Amtrak in Transition

afiggatt wrote:So now people can speculate on which companies will submit bids!

Here's one that has already publicly expressed interest.

The Metra order runs through 2015, but the company also is building some rail cars for transit agencies in Virginia and California. Nippon Sharyo plans to bid on rail-car projects funded by the federal stimulus program, including about 30 new cars that will be put into service between Chicago and St. Louis. The contracts are expected to be put out for bid next month.

http://www.chicagobusiness.com/article/ ... -for-metra

Appropriately John Stolberg's last post to this thread was about the possibility of a bid by Nippon Sharyo for the new bilevel cars on order for Amtrak's Midwest services. Nippon Sharyo's bid ended up winning the contract and hopefully will continue their track record of delivering a consistent, high-quality product on time and on budget. John's latest post to the Amtrak Success Stories thread and the extensive discussion of capacity issues, record ridership and in this case increases to long distance ridership, in that thread and elsewhere lead me to write once again about "Amtrak in Transition".

The Long Road Ahead

After what can only be described as "breathtaking" ridership growth over the past few years, Amtrak's operating position entering the next two fiscal years only begins to be described by the word "strong".

Among other things, in what has to be described as a nearly unbelievable occurrence the deployment of a decade old mature technology (Wi-Fi) has brought about a very substantial increase in ridership on the Northeast Regional trains to the extent that these trains now, as with the Acela Express, are among the rarefied club of Amtrak operated passenger trains that cover their operating expenses. The introduction of new electric motive power in the next two years is expected to bring about additional financial improvement for the Northeast Regional trains which will be able to dispose of unreliable or very old motive power whose cost of upkeep has climbed substantially over the past several years.

Meanwhile, the state supported extensions of Northeast corridor trains supported by Virginia continue to do very well and soon will bring about the resumption of passenger service to Norfolk, VA for the first time since the termination of the Mountaineer in 1977. But in all reality, given Amtrak's negative outlook at the time (they correctly indicated the train would lose a lot of money on a regular basis), the departure of Northeast Regional train #174 on December 12, 2012 from Norfolk will mark the first return of serious passenger service since the Norfolk & Western's Pocahontas left Norfolk on May 1, 1971, never to return again.

On top of these successes the implementation of now agreed upon new formulas for calculating operating costs will eliminate marginal losses on all state supported routes and force other states to take responsibility for routes operated entirely within their own boundaries. Other advantageous financial provisions made over the last several years are also beginning to improve Amtrak's operating picture including the early termination of ruinous sale-leaseback agreements made in leaner years which forced Amtrak to pay rent on their own equipment.

All of these factors point towards a significantly stronger operating and financial picture for Amtrak over the next few years. But as the title of this post implies Amtrak still has a very long road ahead.

Remarkably, capacity appears to remain the key for improving Amtrak's financial performance. I doubt very much that anyone would have predicted ten or even twenty years ago that Amtrak would ever be as capacity constrained as they are right now, especially not on so many of the Long Distance routes. At one time the mere thought of Amtrak Long Distance trains "selling out" anywhere for any period of time would have been nearly laughable. Now it is a constant on many of the Long Distance routes, primarily in the east, which are routinely capable of selling out their sleeper spaces and on multiple "off-peak" occasions are now also known to sell out in, of all places, coach.

With the advent of the new bi-level cars in the Midwest now beginning to become possible Amtrak should begin to deeply contemplate the implications that a surge of additional single level rolling stock will have on their consist and fleet management practices elsewhere. In doing so they will likely come to the realization that beginning in 2015 they are going to be in a position to substantially grow many of their short and medium distance trains. State supported services, which are starved at present for additional rolling stock, and often have unnecessary sellouts of their own will be able to make serious new inroads into their markets by providing additional capacity that has the potential to reduce the need for operating subsidies, especially in areas and during periods where demand far exceeds available supply.

Amtrak will also be able to double down on gains made in the Northeast Corridor by ensuring that their trains are able to meet the crush of passengers that will almost surely continue to push onto the NEC over the next 2-3 years. Finally, I believe this increase in rolling stock will once and for all substantially reduce Amtrak's losses on food and beverage service. While I certainly know better than to predict a "profit" or even "break-even" situation there is no question in my mind that there will be enough passengers riding very long Northeast Regional trains with only a single cafe car to begin to make some serious headway into F&B losses systemwide.

One of the questions that has been almost definitely answered with the ridership growth of the past decade is that Amtrak's Long Distance train consist lengths and available rolling stock are entirely insufficient in most cases to even hope for these routes to cover their operating costs. All too often over the past couple of years the Amtrak's Long Distance trains have experienced marginal growth results when they could have seen far higher rates of growth had the necessary rolling stock been available. The Lake Shore Limited and the Crescent are poster children for this problem which likely will not be resolved for some time to come.

All of this is not to say that things aren't getting better or won't be getting better. Clearly they will, but the process of improving the service, growing ridership and improving the bottom line will continue to remain very challenging for years to come.

As has been discussed and mentioned elsewhere Amtrak has yet to identify a funding source and plans for new single level Long Distance coach cars and bi-level Sleeper cars, both of which are in short supply and high demand. As revenues continue to improve on their Long Distance routes from the addition of new single level Viewliner Sleeper, Baggage and Baggage Dorm cars, and costs are reduced from the elimination of Heritage fleet Diner cars Amtrak will hopefully be in a better position to either negotiate for or self-fund the purchase of these two additional and essential car classes. In some cases additional revenue improvements could be so substantial that Amtrak may be able to exercise all options on additional purchases of Viewliner cars which would finally open up options that would permit them to maximize revenue and capacity based on recurring annual trends in ridership.

Perhaps one of the most significant discoveries over the past two years is that the American railroad passenger base may now be of such depth and strength that a return to at least "break-even" operations is no longer confined to the Northeast corridor but is potentially possible on a broad basis across the country in places where Amtrak is able to provide consistent, frequent and reliable service on schedules that make sense either on a daytime or overnight basis. Yet again I would note that this scenario was believed to have become "lost and gone forever" when Amtrak was started in 1971 essentially as an undertaker for the American passenger train.

The next couple years will be both challenging and very exciting for Amtrak with more change possible than has happened in perhaps their entire 40 year existence. If Amtrak continue to improve financially as they have and if, as expected track improvements lead to dramatic increases in ridership on routes outside the NEC, Amtrak will being to emerge and be seen as a useful and viable alternative to air and car travel in places that haven't taken the passenger train seriously since before WWII. The implications of this change will be very very deep and we could see things happening with American passenger railroads that are unfathomable even now. If Amtrak becomes as competitive as they likely will over the next two years the effect as the potential to be transformative on American passenger travel in a way not seen since the emergence of low cost jet travel 30-40 years ago.

I for one eagerly await the positive effects of these changes and the improvements to our economies that they will bring.

To add to the above post, another thing is the Amfleets (the backbone of the Eastern routes) are not getting any younger, dating back to 1975-1976 (to say, a disco era product in the age of Gaga and Bieber). No matter how many times the cars are overhauled (including the Capstone program of 1999-2002 and recent Recovery Act rebuilds), the bodies are 35+ years old. With growing ridership, high demand and traffic, combined with increasing age and possibly reduced funding, the future of the Amfleet series could be one the greatest fleet strategy challenges of the coming years.

R36 Combine Coach wrote: With growing ridership, high demand and traffic, combined with increasing age and possibly reduced funding, the future of the Amfleet series could be one the greatest fleet strategy challenges of the coming years.

Agreed. The greatest challenge for the fleet is to find the funding and will to capitalize on the burgeoning ridership. It's hard to plan for 2014 when you don't know what is happening in 3 months.

Hell, it is tough finding it on the board sometimes.!

I could see two things happening with the Amfleets; one they could be replaced with a Amfleet III car built by Bombardier or another foundry through some legal wrestling or two, they could be replaced with a Viewliner coach of some sort.

Great post gokeefe. exciting times indeed

I'm sure Amtrak would rather change the game on the NEC from Amfleet trains to more Acela type equipment once that time rolls around. Yes, having locomotive-hauled coaches is more efficient all around flexability, but I think they'd want to go in the other direction for the NEC in the future. What that would require is the issue. Having to build more dedicated sheds for these trains to maintain them, less flexability to get a train together, etc. Where their issue stands is on the Amfleets. Can a new company make this type of car? Would they want these cars, or would they like to change to a different design?

This next generation of Viewliners will probably be a make or breaker.

H Street Landlord wrote:Great post gokeefe. exciting times indeed

Thanks!

lirr415 wrote:I'm sure Amtrak would rather change the game on the NEC from Amfleet trains to more Acela type equipment once that time rolls around. Yes, having locomotive-hauled coaches is more efficient all around flexability, but I think they'd want to go in the other direction for the NEC in the future. What that would require is the issue. Having to build more dedicated sheds for these trains to maintain them, less flexability to get a train together, etc. Where their issue stands is on the Amfleets. Can a new company make this type of car? Would they want these cars, or would they like to change to a different design?

This next generation of Viewliners will probably be a make or breaker.

I would imagine that Amtrak will base any new single level designs on the Next Generation Corridor Car, as has been discussed elsewhere. They've put a lot of time and effort into designing that rolling stock and everything seems to still indicate that this will be the direction that they will pursue to replace the Amfleet I cars.

Once again this still leaves Amtrak with the "lots of new riders" problem. In fact so many new riders that effectively most if not all of the single level cars being displaced from the Midwest and West are going to be needed in the East. This is really quite a remarkable situation for Amtrak to be in. The mere thought that 130 bilevel cars worth of rolling stock is insufficient to deal with their capacity problems is an entirely novel situation for them to be in. While I am certainly open to contradiction from "those who know" ridership projections for the NEC do not appear likely to be reduced anytime soon.

Also, "new" of course to this situation is such high ridership in the Midwest. Regardless of which of these situations is new, there was a time when 130 new bi-level cars of anything would have been enough to run a good chunk of Amtrak's services outside the NEC. Now this number only is enough to become part of the overall puzzle.

All of this adds up to a system that appears more than prepared to absorb an influx of new capacity. In theory this should mean that in 2015 and 2016 in particular we will see very substantial gains in ridership on the system as chronically sold out routes and trains begin to gain some consist flexibility.

gokeefe wrote:I would imagine that Amtrak will base any new single level designs on the Next Generation Corridor Car, as has been discussed elsewhere. They've put a lot of time and effort into designing that rolling stock and everything seems to still indicate that this will be the direction that they will pursue to replace the Amfleet I cars.

Is there an actual Next Gen Single Level Corridor Car design, or is there just a specification? (not sure if this one is the most current, dated 2/15/2011)

If it is indeed only a specification at this point, I think they should seriously look into expanding the procurement of the Viewliner II shells to include a coach configuration (if the initially delivered cars prove to be up to snuff). It would make a ton of sense to reduce the number of car types down to basically 2 in the future (a Bilevel car in a corridor and long distance version, and the Viewliner single level fleet) and really benefit from the commonality of the fleet. Of course, it would be best to initiate a long term order that will sustain the production lines, jobs, and industry knowledge over 5-10-15 years, but the unpredictability of Amtrak's long term funding situation make this a long shot, at least at this time.

Why not just add to the acela order .
Just build them lighter .

MrBoh wrote:

gokeefe wrote:I would imagine that Amtrak will base any new single level designs on the Next Generation Corridor Car, as has been discussed elsewhere. They've put a lot of time and effort into designing that rolling stock and everything seems to still indicate that this will be the direction that they will pursue to replace the Amfleet I cars.

Is there an actual Next Gen Single Level Corridor Car design, or is there just a specification? (not sure if this one is the most current, dated 2/15/2011)

Yes, that is the Next Gen Single Level Spec. But we should instead provide the link to the page with all the Next Gen Specification documents so people can decide what they want to download.

The idea that Amtrak may order a "Amfleet III" design is silly, because Budd company does not make passengers cars anymore and the Amfleets are an old design. No, the new single level coach cars will be built to the full height allowed for more internal space and will be fully compliant with the Next Gen single level specs. Since Amtrak owns the Viewliner design, they have strong reasons to order the planned ~700 Amfleet I and II replacements based on the Viewliner. Whether CAF would build them or not will have to be the subject of an open bid process.

The more immediate question is the 70 car option with CAF. The options, in all likelihood, would have to be for the 4 types in the current order: sleeper, diner, baggage-dorm, baggage. Amtrak is paying for the 130 car CAF order from the annual operation subsidy and capital grant funding because they can handle what is a relatively modest order size that way. Will Amtrak after the election, go ahead and exercise some part of the option to order more baggage and sleeper cars, enough to make sure they have spare capacity? 20 more cars on the option order can be handled with the current annual funding and ticket revenue. A order to replace the Amfleet IIs with LD coach cars and café/diner-light cars will take a lot more money.

Ridership is up, and all this talk is all well and good, but remember guys - Amtrak still relies on government subsidy. And no matter how the election goes, budgets ARE going to be cut. Romney specifically has stated that he would want to completely eliminate the entire Amtrak subsidy.

scoostraw wrote:Ridership is up, and all this talk is all well and good, but remember guys - Amtrak still relies on government subsidy. And no matter how the election goes, budgets ARE going to be cut. Romney specifically has stated that he would want to completely eliminate the entire Amtrak subsidy.

Here's a broader point to consider. Amtrak's reforms under PRIIA mean that they will effectively "transition" all of their state supported routes to a status in which they will require $0 federal subsidy. This means that Amtrak's route structure of short and medium distance corridors along with the entire Northeast Corridor would remain completely intact even if federal operational support were reduced to near $0.

Would Amtrak have capital funding problems? Absolutely. But then again, remember this would only be the case in along the NEC and in Michigan, all of the state supported routes which are privately hosted are currently covered by arrangements that require the host railroad to maintain the tracks to a certain level.

Let's take the Downeaster for example. Under a model where Amtrak is given $0 in federal operational support the Downeaster survives completely intact because it does not use a single inch of Amtrak trackage and it pays for itself completely under the agreed upon PRIIA formulas. Sure it would be fair to say that the Downeaster's CMAQ exemption could be terminated but those are funds that come out of the transportation authorization which is a multi-year federal appropriations process not covered as part of the annual appropriations.

One of Amtrak's major transitions over the next two years is going to be a drastic change in their fiscal health. That and the highly unlikely scenario that Congress would allow them to be defunded means Amtrak is not much of a target anymore, and will be even less so by 2015. Of even further significance Amtrak's support now appears to be crossing party lines, states like Texas, Louisiana, Missouri, Montana, North Dakota, Virginia, North Carolina, and yes even Florida have an ever greater stake in the success of Amtrak's services due to their state's choice to run state supported services.

These factors in effect mean that Amtrak's political base of support is very broad and now could accurately be described as closing in on being a "non-partisan" issue, much like highway funding (which everyone wants to a greater or lesser degree, even if its just to maintain or fix what's already in place). At the end of the day all of this means that the rail services we are seeing put in place now by Amtrak are going to persevere regardless of the agent that is in place to run them. This is perhaps the most important point of this entire thread, things have been irreversibly changed by the improvements, both capital and operational, that Amtrak has administered, is administering or will be administering over the next few years.

On some level I would compare all of this with the changes that happened at Conrail in the 1980's. One of the first things I can ever remembering being told about trains was when my Father sort of explained Conrail to me. At the time it had become profitable, much to the public's apparent disbelief, and this was perhaps a year or two before the government divested itself of its ownership. Conrail becoming profitable was one of the most incredible revolutionary changes in American transportation in the 1980s. I believe that one some level we are just at the very beginning of an era of possibility when Amtrak might see some very substantial progress towards solvency. I do not believe that they will necessarily break even, especially given the current western Long Distance route structure, however improvements of the kind that we are seeing with the Lynchburg Northeast Regional are truly nothing short of astounding.

There are a lot of other similar projects in development right now, that are funded right now that appear to have the potential to produce the kinds of results that we have seen in Lynchburg, i.e. state supported trains with such heavy ridership that the operational subsidy becomes almost nominal.

All of these factors make Amtrak not only an unattractive target but because of their improving fiscal health they will potentially be an irrelevant target. Why spend all of your political capital trying to eliminate a program worth less than $1B/year (which Amtrak could very well be by 2016...maybe....) when what you really need to be doing is making reforms that save $100B (in one single change) and making cuts to things that are costing $10B or more. Amtrak may indeed be a useful symbol to some but I sincerely believe that when people from TX and LA are seriously talking about running trains, when OK, MO, VA, and NC are running state supported services and MT and ND are clamoring for additional capacity on their long distance service then you have the basis for support that is going to cross partisan lines.

And since I'm from Maine, it is probably worth reminding everyone here that the first Republican Legislature, both in the Senate and the House in Maine, in 38 years approved without any apparent difficulty continued funding for the Downeaster operational subsidy despite New Hampshire's now 10 year record of near total intransigence in supporting the service and the total lack of rail passenger service in Northern Maine. That is without question a very strong record indeed which is why Amtrak's future is assured.

gokeefe wrote: Amtrak may indeed be a useful symbol to some but I sincerely believe that when people from TX and LA are seriously talking about running trains, when OK, MO, VA, and NC are running state supported services and MT and ND are clamoring for additional capacity on their long distance service then you have the basis for support that is going to cross partisan lines.

All those states could find another party to run their Amtrak subsidized trains if they wanted. Many commuter rail agencies have found others to run their trains instead of Amtrak, states can too.

Which brings up the question, is Amtrak really needed anymore when there are others around that can do the job, and the states are fully subsidizing corridor trains.