GOP Seeks Bidders on Amtrak Rail Lines

[Jeff Smith]

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Let's have an interesting discussion of the pro's and con's of this. I realize this is political, but let's keep the hyperbole' to a minimum.

Thanks for participating.

House Republicans called Wednesday for the breakup of Amtrak's de facto monopoly on U.S. intercity passenger-rail service, proposing to open up the government-controlled company's Northeast Corridor and other lines to bidding by private investors.

Foreign rail-service operators have been angling to develop high-speed rail in the U.S., where Amtrak's fastest Acela trains average 85 miles per hour, far slower than the 220-mph pace found in Europe and Asia.

...

British billionaire Richard Branson's Virgin Trains, which operates high-speed rail service in the U.K., has said it is interested in running trains along the Northeast Corridor, the busy 456-mile stretch of track between Boston and Washington that is by far Amtrak's most popular and lucrative route.

"The Northeast corridor is an exciting opportunity for anybody," said Virgin Trains spokesman Arthur Leathley. "Purely in terms of the large populations involved, clearly there are great opportunities."

[Greg Moore]

Can I propose we seek bidders for the Congress. Oh wait, I think big business has already bought them.

Sorry. I will be interested in seeing comments on this topic, but I suspect they will become very political, very quickly.

[MattW]

Can anyone point out a case where privatizing the rail system has actually worked out? I don't mean private company running the system, I mean private company OWNING the system.

[R36 Combine Coach]

Why hasn't the GOP yet thought of "AMTK" trading on the stock ticker?

[gprimr1]

Japan does have some profitable private railways, but I think they are probably more the exception.

[DutchRailnut]

untill the GOP gives guarantees that Government will cover any losses they won't get any bids
And if Government covers losses are we not back at what Amtrak is ??

[David Benton]

any attempts to sell the right of way have failed , everywhere . so there will still be the capital and maintenance cost of the right of way for the govt to pay . Mr Branson aint going to accept decrepit infrastructure for his virgins , so the cost may be higher than it is now .He may also vbe expecting to be paid to run the trains , as in (most) english services . pure ideology at work , there may or may not be some improvemnt in operating profits / service , but i doubt its going to be a big difference either way .
Still if private enterprise thinks it can make a profit out of it , why not let them have a go .

[F-line to Dudley via Park]

http://www.huffingtonpost.com/2011/06/1 ... 78169.html

This is proving to be fraught with peril in recent cases where it's been done with highways. As always, nobody anticipated the enormously complex fine print they were signing onto when cutting these deals.

I tend to agree with this article linked above in that privatization works well in certain cases where you're building entirely new infrastructure, but rarely in cases where you're outsourcing existing infrastructure. Even less so when outsourcing existing infrastructure to compel some other for-profit entity to improve it where gov't alone wouldn't improve it. Building new things requires that much more continuous cost/benefit analysis projected over life of the infrastructure before you can even sign a deal. No possible way public or private to put a shovel in untouched ground on projects that complex without seeing those small details through all the way. But when you just want to outright scrape bulk expenditures off a budget line the fastest means necessary, you're not likely to go into negotiations flexing much thought on the nuances of getting a payoff on multi-generational investment with a a zillion little what-ifs breaking favorably. Much less figure out the transitional steps of sharing control and following through on regulatory oversight. Those steps are seen as equally egregious sins of government overreach.

It's inevitable that there'll be shock...shock!...about hidden cost gotchas and contractor penalty dodges, or that those problems can quickly start rearing their ugly heads on a deal the press release boasted was "win-win!". For-profit corporations work over every stone to wring profitability leverage from the contract legalese. In a purely economically-driven decision, the gov't would be just as bottom-line as the corporations and have sniffed out every wrinkle and potential pitfall in the ink. Fine...looks like a fair deal after all that effort, maybe it is a true win-win. Plenty of cases where that's definitely or quite possibly true, and at the very least if it fails it'll be because of more complex external factors than you simply not reading what you signed.

But these aren't economic decisions at the core. Usually cutting government workload is the first-and-foremost ideological litmus test, with "can't someone else do it?" being both the end and the means. If that means signing a really bad economic deal like Indiana did with its toll roads before anybody bothered to consider what obvious catastrophic costs it would entail...well, not reading the fine print was a reduction in government workload was it not? This is how so many pols can reconcile support for proposed cutbacks that end up costing more than they save, when it wildly contradicts their own purely economic philosophies and voting records. Economics is like 2 places back in the litmus test queue...they've already dove head-first before anybody thinks that far.


I wish this was purely economic ideology. We'd be inking a lot less preventably awful privatization deals as a country if this vaunted 'public CEO'-meets-'private CEO' partnership actually had a 'public' side that minded its shareholder value as well as a private CEO vs. private CEO negotiation would.

[frostyorange]

Didn't Amtrak take over from private operators to ensure acceptable passenger service to this country? I feel this is entirely driven by ideology. Show me solid facts and figures. In truth I'm frightened by how these people think in large part about mass transportation. No, not all republicans are anti-rail. That said, I feel the majority of them having an unexplainable need to appeal to a "fundamentalist" voter base will both harm the country and get them eventually not in the majority in any area of government.

[gprimr1]

Didn't Amtrak take over from private operators to ensure acceptable passenger service to this country? I feel this is entirely driven by ideology. Show me solid facts and figures. In truth I'm frightened by how these people think in large part about mass transportation. No, not all republicans are anti-rail. That said, I feel the majority of them having an unexplainable need to appeal to a "fundamentalist" voter base will both harm the country and get them eventually not in the majority in any area of government.

This is true, but on the flip side Conrail was created from private operators to ensure service in the northeast and was eventually sold off as profitable and all but a small minority think it was a successful program. Now of course passenger and freight are different, but it does give me some cause for optimism that a privatization may work one day.

The big problem I would have with this is the simple fact, who is doing it? Are they pro-rail people just trying to make it better or are they anti-rail people trying to put a nail in Amtrak's coffin?

Such a monumental decision should not be made by people wanting to kill Amtrak.

[JimBoylan]

Can anyone point out a case where privatizing the rail system has actually worked out? I don't mean private company running the system, I mean private company OWNING the system.

Pennsylvania RR bought the Philadelphia & Columbia RR from the Commonwealth of Pennsylvania. The State of South Carolina sold the Charleston & Hamburg RR, I think it's now part of Norfolk Southern.

[FatNoah]

Finding "operators" is all fine and dandy, but the real issue is the capital costs. Amtrak's operating subsidy is but a tiny part of the federal budget. It's no surprise that operators are interested, since they make their money running the trains. The real question is whether they are interested in running things with terms that provide efficient service that is cost-effective to both travelers and tax payers.

The Indiana toll road "cautionary tale" is a little too much for me though. Yes tolls have risen, but they can't rise indefinitely (even if the terms of the contract say so). At some point, tolls would rise to the point where it's cheaper to avoid the highway altogether. The point about needing to tread very carefully is a good one though. Here in MA, the operator hired by the MBTA to run the commuter rail wasn't being penalized despite some of the worst performance in years.

[Jeff Smith]

...Sorry. I will be interested in seeing comments on this topic, but I suspect they will become very political, very quickly.

Just to be clear, politics are NOT off-limits. This is an inherently political discussion. I just don't want hyperbole' and ad hominem stuff; you know, like Republicans are doodie-heads, Democrats are pinkos, etc.

Tad and Greg will keep this topic in line.

[Jtgshu]

who are all these private operators they have in mind to take the NEC over?

The states? The Commuter Railroads that operate over the respective sections? how "private" is "private" - would NJT or Septa be considered "private?" Who else would have the knowledge and experience and properly trained employees to deal with the high voltages and the track and the signals and the stations, etc? Would Amtrak employees come with it? Would the signal departments, the track departments, the catenary guys, the dispatchers, all these folks who are the behind the scene faces of the railroad, but essential for it to operate, would they be there one day and gone the next if amtrak got out bid? These people know the railroad like the back of their hands and do the best with what htey are given (most times). These aren't positions that can be outsourced to a firm and folks hired and paid 10 bucks and hour and learn the job in a week or two. Herzog or RJ Corman can do a lot of things, I don't see either of them having the ability to run the NEC....

Freight roads bidding on the NEC? I could see that, but thats a double edged sword. They are going to want to be able to run freight down the NEC, as the anti freight feelings at Amtrak would all but disappear over night, and now, there are going to be more freight trains to deal with and work into and around passenger trains and we are gonna be going 150mph on one track with an acela, while a 100 car freight going 40mph on the next track? But what other companies would have the resources, both money and experienced people, to operate a massive railroad other than a freight railroad? Of course, the catenary would be a new "wrinkle" they would have to deal with, but im sure they could manage. Here's something to think about.....what would happen if say, Union Pacific or BNSF bid on it? would it require an STB approval? would they become the operators of freight over the NEC? Could they drum up new freight service? Would all of a sudden, NS and CSX have competition down the quickest route in the Bowash megaopolis? Doesn't both UP and BNSF operate lines for Metra in Chicago? I know BNSF does, im not sure about UP, but that might be the "passenger railroading" experience needed to "qualify" to run the NEC (if there were standards or requirements for the bid)

Seems fishy to me...........seems to be just yet another attempt of gutting Amtrak and the gov't getting out of the railroad business, which is exactly the opposite of what we need here, especially with regard to the NEC.

[frostyorange]

Seems fishy to me...........seems to be just yet another attempt of gutting Amtrak and the gov't getting out of the railroad business, which is exactly the opposite of what we need here, especially with regard to the NEC.

I totally agree. Sadly there is a lot of people in powerful offices confusing "good for businesses" and "good for the people". It makes one wonder where their priorities really lie.