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With a new administration in D.C., it's time to think outside of the box because passenger rail's survival just may depend on it

Saturday, August 28, 2010

Intercity Rail Competition Part 2

America's intercity rail system needs a major overhaul because what we now have not only doesn't work but risks becoming dysfunctional. There needs to be a realistic vision that combines conventional and high speed rail as well as corridors and long-distance trains. The zero-sum mentality has got to stop!  We don't necessarily have to “start over,” however, monopoly control must give way to multiple operators.
I offer five alternatives to the status quo:
1. Return all passenger routes to the host railroads (aka the Wilner Solution).
Benefits
  • Before the dark days of the 1960s, passenger service was a natural fit for the railroads
  • With BNSF going private, Warren Buffett could fire an opening salvo in the Class I railroads resuming passenger service as a business model
Drawbacks
  • Congress opened up a big Pandora's Box in 1970 when it created Amtrak. Not all host railroads—specifically, Union Pacific—would want to resume intercity service
  • Passengers would have to change trains if an existing Amtrak route is on more than one railroad line
  • Corridor service would be more expensive to run than longer routes
  • Since most railroads opted to hand their trains over to Amtrak in 1971, they would have no experience of how to handle passenger crews. As a result, the Class Is would have to rely on foreign operators for advice since Amtrak would no longer exist in this scenario
2. Return all long-distance routes to the host railroads. Amtrak to continue operating corridors.
Benefits
  • The hosts would be able to better coordinate long-distance routes with each other than with Amtrak
  • The odds of a profit being made on overnight trains increase
  • Frequencies can be added to popular routes like Chicago-Albuquerque-Los Angeles and New York-New Orleans and could easily lead to branch routes like Flagstaff-Phoenix or Meridian-Dallas-Fort Worth
  • Amtrak would no longer be able to force states to pay up for overnight service
Drawbacks
  • The problems of passengers having to change long-distance trains would resurface
  • There could be a potential monopoly in the HSR market, which would kill innovation. If that happens, the bidding process would become a big waste of time for not only Amtrak's various competitors but also for the railcar manufacturers  
  • Congress may get involved and demand that the hosts keep certain routes and harm any possible innovative measures the railroads could conjure up
3. Amtrak retains operation of long-distance routes and the Northeast Corridor. All other corridors would be operated by domestic transit agencies and foreign rail operators. (the worst possible outcome out of the five)
Benefits
  • Some states would welcome the chance to work with another company because they would no longer feel that their voice is being ignored by a company that has its main focus elsewhere
  • These competitors will be given the chance to revolutionize the U.S. Intercity rail industry
Drawbacks
  • Some hosts may like the foreign operators even less than Amtrak and could impose crippling restrictions
  • Amtrak could retain a near monopoly in the overnight travel market with only a couple of hosts competing
  • Amtrak may be subject to scorn from Congress over losses from certain long-distance routes
  • Current Amtrak management has already stated that it has no plans to expand their long-distance routes. Even with predominately overnight routes, future management could still primarily focus on the NEC
4. Assign operators of corridors to several regions.
Benefits
  • The move would randomly allow the world's best operators to demonstrate what they're all about
  • Amtrak and its competitors would all be on equal footing
Drawbacks
  • This model is akin to the pre-1978 airline system as well as the current setups of cable and telephone companies where competitors are limited to specific regions
  • The hosts would have to deal with many operators in particular regions like the Midwest
  • Foreign operators may have route coordinating issues with each other and/or Amtrak
And, finally, my preferred option
5. Open up all long-distance routes and corridors to everyone—Amtrak, hosts, transit agencies, foreign rail operators. (the best)
Benefits
  • Amtrak would be forced to demonstrate why it should operate new routes and why it should continue operating existing routes
  • Monopoly rule would end as other companies innovate
  • Competitors can freely select where they want to operate
  • The best companies will stand out from the rest
  • Via a consortium, the hosts would work out a partnership with other operators that outbid Amtrak
  • There would be no congressional scrutiny over long-distance routes not operated by Amtrak
Drawbacks
  • Strange bedfellows—railfans and highway lobbyists—may squash this option mainly because it's the best of all solutions, and it may not fit their ideologies
  • Based on the December 2009 article Don Phillips wrote for Trains Magazine, the hosts may pull enough strings on Capitol Hill to the point that Congress appoints them as the only operators of the trains. Such a move would avoid the hosts dealing with other passenger companies on U.S. soil  



Tuesday, August 24, 2010

Intercity Rail Competition Part 1

When it proposed the Passenger Rail Investment and Improvement Act of 2008, Congress could have drafted the competition portion a bit better than it actually did. It seems that the process that Congress approved leaves it up to the states. I would have started the bidding process for all corridors next April and mandated that the states hand their HSR corridors over to their operator of choice by October 2013. This would also apply to Conventional routes that would be subject to speed upgrades. The move would make any transition from Amtrak to a new operator should a state or states decide to move in a different direction as smooth as possible.

As for long-distance routes, Amtrak would have been mandated to submit an evaluation of its top third, middle tier, and worst performing routes to Congress 18 months after the passage of PRIIA. Bidding for these routes would have taken place in October 2013 with the host railroads operating them a year later. Congress should give a subsidy and/or grant to the hosts running overnight routes in place of Amtrak. In return, the host would operate the route for five years. After the five-year period, the host railroad would have the option to either operate the route permanently if the entire route is on its rails or lease the route to another operator like Keolis for a decade. If the route is on multiple rails, then the Class Is would come together and select a new operator to run the entire route a part of a consortium.

Now, it seems that January's big winners scheduled to operate Emerging and Regional HSR as well as additional Conventional frequencies will select Amtrak as the operator. While, it seems to be a deterrent, other companies should follow SNCF's lead and begin developing their own alternatives--whether those include Express HSR, Regional HSR, or just a direct alternative to Amtrak that could possibly lead to an Express corridor.

I look at the Midwest, where the French rail operator has provided some interesting alternatives--all of them Express routes--since Amtrak will upgrade many of its existing Conventional lines to Regional status. First, a Chicago-Detroit route via Fort Wayne could compete with the Wolverine route. Second, its proposed Chicago-St. Louis route would be parallel to Amtrak's current Lincoln service. In the end, travelers between the two cities could end up choosing from three different rail companies since MWHSR has also proposed another Express route that would utilize Champaign and Decatur. The thing is that some companies could target specific travelers while others could cater to everyone.

Furthermore, there are openings in Wisconsin and Minnesota as there are some uncertainties over where the Madison-Twin Cities portion of MWHSR will stop. Hypothetically, a rival organization can fill in whatever gaps that aren't covered by either the U.S. or French carriers. Amtrak may be tapped to operate the Hiawatha extension in 2013, but there is an opening to provide a Madison-Chicago alternative by way of Rockford that companies like Deutsche Bahn, RENFE, Virgin Trains, and others could take advantage of. Also, one of these companies could negotiate with NEWRails to run trains between Milwaukee and Green Bay.