# Chances that private US freigtliners get back to people hauling business?



## coventry801 (Feb 28, 2020)

Just curious given the rise of intercity travel demand in US, what are chances that traditional private Freightliner like UP, BNSF look into contemporary intercity passenger rail and get back to people hauling business? 

I'm sure virgin America is currently establishing a very positive example in Florida


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## lordsigma (Feb 28, 2020)

coventry801 said:


> Just curious given the rise of intercity travel demand in US, what are chances that traditional private Freightliner like UP, BNSF look into contemporary intercity passenger rail and get back to people hauling business?
> 
> I'm sure virgin America is currently establishing a very positive example in Florida



I don’t think very likely. It still isn’t 100% proven that Virgin will be able to pull off receiving a return on its investments in these corridors. Obviously everyone wants to see it happen but it’s by far a guarantee. We’ll have to see what happens. But until we have a few years of data from Virgin after its expansions are completed I don’t think anyone else would dare trying.


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## clay.stahlka (Feb 28, 2020)

lordsigma said:


> I don’t think very likely. It still isn’t 100% proven that Virgin will be able to pull off receiving a return on its investments in these corridors. Obviously everyone wants to see it happen but it’s by far a guarantee. We’ll have to see what happens. But until we have a few years of data from Virgin after its expansions are completed I don’t think anyone else would dare trying.


I think we're going to have to see an upgrade in high-speed track infrastructure before we'll see any chance of private investment in passenger rail service. The cost in doing such an upgrade is prohibitive for the public sector, so it'll likely not happen anytime soon.


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## jis (Feb 28, 2020)

And yet, most of the upgrade for passenger rail of higher speed is actually publicly funded today.

Eventually it will take a public-private partnership, as we can see already that Brightline has been unwilling to risk everything without public support in the form of tax free municipal bonding authority, and is quite receptive to municipal funding for stations.


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## railiner (Feb 28, 2020)

I don’t believe the “corporate memory” is that short...that the freight carrier’s will well recall all they went through to relieve themselves (the eventual creation of Amtrak), of passenger service obligations, and won’t be anxious to get back into it.


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## jis (Feb 28, 2020)

railiner said:


> I don’t believe the “corporate memory” is that short...that the freight carrier’s will well recall all they went through to relieve themselves (the eventual creation of Amtrak), of passenger service obligations, and won’t be anxious to get back into it.


Even though not a First Class line, FECR is a freight railroad from which sprung Brightline. FECR had relieved itself of its passenger service after a rather nasty strike as I recall.

I agree that most of today's Class Is with their current Board and Management won't touch passenger service, but then who now how long they will survive with their current structure with continuously shrinking share of the voerall traffic. They are a story of becoming more and more profitable carrying less and less of the voerall traffic until in the limit they will be stupendously proftable carrying almost nothing.


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## lordsigma (Feb 28, 2020)

No to mention didn’t Brightline get a sweetheart deal as far as classification of their labor goes in that it’s employees aren’t treated like railroad employees for benefits a
and there’s no unions? That arrangement obviously lowers their costs. One could argue that’s a “subsidy.”


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## jis (Feb 28, 2020)

lordsigma said:


> No to mention didn’t Brightline get a sweetheart deal as far as classification of their labor goes in that it’s employees aren’t treated like railroad employees for benefits a
> and there’s no unions? That arrangement obviously lowers their costs. One could argue that’s a “subsidy.”


I am not sure having a competent bunch of lawyers setting up the corporation in a way that it stays clear of both the Railroad Retirement Act and any forced unionization really constitutes any "sweetheart deal". It is just the specific legal hoops they jumped through competently. Being a pure intra-state operation that does not interchange passengers with the national network helps I guess in getting STB to be uninterested in it too, though I don't think that has any bearing on the exclusion from RRA.

It would be interesting to see if and how this affects things like future code sharing or through ticketing of any sort.


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## Anderson (Feb 29, 2020)

jis said:


> And yet, most of the upgrade for passenger rail of higher speed is actually publicly funded today.
> 
> Eventually it will take a public-private partnership, as we can see already that Brightline has been unwilling to risk everything without public support in the form of tax free municipal bonding authority, and is quite receptive to municipal funding for stations.


To be fair, there are few situations where companies would decline the sorts of assistance that's in the mix there. Tax free bonding authority is a BIG deal in terms of making for an attractive investment, and the assistance for stations is arguably materially no different than what plenty of cities have thrown at airlines over the years.

I guess the question being asked is arguably "Given similar circumstances, would other Class I or Class II railroads be inclined to do something similar somewhere, potentially using a separate legal entity they control?" Though in the case(s) in question they don't want the business, the equivalent might be CSX setting up a "B&O Passenger Corporation" to do stuff on the lines out of DC (and take an operating contract from Maryland for MARC) or an "RF&P Corporation" for stuff heading into VA.

Probably the biggest jam, FWIW, is the curious mess of track ownership in various places due to mergers and so on. It is one thing for a railroad to do something entirely "internal" and a whole different ballgame as soon as someone else's tracks get involved.



jis said:


> I am not sure having a competent bunch of lawyers setting up the corporation in a way that it stays clear of both the Railroad Retirement Act and any forced unionization really constitutes any "sweetheart deal". It is just the specific legal hoops they jumped through competently. Being a pure intra-state operation that does not interchange passengers with the national network helps I guess in getting STB to be uninterested in it too, though I don't think that has any bearing on the exclusion from RRA.
> 
> It would be interesting to see if and how this affects things like future code sharing or through ticketing of any sort.


Well, and presumably FEC was able to work around any internal issues with their unions, too. Not sure what the situation was there, but they did pull _something_ off.


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## jis (Feb 29, 2020)

Anderson said:


> Well, and presumably FEC was able to work around any internal issues with their unions, too. Not sure what the situation was there, but they did pull _something_ off.


FEC Railway had nothing to do with Brightline in a corporate sense. Brightline is owned by FECI which arguably has no unions, and FECR used to be a subsidiary of the Fortress Group before it was sold to Grupo Mexico, not FECI. It would be legally difficult for a FECR union to fiddle around in whatever FECI was doing.


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## Anderson (Feb 29, 2020)

jis said:


> FEC Railway had nothing to do with Brightline in a corporate sense. Brightline is owned by FECI which arguably has no unions, and FECR used to be a subsidiary of the Fortress Group before it was sold to Grupo Mexico, not FECI. It would be legally difficult for a FECR union to fiddle around in whatever FECI was doing.


I wonder, in the sense that when NY State tried to run those Subway franchises on the Empire Corridor (or somesuch) there was pushback. I'm also thinking of the shooting incidents on FECR back in the 60s (during the strike) and talk of railroad dispatchers refusing to handle or threatening to mishandle non-union trains in other threads...

...which might explain the separate dispatching company (at least in part; I know that there were other practical reasons for that getting set up).


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## lordsigma (Feb 29, 2020)

I think that we can all at least agree that it would be difficult for a private entity to operate a passenger railroad without a similar legal arrangement to what Brightline was able to do. And there isn’t a guarantee that they will be 100% successful even with this arrangement (at least in terms of a return on the investment). Here’s hoping that the state government in Florida wont let it fold if Brightline/Virgin isn’t able to make it as a totally private endeavor after the expansion and would step in to keep it going. So far they seem interested in at least helping out to the degree they have.


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## Willbridge (Feb 29, 2020)

I've had to answer questions about this over the years. In addition to the issues well-described above, there are two other negative points.

There are residual laws lurking at state levels that have regulatory effects that could apply to passenger service. For example, full-crew laws, requirements that fares or schedules be approved by Public Utility Commissions, etc.
Back in the glory days of railway real estate sales before the Staggers Act made running trains great again, a lot of valuable land was sold off. Most of the high rises in back of Denver Union Station, for example, are on land disposed of by Glacier Park Realty (BN). Coors Field property came primarily from the UP. The Brightline or Japanese format coupling passenger service with real estate will not work in some markets.
The Class I's can avoid much of this by working as contractors to public agencies.


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## MikefromCrete (Mar 1, 2020)

There is a zero percent chance that any of the "Big Seven" freight railroads would get back into the passenger business. These guys don't even want to run freight trains any more. They just want to cut back all expenses to please their Wall Street masters. Eventually there will be no business, the execs will sell everything off and head off with their bonuses.


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## MARC Rider (Mar 1, 2020)

MikefromCrete said:


> There is a zero percent chance that any of the "Big Seven" freight railroads would get back into the passenger business. These guys don't even want to run freight trains any more. They just want to cut back all expenses to please their Wall Street masters. Eventually there will be no business, the execs will sell everything off and head off with their bonuses.


Maybe they'll sell everything off to Amtrak, and then we'll have a nationalized rail system.  

The only question would be, if Amtrak also ran all the freight trains, would they give freight or passenger trains priority in dispatching?


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## cirdan (Mar 1, 2020)

jis said:


> I agree that most of today's Class Is with their current Board and Management won't touch passenger service, but then who now how long they will survive with their current structure with continuously shrinking share of the voerall traffic. They are a story of becoming more and more profitable carrying less and less of the voerall traffic until in the limit they will be stupendously proftable carrying almost nothing.



It is entirely possible that with the decrease and eventual extinction of things like coal, that railroads will become increasingly dependent on fast intermodal services. It will thus be in their own interest to upgrade infrastructure for higher speeds while also working towards better overall punctuality and predictability in their operations. That sounds like an environment that is more amenable to passenger trains than what we presently have.


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## MARC Rider (Mar 1, 2020)

jis said:


> \
> 
> I agree that most of today's Class Is with their current Board and Management won't touch passenger service, but then who now how long they will survive with their current structure with continuously shrinking share of the overall traffic. They are a story of becoming more and more profitable carrying less and less of the overall traffic until in the limit they will be stupendously profitable carrying almost nothing.



Actually, this is terrible from a public-policy perspective, as the market share of freight carried by rail should be increasing in order to reduce greenhouse gas emissions. It's crazy that we transport zillions of tons of freight long distances each year in little 80,000 lb bundles. (Actually, it's only 60,000 lb bundles, as the trucks themselves weigh 20,000 lbs.) OK, trucks might be needed for the "last mile delivery," but having thousands of loads, each hand-driven in separate vehicles, all traveling more or less between the same places is nuts.

It's probably too late to dismantle the interstate highway system of 4+ lane freeways, and nationalizing the railroads might be constitutionally close to impossible, but perhaps we could seriously tax corporations and other businesses that make large profits while producing minimal goods and services. That might induce the corporations and businesses to focus on producing goods and services, not playing financial games to provide big payoffs to the the big investors and top management while starving all of the other stakeholders.


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## ehbowen (Mar 1, 2020)

Given the current situations in Washington and Wall Street, no chance.

But, in the event of divine intervention (nothing else will do) which results in wise, stable leadership at the government level and corporate executives motivated more to provide service to their customers than short-term stock price gains, then I could see a move in that direction if the incentives were shifted to make it potentially profitable to provide passenger seats and to fill them. I've posted on this before, but essentially I envision:


A complete exemption from state and local ad valorem taxation on any railroad infrastructure which is used to provide a qualifying passenger service. By "qualifying" I mean that it meets capacity and performance standards appropriate for the territory it serves.
A base subsidy for every passenger seat provided on these services. This subsidy shouldn't be sufficient to make it profitable to run an empty train, but should be enough to hold the bean counters' axemen at bay during a short-term downturn.
An incentive subsidy for every _occupied_ passenger seat sold on these services. There is no more effective means of subsidy than to leverage the customer's dollar, and this would help ensure that pricing and services motivate customers to come and (hopefully) keep coming back.
"...but I can dream, can't I? Can't I...?"


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## railiner (Mar 2, 2020)

jis said:


> I am not sure having a competent bunch of lawyers setting up the corporation in a way that it stays clear of both the Railroad Retirement Act and any forced unionization really constitutes any "sweetheart deal". It is just the specific legal hoops they jumped through competently. Being a pure intra-state operation that does not interchange passengers with the national network helps I guess in getting STB to be uninterested in it too, though I don't think that has any bearing on the exclusion from RRA.
> 
> It would be interesting to see if and how this affects things like future code sharing or through ticketing of any sort.


What about the Alaska RR?
First US government owned, and now state owned...
It does not connect or interchange with any other railroads, it stays within one state, yet its employees are under RRB...


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## 41bridge (Mar 2, 2020)

It does interchange with other roads via car float. When I rode I saw many interchanged cars.


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## jis (Mar 2, 2020)

railiner said:


> What about the Alaska RR?
> First US government owned, and now state owned...
> It does not connect or interchange with any other railroads, it stays within one state, yet its employees are under RRB...


I don't know what the RRB rules are. If you want an answer to your question, find a lawyer who does, or become one yourself  But it is quite clear that there are ways for a railroad to not all under the RRB.


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## railiner (Mar 2, 2020)

Actually, some of the ARR passenger trains are a kind of mixed bag. The operating crew for the entire train, and the OBS crews on the “public”, or ARR marketed cars, are considered “railroad employees”, but the OBS crews and their manager on the cruise line owned cars, are not...


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