Hoosier State goes from Amtrak to Corridor Capital

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What makes these guys think that just using a private contractor to contract put the running to Amtrak will reduce the overall cost completely beats me. There must be something special in the water that people drink in Indiana. :)
It's the right wing mantra jis! Private for profit companies can always do a better job than government, especially when the government subsidizes them!
Check out the political lineup in Indiana, no Thomas Jeffersons or Ben Franklins in office there!

Jim as a resident of Indiana you pretty much nailed it. The state would rather pay more to a private company than pay less to Amtrak, it's a kindergarten philosophy of all things government are bad.
 
Just check out the UK with it being privatised it's costing them a whole lot more now....
Well yes, costs do go up when you massively increase service and investments in new equipment and track improvements.
 
Yes, in my experience the folks in UK are at least getting massively increased service and new equipment all around for the money. That in my books is a good thing. Now I don't know whether there was a less expensive way of achieving the same thing. But sometimes you just have to go with the flow of political realities or get nothing. However, I hasten to add that the nonsense going on in Indiana does not even remotely resemble what happened in the UK, even with all its warts and all. Indiana is sheer idiocy by incompetent and clueless people playing games IMHO.
 
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The fairest way to run the Hoosier state is either for government to continue to run it or for a private contractor that takes no government subsidies. Private industry should be able to stand on its own two feet without being a parasite on our tax money. Otherwise its no longer private industry nor is it free enterprise but in the USA its a different story. Banks get our tax money, insurance companies get our tax money, our taxes support the military industrial complex, foreign dictators are on the payroll, and lets not forget the airlines and the auto industry. No wonder they say that there is no money for Amtrak!!!!
 
Always and forever:

Cost of providing service < Cost of providing service + profit for private company

No way around it.
To be blunt, I've seen a couple of rare exceptions; they seem to relate to Cost of providing service + graft > Cost of providing service + profit. Most government operations, including Amtrak, are pretty well operated with minimal graft, but I can't say the same for the LIRR based on what I've read.

Worst of all is cost of providing service + profit + graft, which seems to be the common thing in *US* "privatization" deals.
 
The question of "cost" isn't exactly straightforward here. Let's say that the Hoosier State currently costs the state/Amtrak $5m/yr net of ticket revenues to run: It costs $6m/yr, but there's $1m in ticket revenue. Company X puts in a bid for $4.5m/yr to run the service, on the assumption that they can generate $2.5m/yr in ticket revenue plus OBS revenue. It will cost them $6.5m to run, but the combined subsidy and revenue increase puts their bid below the current Amtrak cost. Well, the company netted half a million in additional profits while the state saved half a million even though the service cost half a million more to run.

I do think there's a fair case to be made for talking with third-party operators here for a host of reasons. Amtrak should have been able to submit a bid and should have done so, but I think the case for letting someone else try to work with the service is actually pretty strong considering what this particular route has been in the past. Indiana botched the job, but the idea was reasonable.
 
I guess the graft part mentioned by neorden also needs to be added to the equation to get realistic numbers, no? :p

I do agree with your example, but in reality it is just a little bit more complicated than just cost of running and recovery from tickets, unless the graft part is implicitly included in the cost of running. ;) OTOH that also holds true for Amtrak or government run setups, but at least theoretically they can be audited more thoroughly if one wanted.

The bigger problem in the US unlike in the UK is that we don't have a good regulatory framework for doling out train operations piecemeal to private outfits. For example we have no regulatory requirement that all operators must abide by and be able to operate with tickets that are interchangeable, that there is a exchange in place to handle interline operations seamlessly for customers, at least to the extent that it is available in the airline industry (which in and of itself is not brilliant, but at least it is there). Schedule planning would be another area where there should be some kind of outside input mechanism with some commitment by the operators to behave as part of a network to some extent instead of just going off on their own.

So there are several issues that need addressing before we can let the admittedly potentially desirable distribution of operating authorities. Of course the operating authority on private rail tracks is also one of such issues involved.
 
Can anyone provide a link showing the financial information for the state routes? As in how much ticket money comes in, and how much it actually costs to run the trains? I found the fiscal report all the way up to 2014, it shows the ridership numbers and ticket revenue per trains, but it does not show how much the trains actually cost to operate.
 
For some reason, Amtrak only reports "fully allocated" costs on a regular basis -- in other words, with loads and loads of overhead attached. It is therefore rather hard to tell how much it *actually* costs (incremental or avoidable costs) to run any one of the trains. Paulus may be able to tell you the last year when avoidable costs were broken out routinely -- 2007, I think...
 
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The question of "cost" isn't exactly straightforward here. Let's say that the Hoosier State currently costs the state/Amtrak $5m/yr net of ticket revenues to run: It costs $6m/yr, but there's $1m in ticket revenue. Company X puts in a bid for $4.5m/yr to run the service, on the assumption that they can generate $2.5m/yr in ticket revenue plus OBS revenue. It will cost them $6.5m to run, but the combined subsidy and revenue increase puts their bid below the current Amtrak cost. Well, the company netted half a million in additional profits while the state saved half a million even though the service cost half a million more to run.
There's no reason that Amtrak can't do the same thing. Then, rather than the million getting split between the state and the private operator, the state can save the full million.
 
That is where socio-political realities come back to haunt us in both Amtrak-only and public-private partnership scenatios. Usually the problem boils down to who will bell the cat, and how, for whichever one you choose.
 
For some reason, Amtrak only reports "fully allocated" costs on a regular basis -- in other words, with loads and loads of overhead attached. It is therefore rather hard to tell how much it *actually* costs (incremental or avoidable costs) to run any one of the trains. Paulus may be able to tell you the last year when avoidable costs were broken out routinely -- 2007, I think...
That's unfortunate. Anyone remember seeing individual states publish how much they pay amtrak per year? It seems it would be published somewhere... I'll keep digging and maybe I can find something.
 
So far I have found this... http://www.in.gov/indot/files/Amtrak_Agreement_2013.pdf

It states $244,916 per month for operating costs

It also states $35,700 per month will be credited back to the state if they use non-amtrak equipment. I'm not sure if the $35,700 is included in the larger number or not. Let's say it's not.... That's a little over 3.3 million a year. Ticket Revenue was 802,000 in year 14.
 
The question of "cost" isn't exactly straightforward here. Let's say that the Hoosier State currently costs the state/Amtrak $5m/yr net of ticket revenues to run: It costs $6m/yr, but there's $1m in ticket revenue. Company X puts in a bid for $4.5m/yr to run the service, on the assumption that they can generate $2.5m/yr in ticket revenue plus OBS revenue. It will cost them $6.5m to run, but the combined subsidy and revenue increase puts their bid below the current Amtrak cost. Well, the company netted half a million in additional profits while the state saved half a million even though the service cost half a million more to run.
There's no reason that Amtrak can't do the same thing. Then, rather than the million getting split between the state and the private operator, the state can save the full million.
I agree in theory; however, Amtrak has to load a lot of costs (capital charges, prevailing union agreements, stuff loaded into the uniform cost allocation formula, etc.) onto their "bid". In some ways, that's where you do have room for private-sector involvement: Maybe they can take less of a charge for their equipment (for example, an old 10-6 sleeper might be bought and rehabbed for $1 million whereas Amtrak might pay $2.5 million for a new 11-3 Viewliner; even if the Viewliner lasts twice as long on the current build, the old 10-6 is still coming out half a million ahead on straight-line depreciation), maybe they have different/more favorable terms with their employees, maybe they simply have less in the way of pension and other expenses to deal with.
 
For some reason, Amtrak only reports "fully allocated" costs on a regular basis -- in other words, with loads and loads of overhead attached. It is therefore rather hard to tell how much it *actually* costs (incremental or avoidable costs) to run any one of the trains. Paulus may be able to tell you the last year when avoidable costs were broken out routinely -- 2007, I think...
FY2009 was the last year it did it into FRA defined costs, other direct costs, and non-direct costs. Some of the reports from the 1980s use short term avoidable costs and fully allocated costs. Amtrak should be reporting the short and long term cost recovery by route to the FRA soonish; I'm hoping we'll see the first report in April with it: it's dependent on the avoidable costing methodology being completed which I hope will be the case when they start including capital charges in October (or so I've been led to believe).
 
For some reason, Amtrak only reports "fully allocated" costs on a regular basis -- in other words, with loads and loads of overhead attached. It is therefore rather hard to tell how much it *actually* costs (incremental or avoidable costs) to run any one of the trains. Paulus may be able to tell you the last year when avoidable costs were broken out routinely -- 2007, I think...
That's unfortunate. Anyone remember seeing individual states publish how much they pay amtrak per year? It seems it would be published somewhere... I'll keep digging and maybe I can find something.
The states are, in fact, paying an allocated portion of overhead as well. There was a long argument over how much they should pay for overhead, and it was *eventually* settled by a set of rules approved by the Surface Transportation Board.

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For a private operator, they might have a lower pay scale, they might have cheaper equipment.... but the trouble is that they are bound to have roughly the same overhead for stuff like maintenance, ticketing, stations, insurance, legal matters, etc. The same overhead... spread over fewer trains. This makes it unlikely that they can make a good offer.

Unless they're already a large operator. This is why most contract passenger rail services are going to one of a few large multinational companies which already contract to run lots of other services.
 
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Hello group,

Due to some recent news developments in my home state of Alabama, I decided to research this message board to see if Corridor Capital had done any service (or attempted to) elsewhere. Turns out I wasn't dissapointed to find out information. As it turns out, it appears that Corridor Capital has been attempting to get their foot in the door down here in the south as well. Here is a recent news report:

WSFA story from June 10th:

http://www.wsfa.com/...er-train-system

And not 5 days later the Southern Rail Commission issues a responseregarding Corridor Capital's statements:

http://www.southernr...er-rail-service

Interesting that the proposal called for trains running as soon as 18 months. Places like Huntsville, Decatur, Cullman, and Montgomery all have depots but all have been re-purposed for other uses. Mobile's old Amtrak station was flooded out during Katrina and was later demolished. Not to mention, as far as anyone knows those ex-Santa Fe Hi-levels are still unrebuilt. i like the concept, but this looks like maybe more of Corridor Capital's vaporware?

-Jason
 
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