No more charters & special moves: 3/28/18 Memo fr Anderson

[Seaboard92]

http://wvmetronews.com/2018/05/02/new-river-train-back-in-business/

New River train is back as the major event

Note Chris's phrasing "tentative agreement" which means anything can and will change. Either way I hope it runs because I'll be there if it does.

 

[Seaboard92]

And I do agree with the consensus no one truly knows because no one has tried it before. NS dropped their passenger policy last year after the season was done and sold off all except one of the 4x coaches. The one they kept had a HEP gen so that makes sense to keep.

Now what baffles me is how these class ones have enough coverage for themselves but never enough for passenger rail. It seems that carrying cargos that can explode and take out an entire town could have a higher premium than passengers. But I don't understand that part of the business.

 

[jis]

All that they need to indemnify themselves is to have a very large line of credit to draw on. They don't necessarily have to go to an insurance company except to get catastrophic insurance coverage beyond that large line of credit to draw on. As for indemnifying a passenger operation, the potential damages from even a few hundred passengers mangled up can be at least as bad if not worse than a haz mat crash. Companies generally are reluctant to take on risks that are not essential to their business. I don't think any Class I really believes that Charter passenger trains are really essential to their business, hence their conscious choice not to insure them in most cases. At the end of the day it is all about risk and hassle management.

 

[Seaboard92]

Now that was a great explanation. M afraid a lot of these organizations will never be able to have a substantial line of credit. I know VMT is struggling right now financially. They need that engine to run to make money.

The other thing they need is a new manager at VMT over excursions but that's a completely different story. Last years season was a disaster for them.

 

[neroden]

Regarding insurance, this just gets back to something I've been saying my whole life, which no less than John Maynard Keynes agreed with: the passenger operator, or a local government, needs to own the tracks.

The freight railroads are clearly just charging go-away prices because they can, not because they actually need to. A local government wouldn't do the same thing.

 

[cpotisch]

Regarding insurance, this just gets back to something I've been saying my whole life, which no less than John Maynard Keynes agreed with: the passenger operator, or a local government, needs to own the tracks.

The freight railroads are clearly just charging go-away prices because they can, not because they actually need to. A local government wouldn't do the same thing.

CSX and the other big guys know that Amtrak needs the track, so they can charge pretty much whatever they want. If Amtrak (or the government) buys trackage, the initial cost will be tremendous, but at a certain point the Class Is might realize that Amtrak can survive without them.

 

[snvboy]

To clarify my earlier question, I'd like to know what exactly the insurance requirements from the railroad are.

 

[crescent-zephyr]

It is debatable if anyone actually knows. It may vary from railroad to railroad.

 

[MikefromCrete]

To clarify my earlier question, I'd like to know what exactly the insurance requirements from the railroad are.

Call them up and ask them.

Or get in touch with the Milw261 or NKP765 people, they actually run charter trains and would know. I doubt it anybody on this site would know the specifics. Even Seaboard, with all his private car experience, admits he doesn't know about the insurance aspects.

 

[crescent-zephyr]

To clarify my earlier question, I'd like to know what exactly the insurance requirements from the railroad are.

Call them up and ask them.

Not sure who to call.... Someone at BNSF? Maybe they can tell you the actual requirements.

Or do you call an insurance company and get an idea of cost for such a policy. What insurance companies provide this?

 

[crescent-zephyr]

I see the edit now....

Yeah I'm sure #261 has looked into it. They are true miracle workers up there. If anyone can figure it out, if will be them!

Anybody know how UP handles the Frontier Days and Museum trips each year? Maybe the passenger coverage is lumped into the steam coverage they carry for #844

 

[Seaboard92]

The people you would call would be the railroads to get the number they want for insurance. But the issue you would have is actually reaching the person over passenger trains. For instance I do not know the person at BNSF. However I am a known Person at CSX and NS so I have a higher likelihood of getting my phone call answered.

Then once you find out what the railroads want I would reach out to an insurance company.

 

[looshi]

There's been a couple of comments in this thread for "real numbers". I don't think people have an understanding of the magnitude of the cost for insurance like this so I went and asked around.

I have worked with a group that is required to have $10M of insurance to run their excursions on a Class 2. This is considered a low amount in today's day and age but they are grandfathered in through some old agreements. It costs them $100K per year in premiums. Assuming a linear scale taking that up to $250M would require $2.5M a year minimum. This assumes a Class 1 would accept $250M in liability without Amtrak's statutory cap. There is no reason to believe they would not ask for more. Iowa Pacific needed $300M in liability to operate the Hoosier State and it pretty much bankrupted them.

Also, there are only 2 main companies that do insurance for the tourist railroad industry and they both use the same underwriter. The $500M policy that someone like a CSX might require doesn't currently exist. Even if it did it would only take 1 or 2 organizations not being able to make the payment to the pool and then it would all fall apart.

And a good portion of the industry hates one another. But that's another subject entirely.

 

[Seaboard92]

If that isn't the truth I would have thought something like these charter restrictions would bring everyone together. But from what I've noticed is the further fracturing of an already fractured industry. I could think of a few places that don't like each other right off.

I can also think however of a certain excursion manager who is almost universally disliked across the entire industry. It's amazing how catty the industry is in times like these. Then there are people like me who are fighting for everyone's charters despite having no connections to them. But I see an attack against another group as an attack against mine as well.

 

[MikefromCrete]

I see the edit now....

Yeah I'm sure #261 has looked into it. They are true miracle workers up there. If anyone can figure it out, if will be them!

Anybody know how UP handles the Frontier Days and Museum trips each year? Maybe the passenger coverage is lumped into the steam coverage they carry for #844

UP is a multi-million dollar corporation, it's not a bunch of railfans with a steam locomotive and private cars. I'm sure UP can easily absorb any financial impact. UP also operates very few excursions anymore that are open to the public. In recent years, the UP has mainly moved its steam locomotives from place to place on trains open only to railroad employees. The locomotives are displayed at various locations for public relations purposes, but there are not a lot of chances to actually ride behind them.

 

[seat38a]

And a good portion of the industry hates one another. But that's another subject entirely.

Well there you have it. There is your number 1 reason why PV's will not be making a return like they used to.

 

[crescent-zephyr]

I see the edit now....

Yeah I'm sure #261 has looked into it. They are true miracle workers up there. If anyone can figure it out, if will be them!

Anybody know how UP handles the Frontier Days and Museum trips each year? Maybe the passenger coverage is lumped into the steam coverage they carry for #844

UP is a multi-million dollar corporation, it's not a bunch of railfans with a steam locomotive and private cars. I'm sure UP can easily absorb any financial impact. UP also operates very few excursions anymore that are open to the public. In recent years, the UP has mainly moved its steam locomotives from place to place on trains open only to railroad employees. The locomotives are displayed at various locations for public relations purposes, but there are not a lot of chances to actually ride behind them.

Well... NS is also a multi million dollar corporatioj and they chose not to Continue their passenger insirance (according to Seaboard in this thread and also what members of the 611 grouo were saying when I rode last year).

The amount of public trips UP runs is irrelevant. A public trip is a public trip.

"Some railfans with a steam locomotive" is hardly a good description of any of the mainline operations. Just restoring a locomotive is around a million dollars....

 

[Seaboard92]

I'm actually not just a PV guy. I'm a former employee of the Virginia Museum of Transportation who was forced out after they changed excursion managers. So I can speak directly about anything going on with the NS program, and the 611. Even though I don't work there anymore I'm still connected enough to know the goings.

NS cancelled their passenger insurance last year at the end of the 611 excursion season because the 21st Century Steam program was designed as a temporary program for starters. Part of the reason TVRM (4501, 630), Fort Wayne (765) feel animosity towards VMT is because of the program.

After 611 started running again in 2015 you can note that the other engines stopped running on the mainline. Of which the other operators blame on 611 and VMT which keeps the cycle of bitterness running.

UP still does passenger excursions in fact ones ticket sales open tomorrow. And I hope to be lucky enough to get selected to buy a ticket. UP generally hasn't been running as many trips but I believe they retain the ability to run more often.

This year UP is only running the Denver Post Special because they are trying to get 4014 finished for 5/10/2019. Of which if I were you I would reserve your hotel for that as soon as the dates come open for booking. It's bound to be a great treat with the 4014 and the guest engine.

I can speak for hours about why groups don't like each other and generally for the reason.

Disclosure: I hold no hard feelings against the Virginia Museum of Transportation and 611. I do disagree with the way they've been led over the last few years. But I do wish them success.

 

[crescent-zephyr]

Looshi's post above gives a lot of info! If Iowa Pacific needed 300 million.... And with his class II example we are looking at 2-3 million a year. That's just a guess still... But a somewhat informed guess. Ha

 

[railiner]

I don't 'get' why railfan groups would have animosity for each other....when I lived in the Denver area, during the '70's and '80's, the Rocky Mountain RR Club, and the Intermountain Chapter of the NRHS, were 'friendly rival's' that each ran sellout UP steam excursions annually during that period....

 

[Seaboard92]

I don't 'get' why railfan groups would have animosity for each other....when I lived in the Denver area, during the '70's and '80's, the Rocky Mountain RR Club, and the Intermountain Chapter of the NRHS, were 'friendly rival's' that each ran sellout UP steam excursions annually during that period....

It's not so friendly anymore. I mean on paper we all help each other out. But there is a lot of undercutting everyone else in the industry. For instance my former boss at VMT who let me go goes around trash talking my trips that I try and operate.

In the worst case I was running a dinner train in the chicago market because I was stuck with a train after the group pulled the rug out from under me. And he went to work for a PV trip for the same group. He went around train orders, Facebook, and to anyone he could run his mouth to telling them my trip was a sham. And not official. Even though it was official I couldn't share the contracts. And it ran me out of business.

Again this year with the Susquehanna River Trip he was doing the same thing. Which then gave us a lot of trouble selling till Amtrak pulled the rug from under us. I was able to stop him this time by having a mutual friend step in and tell him to quit. The next step would have been legal action.

Another good example of groups that can't work together is to look at Portland, OR the three groups that make up ORHF do not get along well. Followed by the animosity that VMT has built up with TVRM, and Fort Wayne. The industry now that the younger heads are taking over is becoming very polarized and I for one do not like it.

 

[railiner]

Sorry to hear about that...when we ran those excursion's, we were strictly non-profit organization's, with all-volunteer help, and the small 'profit' we made as a result of ticket sales exceeding costs just went back into our organization's general fund. No one stood to make financial gains, individually. For all the hours of work I put in, mainly in handling ticket sales, (the old-fashioned way), my greatest reward were cab rides in the 844 and the 3985 between photo run-bys....

 

[MikefromCrete]

If there is all this grade school animosity between railfan groups, then it looks like excursion trains are on their way out. A unified front with Amtrak might bring results, but a bunch of crybaby isolated groups won't go anywhere.

 

[seat38a]

I don't 'get' why railfan groups would have animosity for each other....when I lived in the Denver area, during the '70's and '80's, the Rocky Mountain RR Club, and the Intermountain Chapter of the NRHS, were 'friendly rival's' that each ran sellout UP steam excursions annually during that period....

The industry now that the younger heads are taking over is becoming very polarized and I for one do not like it.

Seems to be the case with anything the millennials and the snowflakes get their hands on.

 

[Seaboard92]

If there is all this grade school animosity between railfan groups, then it looks like excursion trains are on their way out. A unified front with Amtrak might bring results, but a bunch of crybaby isolated groups won't go anywhere.

That's what I've been trying to convince the agency to do. There are some good groups CP Huntington is actively trying to help others especially the Leavenworth Snow Train which is over 2,000 miles away from them. Then there are other groups that are either doing nothing, or refuse to work with another group to salvage anything. I wish we could salvage something but it's next to impossible if the group's won't come out and unify.

It's one things to be competitors the rest of the year but what Amtrak does to one operator. Could very well happen to you as well. But most don't see it that way. Honestly I don't really like the new young guns in these groups because they think they know everything and their egos are gigantic. Which is why I prefer groups like CP Huntington because they have young people in charge. But neither one has a huge ego. And they are willing to take time and teach.