This Week at Amtrak; September 3, 2008

A weekly digest of events, opinions, and forecasts from

United Rail Passenger Alliance, Inc.
America’s foremost passenger rail policy institute

1526 University Boulevard, West, PMB 203 • Jacksonville, Florida 32217-2006 USA
Telephone 904-636-7739, Electronic Mail info@unitedrail.org • http://www.unitedrail.org



Volume 5, Number 25



Founded over three decades ago in 1976, URPA is a nationally known policy institute that focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, and New York. For more detailed information, along with a variety of position papers and other documents, visit the URPA web site at http://www.unitedrail.org.


URPA is not a membership organization, and does not accept funding from any outside sources.



1) Thanks for the overwhelming response to the last issue of TWA’s presentation of the updated Concepts of the Successful Long Distance Passenger Train of the Future. In addition to the basic distribution through TWA, there have been over 600 additional downloads of the white paper from URPA’s web site, and there have been visits to the web site from over 60 countries around the world, including mainland China and Russia. It’s tough to know how that white paper translates into the two languages of China and Russia, but it’s nice to have a diverse readership base.

One sad note since the publication is the loss of GrandLuxe Rail Journeys, operator of the former American Orient Express. Since we last talked, the upscale passenger rail tour company with exquisite equipment and service abruptly ceased operations.

Some have speculated the high cost of the service was the problem, others have blamed the economy in general. Perhaps, on closer examination some good guesses can be made, such as offering a “Ritz Carleton” product to a “Marriott” audience. Also, equipment utilization was poor, with the equipment sitting idle more than running over the road.

Some have placed the blame for the demise at the feet of Amtrak, but that’s a hard case to make, since Amtrak only provided locomotives and train and engine crews.

For whatever the reason for the grievous loss, it’s hard to imagine that superb equipment will sit idle for long; some entrepreneur will figure out a way to put it back on the road under a different umbrella.

Some longtime railroaders didn’t bemoan the loss, saying they were worried too many people were confusing the high-priced luxury service with routine Amtrak service, thinking the high-priced service was the wave of the future instead of the development of robust Amtrak long distance passenger train service on the model of the Empire Builder (Which is the old Sunset Limited and City of New Orleans and Crescent model from the days of Amtrak’s Gulf Coast Business Group in the late 1990s under the superb and caring leadership of Deborah Wetter and Dave White and Mike Chandler and Tommy McDonald with help from luminaries such as Don Norville and Victor Francis and many others – probably one of the finest groups of passenger railroaders ever assembled in modern times.).

Perhaps, if we as a nation are lucky, Peter Armstrong, head of Canada’s Armstrong Group, which operates the Rocky Mountaineer service in Western Canada, will come south of the border and take over the GrandLuxe franchise.

Peter Armstrong was a Gray Line tour bus operator who successfully bid for the Rocky Mountaineer franchise when VIA Rail Canada’s long distance network was chopped into pieces in the early 1990s. Peter took a handful of old Canadian National Blue and Yellow smooth sided coaches, slapped on a coat of new paint on the outside, spiffed up the inside best as he could, and started rolling down the track from Vancouver, British Columbia into modern railroading history. He took a moderately successful route of VIA Rail Canada and applied sound private business principles to the operation, along with a liberal sprinkling of guts and intestinal fortitude. There were some scary moments at the beginning, but Peter made it work.

It worked good enough that on an early Spring morning in 1993, the late Henry Christie, the man who created Amtrak’s “A” and “B” lists which would determine which Heritage cars would live to see another day of service after installation of head end power, and which would be put up for sale, walked the train in Vancouver station with a critical eye towards running gear and general mechanical issues. Henry was not a man to trifle with when it came to railroad equipment, either passenger cars or freight cars or locomotives. Henry was an Englishman who had an Irish mother (He never did celebrate the Fourth of July even after becoming an American citizen; he felt it wasn’t fair to his mother country.), and he could always turn a colorful phrase.

Henry looked at the Rocky Mountaineer closely, pronounced a few wheel set needing attention soon, and then confidently boarded the train for a day’s journey to Kamloops, British Columbia. Driving back to Vancouver that evening with Peter Armstrong at the wheel of a rental car, Peter filled us in on the background of the privatization of the Rocky Mountaineer. It was an extraordinary story of vision, willpower, and knowing the marketplace.

It’s been close to 20 years since the Rocky Mountaineer went private, and it’s a great performer both financially and as a vital part of Western Canada’s tourism industry. The now-defunct GrandLuxe equipment would have a superb future under the ownership of Peter Armstrong.

2) We have just seen the successful evacuation of New Orleans for Hurricane Gustav, and, this time, Amtrak played a role. City of New Orleans, Sunset Limited, and Crescent trainsets, along with other equipment positioned in New Orleans hauled thousands of passengers from New Orleans to safety in Memphis and other points. This all came about because the federal government contracted with Amtrak to provide the service.

Even New Orleans Union Passenger Terminal, home to Amtrak and Greyhound, again played a pivotal role in keeping New Orleans safe. Many will recall it became a makeshift jail during the Hurricane Katrina problems three years ago, and, this time, it became a staging area for evacuating residents by bus and train.

The building, built in 1954, resembles a granite fortress. One can imagine that magnificent, sturdy structure just laughing at Mother Nature as she throws everything she has at it, and it all just rolls off the building.

As we are grateful New Orleans and its residents suffered far less this year under Gustav than exactly three years ago under the destruction of Katrina, we can’t help but remember it’s been exactly three years since Amtrak operated the Sunset Limited east of New Orleans, even though CSX released the track for use on April 1, 2006. Amtrak has the corporate gall to still note in its timetables the suspension of the service, and that future service will be determined at a date in the future.

Of course, Amtrak President and CEO Alex Kummant was quoted in an issue of Passenger Train Journal magazine this year saying passengers and advocates for the return of the Sunset Limited should “get over it,” that the Sunset is not likely to return east of New Orleans. Amtrak’s hubris on this and many other subjects is astounding to many clear-thinking people, especially since 46% of the revenue of the Sunset Limited when it ran its full route was generated east of New Orleans.

3) Here are some words of wisdom from Andrew Selden, URPA Vice President of Law and Policy and President of the Minnesota Association of Railroad Passengers.

[Begin quote]

Gridlock is a term usually applied to traffic locked in a closed system where congestion blocks all movement. But the term also can describe a broken political process, like what we have today with U.S. transportation "policy."

Our federal system, with the U.S. national government acting as an "umbrella" layer over 50 independently sovereign states is a recipe for wild excess on one extreme (various redundant regulatory schemes come to mind), or paralysis on the other. That's what we face in the area of transportation.

Mary Peters, former Administrator of the Federal Highway Administration and currently U.S. Secretary of Transportation, has been advocating as federal "policy" the devolution back to the states of primary authority and responsibility for identifying, prioritizing, and pursuing transportation investment, in all modes, but especially roadways. In most areas of public policy, states would embrace and welcome this. Getting the dead hand of the federal government out of the way and moving government domestic programs down to state and local governments is almost always a very good idea.

But with Peters' transportation initiative, most of the states have balked, demanding (at a National Governor's Conference) instead a larger federal role. California Gov. Arnold Schwarzenegger, for example, said, "We are joining together … to force Washington to get serious about building our nation's infrastructure."

How exceedingly odd. Why would states, which would ordinarily leap at a federal effort to shift major programs back into state control, demand that the feds instead increase their role in transportation?

Because, it turns out, Secretary Peters is also trying to shift a major part of the responsibility for funding transportation investment back to the states.

So we have the prospect of states actually telling the feds that they prefer to keep and even enlarge the federal role and the funding that goes with it rather than accept responsibility for having to increase state fuel and motor vehicle taxes to pay for state and local transportation projects. They would rather suffer inequitable and politically-based federal transportation funding paid for by the federal gasoline tax, and prioritized by individual members of Congress slinging pork for their home districts, than raise state taxes (or enter into toll-driven private sector "partnership" deals) to pay for their own priority projects.

So, while our existing, aging, roads and bridges continue to crumble under traffic loads far beyond their capacity, and we suffer a ludicrous and ignorant intercity rail passenger "policy," our elected public officials are engaged in a political "gridlock" of trying to force someone else to pay for public investment of enormous value to the safety and prosperity of this country.

Secretary Peters launched a second round of her initiative in July. In it, she advocated refocusing federal highway spending on rural interstates (!), shifting other federal spending to bloc grants to states and regional planning agencies, allowing local prioritization of projects (but with a foolish federal chokehold – more on this below), and accelerating federal funding approvals.

Many traditional politicians and highway interest groups labeled the plan "dead on arrival." Why? Two reasons: Peters' plan presupposes more local funding and private sector investments, supported by tolls, and it allows states and regional planning agencies to shift more federal funding to transit, including rail.

But even the proposed increase in federal willingness to fund rail programs is not a good thing for intelligent rail development programs, because Peters' plan would make the same blunder on a national scale that bone-headed federal policies forced onto the Northstar Regional Rail project in Minnesota. The federal proposal would "Define success in terms of increased travel time reliability, decreased delays hours [sic] and improved condition of bridges and pavement."

That single criterion – reduced net travel time as compared to roadway alternatives – is what kept Minnesota from extending Northstar to St. Cloud (where huge demand for rail service exists) or adding a close-in stop at the existing Foley Boulevard park-and-ride, where thousands of daily commuters will be forced to continue to use diesel buses to get to Minneapolis, the U of M and St. Paul rather than use the trains (which will roll past the parking lot which backs up on the BNSF right-of-way) because the feds won't allow the trains to stop there.

Contrast what passes for policy development in the U.S. with current studies under way in England. Railway Age reported in June:

BRITISH track authority Network Rail (NR) is to conduct a strategic review into the case for building a series of new railways across the country's network.

Five routes are being considered by NR, all radiating from London: the West Coast Main Line from London to Glasgow via Birmingham and Manchester; the Chiltern line from London to Birmingham; the Midland Main Line to Nottingham, Derby, and Sheffield; the East Coast route from London to Edinburgh via York and Newcastle; and the Great Western Main Line from London to Bristol and Cardiff.

While NR is not prepared to suggest the routes could be new high-speed lines, there have been growing calls for a network of 250km/h to 350km/h routes to be built to add capacity to Britain's constrained conventional network, which has seen 40% growth in passenger numbers, and 60% growth in freight volumes.

In the U.S., it will take continued public pressure from rail advocates to persuade Congress that rational investment in a network of high-performance (not "high speed") rail services is the best way to alleviate congestion, protect the environment, reduce petroleum dependence, and give travelers a decent choice of alternatives. Only then will we break the current gridlock.

[End quote]

4) Mr. Selden adds further insights on a related topic.

[Begin quote]

Amtrak under CEO Alex Kummant is continuing its long slide into irrelevance. Amtrak's market share (including in the NEC) dropped again. Kummant led the Company to an increased annual loss in 2007. On $165 million increase in ticket revenues, and $110 million increase in total revenues, Kummant produced a $53 million increase in the net loss and a whopping $280 million increase in total loss on the year, of $1.338 billion on total revenue of $2.15 billion. $180 million in increased labor costs from forced labor settlements were a major factor in the results, but expenses surged in every major category except casualty claims. The Annual Report, published months late (by SEC standards), called this "… a good year."

The Annual Report, almost devoid of critical and relevant metrics of segment performance such as load factor, return on investment, and output in passenger miles, is a depressing celebration of Amtrak's squandering of hundreds of millions of dollars of free federal subsidies on its absolutely least productive and most grossly over-served markets. Amtrak's total revenues were higher in 1998 than in 2007, although "passenger ticket" revenues did reach a new record last year. Its operating ratio, at 1.48, has not improved in ten years.

What has improved is federal support. Amtrak's subsidies during the Bush administration have averaged about $1.2 billion a year, fully 50% more than during the Clinton years. (Discounted for inflation, the growth in subsidy has not been that great in "real" terms.) But judging from the financial results reported for 2007, that money has not been prudently or effectively invested. Management's entire focus has been on its least productive services, the short distance regional corridors.

[End quote]

5) On a very sad note, retired Amtrak exec Jim Larson passed away yesterday in Northern Virginia. He retired about 10 years ago, and had recently been in poor health. He is survived by his wife and two daughters. Mr. Larson was one of the stalwarts of Amtrak who helped hold the company together and form it into a working entity. Our sympathy to his family and many friends.

6) This communique comes from Gil Carmichael’s Intermodal Transportation Institute at the University of Denver. This will be an important gathering.

[Begin quote]

PRESS RELEASE

For Immediate Release


Public-sector Transportation professionals to gain know-how from New Freight training program at University of Denver

- Transportation Experts Gil Carmichael and Andrew Goetz Say Transportation Planners to Study the Synergetic Issues that Affect Both Freight and Public Transportation -

DENVER, CO, September 2, 2008 – The Intermodal Transportation Institute (ITI) at the University of Denver, in a joint venture with the National Center for Intermodal Transportation (NCIT), is sponsoring a 2 ½ day training program called “Intermodal Freight Transportation and the Public Planning Process” that is aimed at educating public-sector transportation agency personnel about the synergies it has with the freight sector. It will be held at the University of Denver, Monday through Wednesday noon, October 13-15.

The instructional program for public-sector transportation agencies is being led by Professor Michael D. Meyer, PhD, Professor of Civil Engineering at the Georgia Institute of Technology and a member of the faculty team of ITI at the University of Denver. He developed the program as a means of increasing the awareness of the importance of the movement of goods and the impact that this movement is having on the nation’s overall transportation system and economic welfare.

“This important freight training program will deal with the synergies involved between the public and private sectors, and it is ideal for professionals working at state DOTs, MPOs, transit agencies, port authorities, or other public-sector transportation planning agencies who want to learn more about how the global intermodal freight transportation sector works,” said Andrew Goetz, Professor and member of the ITI faculty team. “Given that freight transportation has been growing considerably due to increasing volumes of international trade, our transportation planning agencies at the federal, state, and local levels need to be more knowledgeable about how freight moves and what can be done specifically to accommodate an interconnected intermodal transportation system.”

Gil Carmichael, Founding Chairman of the ITI Board of Directors and former Federal Railroad Administrator, emphasized the importance of a public/private sector joint effort if we are to solve the nation’s existing transportation crisis. “Federal and state governments need to work together to create a partnership with the freight railroads to build at least 30,000 new miles of grade-separated, double and triple track, connecting the major cities, ports, and airports,” said Carmichael. “Doing so will create an ethical transportation system where each mode does what it does best. This key training program for public-sector transportation will answer questions dealing with topics such as: how public investment in the nation’s transportation system will benefit the movement of freight; what types of strategies are most effective for successful interfaces between public- and private-sector interests; and how to get freight stakeholders interested in the transportation planning process in order to maximize an intermodal freight and passenger transportation network. This program will stress the need to understand the synergies between the mode segments, which will be intermodal in nature, much safer, much more environmentally benign and will produce maximum fuel efficiencies.”

“Learning more about the intermodal freight sector is a necessary prerequisite to working with the freight community in developing strategies to address the transportation capacity needs of the future,” said Goetz. “This important public-sector training program is exactly what public-sector transportation planners need to help educate them on developing the natural interfaces between the freight and passenger modes. This will help prepare the next generation of public transportation leadership.”

Participants will hear from executives from maritime, trucking, railroads, transit, and intercity transportation on their respective transportation modes and on the challenges of creating a truly intermodal transportation system. In addition, the participants will attend a lecture by Alberto Alemán, the CEO of the Panama Canal Authority, on one of the most important transportation infrastructure projects in the world, the Panama Canal Expansion Program. A focus of the program will be on data, analysis, and modeling and using these tools for freight planning. Importantly, the program will also examine the advantages and disadvantages of different funding sources and strategies for developing a strategic freight investment plan and a process for incorporating freight concerns into statewide and metropolitan transportation plans.

The registration fee for the training program is $1,500.00 and covers 2 ½ days of instruction, program materials, meals, and an ITI-University of Denver certificate of participation upon completion. Additional information or registration forms for this significant public transportation training program can be obtained at: www.du.edu/transportation or by calling 303-871-4146 or 303-871-4702. Interested parties are encouraged to register early as participation is limited to 25 attendees.

About ITI

The Intermodal Transportation Institute at the University of Denver offers an Executive Masters Program that awards a Master of Science in Intermodal Transportation Management from the University of Denver. This graduate degree program prepares transportation industry managers for the increasingly complex, global business environment where knowledge of finance, quantitative processes, supply chain, law, and public policy issues as well as freight, passenger, and intermodal transportation operational strategies are critical management tools for success. For more information on the ITI Executive Masters Program call: 303-871-4702 or visit: www.du.edu/transportation.

About NCIT

The National Center for Intermodal Transportation (NCIT) is a partnership between the University of Denver and Mississippi State University. NCIT builds upon the activities of the Intermodal Transportation Institute (ITI) at the University of Denver and the activities of the centers with transportation focuses at Mississippi State University. NCIT is a part of the USDOT University Transportation Centers Program and was reauthorized under SAFETEA-LU.

[End quote]



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J. Bruce Richardson
President
United Rail Passenger Alliance, Inc.
1526 University Boulevard, West, PMB 203
Jacksonville, Florida 32217-2006 USA
Telephone 904-636-7739
brucerichardson@unitedrail.org
http://www.unitedrail.org