# Is Private Rail the Future for Regional Routes?



## dlagrua (Feb 6, 2017)

Considering the emergence of the Florida East Coast Brightline,. and the numerous regional lines run by private operators like Burlington Sante Fe around the country, I believe that more commercial operators will be called upon to get into the regional rail business in the next few years. I say this because Amtrak is perpetually strangled for funds and will soon face a serious shortage of equipment of Superliner and Amfleet coaches. With exception of some states stepping in, there is no requisition for such new equipment on the horizon. As the 30-40 yr equipment ages and get worn out what will happen? Government will need to turn to private industry to fill the gap and I envision a whole new network of operators will soon emerge. I am not trying to make the argument of the efficiency of private vs government passenger trains, .just pointing out a reality that will bring about changes. What say you?


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## MikefromCrete (Feb 6, 2017)

Do you mean private companies like Brightline running the whole thing on their dime or companies that run trains for governmental agencies like BNSF and UP for Metra or Keolis for MBTA and VRE? I doubt if there will be many private from the ground up operations --- Brightline is only happening because of the real estate side business. However, we may see private outfits running state-supported trains like Indiana tried to do with Iowa Pacific.


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## Karl1459 (Feb 6, 2017)

And the answer is..... (drum roll please).... Iowa Pacific/Hoosier.

Seriously, the opportunities for un-subsidised services with enough profit to have a reasonable return on investment (including equipment purchase) will be rare to non-existant. Maybe LA to Vegas, but that will likely not start showing a profit until 2 or 3 bankruptcies clean out debt. If multi-year contracts with enough subsidy to warrant equipment purchases were to appear there might be some players, and Amtrak would be one as seen by the Cascades, various California trains, the Heartland Flyer etc.

A key concern for national rail advocates is to make sure the ticketing is compatible across the country so anyone traveling does not have to contend with multiple policies and practices.


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## dlagrua (Feb 6, 2017)

MikefromCrete said:


> Do you mean private companies like Brightline running the whole thing on their dime or companies that run trains for governmental agencies like BNSF and UP for Metra or Keolis for MBTA and VRE? I doubt if there will be many private from the ground up operations --- Brightline is only happening because of the real estate side business. However, we may see private outfits running state-supported trains like Indiana tried to do with Iowa Pacific.


Hard to tell what will be Mike, but my comments were based upon what I see as a severe shortage of Amtrak rolling stock in the coming years. When there is a shortage of equipment to run the routes then what will happen? The IPH experiment failed because it was ill conceived, underfunded and had too low of a ridership to make it profitable. Amtrak is back for now but as I said equipment will run low in the coming years.


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## jis (Feb 6, 2017)

You can rest assured that Brightline will not run anything outside Florida and possibly won't even run everything we dream they will in Florida. They are based on a very normal Japanese model of privatized railroad, but not so much as things are done in the US, a model that is basically one of Real Estate development (of significant pre-existing real estate ownership, being the primary reason for running a railroad. Of course if the government opens up its treasure chest to them so that they make some real money over and above their actual operating cost, then they will probably take on almost anything. but what is the chance of the government actually generously subsidizing operations? Not much in my reckoning. So I'd say, happy dreaming.


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## A Voice (Feb 6, 2017)

dlagrua said:


> MikefromCrete said:
> 
> 
> > Do you mean private companies like Brightline running the whole thing on their dime or companies that run trains for governmental agencies like BNSF and UP for Metra or Keolis for MBTA and VRE? I doubt if there will be many private from the ground up operations --- Brightline is only happening because of the real estate side business. However, we may see private outfits running state-supported trains like Indiana tried to do with Iowa Pacific.
> ...


Why? What is going to cause Amtrak to face a worsening equipment shortage?

There is no defined age or deadline "set in stone" by which rail passenger equipment is worn out and/or must be retired. Indeed, the oldest Heritage cars are approaching seventy years of age; While yes, they should have been retired decades ago, Amtrak had no alternative to the baggage or dining cars, so they remained in service. Neither Amfleet nor Superlners face imminent removal from service. Amtrak (badly) needs new equipment, but lacking that, the old cars will soldier on.

Should the midwest states ever actually take delivery of a bi-level fleet of passenger cars, the Horizon fleet will be released to supplement single-level cars in the east. That's hardly ideal either, but it could provide some breathing room in the interim.


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## Just-Thinking-51 (Feb 6, 2017)

There minor chatter of Siemens start a leasing fleet for the US market. This fleet could come with a Siemens maintenance contract.

One stop shopping for lease equipment for a state contract or Long Distance train. Get a quote for engines and coachs, with a maintenance team. With a single phone call.

My two cents is the State should buy equipment and then contract out the operations. The English model with Leasing equipment companies and private operating companies. Would be another.

No reason why Amtrak can't lease Superliner equipment themself. Or is there....


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## A Voice (Feb 6, 2017)

Just-Thinking-51 said:


> No reason why Amtrak can't lease Superliner equipment themself. Or is there....


Equipment leases is how Amtrak obtained the Superliner II cars, P42 locomotives, and Acela trainsets (and HHP-8), among others. What really prevents that from being done in 2017 is Amtrak's current debt level, with RRIF loans outstanding for the ACS-64 and Alstom built Acela-replacements. Makes much more sense for Congress to just make a one time supplemental appropriation for new equipment., but we all know the pitfalls of that approach.


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## dlagrua (Feb 6, 2017)

A Voice said:


> dlagrua said:
> 
> 
> > MikefromCrete said:
> ...


Amtrak was involved in a high number of accidents last year. Accidents remove cars from service and even if they are rebuilt they must go out of service for an extended period of time. Amtrak has very little reserve stock. Its safe to say that the herd will thin in coming years.



jis said:


> You can rest assured that Brightline will not run anything outside Florida and possibly won't even run everything we dream they will in Florida. They are based on a very normal Japanese model of privatized railroad, but not so much as things are done in the US, a model that is basically one of Real Estate development (of significant pre-existing real estate ownership, being the primary reason for running a railroad. Of course if the government opens up its treasure chest to them so that they make some real money over and above their actual operating cost, then they will probably take on almost anything. but what is the chance of the government actually generously subsidizing operations? Not much in my reckoning. So I'd say, happy dreaming.


I would tend to agree with you that Brightline will remain in Florida only but 1. Florida East Coast owns the track, the railroad equipment, many stations and runs it own crew. Big advantage in my view. 2. The manifestation of the shortage of Amtrak equipment will lead to privatization. How else can the future shortage of Amtrak equipment be solved?


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## jis (Feb 6, 2017)

Florida East Coast Railway has a relatively distant arms length relationship with AAF. AAF will only own the Cocoa to Orlando track, not the Florida East Coast Railway track. AAF operating crews will have no relationship to the Florida East Coast Railway. So I am not sure what point you are making.

AAF/Brightline will essentially lease track slots and pay a trackage charge to FECR to run their trains on FECR tracks, using their own crew, just like Amtrak would if it were running on FECR.

And indeed, most interestingly the Fortress Group is contemplating selling off FECR while retaining ownership of FECI and hence AAF/Brightline.

I for one completely disbelieve your premise that shortage of equipment will lead to privatization. That is pure fantasy as good as they come.


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## A Voice (Feb 6, 2017)

dlagrua said:


> A Voice said:
> 
> 
> > dlagrua said:
> ...


Losses due to accidents and similar will not "thin the herd" to an appreciable degree so long as Amtrak keeps up with car repairs. Relatively few passenger cars are truly damaged beyond repair (economical repair is another matter). It's been far worse before when a lot of damaged equipment was just left parked.


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## Ryan (Feb 6, 2017)

dlagrua said:


> Amtrak was involved in a high number of accidents last year.


How many? How many cars are still sidelined as a result?

How does that compare to 2015? 2014?


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## Eric S (Feb 6, 2017)

Unless we believe that "regional rail" (not sure whether that means commuter rail or shorter-distance intercity rail) will suddenly become profitable for these hypothetical private operators, why are those private operators in a better position to acquire new or rebuilt equipment than Amtrak? Wouldn't either one need funding from some other entity (some level of government) to acquire equipment?


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## Triley (Feb 6, 2017)

Eric S said:


> Unless we believe that "regional rail" (not sure whether that means commuter rail or shorter-distance intercity rail) will suddenly become profitable for these hypothetical private operators, why are those private operators in a better position to acquire new or rebuilt equipment than Amtrak? Wouldn't either one need funding from some other entity (some level of government) to acquire equipment?


Precisely my thought throughout reading this whole thread. Thank you.


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## keelhauled (Feb 6, 2017)

But you're forgetting, this is the fantasy forum, where inconveniences like funding can be hand waved away.


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## cirdan (Feb 7, 2017)

Triley said:


> Eric S said:
> 
> 
> > Unless we believe that "regional rail" (not sure whether that means commuter rail or shorter-distance intercity rail) will suddenly become profitable for these hypothetical private operators, why are those private operators in a better position to acquire new or rebuilt equipment than Amtrak? Wouldn't either one need funding from some other entity (some level of government) to acquire equipment?
> ...


It has to do with the way debt is structured.

If a government agency such as Amtrak takes on debt to buy equipment, that comes under a lot of scrutiny.

If a private company takes on the debt, buys the equipment, and then charges Amtrak to use it on a per mileage or per time period basis, overall costs may be higher (as there is a middle man taking a cut of the money) but on the balanace sheet it looks better.


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## Carolina Special (Feb 7, 2017)

You can shuffle the balance sheet debt around, but the ultimate economics of the business seem unlikely to change. Ultimately the business operator has to make money or they will find better uses for their investment dollars.


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## jis (Feb 7, 2017)

No private outfit in its right mind would take on a debt that is not adequately collateralized. The problem is that the marketplace for leasing rolling stock in the US is remarkably illiquid and therefore it is hard to come by a situation where anyone can credibly collateralize a long term debt like that needed for acquiring a large number of rail cars. As we know there are limited cases where Amtrak is able to do so for Acela replacements. My guess is that they should be able to do the same with replacement of the Northeast Regional rolling stock over time. I would be absolutely astonished if they or anyone else could pull it off for the LD fleet, notwithstanding the fond fantasy of many railfans that the LD network runs at a profit only if it could be detached from the NEC.


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## cirdan (Feb 7, 2017)

Carolina Special said:


> You can shuffle the balance sheet debt around, but the ultimate economics of the business seem unlikely to change. Ultimately the business operator has to make money or they will find better uses for their investment dollars.


Sure.

But ticket revenue is not the only source of income but just a major source. Government paying for a service because it has some broader societal benefit (or because they believe it does) is also "income". In some cases susidy may indeed be money thrown into the wind. But it is wrong to think it is always so.


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## A Voice (Feb 7, 2017)

jis said:


> No private outfit in its right mind would take on a debt that is not adequately collateralized. The problem is that the marketplace for leasing rolling stock in the US is remarkably illiquid and therefore it is hard to come by a situation where anyone can credibly collateralize a long term debt like that needed for acquiring a large number of rail cars. As we know there are limited cases where Amtrak is able to do so for Acela replacements. My guess is that they should be able to do the same with replacement of the Northeast Regional rolling stock over time. I would be absolutely astonished if they or anyone else could pull it off for the LD fleet, notwithstanding the fond fantasy of many railfans that the LD network runs at a profit only if it could be detached from the NEC.


Again, equipment for long-distance trains has been privately financed (leased) previously; The Superliner II cars and P42 locomotives, in particular. The difference now is Amtrak's already heavy debt load from the RRIF loans. No, the long-distance trains do not operate at a profit - then or now - but that fact alone doesn't necessarily prevent equipment financing. A further problem, however, is that such leased (financed) equipment drives up the annual subsidy required. Hence, the much better option long term is an appropriation for new cars and locomotives.


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## jis (Feb 7, 2017)

redacted


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## Metra Electric Rider (Feb 7, 2017)

If private operators could make money running trains, wouldn't they already be doing so? Obviously some might still have been had there not been the general downtrend in the post WWII era, but I tend to think not for a variety of reasons.

Question for JIS: weren't the early railroad lines in the US (and much of the London Underground) on a similar business model to FEC, i.e. increasing value of their properties?


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## jis (Feb 7, 2017)

Metra Electric Rider said:


> If private operators could make money running trains, wouldn't they already be doing so? Obviously some might still have been had there not been the general downtrend in the post WWII era, but I tend to think not for a variety of reasons.
> 
> Question for JIS: weren't the early railroad lines in the US (and much of the London Underground) on a similar business model to FEC, i.e. increasing value of their properties?


Yep, and a lot of the Japanese private railroads too. Theoretically even the early NYC IRT and BMT systems were for developing properties in the outer reaches, which were unpopulated suburbia at that time, and then so was LIRR.

Railraods were initially built for one of two reasons or a combination thereof - Property and Commerce development or perceived needs of Defense and Security.

Remember, even our Interstate highway system was justified by needs of National Defense.


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## Philly Amtrak Fan (Feb 7, 2017)

There are three possible outcomes as to who pays:

1) Federal/State government pays and passes the bill onto taxpayers.

2) Private enterprise pays.

3) No one pays and the trains disappear.

I will never be convinced that #2 isn't the best option of the three. Certainly you can argue #2 isn't plausible and our "real" outcomes are #1 and #3. But if the government can encourage #2 I think we're better off. I'm not going to just say spend more of our tax money until the cows come home unless there is a future "payoff" (use your own judgment as to what qualifies as a payoff).


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## Carolina Special (Feb 7, 2017)

If government is substantially paying for part of your income for a "private" service, I would argue that is no longer private rail. The business has to be able to pay for itself with minimal government support. Otherwise the businessman is subject to whatever changes the government makes to the contractual terms when the winds of politics change, which happens fairly frequently. In a business with high fixed costs, like passenger rail, that is a recipe for disaster.

So I can't see private rail working except under rare circumstances that are not repeatable around the whole country.


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## neroden (Feb 7, 2017)

We have historical evidence. If government doesn't subsidize *any* form of transportation, private railroads make a profit on passenger service. (A fellow showed me the P&L statements from some of the railroads in 1900). But as long as government is subsidizing the competition -- namely, roads -- it becomes impossible for private railroads to make a profit on passenger service.

So you have two options if you want railroads:

(1) Government pays for railroads

(2) Government stops paying for roads

Personally I'm fine with either, but I think (2) is not politically practical and hasn't been practical for 100 years, perhaps longer. The private turnpikes were bailed out and nationalized during the latter half of the 19th century; road subsidies have continuously increased since then, with the "Good Roads" program (which paved Route 66 as an early accomplishment) and then the Interstates.

My Dad remembers the time before they paved Route 66 and the other roads. His parents driving with a trailer across dirt roads from Los Angeles to San Diego. The roads were horrible. No doubt it is better for commerce to have these government-subsidized paved roads, but it's only fair to subsidize the railroads too (something which is also good for commerce).


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## jebr (Feb 7, 2017)

How does government encourage private companies to deliver rail travel without spending any money on it? If we can get the same or better level of service from a private rail company as through Amtrak (same fares, same worker compensation, same equipment, same service, or better on any of those) and not have to subsidize it, I'm all ears. But I don't think that's possible by a long shot.

I don't buy the premise that using a private company to deliver a government service, subsidizing the private company in the process, is inherently better than having the government run it directly. There may be reasons that it's better to contract it out to a private company, but it would need to be justified, not just assumed that it would automatically be better.


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## cirdan (Feb 8, 2017)

jebr said:


> I don't buy the premise that using a private company to deliver a government service, subsidizing the private company in the process, is inherently better than having the government run it directly. There may be reasons that it's better to contract it out to a private company, but it would need to be justified, not just assumed that it would automatically be better.


One strong argument for private companies taking subsidies to run a public service lies in the ability to compare.

So say company A is running a train on route 1, and company B is running a train on route 2, and both routes are broadly comparable in terms of length, traffic potential, etc.

The government is interested in the service being as good as possible, but also in keeping costs down. So there is a trade-off between the two.

Now say company A comes up with some innovative way of making the service more attractive. They get down and do some smart marketing for example, or they improve catering, but all in a way that is cost neutral overall. At the same time company B says that doing that would be impossible. Now when the contracts come up for renewal, company B may well lose out and A gets both routes. So the competition situation forces both companies to be on their toes.

So effectively you have introduced competition where there wasn't any before. Not because the companies are competing for passengers (they aren't as the two routes are different) but they are competing to be seen as delivering the best value for money.

When you have a quasi monopoly, there is a tendency to rest and leave things as they are as there isn't really any direct reward for making small things better..


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## A Voice (Feb 8, 2017)

Philly Amtrak Fan said:


> There are three possible outcomes as to who pays:
> 
> 1) Federal/State government pays and passes the bill onto taxpayers.
> 
> ...


How can the government "encourage" option #2? Certainly you can contract-out operation of a service for which a subsidy is provided, but that still leaves the taxpayer as the one who's paying. What possible incentive could a private company have for willingly providing ("paying for") a service on which they lose money?

The "future payoff" lies in providing a public transportation service, much as done for schools, libraries, parks, and other services and facilities which create better, more livable communities but are not things which (generally) are done on a "for profit" basis.



cirdan said:


> jebr said:
> 
> 
> > I don't buy the premise that using a private company to deliver a government service, subsidizing the private company in the process, is inherently better than having the government run it directly. There may be reasons that it's better to contract it out to a private company, but it would need to be justified, not just assumed that it would automatically be better.
> ...


Certainly competition can drive innovation and a quest for excellence. However, for a service which is provided on a subsidized basis is the cost structure really going to be significantly different than it is under a public-run entity such as Amtrak? As Iowa Pacific has demonstrated the hard way, an improved and upgraded service will attract more passengers but implementing such innovations is hardly "cost neutral". It requires more money, and thus a greater subsidy. Assuming the status quo, the cost for private industry to provide the same level of service as Amtrak is also likely to be similar - but the private company expects a profit margin on top of the expenses.


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## Metra Electric Rider (Feb 8, 2017)

I'm not as familiar with European rail construction or Latin America, but certainly in the US the initial railway boom wasn't exactly what would be considered a totally un-subsidized process with land grants, franchises and such.


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## dlagrua (Feb 9, 2017)

I completely understand all the arguments made BUT if Amtrak is the continued solution for providing passenger rail, then the problem of an ever shrinking Superliner fleet must be addressed. Look back at the last 10 years and all of the rolling stock lost to accidents. Point is that there will come a point in the next few years when insufficient equipment to meet demand comes to fruition. Will Amtrak be funded to replace Superliner equipment or will the government turn to private industry to take over some routes? I believe that it is highly likely that government will turn to the private freight railroads that already own the tracks. Its just a theory but again focus on a severe shortage of equipment and what the solution will be.


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## jis (Feb 9, 2017)

dlagrua said:


> I completely understand all the arguments made BUT if Amtrak is the continued solution for providing passenger rail, then the problem of an ever shrinking Superliner fleet must be addressed. Look back at the last 10 years and all of the rolling stock lost to accidents. Point is that there will come a point in the next few years when insufficient equipment to meet demand comes to fruition. Will Amtrak be funded to replace Superliner equipment or will the government turn to private industry to take over some routes? I believe that it is highly likely that government will turn to the private freight railroads that already own the tracks. Its just a theory but again focus on a severe shortage of equipment and what the solution will be.


I think your base assumption that the Superliner fleet is shrinking over the last ten years is bogus, considering the number of Superliners that were repaired with various Obama instigated funding schemes over that period.

Government cannot get out of the need for it to fund LD passenger rail by merely turning to private industry. There is no private industry that will self fund a scheme for losing money hand over fist, unless some other entity underwrites the expected losses. It is a theory based on faulty assumptions so it is a useless theory.


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## A Voice (Feb 9, 2017)

dlagrua said:


> Look back at the last 10 years and all of the rolling stock lost to accidents. Point is that there will come a point in the next few years when insufficient equipment to meet demand comes to fruition.


In September 2007, 180 Superliner II cars were in service. Today, February 2017, 185 Superliner Ii cars are serviceable.

In September 2007 there were 239 Superliner I cars available. Today there are 242.

The number of available singe-level long-distance cars is also expanding slightly with Viewliner II deliveries.

This doesn't exactly support your contention that the car supply is shrinking and will soon be inadequate to meet demand.


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## west point (Feb 9, 2017)

A Voice said:


> This doesn't exactly support your contention that the car supply is shrinking and will soon be inadequate to meet demand.


You are looking only at the supply side. Let us look at the demand side. Some who has the figures can give us the number of revenue passenger miles for 2007 compared with the 2016. Also the population numbers for all the served areas in 2007 and 2016 ?


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## jis (Feb 9, 2017)

Unless the demand side manages to get their politicians to step upto the plate nothing will change. There is not enough willingness to pay the true cost of providing service without judicious subsidy of required infrastructure in much of the demand side.

If passenger rail can be brought on the same footing as roads and air, in terms of subsidizing of infrastructure and core facilities then there is some hope. Not otherwise. And said subsidy is not going to come from the private sector, since they are no charity, but has to come from the public sector, or perhaps from some other country that is sitting on piles of Eurodollars and don;t know what to do with them. Money from public sector or other governments can be leveraged to release significant support from the private sector perhaps, but that is just another form of subsidy. So let us not kid ourselves. Absent that commitment from the government sector, we are where we are w and will remain there.


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## jebr (Feb 9, 2017)

There's also not a lot of private companies that own a large stock of passenger rail equipment. I also don't think a private company would buy or refurbish a large number of coaches without a very strong and rather long contract to essentially guarantee they'll have the business for a long enough time to pay for the equipment.

Most of the contracting out is for crew only, at least that I've seen. As but one example, Metro Transit (technically the Metropolitan Council) still owns the equipment used on the Northstar line, despite the operating crew being contracted out to BNSF.


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## A Voice (Feb 9, 2017)

west point said:


> A Voice said:
> 
> 
> > This doesn't exactly support your contention that the car supply is shrinking and will soon be inadequate to meet demand.
> ...


While an interesting statistic, that's not directly relevant to the topic at hand. The point I was refuting was that Amtrak's car roster is shrinking. It is not.

Nobody is claiming Amtrak has an abundance of rolling stock; The car supply has been limited since the 1970's and that's unlikely to change. Even where greater demand exists, there is still generally the same supply of equipment for about the same size train as ten tor twenty years ago. With (increasing) variations, Amtrak generally has long run long-distance trains with a "standard consist" of 3-5 (often four) coaches and 2-3 (often two) sleepers. Again, the car supply is not shrinking but stable; There is no looming shortage of cars and locomotives to operate the long-distance network as it currently exists.


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## jis (Feb 9, 2017)

I would say that the NEC has seen significant infusion of equipment in the last 20 year timeframe, with the Amfleet stock remaining about the same, the electric engines (serviceable) going up slightly, and 20 additional Acela sets. This will be further augmented by the Acela II sets in the next 5 or so years.

Also, California has added significant rolling stock in the last 20 years as has the Cascade Corridor.

Situation remains pretty static in the LD sector and Midwest, pending the deployment of the new diesels and bi-levels whenever that might happen, and of course the much awaited Viewliner IIs too. The Baggage Cars were essentially one for one replacement, as will be most of the Diners (net 5 or so addition AFAICT). The Sleepers and Bag Dorms will be net add.

NEC has also added and renewed massive amount of rolling stock through the Commuter Agencies over the last two decades, as has California and to some extent Chicago.


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## A Voice (Feb 9, 2017)

jis said:


> I would say that the NEC has seen significant infusion of equipment in the last 20 year timeframe, with the Amfleet stock remaining about the same, the electric engines (serviceable) going up slightly, and 20 additional Acela sets. This will be further augmented by the Acela II sets in the next 5 or so years.
> 
> Also, California has added significant rolling stock in the last 20 years as has the Cascade Corridor.
> 
> Situation remains pretty static in the LD sector and Midwest, pending the deployment of the new diesels and bi-levels whenever that might happen, and of course the much awaited Viewliner IIs too. The Baggage Cars were essentially one for one replacement, as will be most of the Diners (net 5 or so addition AFAICT). The Sleepers and Bag Dorms will be net add.


Interesting thing about the Viewliner II order is that the "net add" cars still just get us back closer to the numbers before most of the Heritage fleet was withdrawn (much without direct replacement) in the 90's. Amtrak had, off the of of my head, about 85 10-6 Heritage sleepers replaced by just fifty Viewliners; At least we'll get back to 75. The single-level baggage-dorms were retired years ago, replaced by Heritage sleepers, then removed altogether without replacement. So we get ten back, for two trains.

More new equipment to meet increasing demand (and offer new services, etc.) would be wonderful, but the discussion we need to be having is not what could be, what we'd like to see happen, or even what we fear could occur. The discussion that needs to happen is _specifically and in detail_ exactly how we get Congress to pay for fleet expansion.


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## jis (Feb 9, 2017)

Exactly. I completely agree with you. And as you can see above, my concern is that the more time we spend on fantasies about private industry paying for the whole shebang the less we talk about the reality of what needs to happen tog et more equipment.


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## Ryan (Feb 9, 2017)

A Voice said:


> dlagrua said:
> 
> 
> > Look back at the last 10 years and all of the rolling stock lost to accidents. Point is that there will come a point in the next few years when insufficient equipment to meet demand comes to fruition.
> ...


Don't confuse Dennis' carefully constructed opinions with actual facts. He's impervious to them.


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## cirdan (Feb 10, 2017)

A Voice said:


> Certainly competition can drive innovation and a quest for excellence. However, for a service which is provided on a subsidized basis is the cost structure really going to be significantly different than it is under a public-run entity such as Amtrak? As Iowa Pacific has demonstrated the hard way, an improved and upgraded service will attract more passengers but implementing such innovations is hardly "cost neutral". It requires more money, and thus a greater subsidy. Assuming the status quo, the cost for private industry to provide the same level of service as Amtrak is also likely to be similar - but the private company expects a profit margin on top of the expenses.


I understand your point and agree that a private operator needsto make a profit and this will come at the cost of increased ovrall subsidies.

So if your primary objective is to reduce susbidies, government ownership and operation is the way to go.

However, in my view susbidies are not the only factor at stake. trains do not exist in a vacuum but only really make sense if they are well used and appreciated.

We have recently seen lots of stories about people like Mica micro-meddling with Amtrak's catering. For the managers and staff having to actually run the whole thing that must be extremely annoying, and must be diverting their energies from more directly pressing issues. If you are at the mercy of somebody who doesn't like trains and the whole thing might well be shut down in 6 months time, that's not a good basis on which to build confidence or growth.

A private company would sign a contract with the government. the contract would lay down the level of subsidy but also the level of service, catering, etc etc. If the company fails to meet those criteria they would pay fines or be punished in some other way. But at least people like Mica can't come and micro manage anything because there is a legal contract for the duration and you can't come in and change a contract without both sides agreeing. So if operating contracts could be awarded for a period of say 8 tzo 12 years as in the UK, you have greater stability and are assured of a flow of future subsidies taking much of the risk out of what you're doing.

So yes, it costs more, but it may be worth it.


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## cirdan (Feb 10, 2017)

Ryan said:


> A Voice said:
> 
> 
> > dlagrua said:
> ...


According to my math, that's up 8 Superlines since 2007.

That may be a comfortable cushion but it's not really a massive improvement. All it would take would be one ot two serious crashes to wipe the fleet back to 2007 levels.


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## neroden (Feb 11, 2017)

Metra Electric Rider said:


> I'm not as familiar with European rail construction or Latin America, but certainly in the US the initial railway boom wasn't exactly what would be considered a totally un-subsidized process with land grants, franchises and such.


Continential European railroad development was largely government-driven as well. Same in Latin America. Also most of the rest of the world (Turkey, China, Iran, Australia, India, etc.)

The UK was the exception, with mostly private funding for their railroads, but they were enjoying an investment bubble; most of the investors lost money. They were still government-backed, with special bills in Parliament giving them compulsory land purchase abilities. (This is essential to build ANY road or railroad.) In addition, the situation of the roads in the UK at the time was awful *and* they were mostly not government subsidized.

The UK quite sensibly nationalized the railroads under the Atlee government after WWII.

The US... sigh. It's not just passenger traffic which is hurt by private ownership of the tracks; freight traffic is hurt too.


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## jis (Feb 11, 2017)

All early railroad development in India was government backed private companies. So yeah, government instigated, but in general, not government funded. Government funding came later.


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## neroden (Feb 12, 2017)

They would have called most of them "public private partnerships" if they happened today. There was a very different monetary environment (gold-backed and silver-backed currency), there was a substantially different legal structure from today; after looking at the way a bunch of these things were run, the "government backed private companies" of the 19th century are often best thought of as quasi-governmental agencies issuing quasi-governmental bonds, like Fannie Mae.


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## west point (Feb 12, 2017)

If private passenger service is so good please explain the Iowa Pacific failures especially the Hoosier ?


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## jis (Feb 12, 2017)

That is sort of like the difference between weather and climate. One single event like that doesn't really explain anything, so I suppose the question at least has rhetorical value and not much beyond that.


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## bretton88 (Feb 12, 2017)

Regional rail in Germany (The REs) are not profitable. The states subsidize those trains, mostly by paying the national operator (DB) to run them (some of the rural lines are run by private companies) Yet they have really nice new equipment. Only the intercity trains are profitable.


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## dlagrua (Feb 12, 2017)

Ryan said:


> dlagrua said:
> 
> 
> > Amtrak was involved in a high number of accidents last year.
> ...


Can't give you an exact number without doing a tally, but just add up what has occurred in the last 10 years and you will find a number of Amtrak cars that have been completely destroyed. Except for the recent Viewliner II order for sleepers, dining cars and baggage cars I cannot recall any new rolling stock equipment being purchased. From memory I recall an accident out West where a sand truck T-boned an Amtrak train and IIRC two Superliners were destroyed.,in the Philadelphia NEC accident three coaches were lost, and further back the Sunset crash lost cars that were not replaced. Give me some time and I will come up with a list of lost equipment that were never replaced. .


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## Ryan (Feb 12, 2017)

Usually people do research, learn facts and then draw conclusions.

Not so sure about this ready, fire, aim method of posting.


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## jebr (Feb 12, 2017)

I'm more wondering how contracting out operations to a private company suddenly results in a significant increase in equipment. I'm not aware of any company in the US that has a significant amount of passenger rail equipment sitting around that can run frequently as Amtrak's equipment does.


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## dlagrua (Feb 13, 2017)

Ryan said:


> A Voice said:
> 
> 
> > dlagrua said:
> ...


I will continue to choose to speak solely about Amtrak and not forum members. The numbers posted show that the available equipment has gone down. Not to argue the point but a fact is that Amtrak equipment is also aging. Yes rolling stock can be rebuilt but eventually that becomes prohibitively expensive. East of the Mississippi more Viewliner coaches may be needed and who can determine what the end of the lifespan, is for the older Superliners.

The Trump administration has called for improvements to the transportation infrastructure including the passenger rail network. Three weeks into a new administration its difficult to say what that approach will be but until now our president has done all his work in the private sector. Wick Mooreman has also worked solely in the private sector. I do not take a strong position on the public vs private argument. Its hard to tell which would serve the American people better. I just comment on the future of passenger rail as I envision it .

*IMO*, during the next four years, we will see a public/private partnership running a portion of the nations passenger rail system. I hope to still be riding the rails in this period so if you accept a wager for lunch on this prediction just let me know.


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## AmtrakBlue (Feb 13, 2017)

Am I reading things wrong? It looks to me that the # of cars increased over the last 10 years.


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## Ryan (Feb 13, 2017)

No, you're absolutely correct. There are more cars in service now, due to all of the wreck repairs completed over the last 8 years.

The entire premise this thread is based on is nothing more than yet another "alternative fact".


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## cirdan (Feb 14, 2017)

dlagrua said:


> I will continue to choose to speak solely about Amtrak and not forum members. The numbers posted show that the available equipment has gone down. Not to argue the point but a fact is that Amtrak equipment is also aging. Yes rolling stock can be rebuilt but eventually that becomes prohibitively expensive. East of the Mississippi more Viewliner coaches may be needed and who can determine what the end of the lifespan, is for the older Superliners.
> 
> The Trump administration has called for improvements to the transportation infrastructure including the passenger rail network. Three weeks into a new administration its difficult to say what that approach will be but until now our president has done all his work in the private sector. Wick Mooreman has also worked solely in the private sector. I do not take a strong position on the public vs private argument. Its hard to tell which would serve the American people better. I just comment on the future of passenger rail as I envision it .
> 
> *IMO*, during the next four years, we will see a public/private partnership running a portion of the nations passenger rail system. I hope to still be riding the rails in this period so if you accept a wager for lunch on this prediction just let me know.


At the end of the day what matters to me is that there is still a significant rail system in operation, and I hope and want it to continue that way. I don't only say this as a railfan but I also say it because I strongly believe the positive effects of passenger railroads (and railroads as a whole) on society, the environment, the economy etc is largely understimated and misunderstood.

At the end of the day, whether that railroad system is operated directly by the government or by some private enterprise with government support is a detail.


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## A Voice (Feb 14, 2017)

dlagrua said:


> Ryan said:
> 
> 
> > A Voice said:
> ...


What are these "posted numbers" to which you refer? The numbers I posted - the same numbers you quoted above - plainly show a slight *increase* in the number of cars in service.



jebr said:


> I'm more wondering how contracting out operations to a private company suddenly results in a significant increase in equipment. I'm not aware of any company in the US that has a significant amount of passenger rail equipment sitting around that can run frequently as Amtrak's equipment does.


I assume the theory is based on these private companies ordering new rail passenger equipment, but that takes time, more than an arbitrary four years. Also, just _who_ are these private companies who want to invest funds in a _money-losing_ passenger rail operation? How are they supposed to get new cars delivered any faster than a government operated entity?


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## Just-Thinking-51 (Feb 14, 2017)

AmtrakBlue said:


> Am I reading things wrong? It looks to me that the # of cars increased over the last 10 years.


The heavy shop is pushing out more wreck cars. However the number of cars that have been total and scrap is a ever growing number. Is this going to cause a collapse of the Western Train. Not today, but given time it will have negative impact. It simple math. You need to look at the long picture, not the last 8-10 years the Superliner 1 enter service in 1979.


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## jis (Feb 14, 2017)

First, we are responding to a statement about what has happened to the number of serviceable cars in the last ten years.

Second, even if all cars disappear it is hard to imagine why any private party would step in and order cars, as hypothesized by the OP. That is distinct from, what in effect amount to public - private partnership which has happened a couple of times with purchase, sell, lease-back so that a private party with a positive tax bill can take advantage of taking depreciation deductions while Amtrak which has no tax liability can take advantage of somewhat lower expense of gaining access to the cars for service.

As I said, the whole line of reasoning is bogus. But that is of course just IMHO.


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## dlagrua (Feb 17, 2017)

In keeping with the open exchange of ideas and opinions; I would like to clarify my point before many of the posters here suffer from high blood pressure. What I really believe will happen is a public/private partnership on some LD Amtrak routes. Amtrak has something like 30 million passengers that travel every year and the government is always looking to save money, especially when the name Amtrak comes up. . Now consider the perpetual lack of sufficient funding for the service, the thinking of current leadership in the house, senate, oval office and the position to rebuild Americas transportation infrastructure. It is reasonable to believe that Amtrak will continue on but why should we rule out a public/private partnership? Its just an opinion and a prediction but is this really so far out of the question? if so explain why this will not happen.


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## Bob Dylan (Feb 17, 2017)

In theory the private/public partnership for commuter/State rail is ideal since this is the model we currently are using in this country in many places.LD Trains are another kettle of fish however.

In reality when the profit motive enters the picture, the subsidies required by government greatly increase the costs in order for the private entity to show a profit. Cases in point, Class I Railroads throwing in the towel on Passenger rail in the late 60s and early 70s bringing about the creation of Amtrak, and the recent financial fiasco for IP on the Hoosier State contract.

With the current political climate, and considering the costs that would be involved, I can't see this happening with LD Trains.

To paraphrase an old saying: How do you turn a large fortune into a smaller one?

Answer:Invest in Passenger Rail. YMMV


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## Ryan (Feb 17, 2017)

I don't think that many of us are ruling out a public/private partnership. Any way that government can take some tax dollars and slip some of them to lining contributors pockets, they will.

The objection is your impervious stance on the facts that underlie your conclusion.


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## A Voice (Feb 17, 2017)

dlagrua said:


> In keeping with the open exchange of ideas and opinions; I would like to clarify my point before many of the posters here suffer from high blood pressure. What I really believe will happen is a public/private partnership on some LD Amtrak routes. Amtrak has something like 30 million passengers that travel every year and the government is always looking to save money, especially when the name Amtrak comes up. . Now consider the perpetual lack of sufficient funding for the service, the thinking of current leadership in the house, senate, oval office and the position to rebuild Americas transportation infrastructure. It is reasonable to believe that Amtrak will continue on but why should we rule out a public/private partnership? Its just an opinion and a prediction but is this really so far out of the question? if so explain why this will not happen.


While I disagree with your conclusion regarding a public/private partnership, it was not that your position was wholly unreasonable - indeed, there have been proposals for a private entity to operate three such routes under contract. Predictably, such a plan has gone nowhere.

The main objection was that your conclusions were based upon a false assumption - that Amtrak's roster of long-distance train equipment was shrinking and would soon become inadequate to meet current requirements. That's not the case, but nor was it ever a prerequisite for private operation of passenger rail.

Among the bigger stumbling blocks to such a plan is just what private entities would want (and be qualified with a workable plan - note Corridor Capital and arguably Iowa Pacific) to bid on such an operation, and how a profit-seeking organization could run the train route for less money than Amtrak and still make a profit doing so (not many for-profit companies looking to invest in a money-losing opportunity). There really is no free lunch; I am not convinced a private company would see cost significantly lower costs, or much higher revenue, than is possible under Amtrak service. Further, there are problems with just where these other companies are going to find cars and locomotives (they don't have them now) and the time to acquire them, and the fact the Class 1's really don't want to deal with anyone other than Amtrak (hints too much at 'open access').



Bob Dylan said:


> To paraphrase an old saying: How do you turn a large fortune into a smaller one?
> 
> Answer:Invest in Passenger Rail. YMMV


I still think the Brightline executives are going to prove that saying correct - the hard way. But I digress.


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## neroden (Feb 21, 2017)

A Voice said:


> I still think the Brightline executives are going to prove that saying correct - the hard way. But I digress.


Nah, they own enough real estate around the Miami Station alone to make a profit. Historically land development is the consistent way to make money off passenger trains. The trains themselves break even at best, but being next to a station increases the value of the property as residential or office property (or even, in the old days, agricultural property).
This was the business model of everything from the Metropolitan Railway in London to the land grant railroads in the US.


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## jis (Feb 21, 2017)

And the land development leads to increased ridership helping break even or do a bit better. There is a symbiotic relationship between the two. This is incidentally also true of road development, in those situations where the roads are explicitly charged for by being in a tax surcharge zone to get road access.


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## WoodyinNYC (Mar 13, 2017)

> CEO Michael Reininger is moving to parent company Florida East Coast Industries ...
> 
> "Reininger confirmed that he was now focusing on the second phase of the Brightline project. ...
> 
> "FECI was already looking at extending the Brightline service north from Cocoa to Jacksonville and west from Orlando to Tampa. But Reininger said ‘we’re going to look beyond’, to find other potential inter-city corridors in which to replicate the rail-plus-property model. ‘Florida is not the only area where there are overcrowded roads and interstates’, he pointed out. ‘We are fulfilling our vision here in Florida, but we are not exclusively bound by the state borders. We have a belief that major cities that are 500 to 600 km apart set themselves up as prime candidates for express passenger rail, and can be made to work. ... "


Railway Gazette has a larger article about new jobs at Brightline.

http://www.railwaygazette.com/news/news/n-america/single-view/view/brightline-targets-inter-city-opportunities.html


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## dlagrua (Apr 23, 2017)

Will more private commuter lines be on the way? This story seems to indicate that it may be coming in Vermont: A new company called All Earth has just purchased a lot of commuter RDC cars..:

http://www.vermontbiz.com/news/april/allearth-pays-4-million-commuter-rail-cars


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## Eric S (Apr 23, 2017)

Didn't this article get posted in another thread a couple weeks ago?

At any rate, I'm not sure what you mean by "more private commuter lines." There are currently no private commuter lines in the US (or Canada), unless you're referring to commuter rail agencies that pay (contract with) private entities to operate commuter rail.


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## A Voice (Apr 23, 2017)

Eric S said:


> Didn't this article get posted in another thread a couple weeks ago?
> 
> At any rate, I'm not sure what you mean by "more private commuter lines." There are currently no private commuter lines in the US (or Canada), unless you're referring to commuter rail agencies that pay (contract with) private entities to operate commuter rail.


It can be argued that Brightline in phase 1, unless it expands north of West Palm Beach, is really just a glorified commuter service. And its privately operated.


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## railiner (Apr 24, 2017)

Call me skeptical, but I would be shocked to see these plans actually come to be...

Vermont couldn't even sustain its former state-wide Vermont Transit bus (privately owned), so how can they hope to succeed with trains, which certainly are more costly to operate?


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## jis (Apr 24, 2017)

railiner said:


> Call me skeptical, but I would be shocked to see these plans actually come to be...
> 
> Vermont couldn't even sustain its former state-wide Vermont Transit bus (privately owned), so how can they hope to succeed with trains, which certainly are more costly to operate?


Exactly my thoughts. Often the spirit is unrealistically willing but at the end of the day the flesh turns out to be weak. There is no enormous flow demand in Vermont on that route waiting for someone to pick up 1% of it to fill up trains.


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## Eric S (Apr 24, 2017)

A Voice said:


> Eric S said:
> 
> 
> > Didn't this article get posted in another thread a couple weeks ago?
> ...


If Brightline does not expand beyond the Miami - West Palm Beach phase, yes, I'd agree that's commuter service. Miami - Orlando, though, is intercity.

EDIT: I'd also add that the Miami-Fort Lauderdale-West Palm Beach metro, with a population of about 6.1 million, is vastly more populous than the entire state of Vermont, let alone any particular metro area in Vermont.


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## dlagrua (May 1, 2017)

jis said:


> railiner said:
> 
> 
> > Call me skeptical, but I would be shocked to see these plans actually come to be...
> ...


Must agree with the logic, but what drove All Earth to spend millions on these trains? Are they just looking for the large government subsidy? Maybe some politicians feel that it would help their cause to claim that they brought commuter rail to the state. The major population center in Vermont is in the Burlington area but AFAIK rail commuting in that state has never been attempted. Many questions remain unanswered.


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## Eric S (May 1, 2017)

Champlain Flyer was a commuter rail service that operated in Burlington in the early 2000s.


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## dlagrua (May 4, 2017)

Eric S said:


> Champlain Flyer was a commuter rail service that operated in Burlington in the early 2000s.


I was not aware of that and looking further om wiki, we find that the federal government gave Vermont $18 million for track improvements and station work. It used old RDC cars, and the fare was $1 on the honor system. The Vermont commuter service experienced low ridership and was cancelled. I just wonder how All Earth plans to do it differently and succeed with a new venture. Could be to just get some federal and state government money, run it for a short period and then retire. Time will tell


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## railiner (May 4, 2017)

dlagrua said:


> Eric S said:
> 
> 
> > Champlain Flyer was a commuter rail service that operated in Burlington in the early 2000s.
> ...


IIRC, the service was provided to mitigate road or bridge closures, for major construction. My company also received a subsidy to provide bus shuttle service, for the period in that area, as well. It ended when the roads reopened.

Ridership was very low..


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