Monthly Archives

October 2013

Editorials

Is It Time to Franchise the Long Distance Passenger Trains?

By Noel T. Braymer

What’s the answer for America’s Long Distance Passenger Trains? Since W. Graham Claytor retired as Amtrak President in 1993 the Long Distance Trains have been slowly decaying. New and more equipment is needed now just for current demand. The equipment is now not being properly maintained which often causes problem on the road and delays. The railroads are increasingly unhappy with Amtrak because they don’t get paid enough to make money with Amtrak’s trains and often deal with its breakdowns. How can we turn things around to create a growing, vibrant and self-supporting Long Distance Passenger Rail service in this Country?

I don’t believe that all public service problems can be solved through privatization with the power of “private enterprise”. There are plenty of stories of privatization going badly. Years ago large corporations like Enron got into the business of privatizing local government services such as water departments. These companies bought city water departments from the cities for a fraction of what they were worth and promised that service would improve and water rates would go down. What happened instead was that many water department employees were laid off, the budget slashed for maintenance and the water rates were jacked up all to increase profits for the private companies.

You don’t have to be Adam Smith to see the problem with this. Giving a company a monopoly without oversight is asking for trouble. The best form of oversight by government is insuring companies are competing against each other and people have choices in what services they want.

In Britain private companies operate rail passenger services. There are several companies operating intercity rail passenger services without a subsidy and at a profit in Britain. These companies don’t own the route or the railroads. Each company has to bid to win a contract for the franchise to operate on a route. Unlike professional sports teams the railroads don’t own the franchise. These companies have their franchise for a fixed length of time. On a regular basis these companies have to rebid and compete with other bidders to keep or win the franchise from the existing franchisor. These companies pay for the right to make money operating trains in Britain.

Not only do these franchisors pay for their franchise, they also invest capital to buy new equipment and expand service. After paying for these and other improvements there is plenty of incentive to increase ridership and run full trains to pay for everything and earn a profit.

How could this work in this Country? We could start by asking for proposals from potential franchisors. Looking at their business plans for a franchise we can find out what they would do to make money on these routes or greatly reduce the subsidy the taxpayers would to pay. The incentive for the potential franchisor should be to increase their revenue and reduce or eliminate any need for an operating subsidy. The point is to promote growing services and reduce subsidies over time.

We still need the trains to connect with each other so passengers can go where they want to go. We shouldn’t hand over all of the routes to only one operator.This will likely be done in steps not the whole system all at once. Passenger transportation involves both cooperation and friendly competition.

Amtrak would likely control the NEC and many short distance corridors. It would save money not operating the Long Distance trains while gaining more connecting riders from them. Amtrak would be needed to provide a central ticketing and reservation service for the whole system. The different franchised trains will need to connect with each other and to Amtrak as well as need a National Timetable and Passes which could be handled by Amtrak. The trains might still say Amtrak on them. But each route would have its own unique service with a unique selection of food and amenities to promote innovation in service.

What companies would want to bid to run passenger trains? For starters the airlines could. Virgin not only owns airlines, but is a major operator of rail passenger service in Britain. Not only do their trains carry more passenger than their planes but Virgin uses their trains to connect with their flights. The company that owns Greyhound Bus in this country: FirstGroup is also a major bus and rail passenger operator in Britain. The same is true of Megabus which is owned by Stagecoach Group of Britain.

The railroads themselves might be interested in  running passenger train service if there is money to be made. BNSF has never been totally out of the passenger business. They have continued to operate the commuter trains on their tracks under local government contract in the Chicago area. This services continues to be one of the most heavily used and most economical to operate commuter rail passenger services in the world. The BNSF also operates the Northstar, the commuter trains in the Minneapolis area. Private companies under contract operate many of commuter rail service already in this Country.

As part of the franchising process the companies should be encouraged to propose service extensions and additional frequencies. They should be involved in joint ventures with the local communities for station and route improvement. These companies would negotiate directly with the host railroads over the price of operating the passenger trains and for capital improvements needed for expanded service.

The point of creating long distance passenger train franchises isn’t to “save” the trains. The path to profitable long distance passenger service depends on growth with more, larger trains with more connections. Franchising will only work if it is a healthy, growing well run service to most of the Country. Government will still be needed for some funding of capital projects like track work, stations and so on. But much of the operation of long distance passenger trains can be self-financed including buying new equipment. Passenger Trains don’t have to pay the full costs of a railroad if it shares tracks with freight trains. But like any good roommate it needs and can pay its fair share for what it uses to the railroads.

eNewsletter

eNewsletter for October 28, 2013

This is the plan for overhauling Los Angeles Union Station just approved by the Board of LA Metro. The old pedestrian tunnel will be replaced with a large open area under the tracks to eliminate crowding and add more retail space at the Station. A new 2 story bus facility will be build along side of track one just west of the Gold Line Platforms. There will also be direct access under the tracks between the Gold Line to the Red and Purple Subway station as well as buses and the trains at original tracks. At the east end where the current bus area is will be use for more retail and office buildings.

October 28, 2013

The above copy of this enewletter is on a PDF file and you will not be able to click on to the links in blue. If you would like to subscribe to this enewsletter write to nbraymer@railpac.org

 

 

Editorials

How To Build a New Railroad Without Federal Money

By Noel T. Braymer

The most critical segment for decent passenger rail service in California is a new alignment between Los Angeles and Bakersfield. The current route built mostly by hand with mules and black powder would still take around 4 hours even if millions for track improvements were spent to get between Los Angeles and Bakersfield. With a new fast link instead rail passenger service can run quickly and economically serving most of California. Lack of a decent alignment on this segment is what is preventing massive ridership growth on California rail passenger service. Until such a link is built investors are not willing to invest in California High Speed Rail.

So what will this cost? At the October 5th RailPAC/NARP meeting in San Francisco Dan Richard, California High Speed Rail Authority Chair said that they estimate the cost at $10 Billion dollars for construction between Bakersfield and Palmdale. There is still $4 billion in bonds left from Prop 1A for High Speed Rail. The problem for this project is finding the other $6 billion dollars. The plan is once the California High Speed Rail Authority has a 300 mile route between Merced and Burbank with connections at each end to most of the populated areas  of the State an initial system would then be able to make an operating profit.

Dan Richard made it clear that the California High Speed Rail Authority (CHSRA) will not be in the business of running passenger trains. Its job is to build a High Speed Railroad. It will finance its operations from a combination of sources such as leasing use of its right of way for things like fiber optics, commercial development around its stations and income from High Speed Passenger Trains which the operators will pay the CHSRA to use its tracks. Dan Richard made it clear that the CHSRA would welcome Las Vegas to Palmdale Trains which could use its future railroad from Palmdale to Los Angeles.

So how can this new railroad be built without more State and Federal Taxpayer’s money? Well they could borrow it. Has that been done recently for a new railroad? Here are 3 good examples although there are many more since this is done all over the world. First, the Alameda Corridor is just over 20 miles of fully grade separated railroad built between downtown Los Angeles and the harbors is owned by the county of Los Angeles. It is used for port traffic by the UP and BNSF. It was financed with private money and tolls paid by the railroads are used to make the loan payments.

If we look back at the start up of the Chunnel between England and France, construction began when Margaret Thatcher was Prime Minister of Britain. After years of delays Thatcher approved the Chunnel project on the condition that no government funding be used so it had to be privately financed. That was the way it was built and still being paid for. The Chunnel handles high speed passenger trains, truck/auto ferry trains and freight trains. It is capable of running trains in each direction every 3 minutes or 20 trains an hour. The Chunnel is capable of running 8 high speed trains an hour per direction of which at most it now gets 2 high speed trains an hour. The Chunnel has surplus track capacity and is seeking more users to increase its revenue and pay off its bills to the banks.

A good model to follow for building a high speed railroad between Los Angeles and Bakersfield would be High Speed One or HS1 in England. HS1 is 67 miles long with 4 stations for a high speed railway between London and the portal of the Chunnel. It cost 5.8 billion pounds (that’s 9.4 billion dollars). So who owns HS1? How about two Candian Pension funds: Borealis Infrastructure and Ontario Teachers Pension Plan.

To pay the investors for HS1, it has high speed trains to and from the Chunnel, freight trains for the Chunnel as well as local high speed rail passenger service. Other operators are seeking to extend service to London from other parts of Europe besides the Eurostar service from Paris and Brussels. The future should see greater traffic in a few years for both the Chunnel and HS1.

The question is can we find lenders who will finance at least 6 billion dollars for a high speed railroad in California? Most lenders are happy to lend you money as long as you are able make the payments. The State might “co-sign” the first loan to get this vital link started to insure financing. The question is will the California High Speed Rail service operate at a profit? Most High Speed Rail Lines operate at a profit. A few so far have paid off the full cost of their construction. There is a large potential market in California capable of supporting profitable high speed rail service.

The secret to breaking even on anything is to control costs and maximize revenue. With any large capital project like a railroad, it must be kept in revenue service as much as possible. The passenger trains should have no trouble making money. But for the High Speed Rail Authority to break even it needs to get as much use out of the railroad as possible. This is why HS1 is a good model for California High Speed Rail. Not only does it have Eurostar trains to and from the Chunnel, but also British high speed passenger trains and freight. HS1 is in use all day long 7 days a week. Maintenance is handled generally at night on HS1.

The CHSRA is looking for partners to help fund construction. One plan being floated is having the freight railroads share in building and using a new right of way over the Tehachapi. The expectation is freight would use separate tracks and not share passenger tracks. The CHSRA believes that because of California Air Quality regulations sooner or later the railroads will be forced to electrify their railroads and an economical way to do this by sharing the cost with the CHSRA.

It is doubtful the railroads will be interested in working with the CHSRA on electrification. The railroads want to use compatible locomotives on their entire system. They don’t want unique equipment for just one location and then have to change locomotives. The railroads are planning to change over from diesel fuel to liquified natural gas both to save money and meet future air quality rules.

Another issue about rail freight is the main traffic in California are from the ports of Los Angeles/Long Beach with most of the trains heading up the Cajon or San Gorgonio passes. The Tehachapi pass gets much less traffic by comparison from the Port of Oakland and local traffic headed east from the San Joaquin Valley.There is heavy truck traffic in the San Joaquin Valley going north and south, But there is little rail freight traffic going in that direction. The railroad now is too slow and the distances too short to interest the freight railroads in local intra-California freight.

So what can the CHSRA do to insure financing to build the vital link to get from Bakersfield to Los Angeles? They can line up more customers. They will have some San Joaquin Trains running in just a few years using a part of their new railroad. A new station is being built in Fresno for the new tracks, But once the high speed trains are running all the San Joaquin Trains are suppose to go back to using the existing station a mile away. This makes no sense from a rider’s standpoint. This new railroad has the capacity for 20 or more trains an hour per direction. It is doubtful it will have anywhere near that traffic for some time. The San Joaquin Trains will be able to run 125 miles per hour in the near future. In years to come that speed could be raised as more fast trains are added to the line.

Speaking of capacity, will full double tracking be needed initially between Bakersfield and Palmdale? Building the start up service with some single track will save money . This is particularly true for tunneling. Using steeper grades can save money to get a railroad built as well. A railroad is never finished. As need and funding is available double tracking and faster alignments can be built. It is easier to borrow a smaller amount of money to get started.

Instead of talking to the railroads, it would make sense to talk instead to the shippers. The shippers would welcome improved and less expensive transport through the Central Valley and up to Oregon and Washington State. This would likely be in the form of trailers or containers on flatbed and or passenger trains converted to handle small containers. No one would want to run high speed trains mixed with heavy commodities trains. But these would be lighter axle load freight trains with high value cargo justifying faster speeds. Freight trains since they are longer than passenger trains don’t have to be run as often. In San Diego County freight trains share the tracks with light rail. They run at different times so they don’t share the tracks at the same time. Freight could run at times there is little or no passenger service through the Tehachapi.

If the CHSRA could work out a deal with the shippers to set up a new high speed freight service along the West Coast they would be in a better position to interest lenders for money to build through the Tehachapi. A private short line operator would be needed for such a service on the high speed tracks which could cooperate with the railroads to share facilities and interchange cars. For the San Joaquin Valley this would reduce truck congestion on the 5 and 99 freeways and improve air quality. This would improve the CHSRA cash flow and increase its credit line to expand service. The more people who benefit from High Speed Rail construction the more support it will have and the better chance it will have of making money.

 

eNewsletter

eNewsletter for October 21, 2013

Most of the hyperbole about the High Speed Rail program is driven by old fashion partisan politics rather than sound transportation policy. The Prop 1A Ballot measure allows the State to sell 10 Billion dollars in bonds for Public/Private financing of a High Speed Railroad through California. The assumption was the bonds would be matched with Federal Funds. The ballot measure prevents the State from subsidizing operation of HSR Train service. But the intent of the project is that the majority of the funding will be privately raised and serviced by profits from the operation of the HSR trains. Most High Speed trains, most intercity passenger trains for that matter make an operating profit. The ballot measure does not require the train’s profits to pay off all of the capital costs of the HSR project. Much of the hysterical opposition to the HSR project is either ignorant of what is in the Prop 1A ballot measure or is intentionally trying to mislead the public. NB

October 21, 2013

The above copy of this enewletter is on a PDF file and you will not be able to click on to the links in blue. If you would like to subscribe to this enewsletter write to nbraymer@railpac.org

 

Editorials

Passenger Trains and Buses Should Connect With Each Other

By Noel T. Braymer

For years in the past the Greyhound Bus Company complained about how unfair it was that as a private business it had to “compete” with Amtrak which received a government subsidy. An example of this is a California State Law, Senate Bill 804 (Perata) for the year 1999 which Greyhound sponsored. This law forbids passengers from using Amtrak connecting buses if they don’t also ride the train. It doesn’t matter if there are no reasonable alternative bus services to the Amtrak connecting bus to where the passenger is coming or going.

It is no secret that passengers have gotten around this law by buying a train ticket near to where they were going. Many people have taken the buses for the San Joaquin trains between Bakersfield and Los Angeles by buying a ticket for the train to either Wasco or Fullerton. There were separate tickets for the bus ride and as long as the bus driver received a valid ticket from you the bus company operating the bus got paid.

Amtrak is now changing over to eTicketing which the airlines have used for a few years already. Your “ticket” is a single bar code you can print yourself which will be read with a scanner every time you ride a train or bus. Will Amtrak enforce SB 804 now if the scanner shows that you didn’t ride a train on a return bus trip and not let you on the bus?

The mentality behind SB 804 is wrong and it should be repealed. RailPAC as well as other Rail Passenger advocacy groups and the California Bus Association opposed SB 804 in 1999. Amtrak was never a threat to Greyhound or any intercity bus service. In fact the roots of American intercity bus service were heavily dependent from the beginning as a feeder to passenger rail service. The railroads often had bus company subsidiaries and invested heavily before World War II in both Greyhound and Continental Trailways. The decline of American rail passenger service after World War II was also followed by the decline of bus ridership and service.

SB 804 did nothing to improve the fortunes of Greyhound and the other bus companies in California. Actually bus companies which won contracts to run connecting buses to California supported Amtrak trains did rather well. Neither Amtrak or the State of California which manages the State Rail/Bus connecting services owned the buses or hired the drivers. All bus service was operated by private companies who won the contracts by competitive bidding.

There has been a turnaround in bus service in the last few years. Some of this has been fueled by the rising cost of gasoline and auto travel. Competition from new bus companies such as Megabus have brought changes in operation with lower overhead costs, more stops, fewer manned stations and online ticket discounting.

Some of this turnaround can be credited to the growth of rail service. Most of the station stops in California for Megabus are at train stations. The Oakland stop is at a BART station and the Sacramento stop by a RT Light Rail station. This is all the better for passengers to allow them to make connections to more places. Greyhound also has many bus stops at train stations. Greyhound is on record as saying they want to move out of their Los Angeles terminal and relocate to Union Station.

What we need are better connections between buses and trains to expand bus service for train passenger going places or at times where or when the train doesn’t go.There are many towns in the San Joaquin Valley which don’t have rail service, particularly those along Highway 99. With interline ticketing and connections much like between many airlines it would be more economical to provide bus connections along the 99 in the San Joaquin Valley to more towns for both the San Joaquins, ACE and future High Speed Rail service. Both the bus companies and train service would get more riders and revenues with connections and interline ticketing, just like the airlines do with cooperative agreements.

In Southern California there are populated areas with little rail or intercity bus service let alone connections to either. One glaring example of this is along the I-405 corridor. Along the I-405 corridor there are major traffic generators like the City of Irvine which does have a train station. But you also have the University of California at Irvine and John Wayne Airport with a major nearby business park. The I-405 has next to major shopping malls in Orange County such as South Coast Plaza in Costa Mesa. The cities along the coast by the I-405 have dense populations but little public transportation. In Los Angeles County by the I-405 you have Long Beach State University, the Blue Line, LAX, the Green Line, the future Crenshaw Line, the Expo Line, UCLA, the west side of the San Fernando Valley and the Van Nuys Amtrak/Metrolink Station. Service on the I-405 can be incorporated into longer distance service for bus passengers. By servicing several markets a new service in the area has a better chance of success.

Another market poorly served by bus and rail is the I-15 corridor. This could serve San Diego State University, El Cajon (both have Light rail service) Escondido, Temecula, it could connect with the future Metrolink extension to Perris and serve Riverside and San Bernardino train stations. From there such bus service could be run east to Phoenix, or Las Vegas. Other places to extend bus/rail connections would be Victorville and Bakersfield. Better rail/bus connections to Reno and Oregon should also be explored.

eNewsletter

eNewsletter for October 14, 2013

Re: Amtrak no bargain for the States    The states that fund their own intercity services, including California, will go on getting gouged by Amtrak to the limits of credibility only as long as they continue to treat Amtrak as a sole supplier rather than put these services out to competitive bid.                                                                     States and commuter agencies do this routinely for commuter services, and have all but run Amtrak–always the high cost provider–completely out of that business. Why the states don’t do this for local and regional intercity services, especially in markets like California where there is proportionally little use for connecting traffic to national system trains, is a complete mystery.                                                                                             I’m sure many of your regular readers will recall that California had essentially brought the San Diegan service to a breakeven level of operation, even under Amtrak’s phony cost allocation regime, under the old “403(b)” program, when Amtrak suddenly changed the rules ostensibly to avoid having to pay a share of looming PROFITS from the San Diegans back to Caltrans.                                                                                           Andrew Selden

October 14, 2013

The above copy of this enewletter is on a PDF file and you will not be able to click on to the links in blue. If you would like to subscribe to this enewsletter write to nbraymer@railpac.org

CA Rail Statistics

Capitol and other CA Corridor Statistics (September, 2013)

By David B. Kutrosky, Managing Director
Capitol Corridor Joint Powers Authority

Year-over-year ridership on the Capitol Corridor trains was even with last September. 132,937 passengers rode the Capitol Corridor trains in September 2013, closing out FY 2013 with a total of 1.70 million riders and representing a 2.6% decrease in riders compared to FY 2012. Revenues for September 2013 were down 3.6% compared to September 2012, with total FY 2013 revenues down 1.1% below FY 2012. Ridership losses appear to be lessening as ridership for the last quarter of FY 2013 (July – September 2013) was even with the same quarter in FY 2012 as compared to the first three quarters of FY 2013 (October 2012 – June 2012) was 3.4% below the
first three quarters of FY 2012.

As we continue to review and analyze the daily conductor e-Ticketing reports, midday weekday trains are underperforming compared to last year. Detailed data at stations available for the period of October 2012 through August 2013 indicate that ridership is decreasing at the Sacramento [-6%], Roseville [-24%], Rocklin [-11%], Fremont [-11%] and Davis [-6%] stations.

Despite these ridership and revenue declines, on-time performance (OTP) for the Capitol Corridor was a remarkable 97% for September 2013. In fact, there were 15 days in September 2013 where all Capitol Corridor were on-time, representing a “100%” day. The superior OTP for September 2013 allowed the Capitol Corridor to finish FY 2013 as the most reliable service [95%] in the Amtrak system for the fourth year in a row. This is a magnificent accomplishment and brings to light the strong commitment by our operating partners to the reliable and safe operation of the Capitol Corridor trains — Caltrain, Union Pacific Railroad, Amtrak and Bar Pilots [tug boat operators who request the lifting of the Benicia-Martinez Rail
Drawbridge]..

The year-end system operating ratio improved to 51% primarily due to lower fuel prices and reduced fuel consumption. With the installation of the power cabinets at the Sacramento Valley Station, the engines of the five trainsets lay overnight are turned off and power is supplied through the electrical power cabinets at the ends of the platforms, which has reduced FY 2013 fuel consumption at Sacramento by 64% through August 2013 and lowered system fuel costs by approximately 41%.

pic06559

Funding Outlook
CCJPA FY14 Budget/Amtrak Operating Agreement

On September 16, 2013, the new California State Transportation Agency [CSTA] (formerly the State Business, Transportation and Housing Agency) sent the CCJPA its allocation letter for the CCJPA’s FY14 budget which includes funds to support Amtrak’s operation of the Capitol Corridor train (and feeder bus) service. The CCJPA Board of Directors adopted the budget and also authorized the execution of the CCJPA/Amtrak FY2014 operating agreement, which covers the period of October 1, 2013 – September 30, 2014 and conforms with the PRIIA Section 209 pricing policy for state-sponsored Amtrak-operated intercity passenger rail (IPR) services. Execution of this operating agreement allows for the continued operation of the Capitol Corridor trains despite the recent federal government shutdown.

Federal Surface Transportation Reauthorization
To-date there has been no or limited progress to reauthorize the Passenger Rail Improvement and Investment Act of 2008, which expires on October 16, 2013 and covers Amtrak authorization and the current railroad safety programs, including Positive Train Control (PTC). Over the last nine months, CCJPA staff continues to be active in working with APTA, AASHTO and other interested agencies to prepare and advance principles that will lay out the development of a multi-year federal capital grants program (using new revenue sources) that would be distributed to state-supported IPR and HST services. APTA is expected to adopt a set of principles at its Board of Directors meeting later this year. These principles will then be referenced into APTA’s documents supporting the upcoming surface transportation
authorization efforts of MAP-21, thereby helping to establish a federally-funded Rail Title.

Customer Service Program Upgrades
• Bicycle Access Plan: While there has been a delay in the launch of the on-board bike policy enforcement program until Spring 2014 (due to the installation of PTC equipment on the cab cars), the cab cars that have been outfitted with PTC controls and added bike storage are in service on some Capitol Corridor trains. Concurrently, the CCJPA is working to replace one regular coach car with a Coach/baggage car which has expanded lower level bike space (similar to modified cab cars) on some of the trains with heavy bike utilization.

The other at-station elements of the Bicycle Access Plan are moving forward with funding agreements and allocation requests to support those actions. The CTC is expected to allocate the final bulk of the funding ($556,000 in December 2013) and once all the agreements and paperwork are in place, the CCJPA will begin the process of deploying the eLocker and folding bicycle rental programs thereafter.

Safety Initiatives
• On-Board Installation of Positive Train Control Equipment: Installation
of the PTC equipment on the state-owned equipment is proceeding. All
California owned locomotives have been equipped and installation on cab
cars is underway (~50% complete).

• Safety Fences: Continued investment to secure the right-of-way and deter
trespassers via fence projects in North Richmond and the Suisun/Fairfield
Station.

• Grade Crossing Upgrades: To address delays and address community safety
concerns, the CCJPA is working with UPRR and Amtrak to develop a action
plan and funding program to prevent cars from getting stuck on the tracks.
There has been a recent increase in these incidents at or near the Oakland
Jack London Station/Embarcadero roadway (which have caused 30+ minute
delays to the trains).

Marketing Updates
• CCJPA’s Marketing Team is working to fill the weekend and midday weekday
ridership gaps by re-introducing the (1) 50 percent train fare discount for
weekend travel and (2) popular Seniors ride for 50% off on selected weekday
midday trains.

Outlook/Closing: For FY 2013, the Capitol Corridor could not keep with last year’s record-setting ridership and revenue results. Capitol Corridor trains carried 1.70 million riders in FY2013, a 2.6% decrease compared to FY 2012 with revenues down 1.1% versus FY 2012. Ridership losses, however, appear to be going away as ridership is even with the last quarter of FY 2013 (July – September 2013) compared the same quarter in FY 2012. The Capitol Corridor enjoys a solid base of frequent users (both weekday and weekend) thanks in large part to the consistently high-quality and reliable customer-focused operation of the trains [OTP of 96% in last six months of FY2013] and CCJPA and Amtrak management keenly focused on continuously improving customer satisfaction. Targeted marketing over the first 6 months in FY2014 should help to push ridership levels from flat to positive results. The CCJPA team working with operating and funding partners continue to complete pre-development work for the service expansion projects (involving San Jose/Salinas, Placer County), as well as developing advocacy strategies to secure capital grant funds to construct these service expansion projects.

Capitol Corridor September 2013
– Ridership: 132,937 riders; +0.0% vs. Sept. 2012; -2.6% vs. prior YTD
– Revenue: $2,328,922; -3.6% vs. Sept 2012; -1.1% vs. prior YTD
– On-Time Performance: 97%, FY 2013 OTP of 95% (#1 in the nation).
– System Operating Ratio: 51% YTD vs. 50% in FY2012
__________________________________________________
Pacific Surfliners September 2013:
– Ridership: 207,310 passengers; -2.3% vs. Sept 2012; +2.5% vs. prior YTD
– Ticket Revenue: -1.2% vs. Sept 2012; +6.8% vs. prior YTD
– On-time performance: 83% (FY2013 on-time performance: 85%)
__________________________________________________
San Joaquin September 2013:
– Ridership: 91,129 passengers -0.9% vs. Sept 2012; +6.62% vs. prior YTD
– Ticket Revenue only: -1.5% vs. Sept 2012; +1.9% vs. prior YTD
– On-time performance: 84% (FY 2013 on-time performance: 78%)

Editorials

How to Operate Passenger Trains at a Profit

By Noel T. Braymer

It is no secret that the key to being profitable is to bring in more money than you spend. To run a profitable passenger railroad the keys are maximizing productivity and increasing revenue with increased ridership. Here are basic steps that other successful transportation services use to do more than just cover their costs.

The key to income for all passengers services (trains,planes, taxis, ships and buses) are passenger miles. The miles passengers travel reflects income since passengers are charged by the mile. Even if a train carries many people for a short distance, it isn’t earning money when the train has empty seats. The best way to generate passenger miles is with extended routes. In transportation the long hauls are always the biggest money makers.

Airlines today when they offer corridor service usually do so to connect with major hub airports. On a recent flight from San Diego to San Francisco the man sitting next to me was on his way to Korea making connections at San Francisco. Many other passengers on this flight no doubt were also making connections. This made it possible for me to get a cheaper ticket for this flight.

On transportation services empty seats don’t generate income. In the aftermath of airline deregulation and competition in the late 1970’s airlines in order to survive discovered hub and spoke service and yield management. Hub airports allowed the airlines to serve the greatest number of markets using the least number of planes and employees. With hub and spoke service airlines increased their productivity. Flight times today are slower than they were 50 years ago. But more people today fly greater distances than 50 years ago and adjusted for inflation fares are generally lower. The key to doing this is having connections so every flight has service to the greatest number of markets and the planes were flying with few or no empty seats.

Hub and spoke service to many markets helps to fill planes. To insure the planes fly full most of the time yield management was developed. An example of this is seen on the many commercials for Online Travel Agencies advertising they have lowest prices for flights, hotels and car rentals. But it is really the airlines, hotels and car rental agencies offering the discounted fares.

Demand for travel can vary from month to month or even by hour to hour. Yield management offers different prices depending on demand at the time for a fight, a hotel room or location for a car rental. A person who books early or takes a seat near the back of the plane will pay less than someone who books at the last minute or wants to sit up front. The point is to keep planes, hotels and rental cars earning income. Even if the price is highly discounted when demand is low it will still be more money than nothing. A person who must travel on a certain day or time of the day will pay more. People who can travel on slow travel days or times of day can enjoy major discounts. The point is to not let planes, hotels or rental cars be left unused.

Today most passenger rail services and intercity bus services in developed countries use yield management and reserve seating to maximized income. Today both Greyhound and Megabus (both are own by different Scottish companies) sell their bus tickets online and use yield management. This is a major reason intercity bus ridership has grown lately after years of decline. America is unusual because yield management is ignored by rail passenger operators here.

Passenger trains by themselves don’t lose money. Most trains cover their direct costs. The problem is there are not enough trains and passengers on the trains to cover the entire overhead expense of the service. To cover overhead trains should be kept in service generating the maximum passenger miles with the highest possible occupancy. Commuter trains historically are the hardest trains to run at a profit. Commuter trains are often crowded during rush hour. But they carry low fare passengers at short distances and commuter trains are often left idle much of the day and weekends.

Local rail service should be seen as a regional service not just for commuters. Regional services runs 7 days a week and all day and into the night. Regional service serves many more markets than commuter trains, not just major jobs centers. They can do this by extending and or combing their routes into longer routes. They also have better connections serving airports, other trains at hub stations and interline tickets with bus service. Such connections makes it easier to travel without a car and for people to travel to more places by air, rail, road or even over water. Take the Pacific Surfliners as an example of the value of extending train routes.These trains run from San Diego to Los Angeles. Those trains that are extended also to Santa Barbara and even San Luis Obispo carry the most passengers and generate the most revenue of the Surfliners.

Any major capital intensive industry keep expensive assets in use generating income as much as possible. Factories run 24 hours a day rather than run 3 factories each 8 hours a day. Airlines keep their planes in the air as much as possible and on the ground only as needed for maintenance and servicing. So it should be for rail passenger service. Too often with the idea of saving money passenger train equipment is left idle when demand is slow or to save money equipment repair is delayed. This is false economy. No successful business leaves expensive equipment sitting idle when it can be put to work making money.

Most intercity rail passenger service including High Speed Rail makes an operating profit. Most passenger railroads around the world today are run on a for profit basis. This includes operating rural and commuter passenger services under contract with a subsidy from the government. But intercity rail service doesn’t need a subsidy in most of the world. A major difference is most countries run more trains and carry many more passengers per train than this country. To operate trains at a profit here we need to expand service to cover overhead, not eliminate trains to “save” money.

What needs to be pointed out is making an operating profit for passenger service is not the same as paying all capital costs. But let’s face the fact that few transportation services cover their capital costs. Airlines don’t own the airports, trucking companies don’t own the highways and shipping companies don’t own the harbors. In this context most commercial transportation is dependent on the government and the taxpayers to some degree. The benefit for the taxpayers is good transportation is central to a healthy going economy.The same should be true of rail passenger service.

Today in most of the world rail service operators don’t own the railroad. In Europe today the only place where the government owned railroads are owned by the rail service providers is Ireland. Generally a government agency or non-profit company operates the railroad. But for-profit companies operate the trains. National railroads in Europe which now are for-profit companies are increasingly looking to expand both passenger and freight service to other counties in Europe.

Facilitating increased track utilization is in the interest of the railroad owners.The non-profit companies or government agencies in Europe which own the railroads are expected to cover most of their costs from user fees. The Chunnel between England and France was built with private financing and is paying its loans from fees charged to the trains that use the Chunnel. The Chunnel has High Speed Passenger Trains, auto/truck ferry trains and freight trains. The double tracked Chunnel is capable of operating in each direction 20 trains an hour which is a train every 3 minutes in each direction.

Owning the Chunnel has not been very profitable. A few times the Chunnel has come close to defaulting on its debt. It has been able to reorganize its debts to avoid default. One problem the Chunnel has is that it only runs now at about half of its capacity. One thing the people who manage the Chunnel want is to run more trains through it. Towards this end the Chunnel is looking for more operators to use the Chunnel to expand passenger and freight rail service from all of Britain to more of Europe. To better pay for the cost of owning their railroads the other European Countries are planning to bring in more service and competition with rail operators from other European Counties.

eNewsletter

eNewsletter for October 7, 2013

Dan Richards, Chair of the California High Speed Rail Authority addressing the RailPAC/NARP Joint Meeting in San Francisco on October 5, 2013. Mr. Richard gave the funniest and most charming talk of the day about the many problems he has faced at the High Speed Rail Authority. He admitted that in 2008 the Authority was like a stickball team that found itself playing in the baseball major leagues. He also pointed out that almost all High Speed Rail services generate an operating profit and he says California is a good market for High Speed Rail. Prop 1A passed by the voters in 2008 calls for High Speed Rail to make an operating profit but doesn’t call for it to pay all capital costs. Mr Richard thinks with only 3 lawsuits pending for California High Speed Rail it is doing better than the Golden State Bridge which in the 1930’s faced over 2,000 lawsuits.

October 7, 2013 Part 1 October 7, 2013 Part 2 October 7, 2013 Part 3

The above copy of this enewletter is on a PDF file and you will not be able to click on to the links in blue. If you would like to subscribe to this enewsletter write to nbraymer@railpac.org

Editorials

Notes on the October 5th’s RailPAC/NARP Meeting San Francisco

By Noel T. Braymer

I wasn’t in the mood this time to ride buses for 2 night in a row for this year’s meeting in San Francisco. So I got a flight out of San Diego at 7:56 AM for an arrival at 9:35 AM at San Francisco. Since the first Coaster Train to San Diego on Saturday morning arrives at 9:36 AM it clearly wasn’t an option for getting to the airport on time. Both of my flights which flew when there was no rail service were full. This was an example of yield management at work which discounts tickets to fill seats when needed. Empty seats means lost money on planes and trains.

The meeting started at 10:30 AM. I knew I would be a little late getting to the meeting from the airport to Pier 40. It only takes 25 minutes to get from Milbrae to San Francisco by Caltrain. But to get from the airport to the Caltrain Station requires a transfer on BART. On weekends Caltrain runs once an hour and I would have to make the 10:08 AM departure for a 10:36 arrival into San Francisco.

My other option was to just catch BART at the airport and stay on it to San Francisco. To get to BART from Terminal 3 would require a ride on the AirTrain airport people mover. On Saturday I could catch BART at either 9:47 AM or 10:07 AM. On my flight we arrived into San Francisco early and then had to wait for a gate to open for us. I just missed the 9:47 BART and had to take the 10:07. This got me to the Embarcadero Station by 10:40 AM. Since my knee has been bothering me lately, instead of walking I transferred to a Muni Metro Train to get to 2nd and Townsend by the baseball park. By the time I got to the meeting it was almost 11:00 AM. Although the actual fight time was only 1 hour and 12 minutes, the time from when I left my house just before 6:00 AM until I got to the meeting was 5 hours. How I wish there was a train to get from Oceanside to San Francisco in 6 hours and get some sleep while I traveled too.

The first speaker of the morning was Dan Leavitt of the San Joaquin Regional Rail Commission. He wears many hats working to improve service on the San Joaquin Trains, the Altamont Corridor Express or ACE Trains in the northern San Joaquin Valley and helping create the Northern California Unified Service. This will better connect the San Joaquins, ACE and Capitol Corridor trains to each other and improve tracks that they share for faster more reliable service. Mr Leavitt gave an overview of what was happening on these trains.

Next was Marian Lee who is a planner at Caltrain. She gave a presentation of Caltrain’s Modernization Program.This included plans to blend future service on Caltrain’s tracks with California High Speed Rail. She also discussed work which is starting to upgrade Caltrain’s signalling which will improve rail safety, meet Federal requirements for Positive Train Control and increase Caltrain’s track capacity. She also discussed Caltrain’s other major capital project the Electrification of Caltrain between the Transbay Terminal and Tamien Stations.

After an hour break for lunch the next speaker after 1:00 PM was Dan Richard, Chair of the California High Speed Rail Authority. Mr. Richard gave a funny and charming talk which included how he found out he have been appointed to the High Speed Rail Authority by the Governor who is a long time friend without being asked. He admitted that the High Speed Rail Authority wasn’t ready in 2008 to take on the job of building High Speed Rail. He compared the authority to a stickball team that overnight found it playing major league baseball. It was because of this that to save the High Speed Rail Project that many changes were made in the Business Plan in 2012.

A major part of the change was to incorporate improvements to other State Rail projects with High Speed Rail funding as a State Wide Rail Improvement program. With High Speed Rail also came electrification of Caltrain, improvements for ACE, the Regional Connector subway for Light Rail in downtown Los Angeles and the run- through tracks at LAUS among others.

Mr. Richard is confident the once built High Speed Rail service in California will be a success. He pointed out that Prop 1A which created the bonds for High Speed Rail calls for the trains to make an operational profit. Making enough money to pay off capital costs is a much higher bar to reach. Mr. Richard pointed out that High Speed Rail services around the world make an operational profit despite what the opponents of High Speed Rail claim. Once there is a High Speed Railroad in California operators will be willing to pay the State to run such trains according to Mr. Richard.

Mr. Richard was candid that the State can’t count on additional Federal funding for High Speed Rail. Other options to raising money are being considered. One idea being explored is to share right of way and capital expenses with the Freight Railroads to improve freight service in the Tehachapis. The plan all along has been to use mostly private financing not tax money once the High Speed Rail Project got started. Mr Richard also noted that some of the biggest supporters of High Speed Rail are the airlines. With traffic constraints at major airports, airlines are more interested in flying transcontinental and international flights than corridor services which can be run more economically with High Speed Rail.

After Dan Richards we had a discussion by consulting engineer Jerry Cauthen on solutions to bottlenecks on the East Bay. A big problem is road and BART connections between the East Bay, Peninsula and San Francisco are at capacity and new tunnels or bridges will be very expense. One cost effective solution would be to repair and upgrade the existing Dumbarton rail bridge crossing to run ACE, Caltrain and Capitol Corridor Trains.

The last but not least speaker was Bob Stewart, Chairman of the National Association of Railroad Passengers (NARP). Mr. Stewart went to great lengths to emphasis that NARP was interested in the future of Long Distance Trains and was a national organization, not just a Northeast Corridor organization. He talked about the problems of the Southwest Chief that the BNSF doesn’t want rerouted through Amarillo or to pay to continue paying the maintenance between Albuquerque and Newton. He criticized Amtrak for their cost estimates for extending the Sunset from New Orleans to Florida which greatly discourage efforts to bring the Sunset back to Florida. Mr. Stewart introduced Larry Scott  of NARP from San Diego.  Mr. Scott gave his opinion that he thought Amtrak knows they are failing.

After 3:00 PM when the meeting ended I planned on having plenty of time to catch my plane to San Diego at 7:31 PM. I met with people after the meeting and took pictures of rail service in San Francisco and had some dinner. My best bet was to catch Caltrain at 5:15 PM at 4th and Townsend to get to Millbrae by 5:39 PM. If  I waited for the next train I would get to Millbrae at 6:39 PM and to be safe I’d rather be at the terminal before 6:30 PM to make my boarding time at 6:56 PM for my 7:31 PM flight home.

What was amazing was how crowded Caltrain was on a Saturday. Also Caltrain is part of a dying breed that locks passenger out of the platforms in San Francisco until shortly before train times. Then a single crew member checks each ticket before allowing passengers to head for the train. Many of the passengers were fans of Washington State which played Stanford that evening and were on their way to the game. The train had standee even before the train left San Francisco and the crowding got worse by the time the train got to Millbrae.

One thing I’ve learned the hard way is in the Bay Area is there are no provisions for transferring on a single ticket between Caltrain and BART or BART to MUNI. I am use to riding Metrolink where my ticket is good for transfers to all of LA Metro trains and buses as well as many other transit providers sharing areas served by Metrolink. In my case after getting off of BART in San Francisco I bought a separate ticket to ride Muni to 2nd and Hill by the ballpark next to Pier 40. Coming home I rode Caltrain to Millbrae for $5.00. When I transferred to BART which is my only choice to get to the airport from Caltrain I ended up paying $4.05 just for a short trip between 2 stations to the airport. I doubt few people transfer to BART from Caltrain to the airport let alone use Caltrain to go to the airport. I wouldn’t doubt if this wasn’t BART’s plan although that doesn’t work for people living south of Millbrae. What I found amazing is from the train near the San Bruno Caltrain Station I could see the Blue Line of the airport AirTrain people mover serving the Rental Car Center at the airport. AirTrain should have been extended to Caltrain.

Again coming back to San Diego the flight was full and loading the plane caused it to leave about 20 minutes after the scheduled departure time. But because of padding in the schedule the planes arrived a few minutes early. But this didn’t help speed up unloading which stops when every person trying to get their carry-on bags out of the overhead bins blocks the aisle which prevents everyone else from going around.