This Week at Amtrak

CP Rail Loco in Thunder Bay ON (Photo credit: Wikipedia)

From the Untied Rail Passenger Alliance 
This Week at Amtrak; Vol. 9 No. 5

A very heartfelt thanks to all who contributed to this issue.

From the Editors…


So you think you know a thing or two about the railroad business. Oh really?


The “invisible hand” versus “the art of the possible”


It is no secret that railroads, as investment opportunities, have regained a stature not seen since what has been labeled as “the gilded age.” With such attention, however, comes great responsibility. Since about the most recent turn of the century, there remain seven major railroads in North America: Union Pacific, BNSF Railway, Norfolk Southern, CSX, Kansas City Southern, Canadian National and Canadian Pacific. It is also no secret that the Canadian Pacific is perceived as the weakest of the seven. Although one of the smaller roads, it still boasts a market cap of $13.2 billion and an enterprise value of $17.7 billion.


For those of us with our boots on the ground, there have long been signs of increasing trouble at CP. Now the trouble is in the top office. In late October, 2011, Pershing Square Capital Management, an activist hedge fund based in New York City, announced it had acquired a 12.2 percent stake in CP. Between then and now, the stakes have only risen to a current 14.2 percent, and the relationship between Pershing Square and the CP board has become bloody.


Contrary to your statement in the letter that we “acknowledge” that we have no plan to improve Canadian Pacific’s operating performance, we do have a plan, and we have made that plan clear both in our initial meeting and in subsequent communications with you. Our plan is to transform Canadian Pacific from the worst performing railroad in North America into one of the best by effectuating a cultural and operational transformation of Canadian Pacific which begins with a new leader. – Excerpt from January 3, 2012 letter from Pershing Square’s William Ackman to CP chairman John Cleghorn


Pershing Square is now promoting to shareholders a slate of seven alternative directors as part of its CP turnaround strategy. Two of these are significant: Stephen Tobias and E. Hunter Harrison.


For most, these names may not ring a bell; but for railroaders, these men are superstars. Both of them are past recipients of the Railway Age Railroader of the Year award: Tobias, as Norfolk Southern Chief Operating Officer and later Vice Chairman; Harrison, as President and Chief Executive Officer of CP-rival Canadian National. Tobias was a lifelong employee of NS and its predecessors, starting in 1969 as a junior engineer. He worked his way through the ranks over the next four decades until being named Vice Chairman and Chief Operating Officer in 1998. He retired from NS in 2009. Harrison’s work history is not as straightforward. He started in1964 with the St. Louis-San Francisco Railway, which later became part of the Burlington Northern. Later, he would be President of the Illinois Central which was acquired by Canadian National in 1998. He retired at the end of 2009 as CEO. It is anticipated that Harrison would reprise that role at CP if Pershing Square’s seven alternative directors are elected by the stockholders. One slight problem: That job is currently held by Fred Green.


The past six months have seen quite the flurry of activity at CP’s headquarters in Calgary, Alberta. Press releases, video streams of meetings and letters to stockholders have literally flowed unabated in preparation for the annual stockholders meeting set for May 17. A letter to the shareholders dated March 7, 2012 sets the company’s tone:


CP’s management team is aggressively and successfully executing on the Company’s Multi-Year Plan and has the full support of the Board of Directors. Your Board and management team firmly believe the CP’s string, established relationships with customers will continue to create significant value for shareholders. Strong and profitable customer relationships are essential to maintaining and expanding the volume growth that underpins CP’s Multi-Year Plan to increase earnings per share, drive down the railroad’s operating ratio and deliver greater shareholder value. The Board believes that Pershing Square’s demand that the Company replace its CEO, Fred Green, with Hunter Harrison would put at severe risk the significant forward momentum the Company is making on the Multi-Year plan.


Interestingly, CP developed and released its “Multi-Year Plan” in January; two months after Pershing Square had announced its investment.


It should be noted that none of what has transpired was at the behest of Washington or Ottawa. What we see at work has been described as “the invisible hand,” that is, when enough people believe the bottom line could be improved, something will be done.


Meanwhile, back in Washington…


Something that has been mentioned repeatedly by transportation advocates is the undying loyalty of the current presidential administration to “rail.” As evidence, they point to the administration’s mention of “High-Speed Rail” in a State of the Union speech. As we have covered here in the pages of This Week, the latest iteration of domestic “Fast Train Fever” is going the way of the previous cycles, with the last gasp — California’s HSR dreams — on life support, and the pulse slowly ebbing into silence. Rail was not mentioned in the latest State of the Union address of this past January. Perhaps the administration has given up hope on rail. If so that may explain its latest nomination:


President Obama has nominated former U.S. Rep. Yvonne Brathwaite Burke, a trailblazing fixture in Los Angeles area politics, to the AMTRAK board of directors, the White House announced Thursday.

As a young attorney in 1966, Burke made history when she became the first African American woman elected to the state Assembly. She was elected to Congress in 1972 and served until 1978. In 1979 she was appointed to a vacancy on the Board of Supervisors but lost her election bid the following year in a racially charged contest. In 1992, she won election to the board from a different district. – Los Angeles Times, March 29, 2012 


Before proceeding any further, let us be clear that we are not, in any way, minimizing Representative Burke’s long and distinguished record of accomplishments. She most definitely blazed trails, and when the doors would not open, she broke through them. That said, what does she know about railroads and their governance?


Currently, the seven members of the Amtrak board are: Thomas C. Carper (Chairman of the Board), Nancy A. Naples (Vice Chairman of the Board), Joseph H. Boardman (Amtrak President and CEO), Anthony R. Coscia, Bert DiClemente, Jeffrey R. Moreland, and Ray LaHood (U.S. Secretary of Transportation). Of these, only Mr. Moreland has a working history with a railroad. Starting in 1978, Mr. Moreland joined the Santa Fe Railway as Assistant General Attorney, in 1994 became Vice President for Law and General Counsel for Santa Fe’s parent company, and later retired with the same title from BNSF Railway.


It has been intimated that Amtrak has lacked a true operating foundation since 1993, when the legendary Graham Claytor retired. What did he bring to the table?


Graham Claytor had, first of all, had the stature on the Hill that we needed, but more importantly, he came out of a business environment. Even though he was a rail buff, which he was, he was a businessman, first and foremost, and that’s what we need at Amtrak. – Kathleen Gordon, Amtrak Senior Director, e-Commerce, retired, Amtrak: The First 40 Years 1971-2011, RK Publishing


Mr. Claytor never singled out one aspect of the corporation to blame for all of its faults. He knew the Northeast Corridor was a drain on finances, but accepted that fact as federal welfare to state-run operations. Under Claytor, Amtrak was a fairly well run “traditional” railroad focused on a national system. After his demise, however, the company morphed into a government agency with ferocious survival instincts. It became very NEC-centric, and continued that path by expanding its corridor service with state partners, particularly California.


Politics, “the art of the possible,” is not concerned with the bottom line, but rather short-term survivability. Politicians count on the short-term memories of their constituents to traverse the delicate tightrope walk that is their elected term in office. Railroading, on the other hand, is anything but a short term-enterprise. All railroads need long-term planning to succeed, and a core philosophy to be the thread that weaves those plans together. Since politics are by their very nature mercurial, anything beholden unto politics will be inefficient and unreliable. That pretty much explains Amtrak after 40 years.


There have been many attempts to recruit people with railroading (or at the very least, transportation) experience to the Amtrak board. Mr. Claytor was appointed Amtrak president in 1982, coming out of retirement. This was one year after Congress had altered Amtrak’s original board structure and governance, in which the four railroad common stockholders were represented on the Amtrak board and the common stock had voting rights. (The eviction of the railroad shareholders from the board and their disenfranchisement was of dubious constitutionality, but was never challenged.)


The pendulum was to swing in the other direction in 1997, when the Amtrak Reform and Accountability Act ended the monopoly voting rights of the preferred stock, held only by the Department of Transportation, restoring the original voting status of the railroads’ (now including the corporate successor of Penn Central) common stock. Nevertheless, Amtrak has continued to ignore the common shareholders, in violation of District of Columbia corporate legal requirements.


The 1997 legislation also mandated a nonpartisan expert board of directors, using language parallel to the National Transportation Safety Board statute . All directors were to possess “technical qualification, professional standing, and demonstrated expertise in the fields of transportation or corporate or financial management,” and could not be “representatives of rail labor or rail management.” Sadly, these requirements were flouted by the initial board appointments by the Clinton Administration. The following regime would attempt to follow the rule of law only to feel the blowback from the usual sources:


Bush appointees to Amtrak board foreshadow breakup and privatization

President George Bush’s proposed nomination of three new members to Amtrak’s board of directors foreshadows the administration’s support for breaking up the national passenger rail system and selling off its most profitable parts to private industry.

Among the nominees is Louis S. Thompson, who retired earlier this year from the World Bank. Thompson began his career at the Transportation Department and played a role in creating Amtrak. At the World Bank, Thompson spearheaded successful efforts to privatize railroads in Argentina, Chile, Mexico and Romania; he also played a role in similar efforts to privatize railroads in China, India and Russia.

The second nominee is Robert Crandall, who retired from the chairmanship of American Airlines parent company AMR in 1998. Since then, Crandall has served on several boards, including Halliburton, the company formerly headed by Vice President Dick Cheney. The last nominee is Floyd Hall, a long-time Republican fundraiser and former executive of companies such as Singer Sewing Machine Co., the Grand Union Co. grocery chain and KMart. – Brotherhood of Locomotive Engineers and Trainmen quoting the World Socialist Web Site, Published by the International Committee of the Fourth International (ICFI), 30 September 2003


Subsequently, all the actual appointees were virtually devoid of any of the listed qualifications, and consisted mainly of elected officials, lobbyists, and others of similar background.


The pendulum was to swing yet again in 2008, with the enactment of the Passenger Rail Investment and Improvement Act (PRIIA). The 1997 board statute was completely repealed, and replaced with a new, larger (nine- versus seven-member) board structure, with language openly inviting the appointment of politicians and the politically connected. The following are listed in PRIIA as alternative and independent qualifications for board membership: “general business and financial experience, experience or qualifications in transportation, freight and passenger rail transportation, travel, hospitality, cruise line, or passenger air transportation businesses, or representatives of employees or users of passenger rail transportation or a State government.” PRIIA also made the Amtrak board avowedly partisan, with a formula usually applied to multi-member federal agencies: “Not more than 5 individuals appointed…may be members of the same political party.” (“Balanced representation” of “major geographic regions served by Amtrak” is a recommended, but not required, consideration.) The ensuing appointments have been predictable.


One by one, each potential expert appointee has not passed political muster for one reason or another. Ultimately the jobs go to those who will not make anyone uncomfortable within the company, including, above all, the NEC orientation of Amtrak. Thus, it again appears that the status quo is not endangered. How will this all end? The words of Mr. Claytor from two decades ago now seem prophetic:


“Not everybody knows, and it does not always come through in the press, that the basic statute provides that Amtrak is not to be a government agency and is to be operated as a for-profit, privately owned railroad corporation. If it weren’t for that, a lot of us wouldn‘t be here, because I don’t‘ think that it is possible to run a railroad as a government agency and not have it be a disaster.” – Interview with Graham Claytor, Trains magazine, June 1991

This Week at Amtrak

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.

Related articles

• Miami-Orlando rail service planned for 2014 (rail-usa.com)
• Local Business Plans Miami-Orlando Train Line (miami.cbslocal.com)
• Treasure Coast train stations on hold until railway service agreements are finalized (tcpalm.com)
• Amtrak service along Treasure Coast on track if governor signs bill (tcpalm.com)
• Amtrak: Liability protection needed before passenger service could come back to Florida's east coast (tcpalm.com)

This Week at Amtrak

Image via Wikipedia
From the United Rail Passenger Alliance:

This Week at Amtrak, Vol. 8 No. 15
Volume 8, Number 15

From the Editors…

As sands through the hourglass, so are the history and future of passenger rail in America; unrelenting.

The Year Is…

“[A]s we all know, events must run their course before becoming history, so that all true history exists only by virtue of its conclusion, and begins its historical career from there.” - Anthropologist Germaine Tillion

Contemporary thinking: The belief in that which is, has always been; ergo, shall always be. Any historian worth his or her salt knows that history does not repeat itself, but does rhyme. The way it is is not the way it has always been, nor can we expect things to remain the same perpetually. Only the most indolent of our citizenry is unaware of the rapidly shifting social order now dawning on the national landscape. Therefore, let us return to where we have been in an effort to determine where we are going.*

*This newsletter contains forward-looking statements within the discretion of the prognostic abilities of the writers. Our forward-looking statements involve expectations, projections, goals, forecasts, assumptions, history, and flat-out guesses. The writers may be spot-on or completely out to lunch. Whatever the case, our readers may rest assured we will be there to document it.

The Year Is 1970

Just 245 days after man landed on the moon, the California Zephyr completed its final run on March 22, 1970. The California Zephyr was considered to be the last word in overland travel in America; perhaps the finest conveyance in the world, but now it was gone after a mere 21-year run. For most Americans this was just a passing of the torch, no different from the demise of the stagecoach or the interstate canal network, for the year is 1970; the Interstate Highway System now makes possible national travel on your schedule. Gasoline is a national-average 36 cents per gallon ($2.09 in 2011 dollars). Jobs are plentiful and so are automobiles. The only real limiting factor of mobility is one’s endurance.

The long road to this reality has been told to the point of being hackneyed. Following World War II, the nation became flush with largess by virtue of its infrastructure remaining intact. Even though the national treasury was empty as a result of the conflict, billions of dollars were “invented” to send to Europe and Japan to rebuild their societies. As a result, those billions of dollars came back to the United States in the form of orders for the material and machines necessary to rebuild. The American worker was a benefactor of this circular cash, giving the average citizen a buying potential unheard of in previous generations. It was the Federal Government which became the primary beneficiary. All of this national income resulted in higher tax revenues, and politicians were more than eager to spend it. The American population was now on a much more level plane than at any other time in human history. With no end in sight to our newfound avarice, there came experiments in socialization. One of these was the Interstate Highway System. While this was pleasing to the American public, it was a millstone around the neck of the American railroads.

With billions of dollars going to highways and roads during the 1950s and 1960s, railroads politicked and lobbied for some sort of Federal aid. They rightfully eschewed nationalization, but did hope for some funds to invest as a counter to their subsidized competition. Any dreams of subtle aid were dashed on June 21, 1970 with the catastrophic bankruptcy of the Penn Central (Transportation Company). With the proverbial lid now blown off the true railroad condition, it became apparent to all that the situation was dire; no minor injection of public funds could rectify three decades of decline.

Even before the wreck of the Penn Central, another experiment in socialization had started public investment in the Northeast Corridor. In the early 1960s, the cause of improving passenger railroading in the Northeast was championed by Rhode Island Senator Claiborne Pell. He had no small plans:

“The encouraging news which I bring you today is that there is a strong current of opinion within our federal government that we should go forward with the kind of development which the railroads themselves have not been able to do…there is now a school of opinion that if we are to promote such a development at all, we should not be satisfied with half-way measures limited to existing technology.” – Railway Age, October 12, 1964

In keeping with the spirit of the times, the Senator sought to spend the national largess instead of answering the very basic question, Why are the railroads, themselves, not able to make such investment?

By 1970, millions of public dollars had been invested in the Northeast Corridor. With Penn Central now a financial basket case, the Federal Government saw its investment in jeopardy. As early as 1969 there was consideration inside the Beltway as to some Federal involvement in passenger railroading. With the true situation of America’s railroads now making headlines, efforts intensified, and President Nixon signed what was then known as the Railpax legislation into law on October 30, 1970. The main reason for doing so was to forestall any more Penn Centrals around the country. Railpax was renamed Amtrak, and began direct operation of a much-rationalized passenger rail network on May 1, 1971. But with other forms of nationalized socialism taking hold around the country, a little more would not hurt, right?

The Year Is 2011

Amtrak has been a reality for 40 years. If you do not believe it, just ask it: http://www.amtrak40th.com/. Amtrak has published a book, a video, and has even commissioned a train to publicize its four decades’ longevity. It has been no small task, and much blood, sweat, and tears have been shed in the process. Even so, there are many larger questions, vastly larger than Amtrak itself, now looming on the horizon.

The seemingly inexhaustible largess of the latter half of the 20th century is gone. The age of avarice is over; the era of austerity now grips us. The question of “The National Debt,” and exactly who is responsible for it, is now a subject for debate in every corner store and boardroom. Ultimately, this is all a referendum on what role government plays and what size it needs to be in order to fulfill that role. Everything is out on the table. It is only a matter of time before nationalized passenger rail is under the microscope.

Meanwhile, America’s real railroads are no longer financial basket cases. Quite the contrary; railroads are the very model of healthy business. Again, this did not come about without much blood, sweat, and tears. The Staggers Rail Act of 1980 effectively ended a bloated regulatory bureaucracy that lasted about three decades beyond its actual usefulness. Moreover, through the rest of the 1980s and early 1990s, the railroads achieved a truce of sorts with their labor organizations, resulting in a drastically-rationalized workforce. Even so, railroads hold onto their traditional role of biding their time and never forgetting the path which brought them to where they are. Eminent veteran journalist Wes Vernon, when answering the question, Freight Rail: What Recession? notes:

“Highway congestion and skyrocketing gas prices strengthen the logic of converting highway-only freight traffic to intermodal. Of the 14 million domestic truckloads moving 550 miles or more each year within the eastern half of the United States, 35 percent-or 5.1 million-have shifted to the mix of rail and highway. That means about nine million truckloads are ripe for converting to intermodal…

“What that means, in practical terms, is that the trains will likely be shipping more consumer products, from appliances to toys. Heretofore, that had been largely the predominant province of the trucks, while the freight trains primarily focused on bulk commodities such as coal and grain.” - Railfan & Railroad, August 2011

The inherent efficiency of a railroad, the thermodynamic efficiency which propelled them to success from their genesis, is once again making them the transportation mode of the future. Unfortunately, such success always comes with its detractors. Special interest groups, specifically utilities reliant upon railroads for shipment of fuels, are actively looking to re-regulate railroads for their own financial relief. The utilities, who answer to multiple state or local agencies for the setting of consumer rates, believe it easier to mandate freight rates down from the Federal level rather than push politically-unpopular higher consumer rates at the local level. Such is the result of socialization of consumer electric rates. Thus far, the railroads have been able to resist such maneuvers to set them back to the era of needless burdensome regulation. But as the era of public cross-subsidization erodes, the search for new sources of subsidy will only intensify. The railroad re-regulation battle is barely out of round one.

Meanwhile, Amtrak touts the number of riders it attracts year over year. It is expected that Amtrak will carry over 30 million passengers in 2011. Gasoline has averaged $3.50 to over $4 per gallon so far this year; for all practical purposes, this is about double the inflation-corrected price of 1970. Even so, Amtrak is a socialized government animal which looks more for “rider-voters” than customers. Even during the days of Senator Pell it was appreciated that the high density population in the Northeast would make subsidizing passenger rail politically palatable. Consequently, Amtrak has concentrated more on achieving ever-higher numbers of rider-voters than it has on efficient business acumen.

Amtrak’s formula is very simple: High-density, short-haul/low-revenue corridor trains are touted as the solution for congestion; these attract the highest number of rider-voters/constituent-subsidy. The dilution of long-distance/high-revenue trains by lower-than-historical coach fares destroys any potential meaningful revenue, but is touted as the thread of a “national network.” If coach fares were raised in line with what it costs to operate them, and the number of high-revenue cars (sleeping cars) were increased, these trains would have a chance of at least breaking even. But sleepers carry fewer passengers than coaches, thus reducing the number of rider-voters. Also, if this happened, then these trains might be turned over to private operators, and Amtrak would lose its national constituency of rider-voters. Such is the mentality of a government agency, to wit: “We have to protect our phoney baloney jobs here, gentlemen!” Governor William J. Le Petomane – Blazing Saddles.

The Year Is 2020

It has been an arduous decade; transition from a guns and butter economy to a guns or butter economy is bittersweet, at best. The American experiment of socialization has ended. The United States was born in defiance of “taxation without representation.” The belief that taxes are a necessary evil defines the American ethos; they are evil nonetheless, and as such, should always be minimized. But the largess of the latter half of the 20th century was too tempting to pass by. When said largess ended, we attempted to fill the void by massive borrowing and hoping, praying for another round of national benevolence which never came. Now the bill has come due.

Life in 2020 is much like 1920, if not in form then certainly in function. The public does not travel as much or as far as during the “good times.” Due to expanding worldwide demand, the price of transportation fuel is now well over four times the rate of inflation. Efficiency is replacing convenience. The Interstate Highway System is being rationalized in the same manner as the railroads were during the 1970s and 1980s. Automobiles and airplanes are returning to their original positions, as toys for the genuinely rich. Just as the American public adapted to the era of cheap and abundant fuel, so they have adjusted to the era of expensive and scarce fuel seen during the early days of the Industrial Revolution. The technological salvation everyone was counting on did not pan out. Technology uses energy; it does not create energy.

It is no longer 1970. No one is trying to save the passenger train from the guilt of excess. It is no longer 2011. No one is trying to expand the passenger train solely on the basis of an imperious immediacy of political interest. Passenger rail has rebounded due to its inherent efficiency, and it is back in the hands of private industry. Thus, trains are running where they should be, and not where they cannot be justified.

Back to the Present

Saving the passenger train from the oblivion of low ridership is a battle that has been fought, won, and memorialized. Unfortunately, many passenger rail advocates are still fighting the battle to save the California Zephyr from the landscape of 1970. Yet even in today’s tight budget debates, no one of any authority is talking about discontinuing passenger trains. Quite to the contrary:

“It is time to deregulate America’s passenger rail system, and give intercity passenger rail the same opportunity for success that the freight rail and commercial truck industry have benefited from.

“We must look for more effective and innovative approaches to providing modern and efficient passenger rail service by focusing on projects that make sense, leveraging private sector investment, increasing competition, and opening the door to public-private partnerships.” – U.S. Representative Bill Shuster, Chairman of the Railroads, Pipelines and Hazardous Materials Subcommittee

It was not too long ago when the call to “reform Amtrak” could be heard around Washington. To those who prefer the status quo, the response was, “Define reform; what do you mean by reform?” Now the focus is shifting from reform toward an orderly dissolving of Amtrak.

For older or retired railroaders, Amtrak’s only reason for existence is an “irrational love of trains that would have us run almost empty trains over long distances simply so a foamer can stand out there and watch ‘em.” Perhaps such reasoning was justified four decades ago. Today it is well documented that those trains, especially those long distance trains, run full. They are sold out weeks before departure. This has not gone unnoticed by the private sector; higher demand means higher revenue potential. Higher revenue should translate into profitability or at the very least break-even. Amtrak, however, as a political animal focuses on “rider-voters” rather than passenger miles. Consequently, it has become the greatest of ironies that the passenger train, which was purported to be saved by Amtrak, now has to be saved from Amtrak.

Also, Amtrak has become an important conduit for tax dollars to flow into the Railroad Retirement Board (RRB) pension system (of which all railroaders are members) instead of Social Security. Many of those currently employed by the railroads, as well as the retirees, fear that if Amtrak is fundamentally changed then an adverse effect on railroad retirement will occur. What is not realized is that any new passenger railroad venture established, which may augment or replace Amtrak service, will also have to be under the RRB; eventually making the system stronger, not weaker. There is also the possibility Congress may find another funding conduit for the RRB, other than through in-and-out entries in Amtrak’s corporate checkbook.

No, history does not repeat itself, but it does rhyme. The “good roads” crusades of the 1920s and Interstate Highway program of the 1950s happened after forgetting the lessons of the National Road debacle during the first half of the early 19th century. Now the lessons of railroad regulation/deregulation have been forgotten by many, and the results are negative.

What really is our rail future? It is not ours to see. But whatever happens, we will be writing about it.

This Week at Amtrak

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From the United Rail Passenger Alliance.

This Week at Amtrak, Vol. 8 No. 13
Volume 8, Number 13

From the Editors…

One cannot discuss Amtrak without at least a basic knowledge of the Northeast Corridor. What exactly is the NEC? In this first installment of a two-part series we examine the rise and fall of the NEC.

In the beginning

“While the mighty Pennsylvania boasted of having pushed its steel tentacles into some of the nation’s most populous cities, it could not make that claim with regard to New York City. Throughout the last years of the nineteenth century, the PRR struggled in vain to conquer the great natural barrier--the Hudson River--which lay between it and America’s largest metropolis.” - Michael Bezilla, Electric Traction on the Pennsylvania Railroad 1895-1968, Pennsylvania State University Press

To understand the United States, one must contemplate the challenges of those earliest days of the Republic. The two largest cities on the East coast, New York and Philadelphia, were a six-day journey by horse and boat for the founding fathers. Yet as early as 1811, Colonel John Stevens, the father of American railroading, petitioned the New Jersey Legislature to charter a railroad between Trenton and New Brunswick. His request was denied. His sons would build the storied Camden & Amboy Railroad in 1834 from a ferry connection in Philadelphia to a boat dock on the Raritan River in South Amboy, New Jersey. The Philadelphia & Trenton Railroad was built and fully operational in 1835. The Camden & Amboy completed a branch between Trenton and New Brunswick in 1839. That same year, the New Jersey Railroad completed its line between Jersey City and a connection with the C&A at New Brunswick, and initiated through service from the New York City area to Philadelphia. A journey that had taken six days a quarter-century before could now be completed in a matter of hours.

A similar story can be told south of Philadelphia. In 1832, the New Castle & Frenchtown Railroad commenced operation in Delaware. After numerous charters and a few false starts, numerous smaller roads were consolidated into the Philadelphia, Wilmington & Baltimore Railroad in 1836. Through service between Philadelphia and Baltimore began in 1838. By 1851, it was possible to travel from New York to Washington, DC in 12 hours via a connection with the Baltimore & Ohio Railroad.

Following the American Civil War, railroads began their transformation from local concerns to national institutions. By and large it was these ideals that were at the heart of the war, itself. The Pennsylvania Railroad acquired control of the C&A, P&T and NJRR roads in 1871. After a battle for control with the B&O, the Pennsylvania Railroad gained control of the PW&B in 1881. As a result, the B&O would build its own line from Baltimore to Philadelphia.

What followed is a lesson in corporate overreach. There had been a proposal in the 1860s to build a "National Air Line" railroad between New York and Washington. It was supported by the then-upstart PRR, and opposed by the established B&O, which already had a line between Baltimore and Washington. After the B&O successfully fought off the "Air Line" repeatedly, it then found that the PRR was buying up the other railroads with which the B&O had been connecting for traffic between New York and Washington (the Baltimore and Potomac was the last piece, and then the B&O would be cut out). So the B&O built its own line to Philadelphia, at a time when the original B&O, and particularly the West End, were still unimproved and badly in need of investment; thus perpetuating its slide from the first-place East-West trunk line to third-place behind the PRR and NYC.

The story of the Baltimore & Potomac Railroad is somewhat more colorful. Originally chartered as a regional road to connect the farms of southern Maryland to the ports in Baltimore, it was purchased by a group of associates of the PRR in 1866. A “branch” was built in 1872 between Bowie, Maryland, and Washington, DC. In 1873, tunnels were completed in Baltimore, allowing connection between the PRR-owned B&P and the PRR-friendly PW&B. Within a decade, the PRR would control its own railroad in what was considered the most valuable stretch of real estate in the country.

North of New York the tale is equally as complex and historic. The first link was the Boston & Providence Railroad, which began operation between its namesake cities in 1835. The New York, Providence & Boston Railroad began through operation in 1837 between Providence and Stonington, Connecticut. In 1848 the New York & New Haven Railroad completed its line between New Haven, Connecticut and a connection with the Harlem Railroad to access New York. In 1858 the New Haven, New London & Stonington Railroad completed the last link, and by 1859 an all-rail route with two ferry crossings was possible between Boston and New York via four railroads. The NYP&B purchased the NHNL&S in 1864.

In 1872, the New York & New Haven combined with the Hartford & New Haven Railroad to become the New York, New Haven & Hartford Railroad; thus began an insatiable quest for consolidation in Southern New England. Germane to the Northeast Corridor, the NYNH&H, better known simply as the New Haven, acquired the NYP&B in 1892. The Old Colony, which had leased the B&P in 1888, was itself leased in its entirety by the New Haven in 1893. With all of its acquisitions, the New Haven controlled all rail traffic in Southern New England and in so doing then possessed three separate routes between New Haven and Boston: The Inland route via Hartford, the “Air Line” which avoided all major cities as well as the State of Rhode Island, and the Shore Line route which hugs the northern banks of Long Island Sound. Sometimes holding all the cards means control of one’s destiny; and sometimes it means too much of a good thing.

Let there be light

The New Haven was a pioneer of electric traction utilizing low-voltage direct-current applications as far back as 1895 on many branch lines. The New Haven connection to New York was then part of the New York Central System, and as a result of a horrific accident on the NYC in 1902, steam locomotives were banned by city ordinance after 1908. The New Haven would use the NYC third rail system into the city, but had much more ambitious plans for the rest of its main line. In April 1907, the first high-voltage overhead catenary was energized between the end of third-rail territory and the power plant at Cos Cob, Connecticut. By the end of that year, wires had been extended east to Stamford. In 1914, electrification had reached New Haven. Numerous branch lines for freight and passenger service were also electrified. Had economic conditions not worsened, the electrification program would have continued, possibly to Boston.

For the PRR, of course, owning the premier transportation system in the country had its own responsibilities. As the final years of the 19th Century wound down, traffic on the PRR continued to grow. Even so, terminating at Harsimus Cove, like so many other roads on the Hudson River, did not meet the expectations of the “Standard Railroad of the World.” After much consideration, a plan of attack was reached in 1901 wherein the PRR would access New York and beyond. Tunneling beneath the solid rock of New Jersey’s Bergen Hill and then slogging through the muck that is the river bottom, the PRR would not just enter Manhattan, but would make the grandest statement in passenger railroading travel: Pennsylvania Station New York. It would not stop there. Working in conjunction with the New Haven and PRR subsidiary Long Island Railroad, four tunnels would connect Manhattan to the Borough of Queens and then a spectacular connection to New England via a bridge over the East River at Hell Gate.

Upon its completion in 1910, the new electric division from Manhattan Transfer, New Jersey to Sunnyside Yard in the city Borough of Queens was powered by low-voltage third-rail DC electricity as the result of the city ordinance banning steam locomotives. Even then the PRR was contemplating electrification of the railroad in a manner without the restrictions of low-voltage DC, high-voltage overhead catenary. In 1915, it electrified the Main Line between Philadelphia and Paoli. This was followed by extensions north to Trenton and south to Wilmington. In 1928, the PRR announced its intention to electrify north to New York, replacing the original third-rail system except for what was needed by the LIRR (the New Haven had extended its overhead electrification to Sunnyside Yard in 1917). Despite the Stock Market crash of 1929 and Great Depression of the 1930s, the expansion continued with plans to electrify to Washington and Harrisburg. Service to New York began in 1933, to Washington in 1935, and to Harrisburg in 1938. Much of this was underwritten by Federal loans of some $107.5 million.

It should be noted that the improvement to what would later be called the Northeast Corridor was not the only PRR plan for massive improvement. In 1905, the PRR incorporated the Pennsylvania & Newark Railroad, to build a parallel freight route from the yard at Morrisville, just south of Trenton, north; connecting to a freight yard in Newark. Work was suspended in 1916 due to wartime scarcities, and never restarted. The PRR had also planned building an entirely new mainline to the Midwest running west from Lewistown, Pennsylvania, across Ohio, and well into Indiana. This new low-grade line would have given the PRR the shortest and fastest link between New York and Chicago. For reasons left to speculation, the PRR decided to improve its line between Washington and New York. This would unwittingly set the stage for passenger railroading in the later decades of the 20th Century.

The darkest hour

By the mid 1960s, America’s railroads were in trouble. Not only was the once-mighty PRR not exempt from this pain, but in many ways was its full embodiment. The radical improvement of the 1930s which made the PRR the paragon of transportation now weighed like a millstone around its neck. Overly-burdensome regulation from early in the 20th Century had ended the PRR program of continuous self improvement. This was followed by the post-war largess manifested in the Interstate Highway program; an open-access network of asphalt and concrete, underwritten and maintained at the expense of the American taxpayer. Passenger trains had always been guaranteed enough cross revenue from freight through the rates set by the Interstate Commerce Commission. Now with freight (especially the premium carloads) leaving for the subsidized highways, there was no longer enough to go around.

For the New Haven, things were even worse. Having a dense regional railroad in a small industrial area of the country made sense before the age of subsidized roadways. With the coming of the Connecticut Turnpike and New England Thruway, the New Haven did not stand a chance.

Sowing the seeds of socialized rail transportation

In the decade of the 1960s, the economy of the country was running like a well-oiled machine. Every corner of business was garnering its share of the national largess with one notable exception: The railroads. Increase in business revenue correlated with an increase in internal revenue, and much of this went to the railroads’ new competition: Socialized transportation in the form of interstate highways and airports. Meanwhile, Japan was continuing to rebuild its infrastructure. As it did not enjoy national largess, it was imperative to make the most of what it did have by rebuilding and improving on existing technology. Thus, after rebuilding its railroads, Japan took the next logical technological step of speeding up its railroads. Its 125 mph “Bullet Trains” captured the imagination of the world, and the imagination of at least one person in the U.S. Senate. After all, that money in the U.S. Treasury was not going to spend itself.

Claiborne de Borda Pell served in the U.S. Senate representing the people of Rhode Island for six terms starting in 1961. He will always be best known as the father of the Pell Grant, which offers tuition aid for college students. Immediately following his election, he turned his attention to the possibility of high-speed trains in the Northeast. He aroused then-President Kennedy’s enthusiasm for the idea, and this led to the initiation of feasibility reports by the Commerce Department. But how to pay for it?

“Where will the money come from to build a high-speed rail line in the northeast corridor? A federal subsidy only as a last resort, said the Senator. What he favors is the creation of a public authority which could guarantee bond issues. But there are other possibilities, too: ‘I am by no means exclusively wedded to the public authority approach…one alternative which has been discussed is the formation of a public corporation…’” - Railway Age, October 12, 1964

Apparently, all the other possible options were discarded rather quickly. Following the release of the Commerce Department corridor studies in 1964, Senator Pell introduced (and Congress passed) the High Speed Ground Transportation Act of 1965. Signed into law by President Johnson, the Act authorized in 1965 an expenditure of $20 million, and $35 million the next year. These funds went to upgrades to the railroad right-of-way between New York and Washington, DC, as well as to the purchase of the now famous Metroliners; 50 multiple-unit cars capable of 120 mph speeds, from the Budd Company.

This was the era of “The Great Society” where all the nation's woes could be cured with copious quantities of public money. Sadly, such was the mindset of the age of avarice; throwing money at problems was much easier than solving problems. All around the country, the railroads were losing traffic to government-subsidized competition. This atrophy of traffic led to the mistaken notion that parallel railroad mergers would equate to survival, thus leading the PRR to merge with its long time rival, the New York Central, in 1968. Part of the PRR’s agreement to allow its property between New York and Washington to become a guinea pig for an imperious immediacy of political interest was the hope of a favorable decision to grant its merger. Unfortunately, in less than two years this misbegotten union called Penn Central became the single largest corporate bankruptcy in history up to that time.

Instead of addressing the continuing failing fortunes of the nation’s railroads, elected leaders of the day concentrated on one symptom: Passenger rail losses. It has been said that Americans operate in only the two modes of complacency and panic. Complacency was no longer an option. Millions of public dollars invested in the NEC faced the possibility of liquidation in bankruptcy court. Politically, this was untenable. A key reason for the 1971 formation of the National Railroad Passenger Corporation, or Amtrak, was to protect America’s investment. America’s passenger trains were now in the hands of Senator Pell’s suggested “public corporation.”

How has this public corporation fared in its governance of the NEC? This will be addressed in our next installment.

This Week at Amtrak

Image via Wikipedia
From the United Rail Passenger Alliance

This Week at Amtrak, Vol. 8 No. 12
Volume 8, Number 12

From the Editors…

Recently a prominent state rail advocacy group signed on accepting the ultimatum of a major railroad. What does this portend for the rest of the country?

Cannot Predict HSR Speed? How About a Happy Medium…

“A thousand miles seems pretty far, But they've got planes and trains and cars, I'd walk to you if I had no other way…” Hey There Delilah - Plain White T’s

Back in January of 2008, not long before the most recent resurgence and subsequent retreat of American High-Speed Rail, Rick Harnish of the Midwest High Speed Rail Association was one of the highlighted speakers at the Carmichael Conference held in St. Louis, Missouri. An interesting anecdote during his lecture told of the public’s reaction to plans for high-speed trains: “How do we get the trains we already have to run on time,” and “How do we keep the bathrooms clean.” This may lead one to wonder: Are the public’s expectations low or just realistic?

It should be noted, all hyperbole aside, that there are currently no high-speed trains in operation anywhere on the North American continent. The true definition of HSR by those who actually operate it is 250 kph (155 mph), so Amtrak’s Acela does not quite make it. But that’s okay here in the USA where our motto is, “If you don’t like what you see, lower your expectations.” Therefore, the American definition of HSR is anything faster than a bicycle going downhill. As a result there are projects ongoing to raise certain corridors up to top speeds of 90 mph or greater. The freight railroads which own the track in those corridors have their own ideas pertaining to “high speed.”

As has already been covered by This Week, Norfolk Southern’s CEO, Wick Moorman, made it clear that for his railroad “passenger train” means 79 mph, maybe 90 mph in certain circumstances. Ergo, the extension of regional trains in the Commonwealth of Virginia to Norfolk will top out at 90 mph. CSX has the same vision for passenger trains. In upstate New York, CSX has stipulated that 90 mph be the top speed for the current service running from Albany-Rensselaer to Buffalo. The government of New York State sees things quite differently, pushing to raise those train speeds to 110 mph. This is where perception meets reality; the former New York Central main line, the storied Water Level Route, is the property of Jacksonville, Florida-based CSX.

In a move to help settle this impasse, the Empire State Passenger Association agreed with CSX:

“The Empire State Passengers Association (ESPA) has endorsed 90 miles per hour as the near-term maximum speed for Amtrak’s Empire Corridor passenger trains operating on CSX’s busy freight mainline across upstate New York from west of the Capital District to the Buffalo region.”

To be sure, the ultimate goal of ESPA is to realize 110 mph trains in New York State. Still, they have wisely determined that half a loaf, paid for by someone else, is better than none. They must also be keenly aware that time is of the essence. As per the Passenger Rail Investment and Improvement Act of 2008, specifically Section 209, it is expected that individual states will be held responsible for the operating losses for such trains. If everything had gone as per the language in the PRIIA, then in October, 2013 New York State would have to buy the cow because the milk will no longer be free.

Asleep at the Switch

Speaking of the Passenger Rail Investment and Improvement Act of 2008, formally known as Public Law 110-432/Division B, it may well be described as a train wreck in no motion. By law enacted October 16, 2008, Amtrak was required per Section 209 to “develop and implement a single, nationwide standardized methodology for establishing and allocating the operating and capitol costs among the States and Amtrak” for routes under 750 miles by October 16, 2010. Now some nine months later, no such “methodology” has been brought forward by Amtrak, although negotiations with the states are ongoing. Even so, the law is clear as to what was supposed to happen following the deadline and no agreement:

“If Amtrak and the States (including the District of Columbia) in which Amtrak operates such routes do not voluntarily adopt and implement the methodology developed under subsection (a) in allocating costs and determining compensation for the provision of service in accordance with the date established therein, the Surface Transportation Board shall determine the appropriate methodology required under subsection (a) for such services in accordance with the procedures and procedural schedule applicable to a proceeding under section 24904(c) of title 49, United States Code, and require the full implementation of this methodology with regards to the provision of such service within 1 year after the Board’s determination of the appropriate methodology.”

In other words, with no negotiated agreement in place by October 2010 there should have been accelerated implementation deadline for the Surface Transportation Board-issued standards. Instead of five years from enactment if the schedule had been followed, with the STB involved, it was supposed to be two years (the missed deadline) + 120 days (the STB decision) + one year = three years and four months vice five years. The STB was required to issue standards by mid-February 2011, to become effective and binding one year later.

To be certain, the Surface Transportation Board has more than enough on its plate these days, what with every utility in the land seemingly attempting to re-regulate the railroad industry. As such, they are more than content to sit back and watch the negotiations from afar, and will only intervene if a dispute arises between the states and Amtrak.

This is nothing we have not seen before, here at This Week. We fully expect Amtrak to come into the STB waving a tardy “agreement,” and then the STB to take the path of least resistance by adopting it. The inherent danger of such after-the-bell acceptance would be the serious legal questions about the validity of any cost standards thus generated. Any other operator seeking to bid on any route negotiated with this agreement will be free to challenge said standards simply on the basis of missing the October 2010 deadline, and the STB’s subsequent failure to promulgate standards unilaterally as specified in the PRIIA when that happened.

The Future of American Passenger Rail Corridors?

No matter how you slice it, the costs of transportation, all transportation, are going to be reallocated such that the states will have a more direct financial responsibility. The Passenger Rail Investment and Improvement Act of 2008, specifically Section 209, has a goal of establishing a uniform strategy for determining those costs of train routes 750 miles and under and then passing the bill along to the states. Translation: The federal government is getting out of the corridor business. Eventually we will see the same scenario with the Northeast Corridor.

Learning from the British experiment, the physical in-place plant should belong to a public entity; in the case of the NEC, perhaps a compact of those states. The legal foundation for such a compact already exists:

“Consent to Compacts.--Congress grants consent to States with an interest in a specific form, route, or corridor of intercity passenger rail service (including high speed rail service) to enter into interstate compacts to promote the provision of the service…” - The Amtrak Reform and Accountability Act of 1997, Section 410

Connecticut and Massachusetts already own all or a substantial portion of their intrastate section of the route. The states already have the bureaucratic machinery in place for their commuter services. The maintenance needs of the NEC are roughly $500 million per year, which comes out roughly to $1 million per mile. New Jersey would have the largest stake, at 58 miles. But they also have the largest NEC demand: NJ Transit. Is it any wonder that New Jersey politicians are fighting tooth and nail to keep the status quo?

The next logical step would be to bid out the premium services. If, say, an entity such as Sir Richard Branson’s Virgin Trains wins the bid, they purchase and maintain their own equipment; they pay an access fee, and the public gets to ride in the same manner as it would if it had flown. The private entity now has room to innovate within the bounds of its own equipment and on its own dime, far from the scrutiny of the budget hawks. In the real world of HSR, this is becoming a reality. In 2013 German Rail (DB) will commence HSR Intercity Express (ICE) service from Frankfurt and Amsterdam to London. The existing HSR services on the lines will continue to run. Although DB is a public entity it is improvising like a private company. This also demonstrates that HSR can be done over someone else's infrastructure, and that competing HSR services can coexist. That is about the practical extent of “privatization” in the corridor world.

This Week in Amtrak

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This Week at Amtrak Vol. 8 No. 11

Volume 8, Number 11

From the Editors…

This week we hear from Russ Jackson, Vice President of the United Rail Passenger Alliance. Russ is a retired California college instructor, former RailPAC officer and editor, and is now living near Dallas, Texas.

AMTRAK Long-Distance trains at 40

And, what they still need is more cars!

Comments by Russ Jackson

That was then: Forty years is a long time. In this report let us first take a look at where the Western long distance trains started for Amtrak, and then look at today. Charting will be for two trains that were in the Amtrak official timetable #1 for May 1, 1971, which was quickly replaced with a new one on July 12 (to view this timetable see: http://www.timetables.org/browse/?group=19710712r&st=0001); then, the May, 1991 national timetable which was in effect when this writer became editor of RailPAC’s Western Rail Passenger Review; and then we do a comparison of those past schedules with the 40th anniversary 2011 national system timetable which is available now at all Amtrak-staffed stations.

Trains 1 and 2, the Sunset Limited

We all know what the problem with this train has been and continues to be: Tri-weekly (also said as tri-weakly) service from day one, thanks to the inherited schedule from the Southern Pacific, and it continues to run today with nearly full loads despite the very bad schedule.

1971 Dp NOrl 1:00 PM; Dp Phx 10:50 PM; Ar LA 7:30 AM Su,W,F 44.5 hrs
1991 Dp NOrl 2:15 PM; Dp Phx 10:31 PM; Ar LA 7:00 AM M,W,F 42.75 hrs
2011 Dp NOrl 11:55 AM; Dp Mar 11:57 PM; Ar LA 8:30 AM Su,W,F 44.5 hrs *

1971 Dp LA 10:00 PM; Dp Phx 8:10 AM; Ar NOrl 8:00 PM Su,Tu,Th 44 hrs
1991 Dp LA 10:50 PM; Dp Phx 7:20 AM; Ar NOrl 7:50 PM Su,Tu,Th 43 hrs
2011 Dp LA 3:00 PM; Dp Mar 10:38 PM; Ar NOrl 2:55 PM Su,Tu,F 48 hrs *

*NOTE: In 2011 the trains do not go through Phoenix, a major city now without train service, and there are generous amounts of built-in recovery times throughout the route. In 1971, the schedule called for Yuma to Tucson via Phoenix to be 6 hours; in 1991, 6-1/2 hours; in 2011, 4-3/4 hours via Maricopa. If Phoenix were still on the schedule, an hour and a half would have to be added to the 2011 schedule.

Trains 3 and 4, the Southwest Chief

In 1971 timetable #1, this train had numbers 17 and 18 and was named “Super Chief-El Capitan,” continuing its inherited Santa Fe tradition.

1971 Dp Chi 6:30 PM; Ar LA 9:00 AM; daily 40.5 hrs *
1991 Dp Chi 5:00 PM; Ar LA 8:10 AM; daily 41.25 hrs
2011 Dp Chi 3:00 PM; Ar LA 8:15 AM; daily 43 hrs

1971 Dp LA 7:30 PM; Ar Chi 1:30 PM; daily 42 hrs *
1991 Dp LA 8:30 PM; Ar Chi 3:50 PM; daily 42.25 hrs
2011 Dp LA 6:15 PM; Ar Chi 3:15 PM; daily 45 hrs

* NOTE: In 1971, the train did not go via Topeka, KS, which adds one hour to the schedule.

While running times and scheduled departures have remained fairly consistent for these trains, for others they has been all over the map. Several interesting changes from 1971: Then, the Coast Starlight was the first west coast train to travel from Seattle to, first, San Diego. It ran tri-weekly north of Oakland and from Los Angeles to San Diego, but daily from Oakland to Los Angeles. In 1971 there were only two daily round-trip San Diegans between Los Angeles and San Diego; no San Joaquins, and no Capitols. Originally, the California Zephyr was scheduled to travel its current route, but when the D&RGW railroad decided to opt out of Amtrak, it ran via Wyoming, and operated daily from Chicago to Denver but tri-weekly between Denver and Oakland. The Empire Builder did not have a Portland section, and crossed the Cascades in Washington going via Yakima instead of Wenatchee. All this was accomplished using low-level cars and locomotives that were 20 years old and operating crews inherited from the freight railroads.

This is now: In the July, 2011 issue of Trains magazine, writer Bob Johnston has written a review of Amtrak’s past, dividing its history into five sections and comparing “then” to “now.” For example, section one, “Wake-up call,” says “Then: equipment had to be ordered and funded.” Sadly, “Now: equipment has to be ordered and funded.” While that is important for all parts of the system, including the Northeast Corridor, Amtrak has neglected its long distance trains badly. In his presentation to the RailPAC-NARP meeting in March, 2011, Minnesota’s Andrew C. Selden said, “Amtrak has made no significant investment in its long distance services in 20 years, and now plans only to replace its Superliner I cars, not to grow its long distance fleet or network.” Mr. Selden’s comments and data explaining all this were published in the May-June issue of the RailPAC newsletter.

On May 17, 2011, Amtrak CEO Joseph Boardman told the U.S. Senate Appropriations Committee, “You are not going to cut costs far enough on the long-distance trains to make (them) profitable.” This statement came after Amtrak’s West Coast Superintendent, William Duggan, spoke to the RailPAC meeting, revealing (with a Power Point visual) that “Sleeping car ticket revenue makes a positive contribution to Amtrak’s bottom line.” That is what RailPAC, URPA, and most objective long distance train advocates have been saying for too many years; but Amtrak has not been willing to fund additional cars that will contribute positively to that bottom line, instead choosing to invest only in corridor trains that are paid for by the states (except in the NEC). Mr. Selden says, “Amtrak is turning away boatloads of money for want of new capacity.” As RailPAC President Paul Dyson, says, “More cars on the (existing) trains means more revenue and smaller deficits. The true deficit is in management, not dollars.”

So we can all agree that adding additional high-revenue cars to existing trains, those that will run every day (including the daily Sunset Limited, eventually), is where Amtrak should be concentrating its efforts, right? RailPAC’s Noel Braymer suggests, “How about private financing (safe-harbor leasing) with a business plan to pay for them with increased revenues? With California about to order new bi-level cars how about Amtrak getting an ‘add-on’ to that order for new hulls at least.”

We must add a caution written by Mr. Selden to us, that it “will take hundreds of new cars–effectively deployed in high revenue services–to get to break-even. But, local wisdom in St. Paul is that there never will be a fourth sleeper on the Builder because the diner is swamped as it is and they couldn’t feed another carload of passengers. Personal observation is that they’re right. The diner in mid-summer (i.e., for the four peak months) is dreadful in terms of regimentation and rushed service, and stress on an understaffed crew.” After a trip on the Empire Builder, where he is a National Park Service volunteer in the Rails-Trails program, narrating the trip between Minneapolis and Wisconsin Dells, Mr. Selden wrote that “All three sleepers were all but sold out on both trains and would be sold out west of Minneapolis. Coaches were about 2/3 occupied so statistically sold-out due to down-line sales.” And this on a train that has had many on-time problems this winter and spring.

RailPAC Vice President-South James Smith returned from a round trip on the Southwest Chief from Los Angeles to Chicago and reported the same sold-out condition in May, before the official travel season begins. People want to ride… Something must be done for these western trains, besides just replacing cars one-for-one, if Amtrak really wants to grow financially and calm the criticism thrown at it. Or does it?

This Week in Amtrak

Image via Wikipedia
This Week at Amtrak Vol. 8 No. 9
Volume 8, Number 9

From the Editors…

For something completely different, This Week goes to the movies, plus some observations by URPA Vice President of Corporate Communications Russ Jackson.

The Little Movie that Just Might: Atlas Shrugged, Part One

To be clear, Atlas Shrugged may not win any Academy awards. But that is not the point. The tale behind bringing Ayn Rand’s 1957 novel to the big screen is almost as long as the book itself. Loathed or loved, public sentiment is anything but neutral for Atlas Shrugged.

In this first of possibly three installments, the year is 2016 and the national economy continues to spiral downward. As a result, commercial aviation is a recent memory and all traffic, freight and passenger, must move by rail. (It is ironic that in this alternate reality all rail traffic is still in the hands of private operators.) In typical Luddite fashion, elected officials attempt to garner support for themselves while exacting a heavy burden from industry. The result? Numerous prominent businessmen vanish, following a shadow named John Galt.

From a literary standpoint, the movie succeeds. All the main points are visited: Hard work, and the virtue of the reward for such hard work, lead to progress; rewarding those who do not contribute will ultimately lead to ruin; the inequity of expecting industry to respond to critics whose sole job it is to criticize. That is not, however, the reason one goes to the movie theater.

This production was constrained by a small budget, and the results have the appearance of made-for-television instead of the big screen. The principal railroad scenes are stock footage of modern day trains and a real Union Pacific track maintenance/concrete tie crew in Indiana. The climax of the film is the completion of the rebuilding of a rail line, and the first train to ply it. Ironically, that first train is a computer-generated image which is heavily based on Amtrak’s Acela, the very epitome of government interference in railroad operations.

As a point of comparison, a rather silly movie from last year, Unstoppable, did succeed in bringing the railroad to the big screen. Although its plot was an unrealistic contrivance of unstoppable exaggerations, the moviegoer did get a first-hand look at the grit, grime and gravity of railroad life.

In Atlas Shrugged, the plot centers around three industries: The railroad, steel, and petroleum. Malevolent special interest government intrusion is hampering their efforts, but they resolve to move ahead despite this interference. The film makers concentrate on the characters and portrayal of the squeaky-clean world they inhabit. After all, why show the gritty side of industry? Interestingly, the plot of this film is not fantasy, but was once reality. Our film’s heroine, Dagny Taggart, presides over a railroad where locomotive parts are hard to come by, and some lines have track that is over a century old. Imagine Penn Central circa 1972. Imagine parked trains derailing. Now imagine direct government involvement. Hardly fantasy, these things actually happened. It was this world which led to creation of the National Railroad Passenger Corporation.

Should the film makers have paid more attention to railroad details? At a screening/Q&A session arraigned by the Reason Foundation, the first two questions asked by the audience were about the railroad scenes. Not too many people have seen the inside of a steel foundry or an oil refinery, but railroads are a universal tie which binds us all, either as onetime passengers or perhaps via family connections. This preexisting subconscious familiarity with railroading is just the sort of connection needed to attract an audience.

In spite of it all, the film does work. It is rather dense, and as such will sail clear over the heads of the average moviegoer. It is a thinking movie for a thinking audience. Is the free market the answer to all our problems? Of course not; but neither is the free market so infinitely large as to subsidize everything else. Some may see this as a political statement, others as social commentary. In the words of Alfred Hitchcock, “It’s only a movie.”

Winter and the Amtrak long distance trains
Report and Comments by Russ Jackson

The western long distance trains had a rough winter in the northern two-thirds of the country. Some trains were canceled altogether for several days. Here is a rundown of some of the activity, by train, in the past few weeks. Not everything is included, but here are some highlights, using Amtrak's data. When April is figured in, things will look much worse.

California Zephyr. 45.2% on time in March, 52.5% for the last 12 months. For several days, Donner Pass was closed not only to road traffic on I-80, but also the Union Pacific main line was snowed in as drifts of over five feet of blowing snow blocked access. While there was diligence by the UP crews, there were several derailments. For the first time in many years, the rotary plows stationed at Roseville were called into service. The old heads who remember how it was up there when snows like that were more common are mostly retired, and the youngsters have never seen snow like this before. The weather is still bad, but the route is open again so that Trains #5/6 can run their regular route. Train 5, which left Chicago on April 16 on time, arrived in Emeryville 3 days later and 58 minutes early. Delays to the trains now are in southern Iowa, where flooding has occurred. For some days the trains originated-terminated at Reno, with passengers bused from California when I-80 finally opened. To see a great video of the rotary plows in operation, look at http://www.kcra.com/r-video/27364908/detail.html.

Empire Builder. 33.6% on time in March, 33.8% for the last 12 months. The Builder was the hardest hit of all the western trains. It did not run at all for many days, including the week before April 15, when it had not operated due to flooding on the BNSF in North Dakota. Before that it was winter storms, but once the snow starts to melt up in that state, Amtrak's line from Fargo to Grand Forks and west is subject to water problems. An anticipated BNSF detour line direct from Fargo to Minot had many slow orders due to high water, and was declared unusable. Amtrak has discussed permanently moving #7/8 to this alternate line, but it will bypass Grand Forks, Devils Lake, and Rugby, towns that rely on the train for service. Amtrak has said it will cost $100 million in upgrades to bridges and track in the Devils Lake area if that service is to continue. The BNSF does not use that route for freight service. It would take two "construction seasons" to rebuild, after Congress had appropriated the money. How likely is that to happen now?

Southwest Chief. 83.9% on time in March, 77.8% for the last 12 months. Not much to say here, as Trains #3/4 continued to depart on time, and arrived early at both ends more than they were late.

Sunset Limited. 88.9% on time in March, 83.1% for the last 12 months; however, problems arose when wildfires damaged a Union Pacific bridge near Marfa, Texas, on April 9, stalling the train for 18 hours; thus weather at the other extreme affected the Sunset route.

Coast Starlight. 45.2% on time in March, 65% for the last 12 months. Winter weather did have an effect on the operation of Trains #11/14, but most of the problems have come due to track work being done by the Union Pacific south of San Jose and San Luis Obispo, which has required the trains to be detoured, and has provided railfans with several chances to ride the detour route through the San Joaquin Valley. The detour began south of Emeryville at Fremont, where the trains crossed the Altamont Pass to Stockton, then traveled on the Union Pacific line south to Bakersfield, up the Tehachapis, across the famous Loop, through Mojave, Lancaster, Palmdale, and into Los Angeles. For a full description of one of the #11 detours that departed Oakland Jack London Square 30 minutes late and arrived at Los Angeles Union Station at 9:57 PM, see Chris Guenzler's picture story on http://www.Trainweb.org. Passengers going south to the Starlight's regular Central Coast stations rode buses from Oakland.

Whether Amtrak and its host railroads were "prepared" for this winter is ripe for speculation, but when a winter like this one happens it's nail biting time all along the routes. We congratulate Amtrak, the BNSF, and the UP for their diligence in restoring service in a timely manner. Lessons were learned, and it will be interesting to see how prepared they all are next winter.

Related articles

• Amtrak Losses to Widen (online.wsj.com)
• All aboard! Amtrak sees surge in ridership (msnbc.msn.com)