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Showing posts with label Florida East Coast Railway. Show all posts
Showing posts with label Florida East Coast Railway. Show all posts
This Week at Amtrak; Vol. 9 No. 2
Volume 9, Number 2
From the Editors…
When the parent company of a legendary railroad states its intention to operate passenger trains, it is bound to garner some attention. This week we try to find out what all the hubbub is about.
What’s all the fuss?
Last week the parent of the Florida East Coast Railway announced its intention to establish passenger train service between Orlando and South Florida. Suffice it to say, this set the world of rail travel advocacy aflutter, leading to numerous online articles, blog posts, and more than a palpitation or two. This is all the more remarkable since the FEC exited the passenger train business on July 31, 1968, thus never having become an Amtrak subscriber. Many find this hard to fathom. As historians like to point out, however, history does not repeat itself; but it does rhyme.
MORE, PERHAPS, than any other part of the United States, excepting the Great Northwest empire of James Jerome Hill, it is possible and, indeed, almost mandatory to think of Florida in terms of the personality of a truly imperial railroad builder whose equally imperial whim was the organization of a vast geography as his pleasure dome and lasting monument. Henry Morrison Flagler, a partner in Standard Oil with John D. Rockefeller who retired with an immense personal fortune in vigorous middle age and full possession not only of millions but the will to spend them grandly, was able before his death to claim Florida almost in its geographical, economic and social entirety as his own creation. Call it enterprise or call it megalomania, no Roman proconsul or magnifico of medieval Italy ever brought into being so grandiose a concept as railroading and its incidental and collateral expansion in Flagler’s Florida. - Lucius Beebe, The Trains We Rode, Volume One, Howell-North Books, 1965
The seeds of the modern era of the Florida East Coast Railway were sown toward the close of the Twentieth Century. With the loosening of Depression Era banking regulations, numerous private equity investment firms were established such as Goldman Sachs, The Carlyle Group, and The Blackstone Group. Their mission was simple: Invest their clients’ hard-earned dollars with an expectation of a return on that investment.
Fortress Investment Group was founded as a private equity firm in 1998, and is headquartered in New York City. Among their stated goals is to obtain “distressed and undervalued assets (some with limited current cash flows and long investment horizons) and tangible & intangible assets (real estate, capital assets, natural resources and intellectual property).” The expected life of these transactions is 3 to 25 years.
The Florida East Coast is much more than a railroad. There is the Florida East Coast Railway that operates 351 miles of mainline track between Jacksonville and Miami. The parent company, Florida East Coast Industries, also owned and operated Flagler Development Group, one of the premier developers in the state. Its portfolio of properties includes about 8.8 million square feet, primarily located in Jacksonville, Ft. Lauderdale, Orlando, and Miami. Flagler also provides construction, consulting, brokerage and property management services. The company also owns about 853 acres of entitled land in Florida and more than 3000 acres of Florida real estate in its land bank that are not yet entitled. It should be noted that of the listed Flagler prime property locations, Orlando is the only one NOT located on the railroad.
The FEC was acquired out of bankruptcy in 1961 by The St. Joe Paper Co., a legacy of the du Pont era. St. Joe controlled the FEC until 2000, when St. Joe distributed its Florida East Coast shares to St. Joe stockholders. The FEC became an independent public company, but this freedom would be short-lived.
The Staggers Act of 1980 removed much of the regulation overreach from earlier in the century, allowing the railroads to act as they were intended; as businesses. Since 1980, $480 billion has been invested by the nation’s railroads into their physical plant. With railroads now allowed to maximize the leverage of their franchise opportunities for growth became evident over the following two decades, especially to investment firms. All aspects of railroading, from manufacturers to railroads, themselves, have found favor once again with the money changers.
Fortress Investment Group’s initial foray into railroading was the acquisition of RailAmerica, a short line holding company, in February 2007. It would take RailAmerica public with an initial public stock offering in October 2009.
By 2007 the FEC was ripe and ready for a change. As a result of the protracted financial malaise gripping the entire state in the first quarter of that year, earnings suffered a drop of about 50%. Net income fell to $9.04 million compared to $18.7 million for the first three months of 2006. Revenue during the quarter dropped to $108 million from $136 million. This was attributed to a decline in revenue of $43.9 million in land sales, and a $7.3 million drop in railway revenue. To most, this would appear to be a distressed and undervalued asset; for Fortress, this was an opportunity.
On May 8, 2007, the Florida East Coast Industries Board of Directors unanimously agreed to a takeover by Fortress in a transaction valued at $3.5 billion. The Surface Transportation Board granted its blessing in September, 2007. Under the Fortress banner, the railroad and Flagler Development have been split apart; but remain as staples of their “Alternative Asset Management” portfolio.
So what’s next?
Flagler’s first hotel venture was The Ponce de Leon at St. Augustine, costing a then astronomical $1,250,000 and advertised as the finest resort hotel in the world. More investments followed in dizzying succession as Flagler, indifferent to considerations of profit or loss, began the realization of a vision which embraced all Florida as the playground of the nation with amenities of relaxation for every taste and purse. In 1893 he added a new dimension of splendor and costliness with the opening at Palm Beach of the incredible Royal Poinciana Hotel while the iron of the Florida East Coast was still sixty miles away at Fort Pierce. From then on resorts palatial and modest leapfrogged the railroad down the seacoast: Hobe Sound, Jupiter, Fort Lauderdale, Biscayne and Miami. - Lucius Beebe, The Trains We Rode, Volume One, Howell-North Books, 1965
The “playground of the nation” as left by Henry Flagler has grown up into an economic force within its own right, and is now the fourth most populous state in the union. The state’s Gross Domestic Product was $748 billion in 2010, also fourth in the nation. For Flagler, the goal was simple: the importation of vacationers (and their money) to enjoy the mild weather; but even Flagler realized that beautiful vistas and sandy beaches were worthless unless a means existed to transport people to them.
For Flagler’s successors at Fortress, the objective becomes a little more complicated. Certainly “considerations of profit or loss” weigh heavily on their minds. The true ultimate goal of Fortress (as with any similar investor) is to build the capital value of the investment to multiples of its original value; before selling out, either to a "buy-and-hold" investor (e.g., Berkshire Hathaway) or to the public in an IPO. Profits are merely the lever, not the goal.
Locked in the legacy of the FEC, Fortress has tangible and intangible assets, the value of which have always been dependant upon the ability or inability of access by the public. The future of publicly funded and maintained transportation is anemic, at best. As a property owner, Fortress has a unique advantage: It already owns a transportation company not dependant upon publicly-funded rights of way or traffic control systems.
How does one maximize leverage of the franchise to advance and tap into the state’s GDP? Port Everglades (Fort Lauderdale) and the Port of Miami are undertaking expansions which renew rail access. Even so, the fact remains that people really do live here. Flagler Development currently lists a nine-acre property consisting of five lots which “is currently entitled for 2.5 million square feet of mixed-use development.” Also from the listing:
Downtown Miami has become a vibrant urban center where a population of 71,000 swells to 194,000 during business hours. Within walking distance of Miami-Dade College, the New World School of Arts, American Airlines Arena, and the Adrienne Arsht Center for the Performing Arts, the property is also at the epicenter of Miami’s cultural district.
Ironically, this is the land which once was home to the FEC’s Miami passenger train station and tracks, which were razed in the autumn of 1963. With rail access being restored to the Port of Miami just north of this site, restoration of rail service to downtown becomes a real possibility. Could this factor into whatever Fortress has in mind for its modern-day version of the FEC?
Obviously, none of us here claim to know what the service proffered by the FEC will look like, or even if it will, indeed, transpire. That is not the point. What is relevant is that investors find railroads attractive again; and this adoration is growing. Generally, one needs to spend money to make money. Is a $1 billion investment of private capital justified to unlock the untapped/unrealized value of existing assets? The formula that made Flagler a success is still quite relevant. Fortress Investment Group may be just 14 years old, but perhaps it has figured this out.
System map (Photo credit: Wikipedia)I have not seen this published in a while but here is the latest copy of This Week at Amtrak from the United Rail Passenger Alliance.
This Week at Amtrak; Vol. 9 No. 1
From the Editors…
Recently, a local regional railway announced a private initiative to begin passenger train service connecting Central and South Florida. Just to be clear, we said private.
A FOX rises in the East (Coast)
A wise fellow once observed that there is nothing new under the sun. It has also been said that if one wants a new idea then one should read an old book. On March 22, 2012, Florida East Coast Industries, the parent of the Florida East Coast Railway, made a significant announcement concerning its future:
Florida East Coast Industries, Inc. (FECI), the owner of Florida’s premier passenger rail corridor, is developing a privately owned, operated and maintained passenger rail service to connect South Florida and Orlando, which will be operational in 2014. By connecting the most visited city in the United States with South Florida’s business and vacation destinations, the passenger rail project, called All Aboard Florida, is designed to serve Florida’s growing number of business travelers, as well as families and tourists traveling for pleasure. - Florida East Coast Industries, Inc.
Obviously, this is a bold move for any private corporation, let alone a railroad. At the same time, all the signs were present. How did we get here?
Henry M. Flagler, Florida’s Empire Builder
One cannot know the story of Florida without knowing the story of one Henry Morrison Flagler who, in “retirement,” changed the face of the state’s tourist identity. Flagler had been visiting Florida in the winter since 1876, but it was during the winter of 1883-84 that he ventured into St. Augustine:
Arriving in the ‘Ancient City,’ Flagler found a sleepy, almost dilapidated town of about 2,500 inhabitants. While he was charmed with the climate and beauty of the old place, he found the hotel facilities quite inferior to the accommodations he and his circle of friends were accustomed to in northern cities. - Speedway to the Sunshine, Seth H. Bramson, The Boston Mills Press 1984
Flagler recognized the potential for creating an “American Riviera” along the east coast of the Sunshine State, but this would mean building hotels and resorts. These, of course, would be useless without a means of getting there. In 1885 Flagler bought the assets of the Jacksonville, St. Augustine & Halifax River Railway. In 1895 the name was changed to the Florida East Coast Railway; and in April, 1896, the railroad was extended into what was incorporated three months later as the city of Miami. All the while, he built and/or acquired hotels and resorts, many of which are still famous: The Ponce de León Hotel, the Royal Poinciana Hotel, and the Palm Beach Inn (later renamed the “Breakers”).
Like many magnates of his day, Flagler had his own share of overreach embodied by the Key West Extension, also known as the railroad that went to sea, which was completed one hundred years ago this year, in 1912; Flagler would die the following year.
Florida’s never ending boom and bust cycles
The decade after Flagler’s demise was one of (mostly) prosperity. The nation as a whole reveled in the post war euphoria, and the Florida land boom certainly did not hurt the fortunes of the railroad. By 1926 the entire railroad had been double tracked, and numerous other physical improvements had been engineered and installed. Traffic to South Florida was so intense the Seaboard Air Line established its own route to Miami, completed in 1927. Even so, what goes up eventually does come back down.
A massive hurricane in September, 1926 destroyed 60 miles of coastline, leaving 220 dead, over 6000 injured, and basically ending the land boom. The malaise of the Great Depression gripped the FEC, and the hurricane of Labor Day, 1935 wiped out the Key West Extension. The FEC had already been in receivership since 1931. In 1941 the FEC went from “receivership” to “reorganization,” slipping control from the Flagler heirs to the du Pont family.
The traffic increase of World War II did help the FEC’s fortunes. Since its chief rival had its own line to Miami, the Atlantic Coast Line’s bonds with the FEC became stronger. As the FEC became the ACL’s gateway to “America’s Playground,” the ACL moved to acquire the FEC in 1944. The ACL and the du Pont family never could see eye-to-eye, and the FEC became a holding of the St. Joe Paper Company, a Florida company which was a subsidiary of the du Pont estate.
A strike in 1963 by the clerk’s union spiraled into the loss of all union positions at the FEC. As a result, the FEC became the first railroad in the nation to have two-man operating crews and extended crew districts, something the rest of the industry would not have for two more decades.
In more recent years, the FEC was acquired by Fortress Investment Group in 2007, which also owns RailAmerica, a short line holding company. RailAmerica’s headquarters was moved to the same building in Jacksonville as the FEC; but the companies are independent. The recent slowdown in the construction industry has had a negative impact on the quarries of South Florida, once a large source of revenue for the railroad.
As anyone here in Florida can attest to, when times are good they are VERY good. But when times are bad, well, hang around here long enough and the practice of tightening one’s belt becomes second nature. The FEC knows this practice only too well.
Florida FOX
In our essay of September of last year, This Week at Amtrak documented the history of Florida’s forays into fast trains. Perhaps the most eye-catching of these iterations was the Florida Overland eXpress proposed in 1996. What was suggested then, and continues to be suggested, was a highway-railway such that the fast train would closely parallel the extant rights-of-way of major highways. For example, the latest surge was the Tampa-to-Orlando section which would have been built on the existing property of Interstate 4.
The Orlando-to-Miami section had two possible routings: Following the Florida Turnpike, or cutting East and aligning with Interstate 95. All of these latest iterations, known as Florida High-Speed Rail, went back on the shelf in early 2011.
Gene is the Man
To say that Eugene Skoropowski is no stranger to passenger trains would be a gross understatement. For this reason alone, the following news flash gained our undivided attention:
The Florida East Coast Railway has announced that it has appointed Eugene Skoropowski to senior vice president of passenger rail development. Skoropowski will report to Jim Hertwig, FEC president and CEO, and will be based out of Orlando, Florida. He will assist in the anticipated development of passenger service over the FEC between Jacksonville and Miami, which has been under consideration for several years.
Skoropowski is well known in the railroad industry for his successful management of California’s Capitol Corridor passenger rail service in partnership with Amtrak, the state of California, and Union Pacific. The 170-mile route has become the fastest growing intercity passenger route in the country. He spent the last two years as a rail consultant with international engineering firm HNTB. He has also served as director of rail projects at Fluor Corp., where he worked on passenger rail developments in Florida, Montreal, Paris, London and Amsterdam. - Trains.com, the online news page for Trains Magazine, March 5, 2012
There is one other salient qualification not mentioned in the Trains résumé: Mr. Skoropowski was the project director for the Florida Overland eXpress in 1996. Suffice it to say he has a very firm grasp of the landscape here.
What exactly the FEC has in mind should become clear in the following weeks and months, but we do get an idea from its press release:
The All Aboard Florida passenger rail project will connect South Florida to Orlando through a 240-mile route combining 200 miles of existing tracks between Miami and Cocoa and the creation of 40 miles of new track to complete the route to Orlando. - Florida East Coast Industries, Inc.
Between Cocoa and Orlando is State Road 528, which is also known as the “Bee Line” and is mostly a toll-road. This is the right-of-way which would have been utilized for the I-95 variant of the FOX. It is not much of an exercise of the imagination to see I-95 replaced with the FEC. It is also likely that the intended terminus would be Orlando International Airport, the same as FOX and later plans. There may be a current Environmental Impact Statement still in place for this option. If SR 528 is not part of the plan, then there is at least one other uninterrupted right-of-way between the Orlando and the East Coast.
Improved intrastate rail service has been on the wish list since at least 1982. With plans and revisions of plans came the nagging question: Who will pay for this? The use of public monies has been tried repeatedly, and has failed just as many times. The FEC is betting that private capital can be raised and used in conjunction with existing infrastructure to accomplish what three decades of public policy could not. The potential payoff is very real; currently over 50 million people traverse between Central and South Florida every year.
Missing, along with the public dollar, is another phantasm of political railroading: There is no reference to High-Speed Rail. The projected travel time for Orlando to South Florida is approximately three hours. This is exactly the type of high-performance rail transportation which could find its niche in the transportation market. Most important is the following railroad rule number one:
PROTECT EXISTING FREIGHT CAPACITY--the new passenger service will not affect freight capacity in the rail corridor, thereby supporting Florida’s role in international commerce and allowing more intermodal freight movements. - Florida East Coast Industries, Inc.
With the current dredging and rail access restoration at the Port of Miami, the freight channels must be kept clear. By the FEC taking the initiative and overseeing the entire operation, passenger and freight, they can make such guarantees.
For its entire life, the Florida East Coast Railway has had to fight for its life. Even when things seemed at their bleakest, it has found a way to make it through as an independent entity. It was Henry Flagler’s vision to open up the East Coast to tourism and industry. His successors are closely following in his footsteps. Hopefully the FEC will once again show the way for the rest of the industry.
A weekly digest of events, opinions, and forecasts from
United Rail Passenger Alliance, Inc.
America’s foremost passenger rail policy institute
1526 University Boulevard, West, PMB 203 • Jacksonville, Florida 32217-2006 USA
Telephone 904-636-7739, Electronic Mail info@unitedrail.org • http://www.unitedrail.org
Volume 6, Number 18
Founded over three decades ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other cities. For more detailed information, along with a variety of position papers and other documents, visit the URPA web site at http://www.unitedrail.org.
URPA is not a membership organization, and does not accept funding from any outside sources.
1) Here at home in an adjoining county to the south is St. Augustine, which bills itself as the Ancient City. St. Augustine, Florida has been around as a point of civilization since 1565, and was pretty much a sleepy, colonial town, even after Florida statehood in 1845. It wasn’t until the notorious Henry Flagler, business partner of John D. Rockefeller (Some historians say Flagler was the smarter of the two ruthless business partners.) came vacationing in Northeast Florida in the 1878 that he noticed sleepy St. Augustine.
Mr. Flagler came to Jacksonville for the temperate climate. (A century ago, oranges were still a cash crop in Northeast Florida.) He crossed the might St. Johns River (The only major river in North America which flows north.) and traveled by passenger train to St. Augustine in 1883. There, he found a slumbering city of Spanish descent which afforded cooling ocean breezes, a pleasant bayfront view, and a rural county seat.
Mr. Flagler took a liking to St. Augustine, and starting building hotels and the Florida East Coast Railway. His first hotel, the Ponce de Leon – begun in 1885 and which today is the home of Flagler College – became an overnight success as a playground for the Gilded Age rich and famous. More hotels followed, with Mr. Flagler becoming St. Augustine’s most prominent part-time denizen.
Not content to stop at St. Augustine, Mr. Flagler pushed his new railroad and string of hotels and resorts southward, creating such famous Florida hot spots as Ormond Beach/Daytona Beach, Cocoa Beach, Melbourne, Stuart, Palm Beach (Where Mr. Flagler eventually built his permanent home and today’s world famous The Breakers hotel and resort, the only remaining asset of the original Flagler System.), Ft. Lauderdale, and, in partnership with Julia Tuttle and her family, Miami and Miami Beach. Mr. Flagler’s railroad entrepreneurship didn’t end in Miami; he gazed further southward and saw Key West, the southernmost point of the United States, and promptly in 1905 began building the Florida Overseas Railroad, one island at a time from South Florida to Key West, completing the huge project in 1912.
Depending on your favorite Florida historian, there is debate as to whether or not Henry Flagler or Henry B. Plant, who owned a freight shipping company and small railroads, and in 1879 combined his holdings into the Plant System (Later, the Atlantic Coast Line Railroad.), building to the west coast of Florida via Orlando, invented modern Florida by the strength of their iron horses.
Of course, it was the common use of residential air conditioning in the late 1950s which created the most modern version of Florida, and allowed inland cities and towns away from cooling ocean and Gulf of Mexico breezes to grow and prosper. The coming of the Space Age at Cape Canaveral on the Florida East Coast Railway really put Florida on the international map.
But, no matter who your preferred railroad robber baron was prior to the Florida Land Boom of the 1920s, it was the railroad which created Florida, and especially St. Augustine.
St. Augustine was the home of a violent and deadly railroad strike in 1963; FEC non-operating employees went out on strike over several issues. The FEC continued to run trains with management personnel, but the strike turned violent with numerous bombings of bridges and trains, resulting in deaths, permanent injuries, and general mayhem.
By the time of the strike, Florida was served by the Seaboard Air Line Railroad, the Atlantic Coast Line, the FEC, and, into the northeast corner of Florida, the Southern Railway.
While the Seaboard’s Silver Meteor, Silver Star, Palmland, Sunland, and a host of local trains traveled down the middle of the state on SAL’s mainline through Ocala, the Coast Line trains, the East Coast Champion, the Everglades, and the trains it operated in conjunction with the FEC, such as the famed Winter-only Florida Special, the Havana Special, and the trains from the Midwest, including the Royal Palm, Dixieland, South Wind, Seminole, and City of Miami all stormed through St. Augustine on their way to and from Miami.
The 1963 strike ended all of that. The FEC’s named trains simply disappeared, annulled because of the strike and the continuing violence and threats of violence. The trains handled by the Coast Line moved inland westward, from the FEC to soon-to-be merger partner’s SAL lines down the middle of the state.
By court order, train service briefly returned to the FEC from 1965 to 1968, with a lone locomotive and two trailing cars – offering coach seating and parlor car seating, but no food service – running up and down from North Miami to Jacksonville’s union terminal. (The main FEC station in downtown Miami had been torn down by 1965 as part of urban renewal in downtown Miami.)
Even FEC retirees who chose to come to Jacksonville from Miami when traveling by train, went via the Seaboard or Coast Line because it was safer, had more frequency offerings, and full train service.
In the late 1990s, in the George Warrington era of Amtrak, there was a brief flurry of activity in St. Augustine because discussions and negotiations were underway to return passenger train service to the FEC, courtesy of Amtrak and a ton of money (Now allocated elsewhere.) from the State of Florida.
Plans were laid, station sites were identified (The FEC, like so many other railroads which exited the passenger business had executives at the time who wanted to make sure those pesky passengers stayed away, so all but one or two FEC passengers stations were either demolished, sold, or had their tracks ripped up.), and cities and towns along the east coast competed to see whether or not they could snag one of the limited number of station stops planned for the new service.
St. Augustine, once the railroad king of Florida and still the corporate home of the FEC until 2008, decided to build a new station on the FEC main line directly across the street from St. Augustine’s general aviation airport, claiming it was creating an “intermodal” center of transportation. No one ever quite explained what the attraction would be for private pilots to fly into the St. Augustine airport, tie their planes down, and then board a passenger train, but that was the plan.
All of those plans came to a screeching halt when Mr. Warrington’s Acela bubble burst, and the Northeast Corridor Service which was supposed to save the entire company ended up having the company coming close to being liquidated.
Now, in the third century of trains through St. Augustine, once again there is talk of passenger trains calling at St. Augustine. Several local government groups along the FEC are petitioning popular Florida Governor Charlie Crist to apply for free federal monies to pay for restoring service between Jacksonville and Miami via St. Augustine, Daytona Beach, Cocoa Beach, Melbourne, Fort Pierce, Jupiter, and into West Palm Beach where a new connection would be built for the trains to join the former SAL main line (Now Tri-Rail commuter line and present Amtrak line.) to take the train into Amtrak’s Miami/Hialeah southern terminal.
The scary part of this is the news media is reporting these funds are being asked for to use for high speed rail, not conventional rail. While the FEC is a very good piece of railroad with excellent infrastructure, no one would ever confuse it with high speed rail. Some of the logic goes the incremental approach should be taken, first restoring service, and then eventually upgrading the service to high speed over a specified period of time.
What is interesting about this is the current ownership of the FEC, RailAmerica, Inc., which in turn is owned by Fortress Investment Group. RailAmerica, in addition to owning the FEC, owns nearly four dozen other short line and regional railroads in the U.S. and Canada.
RailAmerica is a solid company, with good financial performance. Fortress Investment Group is a giant fund which controls many companies, all on a private basis. This means there are no individual stockholders or Wall Street money managers demanding RailAmerica do this or that to shore up stock prices, and no public reporting of financial results. In other words, the managers are free to carry out any prudent business decisions they see fit (Within the framework of the law and overall regulations.), including striking a deal with Amtrak to run trains on their property.
If it makes money and doesn’t interfere with RailAmerica’s other mission of supplying outstanding freight service, then there is an interest.
If the State of Florida does strike a deal for stimulus money for this route, there isn’t much standing in the way of restored passenger service between Jacksonville and Miami via the FEC, with the exception of creating a new equipment pool.
Initial plans were to move the Silver Meteor from Orlando to the FEC, which is a very, very bad idea. Why would anyone want to take service away from one of the world’s busiest vacation destinations in Central Florida to serve the towns of Florida’s east coast?
A better solution is to find additional equipment, or, perhaps split a train in Jacksonville (Which Amtrak did from its very beginning until the horror of the common consist in the 1990s, and the closing of the Tampa crew and maintenance bases.), with half of the train traveling via Orlando and half of the train traveling via St. Augustine. Other options are to extend other trains from the Midwest or Northeast south to Miami via the FEC, such as the Capitol Limited or City of New Orleans via Mobile, Alabama. Extending an existing Superliner train would require less equipment than starting a complete new route.
As usual, it’s all going to come down to politics. Which state (Other than Illinois.) has the most juice in Washington? Which state has the best planning? Which state can move the quickest?
St. Augustine may or may not have train service again, 125 years after Henry Flagler became serious about hauling passengers into Florida to fill up his elegant hotels and resorts. If it does, yet another of the dozens and dozens of gaps in America’s passenger rail system will be rightly filled.
2) Inquiring minds want to know: With all of the money being thrown around Washington, and every city, town, village, hamlet, and their dog making plans to snap up as much money as possible to expand everything from local trolley systems (A good idea.) to major commuter rail systems to sprucing up stations, where are Amtrak’s plans for the future? What about fleet expansion, Rail Passenger Association of California President Paul Dyson wants to know? The single-level sleeping car order for the east coast trains doesn’t do anything to expand capacity; it just keeps enough new equipment floating into a maintenance-weary fleet to delay total breakdown.
What about new routes? We know three restart routes are being studied (The Sunset Limited east of New Orleans, the Pioneer, and the North Coast Limited/Hiawatha.), but, what about bold, new plans to fill in so many of the other gaps in the country outside of the Northeast Corridor?
And, the easiest thing of all, what about all of the other dozens and dozens of pieces of equipment sitting around in the weeds on wreck line tracks, waiting to be re-loved and repaired? When will Amtrak ask for money to fix this stuff, too?
A dose of reality for True Believers is Amtrak is lagging behind everyone else in vision, if not outright bold management. Yes, Amtrak Interim President and CEO Joseph Boardman seems to be nudging things in the right direction – only marginally and slightly so – but, when is he or the Board of Directors going to give things a major shove in the right direction?
Wise gray head Gil Carmichael has called for at least 150 new trainsets to ready Amtrak for his brilliant Interstate II strategy. While to some that may seem a big number, it’s only a starting point.
Remember, Amtrak today has considerably less than 2,000 cars on its total roster, including active cars and cars sitting in the weeds on the wreck line. In the mid 1960s, just before the invention of Amtrak, there were over 5,000 passenger cars in the combined national fleet of America’s passenger carriers, and that was a depleted number from the halcyon post-World War II days of rebuilding the worn out war time fleet of cars.
Now is not the time for timidity and reliance on the graciousness of others for survival. Now is the time for bold plans, bold action, and an understanding of how easy it is to bring America’s passenger rail system from an asterisk on the charts of transportation output to a real figure representing growth and prosperity.
3) While we’re on the subject of history, News From 1930 blog on the Internet came up with this fascinating gem, reporting what was written in The Wall Street Journal from June 16th through the 21st in 1930:
[Begin quote]
Pullman Company [Operator of the nation’s sleeping car business over the majority of passenger railroads.] purchases in the last year: 1,165,000 towels, 444,000 pillow slips, 387,000 sheets, 63,000 porter’s jackets, 5,786,000 paper bags for women’s hats. Launders 278 million items annually.
[End quote]
That’s a lot of items, especially for the first year of the Great Depression. At one point early in the 20th Century, it was said the Pullman Company made up more beds every night than the largest hotel chain in the country.
4) Now, what? Amtrak’s highly respected Inspector General, Fred E. Weiderhold, Jr. suddenly retired from Amtrak after 35 years, including being the watchdog who kept the contractors honest when the NEC was electrified north of New Haven, Connecticut.
This happened practically overnight, and was unexpected by most. The Boston Globe wondered in its news columns what brought on this sudden urge to retire, but no one is talking. It should be noted in the same several day period Mr. Weiderhold retired, at least three other government IGs were forced out of their jobs by the Obama Administration without reasonable explanation.
[Begin quote]
National Railroad Passenger Corporation
60 Massachusetts Avenue NE
Washington, DC 20002
www.amtrak.com
FOR IMMEDIATE RELEASE
ATK-09-047
Contact: Media Relations (202) 906-3860
June 18, 2009
Amtrak Inspector General to Retire
Fred E. Weiderhold, Jr. Served Amtrak for 35 Years
WASHINGTON – Amtrak Inspector General Fred E. Weiderhold, Jr. today informed the Chairman of the Amtrak Board of Directors that he is retiring after 35 years of loyal service to the railroad.
"As Amtrak's first and only Inspector General, Fred has made important contributions in helping the Board of Directors understand key issues facing the railroad and made useful recommendations to improve how we do business," Amtrak Chairman Thomas Carper stated. "We thank him for his dedicated service to Amtrak and wish him well in his retirement."
Carper added that under the federal Inspector General Act, the Amtrak Inspector General is appointed by the Chairman of the Board of Directors. Carper said he takes this responsibility seriously and will soon undertake a search for a replacement that can continue to maintain the integrity, independence and objectivity required of the position.
In addition, Carper said that he has confidence in the Inspector General staff and expects them to carry on their important work during this interim period, including providing effective oversight of how Amtrak is handling the stimulus funds it received from the American Recovery and Reinvestment Act.
Mr. Weiderhold has been the only person to serve as the Amtrak Inspector General since former Amtrak Chairman W. Graham Claytor, Jr, asked him to establish the Amtrak Office of Inspector General (OIG) in 1989. Previously, he was Amtrak's first Special Assistant to the Chairman for Employee Relations, conducting special investigations and acting as the company's first employee ombudsman. He has been one of the longer serving Inspectors General within the OIG community.
About Amtrak
Amtrak has posted six consecutive years of growth in ridership and revenue, carrying more than 28.7 million passengers in the last fiscal year. Amtrak provides intercity passenger rail service to more than 500 destinations in 46 states on a 21,000-mile route system. For schedules, fares and information, passengers may call 800-USA-RAIL or visit Amtrak.com.
[End quote]
5) The Holland, Michigan Sentinel on Monday, June 22, 2009 reported ridership on Amtrak’s Pere Marquette is down 12.7% this May compared to a year ago, and a state senate committee which funds the service is looking to slash funding for the train.
Only 8,500 people boarded the route in May of 2009, or an average of 137 passengers per departure. All of the usual reasons were given for low ridership, including low gas prices and the slowed economy.
Here’s the problem no one seems to want to understand: As long as government funding as the primary source of revenue for these short, perpetually money-losing routes is necessary, politicians are going to always be looking for ways to cut budgets, and low return on investment programs are usually the first to go.
Too much of Amtrak relies on this very type of funding. There are unceasing stories from New England about those states wanting to cut funding for local trains (This, of course, does not include Amtrak Interim President and CEO Joseph Boardman’s home State of New York where he previously served as head of the state department of transportation. New York only funds one Amtrak train, the Adirondack, even though the entire Empire Service trains, with only an average load factor of 35%, gets a free ride with an all-federal subsidy.). Oklahoma pays big bucks for the tiny Heartland Flyer with even worse transportation output performance.
What will it take to make Amtrak and its True Believers understand a healthy and robust long distance system throws off enough excess cash (profits) these short distance trains can be mostly internally subsidized? Why perpetually fight these annual political battles when the simple answer is vision and expansion, even if it’s just making the existing skeletal long distance system train consists longer?
Why is this such a difficult concept to understand? Why do so many ill-informed people think it’s perpetually okay to support failure when success is within easy grasp?
6) Here’s some heartburn for those who believe the passenger business can never be profitable: Carnival plc, which owns Carnival Cruise Lines, Princess Cruises, Holland America Line, Cunard Line, and The Yachts of Seabourn in North America; Costa Cruises in Europe; P&O Cruises, Cunard Line, and Ocean Village in the Untied Kingdom; AIDA Cruises in Germany; Ibero Cruises in Spain and Brazil; and P&O Cruises Australia in Australia and New Zealand, operates 88 cruise ships with a passenger capacity of approximately 169,040 souls. Carnival also marketed and operated 16 hotels or lodges with approximately 3,500 guest rooms; approximately 560 motor coaches used for sightseeing and charters, 24 domes rail cars, which run on the Alaska Railroad between Anchorage and Fairbanks, Whittier and Denali, and Whittier and Talkeetna; 2 luxury dayboats; and sightseeing packages.
Carnival plc, headquartered in London, when tracing its heritage back through P&O Princess Cruises, was founded in 1850. Television fans may remember the real Princess Cruises happily loaned its ship, the real Pacific Princess, to Aaron Spelling and ABC to create the wildly popular television hit, The Love Boat, which spurred the modern cruise line renaissance.
All of this, by the way, is somehow accomplished without any government subsidies and is effected through private capital and entrepreneurship.
7) William Lindley of Scottsdale, Arizona has some thoughts on state passenger rail organizations. Mr. Lindley, a longtime professional associate of URPA, is a past president and treasurer of the Arizona Rail Passenger Association, and currently serves as a writer and editor for the group’s newsletter.
[Begin quote]
What does a rail passenger association really need to do? A recent report illustrates how what looks like failure to uphold principles may have helped doom a major city's plans for modern passenger train service.
In Atlanta, Georgia, a proposed green space called the "Decatur Beltline" would remove track connections which permitted trains to connect in all directions from Atlanta's downtown yards and stations. According to the National Association of Railroad Passengers Newsletter of May 2009, this "pitted local environmentalists against passenger train advocates (Georgia ARP remained officially neutral to minimize bad blood among erstwhile allies.)"
Say, what? Since when would a responsible passenger advocacy group roll over and play dead when the future of any kind of sensible passenger train operations is threatened? When I saw that I had to do some digging.
According to a November 30, 2005 Associated Press report, Ed McMahon of the Urban Land Institute called for using Atlanta's "unused" railway tracks for a linked system of parks, paths and transit. Now, while this is certainly an admirable goal, according to AP, "A panel of transportation experts raised concerns when it found isolated parts of the loop would not have riders to support trains, trolleys or whatever transit options are proposed." In other words, here we go again with removing a vital railway link – which can't be relocated – in favor of some green space which can be placed anywhere.
This conflicts with the goals of a long-proposed and eagerly anticipated downtown intermodal terminal at approximately the site of the original Atlanta Union Station, and with an immediate connection to mass transit MARTA's hub, the Five Points subway station, from which trains radiate north, south, east, and west.
Atlanta's other former main station, Terminal Station, on the Southern Railway, had south-facing stub-end platforms and was on Southern’s mainline just west of Union Station. Although the Richard B. Russell Federal Building replaced Terminal Station in the 1970s, a single through-track connection to the Union Station area still exists ... but neither Terminal Station nor the current Peachtree station used by Amtrak can reasonably be expanded for the demands of an expanded modern passenger operation.
The Five Points site is within walking distance to Georgia State University buildings, the popular Underground Atlanta shopping and nightlife district, and the downtown sports arenas. Furthermore, there is potential at a downtown terminal for a building with visual and interpretive ties to Atlanta's historic train stations and its growth as the key city to the "New South" – building on the idea of the station as gateway to the city.
The City of Atlanta, according to an Atlanta Journal-Constitution newspaper article of March 5, 2009, said that the State Department of Transportation's "vision of high-speed rail would discourage future residential development." Amazingly, the city seems thereby to value a few new apartments over connecting the entire metro area with its downtown transit center.
With the Georgia DOT's March 2009 removal of its objection to the park project, trains will only be able to reach downtown via the west side connection. Amtrak's Crescent and commuter trains from the north and east would have a two-mile backup move to reach a new downtown station.
Now, without the eastern loop connection, Amtrak would likely have to stop at a new station with a MARTA connection – a new stop miles further northeast from downtown than even the existing Peachtree Station. This would mean requiring longer trips for most users, and a
change of subway trains for many. This site, like Peachtree, has little potential for filling the perceptual role of a Gateway.
So, now, let's return to that quote again:
"... pitted local environmentalists against passenger train advocates (Georgia ARP remained officially neutral to minimize bad blood among erstwhile allies.)" – NARP Newsletter, May 2009.
I wasn't privy to the discussions but this certainly sounds like a failure to uphold the principles which should govern a passenger rail association. Rail passenger associations are neither historic preservation groups (the National Railway Historical Society fulfills that goal) nor are they railfan groups. Our associations are not yes-men to Amtrak, the railroads, local transit operators, real estate interests, sports teams, or environmental groups.
Indeed, the whole point of such a rail passenger association, as a non-profit institution, is a fiduciary (meaning: a relationship of confidence and trust) and a moral obligation to guide the progress toward modern and expanded passenger rail service. This is a charitable goal because passenger trains improve our quality of life, offer transportation options to everyone, improve our economy, and improve our environment ... everyone wins with better public transit.
So was Georgia ARP's failure to object to the removal of a vital transportation link a breach of trust for the objective of advocacy? Again, I wasn't there so I can't say, but if NARP's account is correct, placing "not upsetting so-called environmentalists" above "fulfilling the confidence placed in your organization to preserve and enhance passenger train service" seems
highly suspect.
Because detailed coverage has proven difficult to find in newspapers or on-line, I dearly hope one of our Gentle Readers more familiar with the subject can soothe my fears.
[End quote]
8) Six months from today is Christmas Day!
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