company? Remember, Bombardier runs MARC service over two CSX lines into DC, and Keolis runs MBTA service over MBTA rail.

Contractors might have a chance with a one night train, not the three night trains because it can't be done. Amtrak already has the coach ticket prices very low on the long distance and very few are riding the trains for scenery these days.

Albany Rider wrote:If I recall correctly, this is the third time since the 2008 PRIIA law that such rules have been proposed. Earlier attempts have drawn no bidders. I suspect this effort will not be different. If any company is interested, the freight railroads will block the effort.
Tony

Third time to propose such rules - I don't think you remember correctly. If the FRA has just proposed rules, doesn't that mean for the first time?

Whether or not private companies bid, it'll be interesting to see how Amtrak plans to renew it's long distance fleet west of the NEC.