No, Amtrak should be able to get a commercial loan to pay for the Acela II trainsets. The Acelas have an advantage that they generate substantial revenue and an operating profit above the rails. But a commercial loan would be at higher interest rates. Now, it would be better if Congress were to provide some funding for rolling stock purchases, that Amtrak could use for upfront costs and maybe the initial progress payments so they don't have to take on as much debt that has to paid off over the next 20 or how ever many years.
Acela II RFP information announcement
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jis
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Unfortunately it is a little more complicated than that. Amtrak cannot use the same surplus from Acela to both cross-subsidize LD and use as collateral for loans. So for them to be able to use that as the collateral for loans, they will have to find money from elsewhere to pay for LD operations. This may or may not be easy to do considering the political climate. Already they have some amount of the surplus from Regionals locked in for paying for the ACS64's I imagine.
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Nathanael
Guest
Eh, just speed up the LDs until they're profitable.
OK, OK, I kid, I kid. But I've been looking pretty deeply into these for a while. The Boardman presentation with direct costs was very illuminating. A lot of the "costs" we see are actually overhead which can only be covered by expanding operations. The more state-subsidized corridors there are to spread the overhead out across, the better that will get. Meanwhile, most of the eastern long-distance trains are within striking distance of profitability on a direct-costs basis; a few targeted speed improvements and better on-time performance would do the trick.
Only some of the trains require large operating subsidies (CZ, SL, SWC), and even there it's only parts of their routes (Denver-Chicago is pretty good financially, Denver-San Francisco is horrible). Amtrak rejected breaking up routes into connected corridors in the PIPs, but frankly I think it's not crazy to break the CZ at Denver -- except that it would reveal how bad the western half does and how well the eastern half does.
There's a very real sense in which the Amtrak federal operational subsidy, and many of the state operational subsidies (as opposed to the capital subsidies) are for a very specific list of line segments -- ones with particularly slow running. I mentioned the terrible speed of the Crescent south of Atlanta in another thread, and the terrible Indianapolis-Chicago speed is well known. The mountain crossing of the Coast Starlight and both mountain crossings of the California Zephyr have bad running times compared to alternatives, the SWC has awful running times over Raton, and the Sunset Limited has awful running times for most of its distance.
If I were master-planning for Amtrak, I would be tempted to sit down and find out what routes have geometric alignment suitable for continuous 80mph+ running between major cities, and then move heaven and earth to get those lines under passenger-operator control -- and focus all service on those lines. But I suppose in some sense they're doing exactly that in the attempt to get a "South of the Lake" route out of Chicago. Hasn't really succeeded yet.
Anyway, sparked a lot of interesting thoughts though.
I don't think there is a legal reason Amtrak can't use part of the surplus from the Acela to pay for a loan for an Acela II purchase. Doing so would mean a smaller surplus amount to draw on to cover the LD operational losses. A lot depends on what the annual operating subsidy amount provided by Congress stabilizes at. That is, of course, assuming that Congress does not pass a re-authorization bill that forces Amtrak to cut some LD trains. Reducing the losses for the LD trains with a higher cost recovery is the other way to lessen the dependence on the Acela surplus but that is a long slog process.
I'm pretty sure Boardman and Amtrak management have crunched the numbers extensively to determine how much of the current Acela surplus and how much extra projected revenue from the new trainsets they would have to draw on to pay for the first Acela II order. The wild card is the annual funding amounts provided by Congress. With the news that a budget deal has been reached by the House & Senate budget conference, we may find out soon what Amtrak will get for FY14. But the budget deal has to be passed by the House which may prove difficult.
Well, Friday afternoon is an interesting time to issue a press release on the release of the RFP. Maybe CHSRA is trying to go for a lower profile to have the likely attacks from the political opposition end up in the Saturday newspaper (the least read newspaper of the week). Here is the news release that was posted to the Amtrak website:
AMTRAK AND CALIFORNIA REQUEST BIDS FOR HIGH-SPEED TRAINSETS.
Ok, time to speculate who will bid and who might win the contract. ^_^
AMTRAK AND CALIFORNIA REQUEST BIDS FOR HIGH-SPEED TRAINSETS.
The bold face emphasis is mine.
Ok, time to speculate who will bid and who might win the contract. ^_^
Well, Amtrak posted the username and password to access the RFP document on their procurement portal website. Lots of interesting details for those inclined to access the documents while they are available. I just started to skim the documents.
Why Boardman is saying up to 28 trainsets? Because Amtrak is requesting the bidders submit proposals for 4 alternatives and offer how many trainsets they think are needed to meet the Amtrak service operating plans for current level of service and expanded half hourly service. Note that 3 of the 4 alternatives are for replacing the current Acela fleet. Excerpt from the instructions to the offerors:
Why Boardman is saying up to 28 trainsets? Because Amtrak is requesting the bidders submit proposals for 4 alternatives and offer how many trainsets they think are needed to meet the Amtrak service operating plans for current level of service and expanded half hourly service. Note that 3 of the 4 alternatives are for replacing the current Acela fleet. Excerpt from the instructions to the offerors:
Fan Railer
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I do not believe the plans are included in the downloads. The closest thing I could find to that is in the "Acela HSR Mechanical fact sheet" document:
I don't see the document either on the site. There is an Amtrak Operating Plan along with route profile spreadsheet files, technical references listed as attachments in the performance specification. Some of those files may be considered confidential, which would only be provided to qualified bidders upon request. Even without all the reference documents, there is a lot of information and specs on the RFP in the available documents.
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Woody
Guest
If I parsed Boardman's interview in Railway Age correctly, he said
that the future operating supluses from the new Acleas would pay
for the new equipment, and help pay for future improvements to the NEC.
I took that as a promise to some in Congress that surpluses from the new
Acleas would not be used to subsidize the LD trains.
But since the new equipment won't arrive for 5 or 6 years if we're very
lucky, presumably the surpluses from the present Acela trains can
continue to be used to subsidize the LD trains for a few more years.
How much cross-subsidy is there anyway? Do we have a good guess?
Isn't this one of the areas where the famed Amtrak accounting may
obscure the view? LOL.
Several hundred million dollars, from what I can tell. Per the September 2013 Monthly Performance Report, you have the following contributions/losses excluding capital charges:
Acela: $245.4m before OPEBs, $236.9m after OPEBs
Regional: $143.7m before OPEBs, $133m after OPEBs
Short Corridors: ($158.3m) before OPEBs, ($180.8m) after OPEBs
LD Trains: ($593.8m) before OPEBs, ($627.1m) after OPEBs
Total: ($360.0m) before OPEBs, ($435.0m) after OPEBs.
Total sans Corridors: ($201.7m) before OPEBs, ($254.2m) after OPEBs
Put another way, the NEC as a whole is arguably picking up 2/3 of the tab for the LD trains.
If Amtrak can handle the financing for the HSR trainset order, I think the new trainsets would be in service on the NEC sooner than that. Depending on who wins the contract and the cost, Amtrak's hope is probably to have new trainsets entering service in 3 years from contract award. There is a reason Amtrak is seeking as close to off-the-shelf trainsets as possible. I have not found a delivery schedule for Amtrak in the publicly accessible RFP documents, so that is one of competitive parts of the bid. Which companies have manufacturing plants in the US that can build the HSR trainsets without taking years to expand their facility and ramp up on qualified employees?
Another aspect of the joint RFP and stretched production schedules is that the contract winner will need the flexibility to ramp up and down on production of the HSR trainsets. Build a bunch for Amtrak, then a few for CHSRA, then no trainsets for a time, them ramp production up again. That will require a manufacturing plant that has enough other work and space to switch employees to building other equipment orders and than back to HSR trainsets when CHSRA or Amtrak is ready for more trainsets. Siemens with a potentially large order for Next Gen diesel locomotives running through the early 2020s could be able to do that.
Under the options for Amtrak in the Instructions to Offerors, there are these items:
Full sized Bistro car? These will be fixed length trainsets. Don't repeat the mistake made with the waste of revenue space made with the Acela I bistro cars.
Video screens on all seatbacks? By the time, the full set of trainsets are in service, half the people on the train may have Google glasses and most of the others, tablet computers or really large cell phones for their own video source. But this is a price option Amtrak is asking for, not something they are requiring in the base specifications.
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Andrew
Guest
I wonder which company is the most likely to receive Amtrak's new contract for high speed trains:
Talgo,
Siemens,
or
Bombardier?
Talgo,
Siemens,
or
Bombardier?
Fan Railer
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I don't know, I sort of like the idea of chilling in a full bistro car with my meal before I return to my seat for the rest of the journey. I know that, alternatively, you can take your food back to your seat and eat there, but sometimes I just want to chill with my food elsewhere. That aside, I believe that the additional seats they are gaining from the lack of two power cars (301 -> ~420) is plenty of revenue growth without the half bistro car. In addition, there is already a provision, as you've probably read, for the addition of (I'm guessing) two business cars in the future to increase trainset capacity by 33%. Honestly, I don't foresee the loss of half of a car (~30 or so seats) stemming from going from a half bistro to a full bistro to be a terrible problem.
Talgo is disqualified, they don't have the relevant experience or vehicles. Alstom is eligible as well as the various Japanese companies, but I think that Siemens will win and force all the rail fans to sing Deutschezug über alles.
It's pretty much an expectation from the airlines that they'll be competing against and it also allows them to do other things not necessarily doable with Google Glasses or smartphones/tablets like at-seat meal ordering (technically doable with smartphones/tablets, but implementation will not be as elegant or as reliable). Remember too that bandwidth and connectivity are always going to be a bit of an issue with trains; 400 people trying to stream Netflix all at once will result in complaints, but people streaming videos from an on train server is added customer revenue and satisfaction.
I can't find anything on the operating plans either, but I suspect that the 25 additional services refers to an additional 25 Acela frequencies. Hourly BOS-WAS and half hourly NYP-WAS throughout the day perhaps?
30 seats is 7.5% of capacity, which is a fairly large ding, and with current Acela pricing and occupancy, is ~$15.88 in revenue per train mile (and, across the whole fleet, over the course of a year, is $16.8 million in lost revenue potential. This does assume a certain lack of elasticity of course.
Fan Railer
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There must be another factor then, of course, to offset the potential loss in revenue that they are considering if they are exlporing pricing options for a full bistro.
WoodyinNYC
Conductor
It would be a helluva thing if Amtrak went from making big
losses on food service to turning the bistro car into a profit center!
Couple other things: If they are increasing the number of seats
and passengers on the new Acelas, . . . [edited to remove error]
they'll need to increase the size of the bistro car simply to hold
the same ratio of total passengers/bistro seats. Going from ½ car
bistro to ⅔ car bistro seems silly, so might as well go whole hog.
Certainly the bistro car conveys an upscale image of comfort
and space that is an important marketing feature, so the bistro car
has value beyond the products and services offered therein.
One of the major advantages of rail travel over planes and cars
is that you can get up from your seat and walk a bit to stretch.
Going to the bistro car is a good excuse to take that walk and
loosen up. Simply going to the john, or walking aimlessly from
one end of the coach to another, is boring, and it doesn't fill
that need to reward yourself.
I'm impressed by the figures Paulus provides on the potential
foregone revenue. But if Amtrak runs the numbers and goes
with a full-car bistro, I won't be angry about it.
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WoodyinNYC
Conductor
Sorry, Nathanael, but I missed this post back in December.Eh, just speed up the LDs until they're profitable.
OK, OK, I kid, I kid. . . . The Boardman presentation with direct costs was
very illuminating. A lot of the "costs" we see are actually overhead
which can only be covered by expanding operations. . . .
Only some of the trains require large operating subsidies (CZ, SL, SWC),
and even there it's only parts of their routes (Denver-Chicago is pretty good
financially, Denver-San Francisco is horrible). . . .
Anyway, sparked a lot of interesting thoughts . . .
It sparked some thoughts on mine, tho, when I did read it.
But to comment here would go completely off-Acela-topic.
Would you please post your comment to start a new thread?
(I could start one quoting you a lot, but that seems clumsy.)
NE933
Conductor
Whole car Bistros, half car, or two thirds, whatever -- the steel enemas that are supposed to pass for seating, and the tiny tables, gotta go.
Suggestions: use the Amdinettes and/or Viewliner Diners as models, also the Metroliner Conference Car #9800 has very nice seating for two or four that is comfortable and has a small footprint on taking up space inside. Also, crescent bench seating that clashes on the Cross Country Cafes would work nicely on this high speed train, because it's a short-medium distance corridor route and not one that will see the same passenger visit three or more times during his or her overnight journey.
Suggestions: use the Amdinettes and/or Viewliner Diners as models, also the Metroliner Conference Car #9800 has very nice seating for two or four that is comfortable and has a small footprint on taking up space inside. Also, crescent bench seating that clashes on the Cross Country Cafes would work nicely on this high speed train, because it's a short-medium distance corridor route and not one that will see the same passenger visit three or more times during his or her overnight journey.
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Amtrak also seems to generally want one car to have one purpose, at least on single-level trains. Note the long-standing trend against BC or coach in snack/cafe cars, even where doing so could pull in another slab of revenue.
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Nathanael
Guest
Unfortunately, about 1/3 to 2/3 of the "costs" on most of those trains are unavoidable overhead, so the overhead allocation completely muddies the picture. And we don't know how Amtrak chose to allocate overhead.
Some of the long-distance trains look worse than they should due to allocation of overhead. Others look better. We got a clue about "direct costs" from that one Boardman presentation. But The Acela and Regionals may also be artificially inflated in profitability by allocation of *less* overhead than appropriate, and we don't have a clue about "direct costs" there.
I don't think we can get a good picture of the actual cross-subsidy unless we have numbers without overhead attached. Key questions for me:
- Does the NEC actually cover the overhead necessary to run it? If we (very roughly) count half of all costs as being overhead, then it doesn't cover all the system overhead. *Some* of the overhead isn't necessary for the NEC -- but how much?
- Is the federal government actually subsidizing the overhead for the system, as well as the direct operating costs of the long-distance trains? If so, I can't call it a cross-subsidy.
The dominance of overhead, financially speaking, leads to a few straightfoward conclusions. It means that the only sensible way for Amtrak to go forward is to expand the system while using the same overhead -- i.e. longer trains, extra frequencies on the same routes, etc. Obstreperousness by the freight railroads means that extra frequencies are quite difficult for routes where the state government has not gotten involved. To get back to the initial topic here, running more and longer Acelas is a sensible response to the dominance of overhead.
jis
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In this discussion is the concept of "allocated cost" being conflated with "overhead cost"? If so that will lead to confusion in analysis, since all allocated costs are not overhead. There are the variable allocated costs that would disappear from the overall account if a train does not run. The fixed costs will not. It would help to clearly identify what exactly is being talked about when the term "overhead" is used.
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Andrew
Guest
Will RRIF finance the cost of these new trains?
