Contracting out the long-distance trains

[SouthernRailway]

I've been thinking that one solution to criticism of Amtrak for "wasting" money on long-distance trains is to turn the long-distance trains back to their freight railroad hosts. Let the freight railroads run them and be responsible for all decisions re: operations and let them take the financial risk. In return, give the freight railroads tax credits for, say, 90% of Amtrak's average annual losses on the long-distance trains during the last three years. Just as Amtrak did for the privately-run passenger trains that lasted past 1971, Amtrak could handle reservations.

I see this as a win-win: the freight railroads would get Amtrak off their backs, and Amtrak would get the long-distance trains, which seem to be the target of much criticism, off its back. Republicans in Congress would likely be less opposed to giving tax credits to private companies who would, in the right-wing ideological view, run them more efficiently than Amtrak did.

Why wouldn't this work?

[DutchRailnut]

Cause Amtrak was created cause the freight railroads no longer wanted passenger rail.
They (freight railroads)fought to get rid of passenger service, so Amtrak was created by big brother to run the passenger services.

[SouthernRailway]

Yes, but freight railroads wanted to get rid of passenger trains because they lost money. In this set-up, they wouldn't lose money; freight railroads would break even or could even make money.

When freight railroads make money on passenger trains (such as by operating commuter trains under contract, which some freight railroads do), they seem not to have a problem with them. Some freight railroads (predecessors to Union Pacific and Norfolk Southern) were so motivated not to have Amtrak running on their tracks that they ran their own passenger trains at a loss; in my setup, they'd be free of Amtrak interference.

[Greg Moore]

Yes, but freight railroads wanted to get rid of passenger trains because they lost money. In this set-up, they wouldn't lose money; freight railroads would break even or could even make money.

When freight railroads make money on passenger trains (such as by operating commuter trains under contract, which some freight railroads do), they seem not to have a problem with them. Some freight railroads (predecessors to Union Pacific and Norfolk Southern) were so motivated not to have Amtrak running on their tracks that they ran their own passenger trains at a loss; in my setup, they'd be free of Amtrak interference.

Except instead of Amtrak interference they'd have interference from whatever watchdog agency is setup to make sure they follow the terms of their contracts.

The commuter railroads I would argue are a far different situation than say running the SWC over BNSF's Transcon. They tend to interfere a lot less in the long-haul operations of the Class 1s.

If the freight railroads really wanted to run passenger trains, they'd find a way now.

[CHTT1]

There is no incentive for the major freight railroads to run passenger trains. Amtrak was formed to get the passenger problem off of their hands. They don't want it back. As far as commuter trains go, BNSF and UP continue to operate commuter trains under contract with Metra in order to retain control over their main line entrances into Chicago. Are there any other Class 1 running commuter trains? Just CSX in the Washington area and they want out. Every other commuter train is operated by the commuter authorities, Amtrak or private, non-class 1 companies.

[Noel Weaver]

There is no incentive for the major freight railroads to run passenger trains. Amtrak was formed to get the passenger problem off of their hands. They don't want it back. As far as commuter trains go, BNSF and UP continue to operate commuter trains under contract with Metra in order to retain control over their main line entrances into Chicago. Are there any other Class 1 running commuter trains? Just CSX in the Washington area and they want out. Every other commuter train is operated by the commuter authorities, Amtrak or private, non-class 1 companies.

With regard to the above question, I am not sure but I suspect both the Canadian National and the Canadian Pacific provide the T & E crews for commuter trains in both Montreal and Toronto and in the case of Canadian Pacific maybe Vancouver as well.
Noel Weaver

[SouthernRailway]

There is no incentive for the major freight railroads to run passenger trains. Amtrak was formed to get the passenger problem off of their hands. They don't want it back. As far as commuter trains go, BNSF and UP continue to operate commuter trains under contract with Metra in order to retain control over their main line entrances into Chicago. Are there any other Class 1 running commuter trains? Just CSX in the Washington area and they want out. Every other commuter train is operated by the commuter authorities, Amtrak or private, non-class 1 companies.

Just as BNSF and UP operate commuter trains to retain control over their main line entrances to Chicago, I'd have the freight railroads operate long-distance trains in order to retain control over their lines.

There is currently no incentive to freight railroads to operate long distance passenger trains, but I'd propose to offer them tax credits for a certain percentage of Amtrak's losses on them. The freight railroads would be incentivized to cut those losses a bit and thus make a profit, by having their losses be less than the tax credits that they'd get.

[Gilbert B Norman]

First,, I would like to have it noted that I believe this is a sincere inquiry being made by a young railfan and that I further believe should be responded to with respect. I could well have made the same inquiry myself when I were a teenager (and far more an active railfan than today).

As I read Mr. Southern’s material, I believe he proposes to have the Long Distance trains (maybe or maybe not the Short Distance non Corridor such as The Pennsylvanian as well) proffered to the Class I railroads over which they operate. That railroad would staff, equip, and maintain, as well as provide all institutional support, i.e. supervision, required to operate the train. Each train would be identified with the road operating it. In short, there would be a BNSF Southwest Chief. Amtrak would simply become an oversight agency with regards to LD operations.

The railroads would be remunerated by means of “Tax Incentives‘ rather than contract payments..

First, this would appear to be a return to the conditions that existed from A-Day through the ‘70’s. During that era, the railroads holding contracts would provide a ‘turnkey purchase of service’. The roads “did everything’; Amtrak merely paid the bills. However, there was understanding that Amtrak would assume all “above the rails” operation of the trains. This assumption first began with non-operating employees such as clerks and with the first function to be absorbed being ticket sales and revenue accounting (after all, in business when someone wants to pay a bill and someone also yells “fire“ what do you do? You take the money first then put out the fire). Next followed the on-board service employees, and the Shop Crafts. Amtrak was acquiring their own property such as equipment and shop facilities as well as of course the Corridor which is beyond the scope of the LD trains. The last major assumption to occur was Train & Engine employees during the ‘80’s. As each craft was assumed, Amtrak negotiated their own labor agreements with each craft. Some may say these Agreements were giveaways’ but others may say they were “groundbreaking’. I would contend the latter with regard to T&E. To pay these employees for hours worked rather than mileage run and to have employees “not holding seniority on the road over which operating’ to be “groundbreaking”.

Now with all this having been done, it would make no economic sense whatever to “undo it” .

Finally, Tax Incentives are simply appropriations and/or contract payments in disguise; if I can see through that, be it assured so could Amtrak opponents on The Hill.

[hi55us]

While I am certainly not in favor of contracting out LD trains (due to failed experiments like MBCR in boston and VRE in Virginia), I do think that tax credits in lieu of other payments to freight RR's would be a step in the right direction.

Take for instance a tax credit for improved on time performance. Take for instance a tax credit that reimburses freight RR's 80 cents on every dollar they spend that decreases passenger train running time.

[trainmaster611]

Just scanning through this thread I can think of three major problems

1) Freight railroads don't have any incentive to actually provide quality service. They could just do the bare minimum, bump trains to unreasonable hours and less convenient routes to fit into their freight schedules, cut food service, etc.
2) Train connections -- unless Amtrak is allowed to dictate schedules, connections won't be lined up between different railroads.
3) I might not understand your proposal correctly but if the fed were to give tax breaks to cover a percentage of the loss, wouldn't the trains still be making a loss? Or do you just mean covering a percentage of expenses?

[slchub]

Keep in mind that Amtrak provides an "incentive" to the Host RR's for on-time dispatching. I'm not sure if the other Class 1 RR's have a passenger service desk, but Amtrak has a specific desk in Omaha to act as a liaison between UPRR and Amtrak in regards to dispatching issues. Amtrak pays for this desk to be operational, not the UPRR. While the UPRR has gotten much better at dispatching the California Zephyr, there is still room for improvement, and with a carrot dangling out in front, the UP sure seems to disregard this incentive and favor it's trains at times over Amtrak.

I doubt that a tax incentive on top of the on-time performance incentive paid by Amtrak will improve anything. The Host RR's have a sole purpose; move their freight which does not talk back, provides a steady stream of revenue to carry bulk goods and ensure that the shareholders get a good return on their investment. Having worked in the airline industry and now RR paxs service, money is found moving cargo rather than people.

Browse over to this webpage for the incentive summary:

http://www.amtrak.com/servlet/ContentSe ... 6041980246

[David Benton]

I understand southern railways thinking . Politically , answering the criticisim of amtrak , as a govt agency , been wasteful or inefficent , by turning operation over to a private company . Problem is , the class 1 railroads would be just as "wasteful" .
Maybe they might be 10 % cheaper , maybe 10 % more expensive . but i'm sure the difference in cost would be in that range .
so , this is an exercise indulged in by govts all over the world ( NZ must have tried every posiible combo of rail ownership ) . change the structure , give it a dazzling new name ,rack up millions in costs doing so , and find the result is pretty much the same . but it will keep one side of the political spectrum happy .
i like Don Philips byline quote in Trains . Although he is talking about Frieght and highways , the gist applies here .
" hey , can anyone say public-private partnership ? Get real , raise gas taxes now . Then worry about fancy words that mean almost nothing ".
in other words , changing the stucture will do nothing significant , unless either alot more money is poured in , or huge structural changes are made .

Please note , i am not wanting discussion on a gas tax to pay for Amtrak , that is just a quote to illustrate the point .

[trainviews]

Though not without problems I think the suggestion is interesting. It is clearly not a "let's kill passenger trains through privatisation" scheme, and it could bring in some innovation in how to run the trains or modest savings on the subsidies. The fact that tax credits might also be easier to stomach for subsidy-averse republicans is a good point too (even if they from my point of view are exactly the same, this appears to be a political fact)

I also think a couple of the answers/dismissals look like people either didn't really read the proposal beyond "contracting out" or are somewhat obsolete.

1) Freight railroads don't have any incentive to actually provide quality service. They could just do the bare minimum, bump trains to unreasonable hours and less convenient routes to fit into their freight schedules, cut food service, etc.

Well this proposal actually has precisely that, as it provides a fixed subsidy/tax credit and leave the RR with the risk if financial performance deterioates and the opportunity to make money if it improves. Of course a contract with some minimum service for the arrangement must be in place, so it doesn't become a total scam, but not so tight it will need a lot of oversight or no room for finding the level of service that actually makes the smallest deficit.

Cause Amtrak was created cause the freight railroads no longer wanted passenger rail.

Yes but it is 40 years ago, and the solution was accepted by a desperate railroad industry fighting for its life. They were not offered a solution where they could keep offering passenger rail and make money on it back then, and noone has asked since. The railroad industry of today is far stronger and often annoyed with the obligation and interference they have to accept from Amtrak. They might be willing to look at other solutions.

If the freight railroads really wanted to run passenger trains, they'd find a way now.

Come on, of course they are not interested as long as it is a sure money-loser, no matter how well they run the passenger routes. They are not in the railroad business because they are interested in playing with trains.

There is no incentive for the major freight railroads to run passenger trains.

If you really read the proposal it offers a scheme for them to be able to make money on passenger rail if they can do it just moderately more efficient than Amtrak. Making money is a great incentive, and so might be getting the power over running both passenger and freight trains within the same company weighing the interests in finer details.

However there are more than a few conditions and problems that would need to be sorted out:

First this is only a good idea for routes on host railroads that also think it is a good idea. In any way forcing passenger routes back to railroads that don't want them would be a disaster. But it could be very interesting to see if any of them wanted to have a go at it, and would offer their way of how to run a passenger service.

Secondly there is an issue of how to set the size of the tax credit in the long term. In 20 years it might not say a lot what Amtrak needed of subsidy to run the service in 2011. Both cost structures, overall passenger appeal of railways and possible fares may have changed a lot, resulting in either a return to perpetual losses for the private railroads or close to profitable routes that are still backed by large tax credits. I can already hear the political fight over either scenario.

Thirdly how does this system leave space for introducing new services if this should become possible politically, and how should the tax credit then be priced? For the first many years at least there will still be an Amtrak though as I doubt all the RR's would jump on this ship right away, so totally new routes would not be that much of a problem. But what about additional frequencies on existing routes for all or even more complicated parts of the route, which would also affect the market for the existing now private service? A system that would block new intrastate services in Florida or Texas or daytrain runs WAS-ATL or Toledo-Buffalo would be highly undesirable.

And fourth there is a host of practical problems - What about routes run over several different railroads? Someone also mentioned schedule coordination and on a related note guaranteed connections. I'm sure there's a bunch of others too.

But if those problems could be sorted, I actually like the idea. I don't think it will save many cents in costs for the federal reserve be it subsidies or tax credits, but monopolies whether governmental or not tend to be not the most innovative businesses in the world. Cost efficiency is also sometimes lagging. As I wrote I don't think anywhere near all of the freight RR's would buy into this scheme, but both the routes that are transferred and the remaining Amtrak might actually benefit.

[CHTT1]

Once again, guys, I don't think that undoing something that was done 40 years will accomplish anything. Conservatives will still criticize the money spent on passenger trains. Freight railroads could take their "tax credits" and run awful services that would drive anybody away and the freights would get rid of the passengers trains that bug them so much. The corporate types that run today's railroads aren't railfans interested in returning to the days of glory. They just want to make money and they do that by running freight trains.

[ThirdRail7]

Sounds interesting, except for one thing. Liability. The host railroads have been offered the chance to run the trains Amtrak operates on their territory. They remain uninterested because they really don't want the liability of passenger service.

If they took over the service, there would be no shield between them and liabilty.

It's one of the things that saves Amtrak.