Southwest Airlines vs Amtrak

[neroden]

As a very specific example of why privatization is stupid, at the time of the privatization of CN, the government of Canada received about $2.16 billion.

Since then, the government of Ontario has spent $1.058 billion buying tracks back from CN just in the Greater Toronto Area. The government of Quebec has spent an additional $92 million on tracks in the Montreal area and will be spending more. (I can't find out how much the City of Toronto and GO Transit spent to buy Toronto Union Station and the related tracks, so that isn't included in these numbers.) It's not clear how much money VIA has spent on improvements to track owned by CN (without getting its money's worth, I might add).

In the end, the privatization will probably turn out to have cost the taxpayer money.

(Found a quote for the Kingston subdivision "improvement" costs, which is federal money going straight to CN ostensibly for passenger rail improvements: $341 million in initial budget, not actually completed, and CN is using the "improvements" for freight while still refusing to give better passenger service.)

 

[neroden]

I am always interested when folk say stuff about "the unions", either for or against... Just wondering why having a union is seen as so problematic to running a decent business in America?

People have a lot of different views.
I will simply explain that the *railroad* unions in the US are not like most unions. They're still divided up along craft lines, and there are a whole bunch of them at any given railroad, who fight over turf. I think you largely got rid of craft unions in favor of industrial unions a long time ago in the UK... you can probably figure out the problems with craft unions fighting over turf pretty quickly.

 

[XHRTSP]

Would they have been more successful by starting with a clean slate, possibly building a high speed rail system from the start?

Southwest has done well for itself, but how many other airlines that started flying then or since have gone tango uniform?

 

[George Harris]

Would they have been more successful by starting with a clean slate, possibly building a high speed rail system from the start?

Southwest has done well for itself, but how many other airlines that started flying then or since have gone tango uniform?

I was aware of some of these European privately built lines, and also that they were nationalize a long time ago. By that happening they missed all the economic realities of changes in the rail industry over the last 50 to 80 years which is the main cause of the issues discussed here. The British privatization is in many ways an example of how not to do it.

Neroden: The three examples of government owned railroad in the US that I mentioned were owned by the named governments from their beginning and still are. The current operators do so through long term leases. As to the Pennsylvania issue, I know nothing. How Conrail fits, I do not know, but that is an example of nationalization followed by later privatization. I do suspect that the government lost money on the scheme, but the results of letting it all turn into bike trains and strips of woods would have been far worse.

As to the thought of building all new passenger lines everywhere in the country, the ongoing drama in California is a good example of the agony that those that try to go through. And the cost? A rough estimate of what it would cost to build a line good for high speed between Bakersfield and Los Angeles approaches the annual combined GROSS income, not NET income of UP and BNSF. To think that this sort of thing could be done nationwide to provide for passenger trains is simply a hallucination. By the way, the cost of this building this segment for 80 mph or 200 mph is not really that much different.

 

[Anderson]

George,

The LA-Bakersfield example is a particularly bad case since the only line between the two is Tehachapi, and you have a lot of mountains and fault lines to contend with. Arguably, that segment is among the worst in the US. The situation on the Eastern Seaboard is probably a bit more typical...you have two tracks (ex-B&O and ex-Pennsy) from Hoboken/Newark to Washington. From there, it's one line (ex-RF&P) from Washington to Richmond, after which you pretty much have two lines (or at least two sets of right-of-way) down to Jacksonville. After that, I can't recall if it is two sets of ROW or three into Miami.

Similarly, from New York to Chicago, you had four ROWs: New York Central, Erie Lackawanna, Pennsy, and B&O. Of those, I believe you've got the Pennsy and NYC almost entirely intact. The Erie and B&O ones are a lot more hit-or-miss, though in the latter case IIRC there are either C&O tracks or non-Water Level Route NYC tracks filling in some of the gaps.

I guess the bottom line is that, after all the mergers and whatnot, there are more than a few cases where you might be able to take one "set" of tracks to prioritize freight and another to prioritize passenger traffic on in most cases. Even bumping up the MAS on those tracks well beyond 79 MPH would, in a lot of cases, require limited rebuilding (especially in cases where the railroad bought up far more land than they needed at the time).

 

[neroden]

Similarly, from New York to Chicago, you had four ROWs: New York Central, Erie Lackawanna, Pennsy, and B&O.

More than that.NY Central had one four-track route from NY to Buffalo, and then two double-track routes west of there (Lake Shore route and the Canada Southern).

Pennsy had one route, four-track as far as Pittsburgh IIRC.

B&O had a full route from NY to Chicago.

Most of the others were paired routes, run by one railroad from NY to Ohio and a different one from Ohio to Chicago.

Erie and Lackawanna had separate routes from NY until the vicinity of Buffalo or Erie PA. From there westwards one of them took the Nickel Plate route, IIRC.

The C&O had its own entirely separate route from the DC area as far as the Ohio River, and then I forget who they connected with. There were a large number of different railroads from Chicago area east into the vicinity of Ohio, including the Wabash and the Nickel Plate; I don't remember the names of all of them.

I guess the bottom line is that, after all the mergers and whatnot, there are more than a few cases where you might be able to take one "set" of tracks to prioritize freight and another to prioritize passenger traffic on in most cases.

A huge number of cases east of Chicago, and well into the prairies. For instance, if Iowa's government had its head screwed on right, they'd notice that there's a passenger-primary route there for the taking (the former Rock Island line).
There was much less redundancy west of the Rockies because both population and industry were still quite small there when the railroads started declining.

Even bumping up the MAS on those tracks well beyond 79 MPH would, in a lot of cases, require limited rebuilding (especially in cases where the railroad bought up far more land than they needed at the time).

There are 100 foot right of ways in California. *100 foot*, for what were mostly single-track railroads. East of Chicago, the ROWs are usually narrower, but they're still usually 50-70 feet. The current freight operators like to waste the width of the ROW on dirt roads so that they can drive gasoline-powered trucks parallel to the tracks -- which is certainly not its highest and best use.

 

[Anderson]

Nathanael,

I'm just wondering...how many tracks could you fit into a 100-foot ROW? That at least sounds to me like you could pack in two freight tracks, two passenger tracks, and 30-40 feet of separation so long as you didn't need sidings or to manage a crossover of some sort (which would get interesting, to be sure).

As to the trucks...a lot of that is maintenance-of-way stuff that I can understand.

Interesting, the multiple ROWs situation is also the case over on the Southside in VA (where you have the N&W mainline and the V-Line in several places). The Virginian is, unfortunately, a somewhat slow/messy ROW, and it's the one that got torn up. The N&W line, which could probably support 125 MPH operation on the basis of the ROW (i.e. not taking into account track conditions and the need for grade closings), is also the freight line in the area.

Edit: I'm reminded of Charlie suggesting that we try and sort out where all of the intact or largely-intact ROWs out there are.

 

[George Harris]

I could try ot explain why a lot of these things are not nearly as easy as you appear to think, but I simply give up. When you have a one or two track line on a 100 foot right of way, there is really nothing left over by the time you get through more than a couple of feet of difference between track elevation and ground elevation, space for ditches, etc. The space to drive along side the track with maintenance vehicles is not a waste. Just because you can raise the speed limit to 110 mph, 150 mph, or whatever, does not mean that you can run at that speed thrughout. With this I say no more.

 

[Ispolkom]

Continental european railroads were nationalized in the late 19th - early 20th century for one simple reason. Military mobilization. At the time, you couldn't move mass armies without railroads.

This resulted in very odd things, such as border stations with endless platforms, something still visible in France and Germany, and as well all know, the shape of the 1914 campaign was dictated by prepared railroad timetables.

Britain and the United States didn't need this capacity, and didn't nationalize their railroads.

Both countries did take over their railroads in World War I in the name of "efficiency." I'm not familiar with British WWI railroading, but I do know that the US government mismanaged the railroads given the chance (they did do some good things, like standardizing locomotives, but look at the Colorado Midland, or, near to my heart, the mismanagement of the Addison Branch of the Rutland Railroad.)

After the WWI experience, the US government let the private sector deal with things in WW2. The British, for whatever reason didn't, and the result was the necessary nationalization in 1948 (not 1946), since the railroads were pretty near bankrupt.

Let's remember that state control isn't always a good thing for railroads. Look at the Beeching Axe in Britain, or the wholesale abandonments with Conrail in the US.

ETA: Not that private ownership is so great. I spent my first years in Musselshell, Montana, along the Milwaukee Road's Pacific Extension. Wouldn't it be nice if that were still there?

 

[neroden]

I could try ot explain why a lot of these things are not nearly as easy as you appear to think, but I simply give up. When you have a one or two track line on a 100 foot right of way, there is really nothing left over by the time you get through more than a couple of feet of difference between track elevation and ground elevation,

That's relatively unusual. Yes, situations with viaducts and trenches are a big deal.

space for ditches, etc. The space to drive along side the track with maintenance vehicles is not a waste.

But it usually isn't the highest and best use. Lazy railroads which, 100 years ago, would have used track-mounted maintenance vehicles, now try to prevent the installation of a second track where there was one before -- *solely so they can drive the occasional maintenance vehicle next to the track*.
Give me a break.

 

[neroden]

Let's remember that state control isn't always a good thing for railroads. Look at the Beeching Axe in Britain, or the wholesale abandonments with Conrail in the US.

Attitude always matters. I'd rather have a private railroad with a good attitude than a government railroad with a bad attitude.
But it seems to me that, contrary to most people's assumptions, it is actually *easier to change attitudes* in the government than it is in extremely large privately controlled organizations. (I suspect most people misgeneralize from the situation of *small* private organizations, where attitude can change quickly.) Even Beeching did some good things (he recognized the value of containerized freight).

ETA: Not that private ownership is so great. I spent my first years in Musselshell, Montana, along the Milwaukee Road's Pacific Extension. Wouldn't it be nice if that were still there?

That was the most egregious example of business mismanagement I've ever read about. Those who haven't read about that... read about it.
http://www.trainweb.org/milwaukee/article.html

The ICC carefully auditted the Milwaukee's own books, which none of the auditors commisioned by the trustee had done, for the years 1976 through 78 and the findings were startling. They found that for some reason the Milwaukee had been double entering expenses on "Lines West". It has never been discovered who authorized this or who was doing it, but the ICC auditors found it and were able to derive accurate figures for profits on "Lines West". What they found was that instead of the terrible cash drain the trustee said it was, the Extension had actually contributed profits of $12.7 million in 1976, $11 million in 1977, and $2.9 million in 1978. It should also be noted that these three years were well into the decline of traffic on the western lines due to deteriorated trackage and transit times and the refusal by the company to supply cars to western customers. The ICC was so startled by these findings, they had another group of auditors go over the books just to be sure the figures were right. They were.

HOW did they manage to double-book the expenses for years on end without anyone noticing? WHY did they do it? What was going ON? It really seems like there was some tax scam being operated by a prior management which the later management forgot about the existence of, or something...

...found some more about this, though it doesn't answer those questions.

http://www.american-rails.com/milwaukee-road.html

I suggest everyone read the Levitan thesis. It neatly lays out the unusual economic conditions which apply to railroads on pages 11-14.

The most important fact to remember is that due to high fixed costs, low variable costs, and huge economies of scale, railroads will tend towards monopoly, very fast. As they have.

Private monopolies generally become abusive very quickly, unless they are regulated tightly as public utilities. And studies in the public utility area show that on average, municipal ownership gives better results for nearly everyone than "regulated" profiteering utilities.

It's no wonder rent-seeking profiteers want to own monopolies which provide basic public services. Heck, I'd like to. But it's not good for anyone except them. If your private monopolist *happens* to be public-spirited, you can get good results, and that's all very well until management changes. Then you have to put the monopoly under democratic control, which means nationalization.

 

[railiner]

Very interesting reading.....the obvious answer to the "Why" question as to the reason for killing the PCE, could be that someone on the MILW board may have had other interests, such as BN or UP stock ownership.....may or may not be true, but is a possibility......

 

[Swadian Hardcore]

Very interesting reading.....the obvious answer to the "Why" question as to the reason for killing the PCE, could be that someone on the MILW board may have had other interests, such as BN or UP stock ownership.....may or may not be true, but is a possibility......

Maybe there were just too many parallel lines and Milwaukee Road got smashed by monster competitor Burlington Northern after the merger of GN and NP. Before that merger Milwaukee Road could still compete, afterwards it just couldn't take the pressure. I think building the PCE might've been a mistake, they entered late into a saturated market.

 

[JayPea]

Let's remember that state control isn't always a good thing for railroads. Look at the Beeching Axe in Britain, or the wholesale abandonments with Conrail in the US.

Attitude always matters. I'd rather have a private railroad with a good attitude than a government railroad with a bad attitude.
But it seems to me that, contrary to most people's assumptions, it is actually *easier to change attitudes* in the government than it is in extremely large privately controlled organizations. (I suspect most people misgeneralize from the situation of *small* private organizations, where attitude can change quickly.) Even Beeching did some good things (he recognized the value of containerized freight).

ETA: Not that private ownership is so great. I spent my first years in Musselshell, Montana, along the Milwaukee Road's Pacific Extension. Wouldn't it be nice if that were still there?

That was the most egregious example of business mismanagement I've ever read about. Those who haven't read about that... read about it.
http://www.trainweb.org/milwaukee/article.html

The ICC carefully auditted the Milwaukee's own books, which none of the auditors commisioned by the trustee had done, for the years 1976 through 78 and the findings were startling. They found that for some reason the Milwaukee had been double entering expenses on "Lines West". It has never been discovered who authorized this or who was doing it, but the ICC auditors found it and were able to derive accurate figures for profits on "Lines West". What they found was that instead of the terrible cash drain the trustee said it was, the Extension had actually contributed profits of $12.7 million in 1976, $11 million in 1977, and $2.9 million in 1978. It should also be noted that these three years were well into the decline of traffic on the western lines due to deteriorated trackage and transit times and the refusal by the company to supply cars to western customers. The ICC was so startled by these findings, they had another group of auditors go over the books just to be sure the figures were right. They were.

HOW did they manage to double-book the expenses for years on end without anyone noticing? WHY did they do it? What was going ON? It really seems like there was some tax scam being operated by a prior management which the later management forgot about the existence of, or something...

...found some more about this, though it doesn't answer those questions.

http://www.american-rails.com/milwaukee-road.html

I suggest everyone read the Levitan thesis. It neatly lays out the unusual economic conditions which apply to railroads on pages 11-14.

The most important fact to remember is that due to high fixed costs, low variable costs, and huge economies of scale, railroads will tend towards monopoly, very fast. As they have.

Private monopolies generally become abusive very quickly, unless they are regulated tightly as public utilities. And studies in the public utility area show that on average, municipal ownership gives better results for nearly everyone than "regulated" profiteering utilities.

It's no wonder rent-seeking profiteers want to own monopolies which provide basic public services. Heck, I'd like to. But it's not good for anyone except them. If your private monopolist *happens* to be public-spirited, you can get good results, and that's all very well until management changes. Then you have to put the monopoly under democratic control, which means nationalization.

I remember very well the Milwaukee in its declining years. I grew up less than nine miles from the Milwaukee main line here in Eastern Washington. My uncle was a bookkeeper for a local grain co-op which had a couple of elevators along the Milwaukee line. My uncle was one of the kindest, gentlest souls to ever draw a breath--a true gentle man. But I still remember his disgust in describing how it practically took an act of Congress to get hopper cars to ship the grain from those elevators. I never saw him so worked up over anything else. I also knew a few of the old timers who were retired from the Milwaukee. One was a former engineer on the line and he had no use whatsoever for the Milwaukee in its (then) current state nor for the "young punks" who worked for it. Track maintenance was slipshod at best or nonexistent at worse. There were places in my neck of the woods where maximum speeds were 10 MPH. Hard to compete with the BN at 10 MPH!!! :lol:

I remember one time I was fishing on a lake by which the Milwaukee passed. I was combining two of my favorite activities, fishing and trainfanning, and noticed smoke coming from the rear of one passing train. Turns out the caboose's rearmost trucks had derailed, and were setting off smoke as they drug along the ties. I don't remember how long the freight had run before finally stopping to rerail the trucks, but that old engineer said it was a fairly long distance. He was convinced Milwaukee personnel aboard the train were fully aware of the situation but simply didn't care.