Transit
Are private operations on the Northeast Corridor the means to an end, or just an end?
House Republicans have proposed "privatizing" Amtrak's Northeast Corridor, keeping the tracks publicly owned but contracting out operations to a private operator. But without more federal funds to improve the corridor, this won't accomplish much.
Photo by tracktwentynine on Flickr.
In order to take advantage of the roadways effectively, bus drivers Sometimes, there are accidents, which can be mostly avoided through proper design of the roadways, and there is sometimes congestion, which can be relieved through road fees. Fundamentally, the system works: There are vehicle owners, usually private individuals, and there are infrastructure owners, usually the public sector, and they get along fine.
All of this, I know, is obvious. But when it comes to rail transportation, this formula has been avoided, especially in the U.S. The owner of railroad tracks usually is also the operator of trains along them. When other operators want to move their own trains in, conflicts typically erupt.
The frequent disagreements about acceptable service levels between national rail operator Amtrak and freight railroads on tracks that the latter owns (and which it isn't very happy to share) are indicative of this problem. But these disagreements are not irreconcilable.
Indeed, an infrastructure owner that is able to arbitrate between competing operators could be more effective in producing efficient service for everyone than might be an owner-operator, which discriminates against other operators.
In this context, last week's revealing of House Transportation and Infrastructure Committee Chairman John Mica's (R-FL) plan for the Northeast Corridor raises a number of interesting questions. Convinced of the value of private sector competition and promoting a pull-out of the federal government from every public service imaginable, Mr. Mica has submitted a proposal that attempts to re-imagine the Northeast Corridor, Amtrak's flagship route and the nation's most-traveled intercity rail line, as a place where, fundamentally, the rules of the road The bill (draft text) would force Amtrak to abandon its control of (much of) the Northeast Corridor between Washington and Boston, handing it over to the Department of Transportation, which in turn would lease it to an "Executive Committee."
Amtrak would have to give up all of its assets and it would lose federal funding. The Committee, in charge of infrastructure and setting pricing policies, would then engage a public-private partnership (PPP) with a private group, which would commit to upgrading the line and then operating trains to offer two-hour trips between New York and Washington and 2h30 between New York and Boston Mr. Mica also claims that this could be done at a cheaper price than Amtrak's $117 billion proposal.
Outside of the Northeast, states would have to offer their rail corridors to competitive bidding; current subsidies to Amtrak would simply be redistributed to the winners of those operations bids.
Despite the wide-ranging proposed effects of the bill as summarized, the manner in which any of this would be implemented remains incredibly unclear. How would intercity rail operators interact with the freight and commuter railroads that also use the tracks, in the Northeast and elsewhere? If a PPP were implemented, how much would the government agree to commit to pay for improvements?
Unfortunately, the bill would not provide a realistic way to promote true operational competition. Nor does it would it offer a promise of actual federal support to fund an upgrade of the corridor, which seems unlikely to be sponsored by private entities alone. Most problematic would be the transfer of authority over the line's management to the currently non-existant Executive Committee, whose ability to make decisions about rail properties has yet to be tested, let alone proven.
Fortunately, the proposal is unlikely to make it through the Senate, where Democrats and other Republican supporters of Amtrak are likely to prevent the bill from passing even if it makes it through the House. The American intercity rail system and the governance bodies that oversee it at the federal and state levels are too underdeveloped to be able to guarantee that this semi-privatization wouldn't be a disaster.
But Mr. Mica's bill does articulate a number of policy changes that could play an important role in shoring up passenger service in the Northeast. The status quo, in which Amtrak operates relatively infrequent and slow passenger trains within the nation's most important megaregion, certainly is not ideal. If managed appropriately, the separation of track ownership and line operations could allow for a situation in which multiple operators offer competing services along the same routes, just as Megabus and Bolt Bus compete for the most customers on I-95.
In mainland Europe, E.U. regulations have mandated that national rail companies like France's SNCF or Germany's DB allow other operators (in many cases, SNCF and DB affiliates) to run trains between similar destinations. Though I am not convinced that this will produce universally positive results, it will at least likely result in lower fares for customers on the most heavily trafficked rail corridors.
And focusing on the most-used lines is clearly Mr. Mica's goal; according to the bill, the second-highest stated priority for potential investors are "activities that benefit the greatest number of passengers" (just after safety). Amtrak's current policies do not exactly fit that bill since they are designed to push lower-income individuals (like myself) onto slower and less comfortable intercity buses.
Yet the Mica proposal would not produce true competition in rail operations. It would encourage competition in rail operations contracts. Rather than invest in the infrastructure and then open up the rights to use tracks, the PPP structure as proposed would be a build-operate-maintain system in which one private group would invest in improvements and then have control over operations, which it would perform itself.
Mr. Mica has repeatedly referred to Amtrak as a "Soviet-Style" system because it has a monopoly over its services, but it is hard to see how a PPP extended over a long contract would be any different, except that it would charge even higher prices to make up for the initial cost of capital improvements and The biggest question of all, though, is whether Mr. Mica is in complete denial about the extent of either the private sector's ingenuity or their collective willingness to invest in public infrastructure. While it may sound nice, asserting that corporations can rebuild the Northeast Corridor in 10 years at a far lower cost to the taxpayers than Amtrak has proposed could is a stretch. And even a $50 billion upgrade would be larger than any single private investment in infrastructure ever in the U.S. What evidence does Mr. Mica have that a plan like this could move forward?
Cross-posted on The Transport Politic.Yonah Freemark writes about transportation issues on his blog, The Transport Politic, and periodically in other publications such as Next American City. 
Comments
@ggwash
- Bikeshare is a gateway to private biking, not competition
- Short-term Washingtonians deserve a voice, too
- Judge denies injunction against closing schools
- DC Council makes major policy changes overnight
- Public land deals have both benefits and pitfalls
- Long-term closures: A solution to single-tracking?
- PG planners propose bold new smart growth future
by smoke_jaguar4 on Jun 20, 2011 2:38 pm • link • report
Mica is a transit advocate and all, but sometimes, power just goes straight to peoples' heads...
by C. R. on Jun 20, 2011 2:47 pm • link • report
by OctaviusIII on Jun 20, 2011 2:48 pm • link • report
by Thayer-D on Jun 20, 2011 2:51 pm • link • report
Many of the effects can be largely predicted from the airline industry: competition will go up, prices will go down, companies will go bankrupt (requiring pension assistance from the government, ex. United)
by funInSun52 on Jun 20, 2011 2:54 pm • link • report
Oh, wait. That's a stupid fucking idea. Never mind.
by oboe on Jun 20, 2011 3:15 pm • link • report
Mica's bill does nothing to address the FRA's regulatory isses with high speed rail, which is the most fundamental issue preventing implementation of true HSR services. Likewise, the idea of separating the train operators from the infrastructure owners isn't a terrible idea at all - but the notion that such private interests in operations will eliminate the need for public funds to be invested in the infrastructure is farcical. Likewise, Amtrak certainly shouldn't be seen as a sacred cow - it has plenty of opportunities for improvement. However, this bill (as is) doesn't actually improve anything.
by Alex B. on Jun 20, 2011 3:25 pm • link • report
Splitting the train operations into a private operation might not be a horrible idea. The UK's franchise system isn't horrible, and prices on main lines do have a fair bit of competition, and comfort/quality is really quite excellent on long-distance routes (the MkIV coaches are very nice). However, the cost-effectiveness of that system can be hotly debated, and the government still does need to specify routes, subsidies, and minimum service levels at the end of the day. Given that there are subsidies involved, it starts smelling like corporate welfare.
On the flipside, although the Network Rail/train operator split is at the very least fairly decent, the attempted privatization of the London Underground's right of way was nothing short of an unmitigated disaster that ended up costing billions.
Still, though, we've seen that there are certain public-private transit partnerships that do work quite well. The DC Circulator is the most obvious local example.
However, I have absolutely no idea how you'd be able to maintain service, or find bidders for rural routes.
As things stand, though, the NEC seems to work just fine. In concept, this idea isn't godawful. However, the specifics of the GOP's proposal most certainly are.
by andrew on Jun 20, 2011 3:49 pm • link • report
by Phil on Jun 20, 2011 4:20 pm • link • report
The chief reason ticket prices on NEC are sky-high is due to its need to subsidize other less profitable Amtrak routes. I'm not saying keeping those open is bad, but states need to pony up more money if they wish to keep those routes open in the long-run, not depend on NEC travellers.
by John M on Jun 20, 2011 4:56 pm • link • report
by JAY on Jun 20, 2011 10:59 pm • link • report
The UK rail system is unreliable and expensive and the rolling stock is ancient. The Japanese rail companies own a myriad of other enterprises which are integral to their service (hotels, kiosks) and have a density unmatched anywhere in the US, which makes sense given the density of the population.
Amtrak fares are hardly sky high and vary by time of day, day of the week and level of service, much like planes.
by Rich on Jun 20, 2011 11:03 pm • link • report
If something can only exist through painful government subsidies...why should it exist at all? Do Americans have a *right* to have rail service?
How come I can get a bus from DC to New York for $20 and a train costs as much as 8 times that amount?
by Ian Luria on Jun 21, 2011 12:07 am • link • report
by Thayer-D on Jun 21, 2011 7:10 am • link • report
Mica's plan seems to indicate we would do this (VfM style) as well, but I am skeptical we would be open enough about explicitly paying for outcomes via government to ensure a reasonable subsidy is paid for given our current economic and political climate.
I'm a big believer in achieving the possible. Japan and Europe have great rail systems. Do I think we can build something like they have? Not anytime soon. Maybe trying to get some improvement via the PPP model isn't a bad idea, especially if a way could be worked out to increase private sector funding. I don't think the private sector will magically be able to fund everything, but one of the basics of PPPs is to get investment from other channels when budgets are tight allowing infrastructure or services to be able to be improved. I think the plan should be fleshed out more before it is cut down. After all, one way you can get the most profitable train route in the US to improve is to try and separate it from the rest of the system. Does this mean the rest loses its subsidy? Well, that's the trade off isn't it?
I am also skeptical of the idea that the UK rail system is worse than ours. Their rolling stock certainly isn't ancient when compared to ours. Other than the Alstom, I believe Amtrak's youngest rolling stock is from the 90s with some dating back to the late 70s (although refurbished since then).
Just as long as we don't try to privatize the rail infrastructure. All you need to do is study the history of Network Rail in the UK to see what a disaster rail infrastructure privatization can be.
by Ed on Jun 21, 2011 7:56 am • link • report
by Mike on Jun 21, 2011 8:05 am • link • report
So... you wanna get rid of DHS, DOD, NASA, NIH, agriculture and roads in general? Just asking.
by Jasper on Jun 21, 2011 3:27 pm • link • report
But the problem in the US is that most rail is in private hands. BTW, I don't think that the Brits privatized their infra, just the service. They wanted competition, but it turned out that it's a major pain in the ass to have multiple services between two points because you can't just hop onto the next train when you miss yours.
Regional bus systems in the Netherlands are largely privatized and subsidized by the government. Basically, the provincial and city governments write out a competition stating what service they want to have run in their province or city, including ticket prices. Commercial operators can then bid for the entire package, i.e. all the required lines, profit making ones, and losing lines. They can bid negatively as well, if they don't think they can make a profit. The province or city then takes the lowest bidder.
When the contract is up (every 5-10 years) there are provisions that if the provider changes, the incoming provider has to take over material and personnel from the expiring operator, should they be short on material and personnel.
In reality, this works out pretty well. Politicians get to decide how many buses run where at was prices, but commercial operators get to run the service as efficient as possible, and present that bill (positive or negative) to the politicians. The semi-monopoly works well because it allows for good transfers, which never works when you have different operators.
Ticket prices are pretty much set on the national level, and the national government forces all operators to accept the same forms of payment (cash, paper fares and now the failed electric payment). Note that city and provincial networks do overlap.
by Jasper on Jun 21, 2011 3:44 pm • link • report
The answer is yes! We currently borrow 43 cents out of every dollar America spends. Everything in government should be subject to a 43% cut.
I strongly believe that a lot of what the government currently does is grossly inefficient and wasteful. Amtrak and the US Postal Service being glaring examples.
DHS and DOD have important functions but must be downsized.
NASA: I think a case can be made for reducing their funding by at least 43%.
NIH...I am not so sure about.
USDA could be reduced by 43%
and a strong case for road privatization has been made by Dr. Walter Block . (http://www.walterblock.com/)
All oil subsidies must be ended immediately, all foreign aid must stop and all American troops must be brought home from abroad. Americans need to pay the 'real' cost of gasoline. If that means trains suddenly become a viable means of transportation again, then so be it! Get the government OUT and let individuals make decisions!
by Ian Luria on Jun 21, 2011 3:53 pm • link • report
Add a Comment