The problem of wall street's only looking at a RR's operating ratio is why IMHO UP wants to dump the service. If UP is making say 5% profit on the commuter service that causes the OR to get higher. So even though UP is adding to the profit per share that figure is being ignored by wall street.
As has been posted elsewhere chasing a lower OR makes it very tempting for a RR to defer track maintenance.
I read it the same way. I don't have any inside information. But it appears to me that UP wants to get out of any responsibility for running, crewing or otherwise managing or supporting the commuter operation (except for dispatching) and wants Metra to manage and run the operation essentially like a trackage rights tenant. That's not really unreasonable, since commuter operations established in modern times over freight railroads typically follow this model - for example, Metra's commuter operations over CN (ex WCL) to Antioch, IL
highball6868 Chicago would shut down if UP stoped the N side Commuter rail...Now the case is before the STB. MY prediction is that METRA will buy out the 3 lines and then run themselves or under contract like Kelois or First Transit. Seemed to work well for MBTA and few other places. MBTA bought out the former NYC Boston and Albany Former Conrail btwn Boston and Worchester MA.
Chicago would shut down if UP stoped the N side Commuter rail...Now the case is before the STB. MY prediction is that METRA will buy out the 3 lines and then run themselves or under contract like Kelois or First Transit. Seemed to work well for MBTA and few other places. MBTA bought out the former NYC Boston and Albany Former Conrail btwn Boston and Worchester MA.
Read UP's side of the story in the PRESS RELEASE section of the UPRR website. Does not sound like they want to sell any of the lines. Sounds like they want METRA to operate and take partial responsibility for line maintence and full responsibility for crewing the lines and full responsibility for ticket sales.
charlie hebdoThanks again, Falcon. Let's hope the two parties can settle. I wonder if the UP would like to see some reductions in Metra service, particularly in non-rush hour periods? And a shorter rush hour segment? I don't commute anymore, but I think that could be managed without much impact on riders on the UP West line.
All UP wants to do is dump the employees. They do not care about current levels of service and in the future agreement UP would retain ownership and dispatching on all the lines. They do not want to carry the extra employees involved in train movement, ticket sales, maintenence or whatever and want METRA to take on the employees. Their public reasoning is that brings the contract in line with other contracts they have external to Illinois. My feeling is they projected out into the future the pension, health care, etc of the employees and figured out they were probably getting soaked financially by the METRA contract. It reads like via the challenge that METRA can't afford the costs of the employees without a fare or subsidy increase. Just my read based on METRA stalling the transfer.
So potentially bad news for METRA and it's costs if UP wins the case and I predict UP will win the case just by showing the contracts in other states and how they are different in just that one area. UP has a strong case for showing Metra is shifting it's costs to UP.
Thanks again, Falcon. Let's hope the two parties can settle. I wonder if the UP would like to see some reductions in Metra service, particularly in non-rush hour periods? And a shorter rush hour segment? I don't commute anymore, but I think that could be managed without much impact on riders on the UP West line.
One other thing. Even if a court or STB held that UP had to resume commuter passenger operation on its own (based on a "common carrier obligation" or something else), UP would have a right to establish rates for the service to the maximum level permitted by STB maximum rate standards.
Under STB's governing statute, a rate for transportation cannot be challenged if it produces a revenue/variable cost ratio less than 180% Given the chronically poor economics of commuter rail transportation and the amount Metra is paying UP above and beyond the ticket revenue collected by UP, it's a safe bet that the existing Metra rates don't produce anything near a 180% R/VC ratio.
Further, the statutory 180% R/VC standard isn't the ceiling on the rate a railroad can establish. It's a floor on the rate STB can require. Ths isn't the place to discuss the complexities of STB's maximum rate standards (they are based on a concept called "stand alone costs") Suffice it to say that these standards can support rates substantially in excess of 180% R/VC. Again, the size of the annual payment Metra makes to UP over the ticket revenues UP collects is an indication of the level of rates that could be supported.
Bottom line, if UP were forced to take over the commuter service, you're probably looking at a 100% fare increase or more. The term "Pyrrhic Victory" comes to mind.
Thank you! It sounds like this will be very complicated if it actually gets to court.
highball6868 METRA is claiming before the STB that UP has "common carrier" obligations for both passengers and freight. Problem is that after the ICC Interstate Commerce Commission The ICC Sunset Act (S. 1396, the Interstate Commerce Commission Sunset Act of 1995) limited what the STB could do in railroad regulation and passengers and LTL/LCL and Intermodal were left out.
METRA is claiming before the STB that UP has "common carrier" obligations for both passengers and freight. Problem is that after the ICC Interstate Commerce Commission The ICC Sunset Act (S. 1396, the Interstate Commerce Commission Sunset Act of 1995) limited what the STB could do in railroad regulation and passengers and LTL/LCL and Intermodal were left out.
This isn't entirely correct. The ICC Termination Act (ICCTA) significantly reduced ICC/STB regulation of passenger operations, but didn't totally eliminate it. For example, STB has recently taken jurisdiction over construction of the proposed Texas Central high speed rail line.
But, as relevant to the Metra dispute, ICCTA did eliminate ICC/STB regulatory authority over passenger transportation provided by a local government authority (like Metra), and by an entity that provides this service under contract to such an authority (like UP), 49 USC 10501(c)(1). This exclusion covers the statutory "common carrier obligation" (which only applies to transportation subject to STB regulation, see 49 USC 11101(a)). Logically, the entire life cycle of local government authority service - including the inception and termination of the service - should be encompassed in the "local government authority" exclusion. We'll see what the court and/or the STB ultimately has to say about this.
ICCTA also eliminated state authority over passenger rail service by STB regulated railroads. Prior to ICCTA, states had ICC type authority over intrastate passenger service, subject to ICC review.
Finally, ICCTA didn't eliminate ICC/STB authority over things like intermodal or LCL/LTL. Rather, prior to ICCTA, the ICC itself eliminated regulation of these services under its authority to "exempt" rail services and transactions from regulation. That authority dates back to the 1976 4R act and was expanded by the 1980 Staggers Rail Act.
Probably more than anyone wanted to know. Just my little weakness.
CSSHEGEWISCH Except for the purchase of service agreements with UP and BNSF, Metra operates with its own crews on its own tracks. A contract arrangement with a third party on the UP lines may not be practical under current labor agreements.
Except for the purchase of service agreements with UP and BNSF, Metra operates with its own crews on its own tracks. A contract arrangement with a third party on the UP lines may not be practical under current labor agreements.
The UP might be glad to sell the North and Northwest lines to Metra. But the West line is vital to UP for freight, as it is one of the busiest the US. They would never sell and lose control over operations.
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