How the Dutch Model Could Work Here

The Background

Applying the Dutch Model to Each Amtrak Business Unit

The Northeast Corridor

The NEC is the U.S. equivalent of the Main Line Network. The logistics and politics would at very best require major compromises. Under the Dutch Model, Amtrak would keep the service via a no-bid contract but in exchange for that exclusivity, track and infrastructure would be transferred to a new USDOT entity--nullifying any false claims of the NEC being "privatized" once and for all.

That infrastructure company would be responsible for restoring the 457-mile route back to acceptable shape, leaving Amtrak to exclusively focus on running trains (let's face it, the 1976 decision to burden Amtrak with NEC ownership has been a bane on passenger rail). 

State-Supported Routes

For routes under 750 miles, the tender system will be used and applied to individual states, multistate compacts and California's Joint Powers Authorities. These routes would be put up for bid for contracts ranging anywhere from five to 10 years, and the commuter rail model could also be worth a look.

This would allow these entities more freedom to explore other companies who could expand and vastly improve service in ways that are currently unimaginable. The West Central Wisconsin Rail Coalition is currently doing a version of competitive bidding with its proposed Eau Claire-Twin Cities service which last saw passenger service six decades ago.

If enough states use the tender system, innovations from the most ambitious of these companies could largely render the Amtrak Connects US plan obsolete outside of Virginia (has a 30-year contract), Illinois (home to the Chicago Hub), Michigan (only place outside of the NEC where Amtrak has track rights) and parts of Southern California (Pacific Surfliners and future Coachella Valley and Las Vegas routes).

Long-Distance Routes

The overnight trains should be handled via the open access model. In addition to the FRA's Long Distance Service Study being utilized, other companies would run overnight service on the track via intense negotiations and assuming full responsibility. 

Two potential examples are Dreamstar Lines and the Southeast Passenger Rail Initiative. The former plans to launch an overnight route between Los Angeles and San Francisco (in the mold of the SP's Lark route) while the latter is a rail advocacy group pushing for the Nightjet model, which would provide express or semi-express services throughout the Southeast.

The King of Passenger Trains

Background: This three-part series (1 2 3) is a good place to look 

Part 1: Starting things up

After a half century, the time has come to hit the reset button and start over because the Amtrak experiment has only resulted in mediocrity with passenger rail.  I would split the intercity into two categories--regional and overnight. The former would be run by the companies that also handle commuter routes while letting new companies run the overnight services.

I would rely on experienced people in the travel industry and implement the best aspects. My main focus would be on long distance trains and leave the shorter runs to multistate pacts. Since the overnight trains are in need of an overhaul, I would revert back to sleeping cars' roots as hotels on wheels as a way of luring travelers.

Speaking of night trains, luring executives from Europe or Asia would be a good idea since they're miles ahead of us at this point.

Part 2: The Matrix

The matrix theory connects passengers to previously unimaginable destinations. For my hypothetical rail company, I will use the Crescent's original route via Montgomery and Mobile as my sample service.  Atlanta would be a matrix point as it would be a transfer point for regional routes to Savannah, Chattanooga and Nashville. The current Crescent route would also be used as the Gulf Coast Corridor for daytime travel between Atlanta and New Orleans, a New York-Fort Worth overnight route and a transcontinental Atlanta-Dallas-Los Angeles service.

Part 3: Operations

The trains would be daily and would run every six to eight hours. My Crescent Group would have the namesake train as a premium train alongside a second frequency, and I would also own the Fort Worth service and L.A. transcon as a way of diversifying.

Instead of the depersonalization that has been a main part of the Amtrak Era, stations would be staffed with people who actually know a thing or two about train travel. When it comes to the future of train stations, the Brightline model--which resembles the airline model--is the best way to go.

The statement about host railroads' stance on infrequent trains goes against everything I've seen on message boards.

Fragmenting Long-Distance Passenger Trains?

Railfan & Railroad, August

NEC a different matter 

• Not only is the NEC huge but the region but the region's congressional delegation would block any effort by AIPRO members to compete against Amtrak
• Maybe when the folks in D.C. get serious about infrastructure, then, we'll see Amtrak face competition in its home region. Until then, I wish the LEO Express people good luck because they'll need it
• By avoiding the NEC, Chambers is sticking to what he knows since the bulk of the AIPRO's commuter contracts are outside of Amtrak-friendly Northeast and Chicagoland territories

Opaque

• By opening the overnight routes up to competition, we'd finally be able to find out the truth about the financial condition of the routes

Cutting a deal?

• By capping the subsidy at 90 percent, the FAST Act is actually doing all potential Amtrak competitors a favor because these newcomers will be hungry and eager to demonstrate that the long distance train of the future is better off without Amtrak

Amtrak--another shot at the target

• "America's Railroad" may get the chance to counterbid but it'd be wise to figure out just which three routes it can do without

Role of Class Is

• As far as the major railroads go, Sections 209 & 214 of PRIIA as well as Section 205 of the FAST Act supersede their long-held Amtrak-only stance
• If the major railroads (continue) flout(ing) the laws, then Congress will have to play hardball: Allow non-Amtrak operators who fairly get contracts for state-supported or overnight routes on your rails or you'll be in charge of every intercity route outside of the Northeast--and in the process, reducing Amtrak to an NEC-only entity

Who bids?

• To me, it's simple: A partnership between independent and Class I railroads--shades of my rail consortium

Another thorny complaint

• Vernon discusses how the major railroads have griped about how Amtrak has never paid them market rates for access on their tracks. As it turns out, a fellow AIPRO member Stan Feinsod advocated a scenario in which other operators would use the commuter model in order to access freight tracks
• In the event the AIPRO is able to see its vision happen, then perhaps we could actually see some of its members revive and actively push for the restoration of service along routs Amtrak abandoned

High mountains to climb

• As far as the RRIF loan scenario goes, whatever it takes

Disrupters, Innovators & Rent Seekers in Rail

Introduction

The purpose of this post is to demonstrate how disruptions, innovations, and rent seeking apply to the world of passenger rail just like it does to any other form of business.

Here are some examples of business disruptions. Such actions have resulted in life being much better for society today. 

Rent seeking is the yang to disruption's yin. As Steve Blank says about this counterbalance:  

Rent seekers are individuals or organizations that have succeeded with existing business models and look to the government and regulators as their first line of defense against innovative competition… Rent seekers spend money to increase their share of an existing market instead of creating new products or markets…

Overhauling the Paradigm Could Make the Passenger Train Thrive Once Again

Here are some possible scenarios of how passenger rail could drastically change for the better:

• Operators provide multiple classes of service--beyond today's coach, business, first classes
• Premium and specialty food service on trains
• New operators using historic stations in major cities that are currently commuter only or have no meaningful Amtrak service
• Train tickets that include non-rail connections and transfers between multiple stations in the same city
• Rail operators providing other services at stations, like real estate agencies 
• Private industry like travel agencies and cruise companies getting into the world of passenger rail
• Expanded Auto Train service, regardless of operator
• Some ideas for unconventional rail travel Jon Fostik and I separately proposed a few years ago
• All-sleeper trains that are affordable but also offer premium rates
• The recent move by the feds to allow Caltrain to use European style equipment on U.S. tracks
• Different ways to finance passenger rail given that politicians aren't readily receptive to funding trains

Who Are Passenger Rail's Innovators Today?

Passenger rail ridership in America is at its highest in decades but most expansion plans to draw even more riders are stuck at the station due to congressional gridlock. There are disagreements over whether Amtrak—and by default, the public sector—should continue its role as a monopoly operator or if other carriers—some of whom are privately run—should be allowed to compete.

In the midst of the fight over passenger policy, there are several renegades who are not waiting for Congress or the White House to set new laws. In the last three years, Iowa Pacific has emerged as a potential shortline powerhouse by planning and providing passenger service to areas that hadn't carried people in decades while Florida East Coast’s All Aboard Florida has laid the groundwork for passenger service in 2015. 

Meanwhile in Amtrak's own backyard, Housatonic and New England Central have plans to provide service to cities that are underserved by the national carrier.

Last year, two different companies provided plans to run private service between Portland, ME and Montreal--one during the day, the other, at night. For years, the feds have included a Boston-Montreal route as part of a national high speed rail system, but the problem is that HSR money has dried up and even if it hadn't, there would have been some serious disagreements over where the route should go (via the Downeaster/western ME, central NH or Springfield, MA/Vermonter).

The Roadblocks to Innovation

Just as there are people who are thinking beyond an Amtrak (-only) world, there are many others who aren't willing to give up the existing order without a fight:

• The aviation and highway lobbies along with their allies like think tanks and politicians
• The Class I railroads and the AAR's Amtrak only stance
• Amtrak management's complacency (continued focus on the NEC at the expense of its other routes)
• Rail activists who support the status quo and oppose competition
• Amtrak friendly politicians who resist meaningful changes for the national carrier (NJ Transit & politicians and the Northeastern congressional delegation)
• A segment of the rail community that is opposed to lighter equipment being used because they allege that the European cars are "too dangerous" despite the fact that bulky equipment currently used on U.S. rails has its own safety issues
• True Believers who think that giving more money to Amtrak is the answer while failing to realize that the agency's management is too focused on the Northeast
• The FRA's inane standards on things like equipment crash-worthiness 

How Rent Seeking Is Blocking a 21st Century Rail Renaissance

I will now provide some examples of how rent seeking behavior is hurting the cause for passenger rail by responding to three of Blank's quotes:

Instead of offering better products or better service at lower prices, rent seekers hire lawyers and lobbyists to influence politicians and regulators to pass laws, write regulations and collect taxes that block competition.

When foreign operators devised plans to run HSR in late 2009 and early 2010, Amtrak was forced to create an HSR department just to keep up.

Amtrak president Joe Boardman sent a letter to four congressional leaders to impose burdens on some of these would-be HSR competitors by playing the liability card.

In 2012, the Senate proposed three provisions that would have stunted competition. Amtrak claimed plausible deniability because Senator Durbin and Majority Leader Reid took the brunt for proposing such foolishness. It wasn't coincidental that the move was directed at the very operators that have constantly outbid Amtrak on commuter contracts and formed the Association of Independent Passenger Rail Operators in 2011 to bid on intercity routes.

When companies are protected from competition, they have little incentive to cut costs or to pay attention to changing customer needs.

The Tea Party backlash of 2010 led Amtrak to primarily focus on the Northeast Corridor without much detail to the rest of the system. Remember, the non-NEC states are paying Amtrak for Section 209.

The FRA’s foot dragging on Section 214 provisions led Amtrak to tell three states to pay for a non-corridor train or lose service in 2016. That lax federal enforcement has also led Amtrak management to not make any serious efforts to provide additional equipment for the Western long distance trains.

The national operator is planning to completely phase out its remaining Heritage fleet while providing no additions to its eastern long distance capacity and completely neglecting inactive Superliners. Rumor has it is that Amtrak would rather scrap its older equipment than see other companies use it for state-sponsored services. 

Startups, investors and the public have done a poor job of calling out the politicians and regulators who use the words “innovation means jobs” while supporting rent seekers.

The Nightmare Scenario or the possibility of Amtrak only running overnight routes (plus the NEC) would stifle any hopes for reviving passenger rail in this country yet most rail advocates haven’t gotten this message, choosing instead to support the near monopoly.

On the other hand, it’s to the AIPRO’s credit that it got a jump start in challenging the rent seeking activities by pointing out the regulatory burdens. Now, someone needs to point the following out to the unions: If they are opposed to non-Amtrak operators, then they are in effect opposed to more jobs.

Conclusion

Innovation has helped other businesses and can help passenger rail—if entrepreneurs are allowed to. Rent seekers are around the corner and will seek to keep the laws as they are. If this latter group succeeds, then the public will be the biggest losers as America would continue to have mediocre rail service, and anti-rail forces will then continue to mock passenger trains as "outdated."

A New Model For American Passenger Rail

This article is yet another call for passenger rail reform. It was published several months ago in a newsletter and eventually republished by RailPAC. 

More and more people are coming to the realization that the current approach to passenger rail is broken and. This is one of the most potent calls for reform from the rail community, and a major advocacy group is being asked to support a proposal to dismantle Amtrak as we know it. If RailPAC backs this and Spotswood's plan gains lots of traction at the national level, NARP will be in a lot of trouble—as will Amtrak. So, does anyone still have an issue with my proposed rail consortium now?

I will now respond to the eight quotes that caught my eye the most: 

It is time for America to have two intercity rail passenger operators: The current Amtrak in the eight-state/District of Columbia Northeast Corridor and a brand-new passenger corporation providing a high level of services for the remaining forty-two states.

At first glance, it seemed as though only two operators would be possible but as I continued reading the article, this was clearly not the case.

To any impartial follower of the national rail passenger scene, it’s clear that unless a prompt order is made for new long-distance passengers cars, the national service will wither away within a decade or two. That’s how long the present roster of coaches, sleeping cars and diners have before being hauled off to the scrap heap. Given the huge lead time in ordering any new equipment, the current delay by Amtrak management to address this critical need is appalling.

Given Amtrak’s attitude about long distance trains lately, someone else needs to operate them. 

It’s time to dissolve Amtrak. It’s very name “Amtrak” has developed in the public such a negative, bureaucratic connotation that it should become the latest “fallen flag.” Why else does Amtrak in the East focus on the weird word “Acela” to describe their premier service.

This once again proves my point that I’m one of the very few pro-reform people who isn't calling for Amtrak to go away.

One involves transforming the present National Railroad Passenger Corporation into a new, slimmed down entity. Either remaining in the public sector which much state involvement, or as a taxpayer assisted but private enterprise run corporation, this new NORTHEAST RAIL would be allocated the sole responsibility of perfecting a southern New England -Middle Atlantic passenger service stretching from Boston south to Richmond, Virginia. If the Northeast Corridor is privatized, there is little doubt that the needed management staff will be lean.

Many advocates pooh-poohed any NEC-National System split in ’02. Given how much interest passenger rail has gotten with various companies wanting to operate routes, these activists cannot hold onto that view today.

Its purpose will be to assume responsibly for all aspects of a new independent passenger railroad. That entity will operate and secure financing for all long-distance and corridor services in America west and south of the Appalachians. It should combine some aspects of public funding with the actual service operated by private operators on a line-by-line basis.

Letting private companies operate trains could be the way to go since non-NEC residents already feel left out by Amtrak’s management when it comes to expansion plans.

The name AMERICAN RAIL signifies a fresh start and new direction. It should have its headquarters anywhere but Washington. Chicago, the traditional hub for western and mid-American rail passenger services, would be a fine location as would St. Louis or even Denver. With its own separate board of directors, with new management and working with new private sector operators, AMERICAN RAIL would not compete with NORTHEAST RAIL but serve as its national connection.

The Class I railroads will have to get on board. If they object to this proposal, the White House and Congress should tell all seven railroads in no uncertain terms that they will be running the trains since Amtrak would no longer exist and the feds would be playing a reduced role.

With innovation the watchword, AMERICAN RAIL should lead to way to new routes and more frequencies all in new passenger cars and locomotives operated by a freshly recruited and trained staff equipped with a private sector-style customer-first approach. Is there risk of failure? Yes, but right now the risk of the ultimate demise of Amtrak’s long-distance service seems assured.

Given how anemic the long distance system currently is, all overnight routes must be daily, frequencies at least doubled, with the heavily used routes having a four frequency minimum, and branch routes are also a must.

An essential early step is to secure bipartisan sponsors in both the U.S. Senate and the House of Representatives to serve as our proponents. It’s naive to think that Amtrak’s current board and senior management will not oppose this move. Substantial bipartisan Congressional and Administration support is essential if this proposal is to be taken seriously. Just getting the debate off the ground is not an easy task. We can’t do it with just the old friends of passenger rail. Simultaneously, we need to expand by adding others, e.g., Republicans and the business community, who have in recent years opposed or indifferent to passenger rail, but were supportive in the past.

As they say, if your current allies are stuck in their old ways, it’s time to get new allies. The bottom line is that the rail community has to broaden its horizons.

Some extra food for thought: Spotswood's proposal may produce an interesting situation in that it could provide independent operators the opportunity to challenge the official routes planned by authorities like MWHSR.

Here are some potential examples:

• Alternative Chicago-Milwaukee service via the Chicago & North Western route. Such a route would make up for the failure of the Kenosha-Racine-Milwaukee commuter route 
• New Upstate New York service serves Grand Central Terminal and downtown Albany
• An extended Pere Marquette by a new company provides a Chicago-Detroit alternative to the Wolverines for western Michigan residents
• The state of Florida leases S-Line passenger service to an independent entity to provide alternative Jacksonville-Miami service—setting a three-way fight with Amtrak and FEC’s All Aboard Florida

Amtrak takes (yet) another step in the wrong direction

There are two stories from RailPAC that actually confirm that: 1) Amtrak management simply does not get it and 2) the agency is in serious danger of being left behind once true competition begins.

The first one is from the group's president while the second one points out doublespeak from a national operator that contains Northeast-centric management. 

In regards to Paul Dyson's commentary, Joe Boardman clearly has one foot out the door since he is ripping his own staff while he refuses to go after Union Pacific. It also shows that the Amtrak boss has revealed himself for what he really is--a career bureaucrat who is angling for the next available government job. Given that Amtrak doesn't really care about expanding on its own (i.e., adding non-state supported routes to the National System), it's time for the company to retire the "America's Railroad" gimmick. Let's be honest: Boardman only began using it when SNCF and JR Central drew up their own plans and posed as real threats in 2009. Even though High Speed Rail Mania is over, Amtrak has to deal with the likes of Virgin, First Group, and various AIPRO members bidding for corridor and long-distance services.

If Amtrak senior management really cared about cutting the company's costs, someone over in D.C. would have figured out a way to put rehabbed Superliners in Beech Grove, IN back into service while also adding equipment to help out the western states. It's really sad that those states are forced to supply cars for long-distance trains because the national organization is unwilling to do so.

I applaud Dyson's advocating a breakup of Amtrak for at least getting a conversation going on how to break the monopoly. Proposing a breakup of Amtrak has been dormant since 2002 when Amtrak, Congress, the Bush Administration, and rail advocates completely ignored the recommendation from the Amtrak Reform Council. The rail unions are also a part of the problem since they were on the forefront in turning back any breakup plans then and again last year when the divestment of the NEC was seriously being discussed. Just separating the long-distance network from the Northeast Corridor would produce more jobs and let the non-NEC network grow. If the private competitors are stymied by legislation and/or the FRA, this would have to be the option of last resort because people are tired of being led by the nose of an organization that pretty much says that only passengers on a 457-mile line between Washington and Boston mean anything while they are screaming for better train service in their own communities. Personally, I still think that my consortium idea would be a better fit if we are to get a national rail network going again in this country.

Not only does NARP need to be called out but so do the various organizations that hate competition because they claim to want better train service but they throw their hands up when pressed for solutions and they tend to ignore anything that is outside of the scope of Amtrak when others provide ideas.

Regarding a conspiracy: I wonder if the real conspiracy was for the feds to gauge interest from foreign and independent operators, only to pull the rug when times got rough. Such a move would then lead to the current monopoly being preserved.

Here's what the public needs to know about Russ Jackson's commentary:

• Amtrak's so-called "aggressive agenda" is virtually centered in the NEC (where else?) with a few bones thrown in for eastern long-distance and Cascade routes (10 of the 13 listed items were NEC first or NEC only)
• Boardman's refusal to press UP on making the Sunset Limited daily is proof enough that this route needs to be transferred pronto and that Congress has to act by letting the private sector handle other long-distance routes. It also shows that the Amtrak president/CEO is unwilling to fight the big boy railroads when the hosts' price tags are exaggerated at best and full-out extortion at worst
• Amtrak is not interested in expansion. If anyone wants to make a claim to that giving the agency more money will make things better, I have a rail tunnel to sell you. All or almost all of the non-NEC work is coming out the pockets of one state or another
• “One of the things I learned in the transit business before I came to Amtrak is that as I added more trains during the peak hour my losses increased. Right now, the business model that exists for long-distance trains is that as you add trains your losses increase, and that is our policy direction coming from the administration and Congress, so Amtrak believes that is achieved by rebuilding the equipment we have.” As for that quote, I have this to say: If that is true, Mr. Boardman, then your company is clearly doing something wrong. What about that record ridership that you bragged about last fall? What about the fact that western trains like the Zephyr and the Builder are so packed that people are turned away during the summer? And your organization doesn't want to make all overnight trains daily? I'm sure that someone with a better business plan could--I don't know--find a way to make a profit and add frequencies along congested routes

Addendum: The Rio Grande Corridor

The schedule is based on this entry

Operator notes:

Amtrak

There would be no changes to the California Zephyr along this portion of its route.

Rail Consortium West

The Texas Zephyr is a Salt Lake City-Dallas-Houston train that will be extended to New Orleans. For its stops in the suburban Denver area, the TZ would utilize either Englewood or downtown Littleton nearby the light rail station to handle passengers traveling to/from points south while either Sheridan Blvd or 41^st Street will handle passengers traveling to/from western points.

Rocky Mountain Rail

This is a (hypothetical) regional organization composed of ID, MT, WY, CO, UT and NM that oversees local and regional passenger rail service. The Prospector is an all-sleeper train. Most of its other routes would be daytime trains.

The Desert Wind Group

A coalition of rail fans and businessmen forms an independent group in the event that Amtrak deems a Desert Wind restoration between Chicago and Los Angeles via Las Vegas infeasible. The train would use LaSalle Street Station instead of Union Station as its eastern terminus. 

	Rocky Mountain Rail Royal Gorge 17	Amtrak California Zephyr 5	Rail Cons. West Texas Zephyr 60	Rocky Mountain Rail Prospector 19	The Desert Wind Group 111
Denver Union Station	5:05	8:05	14:05	17:05	23:05
Denver 41st Street or Sheridan Blvd	Future stop		Future stop	Future stop
Fraser-Winter Park	7:07	10:07	16:07	19:07	1:07
Granby	7:37	10:37	16:37	19:37	1:37
Glenwood Springs	10:53	13:53	19:53	22:53	4:53
Grand Junction	12:10	15:10	21:10	0:10	6:10
Green River	13:58	16:58	22:58	1:58	7:58
Helper	16:20	19:20	1:20	4:20	10:20
Provo	18:26	21:26	3:26	6:26	12:26
Salt Lake City	20:05	23:05	5:05	8:05	14:05

	Amtrak California Zephyr 6	Rocky Mountain Rail Royal Gorge 18	The Desert Wind Group 110	Rocky Mountain Rail Prospector 16	Rail Cons. West Texas Zephyr 59
Salt Lake City	3:30	9:30	12:30	18:30	21:30
Provo	4:35	10:35	13:35	19:35	22:35
Green River	6:37	12:37	15:37	21:37	0:37
Helper	7:59	13:59	16:59	22:59	1:59
Grand Junction	10:23	16:23	19:23	1:23	4:23
Glenwood Springs	12:10	18:10	21:10	3:10	6:10
Granby	15:12	21:12	0:12	6:12	9:12
Fraser-Winter Park	15:50	21:50	0:50	6:50	9:50
Denver Sheridan Blvd or 41st Street		Future stop		Future stop	Future stop
Denver Union Station	18:38	0:38	3:38	9:38	12:38