Unbundling Amtrak Infrastructure Capital Spending

[V.Payne]

Two recent posts in Railway Age, one from Mr. Mulvey, a former STB Board member, and a second article in response from Mr. Weinman one of NRPC’s (Amtrak) first officers, both discuss the need to reform Amtrak’s management incentives so as to recognize the dragging effect that paying the full costs of infrastructure, mostly NEC infrastructure, can have on an operating company such as Amtrak.

 

Mr. Mulvey’s article

 

“This requires a new transformational process, which generates a steady, reliable source of non-appropriated money for Amtrak’s infrastructure…  AlRNet-21, is such a new process. It creates an “off-budget” funding stream that causes more than a billion dollars annually to be invested in Amtrak’s owned infrastructure… It eliminates the allocation of Amtrak’s NEC costs to non-NEC trains and, consequently, it increases Amtrak’s political viability and broadens its political support. AlRNet-21, by means of a stock spin-off, separates Amtrak into two federally owned entities:…”

Ed. Infrastructure and Operations are the entities to be created.

 

Mr. Weinman’s considerations

 

"Though well-planned by some brilliant minds within USDOT/FRA, it was burdened by enabling legislation that named it a “for profit” corporation, without defining the term. Clearly, this should have referred to what most railroads and regulators had defined as “avoidable costs,” also known as “above the rail” costs. In other words, the system, on the whole, should have paid its operating costs, and perhaps a bit more, while the funding sources should have provided a sufficient stipend to get it going, and then, on an ongoing basis, to fund its capital needs. A portion of these needs would have, of course, made it more efficient, and lowered operating costs. Sadly, this was not done.”

 

That is that the capital was not provided to the degree needed. Consider the constant equipment shortages such as the equipment to operate the eastern long distance trains and route reductions from such moves like the Broadway Limited and Florida service that have come as the NEC infrastructure will always drink allmost all capital.

 

“a plain, non-high-speed operation with sufficient offerings and market appeal would make the difference between a flat or declining market share and a growth mode, and all the benefits that would accrue therefrom.”

 

 So High Speed is not the answer in all markets.

 

“Crackerjack management of the passenger railways can be achieved and occasionally has been seen within our lifetimes (think Canadian National’s 1960s-era efforts, Amtrak’s Coast Starlight, which came within a heartbeat of above-the-rail-profitability, Auto-Train, New York Central’s Empire Service, which WAS profitable above-the-rail, and a few others).”

 

His view seems to be that several services have operated at the above the rail profitability mark, both Long Distance such as the Starlight, and daytime Corridor services such as the Empire Service.

 

So perhaps the way going forward is to recategorize the access fees paid to Investor held railroads as a capital expense and let them float higher for capacity increases on the mixed use lines like sidings, as they are in fact a capital lease anyway. Then throw in a bit of operational money per passenger mile (about $0.02/psgm) to account for the value to governments for accident savings relative to automobiles. Finally provide enough stability in a long term bill to allow better management to bloom under any flag, starting with new better suited equipment orders such as private room sleepers and business class coaches, so as to grow revenue per trainmile.

[northeaster]

Well presented...addressing the essential weaknesses of the Amtrak structure and being able to articulate solutions rationally might just garner support for a truly national passenger rail system properly funded. Thanks.

[MikeF90]

Looks like our favorite 'attention wh***' U.S. Sen. C. Schumer is taking credit for this idea to create a new 'infrastructure' agency:

http://bigstory.ap.org/article/89c6969c1d7949e59095f281362141e4/schumer-proposes-plan-hudson-river-rail-tunnels

Aside from his usual grandstanding, I've read that he is well connected and could move this forward.

[V.Payne]

INDOT released many more documents from the Hoosier State bidding recently. At least one of the bidders  is essentially showing a "above the rail" operating profit in their proposal letters, if the operation was increased to two round trips a day with conventional speeds and the amenities increased to support ridership. This for a line that has performed poorly under NRPC Accounting and the planning that stems from such a process.

This above the rail profitability proves the point of the two author's above and is a better position financially than highways were a good portion of accident costs are absorbed off budget into the autopilot Federal funding programs and below the road spending is leveraged from taxes on the use of the locally funded network.

[PNWRMNM]

So if we rename, move, and complicate the rat hole we are no longer throwing money down a rat hole?

[Paul Milenkovic]

PNWRMNM

So if we rename, move, and complicate the rat hole we are no longer throwing money down a rat hole?

 

I firmly believe, that the Senior Senator from the State of New York's courageous and principled opposition to an ill-conceived agreement, currently in the hands of Congress, will indeed prevent an arms race in the Middle East and possibly a disastrous regional war.

The monetary savings alone from the good Senator making his voice heard will pay for a new Trans-Hudson tube/tunnel many times over.  It is on this basis that I ask that we put our partisan differences aside and stand with the man, on behalf of the loyal citizens of New York City, New York State, and New Jersey to give them whatever Northeast Corridor improvements they ask for.

It is the least a grateful country and a grateful world can offer as a gesture, and as such, it is an immense bargain.

[blue streak 1]

Maybe the payment answer is to charge every person crossing into and out of NYC to NJ a fee of $2 - 3 .  That will be all persons whether auto, ferry, bus, rail, helicopter.  That might pay for the whole Gateway work from Newark - thru NYP.

[V.Payne]

To even understand that a system has a declining Average Cost curve one has to first understand (or represent) fixed (infrastructure) and variable (operational) costs exist to properly model the system. 

As an example one of the proposers for the Hoosier State gets this and proposed they could double the frequency of the proposed service for less net cost to the state while hauling many times over the passengers.

That is true efficiency that grows an economy not complicating things to no avail.