Arguments against Privatizing Amtrak?

[NY Penn]

Having read End of the Line, I have to say that Vranich, although extremely biased, makes a considerable case for privatizing Amtrak. My question is, why not?

 

[dlagrua]

Privatizing Amtrak won't happen any time soon unless private investors come forward with a plan to buy it. The freight railroads have no interest in passenger rail. Even during the Golden Years of railroading when almost everyone took the train, passenger rail travel was only minimally profitable. You can bet that if passenger rail was highly profitable, private industry would be making a play for it.

 

[Ispolkom]

What are Vranich's arguments? It's hard to argue against them without knowing what they are.

Along with dlagrua's argument, I'd add that hiring a private contractor to run a government operation is not always cheaper than having a government agency run it.

 

[Shanghai]

I think if Amtrak were to be privatized, our Government would insist that some form of Government

oversight would be retained. This action would be most discouraging to a private company, but

depending on the agreement, I would think that the company would begin to dismantle the unprofitable

parts of the system. Ticket prices would rise, many of the long distance trains would disappear

and much of the rolling stock would likely be sold. There would be labor strife and we taxpayers

would be responsible for the pension benefits promised to existing employees. There would be NO

savings to the Government for many years (if not forever) and we train customers would be terribly

frustrated with the extend and level of service available.

Any sale would most likely be Government financed, that being the private company would have a long

term installment contract to repay with some Government guarantees in terms of revenues into the future.

This would produce no short term financial relief to the taxpayers and the taxpayers would carry all

of the risk. In short, any private company who would accept this type of deal would probably fail

and we would end up with a very badly broken Amtrak that would either disappear or require far more

Government subsidies than currently provided.

 

[The Davy Crockett]

The main reason that privatizing Amtrak won't work is that virtually all other forms of transportation are heavily subsidized. Think about it. Roads are heavily subsidized. Thus personal automobiles and buses are. (On that level it is amazing that freight railroads can compete with trucking. One of the main reasons for this is because labor and fuel costs are so much less for freight when shipped by rail.) Air travel is heavily subsidized. Public transportation, in all its many forms, is heavily subsidized. Even water traffic is heavily subsidized. Look at the amounts spent by the Army Corps of Engineers and the Coast Guard to facilitate travel on fresh and salt water.

So, while the reasoning sounds good, it is incomplete reasoning. So the question I ask you is: If rail travel should not get government money, why should any other forms?

IMHO the far right has decided that Amtrak is an easy political target and the industries that rely heavily on our current transportation system are afraid the 'masses' will come to the realization that a good rail transportion network would be better than our current system. And I have not even mentioned the environmental, fiscal, social and military costs that go with our current way of getting from "point A" to "point B." That is why there has been so much focus on killing Amtrak.

 

[GPSTraveler]

The main reason privitazation won't work in the United States is because the federal gov't doesn't maintain the rails. The gov't does maintain the roads and airports. Or to look at it another way, how profitable would the trucking companies be if they had to fix the roads themselves. Privitazation COULD work here, but it would have to be a combination of public and private companies. AMTRAK would still get public funding to maintain the tracks (just like highway funding), and then the train operating companies (airlines) would only have to maintain equipment. The same analogy works in the air. The FAA maintains the airports (federal), the airlines only pay for the planes. Therefore, they can be profitable.

I am all for privatization if it is done properly. The United Kingdom has a fantastic private rail system, but Network Rail still maintains the tracks with taxpayer money.

One reason I could TOLERATE a UK style privatization..... The Federal Govt would be 100% responsible for giving AMTRAK ( now just the track infrastructure company) enough money to get the entire country up to "at least" NEC speeds, which would also be a win win for freight companies. In the UK, you do have many TOC (train operating companies) choices which makes things interesting. Virgin and East Coast are my favorite TOCs (airlines of choice). I would just hope that services EXPAND and not contract.

What I don't like about UK privatization is somehow the Lounge Cars and Dining Cars disappeared. This has been replaced with meals at your seat service, like in the VIA corridor. It now has made Amtrak more desirable than these TOCs.

But a couple of TOCs still run overnight trains with sleeping cars! Pretty neat!

 

[henryj]

'Privatization' has different meanings to different people. There are multiple companies out there that can and do run passenger train and freight services on a contract basis. We have seen this with the VRE and out west in Calif. Anyone can bid on running the services. No one with any common sense thinks that such services can actually make money under the current circumstances so the contractor is paid to do this. If something like this is to evolve then I would assume that the DOT would assume ownership of the NEC and maintain the infrastructure. The 'operator' would pay a fee to use the tracks based on how many trains it ran. Most of the rest of the network is privately owned by the freight railroads or by local commuter agencies. In other words, privatization does not mean the thing has to make money, it just means that the services go to the contractor that handles it in the most efficient manner. Amtrak could certainly become one of those contractors, but only if it becomes a for profit company. Or it could be the government agency that handles the contracts and pays the contractors.

This discussion can of course go on forever because there are so many variants. But as it is run right now, Amtrak is not doing much to grow the business. It is relying on the states to initiate anything and then running the trains.

 

[MikefromCrete]

The interesting thing about the "privatization" of UK trains is that the government spends more money on rail operations now than it ever did under British Rail and rail fares in the UK are much higher than in the rest of Europe. So somebody has benefited, but certainly not the public._

We have some private operations of passenger trains in the U.S. with firms running commuter trains under contract with the local government agencies. Are these operations any better or cheaper than the publicly operated commuter trains? I don't think so.

 

[NY Penn]

I'm saying what Vranich is saying here... this is not necessarily what I think.

Privatizing Amtrak won't happen any time soon unless private investors come forward with a plan to buy it. The freight railroads have no interest in passenger rail. Even during the Golden Years of railroading when almost everyone took the train, passenger rail travel was only minimally profitable. You can bet that if passenger rail was highly profitable, private industry would be making a play for it.

In cases where railroads have been privatized, efficiency has increased. (Rocky Mountaineer, Alaska Railroad, British network).

What are Vranich's arguments? It's hard to argue against them without knowing what they are.

Along with dlagrua's argument, I'd add that hiring a private contractor to run a government operation is not always cheaper than having a government agency run it.

See my other answers...

I think if Amtrak were to be privatized, our Government would insist that some form of Government

oversight would be retained. This action would be most discouraging to a private company, but

depending on the agreement, I would think that the company would begin to dismantle the unprofitable

parts of the system. Ticket prices would rise, many of the long distance trains would disappear

and much of the rolling stock would likely be sold. There would be labor strife and we taxpayers

would be responsible for the pension benefits promised to existing employees. There would be NO

savings to the Government for many years (if not forever) and we train customers would be terribly

frustrated with the extend and level of service available.

Any sale would most likely be Government financed, that being the private company would have a long

term installment contract to repay with some Government guarantees in terms of revenues into the future.

This would produce no short term financial relief to the taxpayers and the taxpayers would carry all

of the risk. In short, any private company who would accept this type of deal would probably fail

and we would end up with a very badly broken Amtrak that would either disappear or require far more

Government subsidies than currently provided.

Supposedly, private contractors are more efficient.

The main reason that privatizing Amtrak won't work is that virtually all other forms of transportation are heavily subsidized. Think about it. Roads are heavily subsidized. Thus personal automobiles and buses are. (On that level it is amazing that freight railroads can compete with trucking. One of the main reasons for this is because labor and fuel costs are so much less for freight when shipped by rail.) Air travel is heavily subsidized. Public transportation, in all its many forms, is heavily subsidized. Even water traffic is heavily subsidized. Look at the amounts spent by the Army Corps of Engineers and the Coast Guard to facilitate travel on fresh and salt water.

So, while the reasoning sounds good, it is incomplete reasoning. So the question I ask you is: If rail travel should not get government money, why should any other forms?

IMHO the far right has decided that Amtrak is an easy political target and the industries that rely heavily on our current transportation system are afraid the 'masses' will come to the realization that a good rail transportion network would be better than our current system. And I have not even mentioned the environmental, fiscal, social and military costs that go with our current way of getting from "point A" to "point B." That is why there has been so much focus on killing Amtrak.

Air travel is subsidized using user fees and taxes (paid only by air passengers). Highways are subsidized using the gas tax and licensing fees (paid only by car/bus/truck users)(and remember that highway funding helps intercity buses, car travel, AND truck freight).

However, there is no Amtrak-travel tax.

The main reason privitazation won't work in the United States is because the federal gov't doesn't maintain the rails. The gov't does maintain the roads and airports. Or to look at it another way, how profitable would the trucking companies be if they had to fix the roads themselves. Privitazation COULD work here, but it would have to be a combination of public and private companies. AMTRAK would still get public funding to maintain the tracks (just like highway funding), and then the train operating companies (airlines) would only have to maintain equipment. The same analogy works in the air. The FAA maintains the airports (federal), the airlines only pay for the planes. Therefore, they can be profitable.

I am all for privatization if it is done properly. The United Kingdom has a fantastic private rail system, but Network Rail still maintains the tracks with taxpayer money.

One reason I could TOLERATE a UK style privatization..... The Federal Govt would be 100% responsible for giving AMTRAK ( now just the track infrastructure company) enough money to get the entire country up to "at least" NEC speeds, which would also be a win win for freight companies. In the UK, you do have many TOC (train operating companies) choices which makes things interesting. Virgin and East Coast are my favorite TOCs (airlines of choice). I would just hope that services EXPAND and not contract.

What I don't like about UK privatization is somehow the Lounge Cars and Dining Cars disappeared. This has been replaced with meals at your seat service, like in the VIA corridor. It now has made Amtrak more desirable than these TOCs.

But a couple of TOCs still run overnight trains with sleeping cars! Pretty neat!

But the new company would not maintain the (non-NEC and Keystone line) tracks either, it would still be the freight RRs. Vranich actually sites Britain (and Japan) extensively as 'proof' that privatization can work.

'Privatization' has different meanings to different people. There are multiple companies out there that can and do run passenger train and freight services on a contract basis. We have seen this with the VRE and out west in Calif. Anyone can bid on running the services. No one with any common sense thinks that such services can actually make money under the current circumstances so the contractor is paid to do this. If something like this is to evolve then I would assume that the DOT would assume ownership of the NEC and maintain the infrastructure. The 'operator' would pay a fee to use the tracks based on how many trains it ran. Most of the rest of the network is privately owned by the freight railroads or by local commuter agencies. In other words, privatization does not mean the thing has to make money, it just means that the services go to the contractor that handles it in the most efficient manner. Amtrak could certainly become one of those contractors, but only if it becomes a for profit company. Or it could be the government agency that handles the contracts and pays the contractors.

This discussion can of course go on forever because there are so many variants. But as it is run right now, Amtrak is not doing much to grow the business. It is relying on the states to initiate anything and then running the trains.

And the status quo of Amtrak is the problem. The goal of privatization is to make the network as efficient as possible.

The interesting thing about the "privatization" of UK trains is that the government spends more money on rail operations now than it ever did under British Rail and rail fares in the UK are much higher than in the rest of Europe. So somebody has benefited, but certainly not the public._

We have some private operations of passenger trains in the U.S. with firms running commuter trains under contract with the local government agencies. Are these operations any better or cheaper than the publicly operated commuter trains? I don't think so.

While the book is not totally up-to-date (2004), it says that subsidies dropped from 1.425 billion pounds to 908 million pounds in the five years after franchising began.

Interestingly enough, Vranich notes that some of Japan's progress came from permission to drop unprofitable routes. I'm just hoping that if Amtrak is privatized, the same thing will not happen here.

 

[AlanB]

I think if Amtrak were to be privatized, our Government would insist that some form of Governmentoversight would be retained. This action would be most discouraging to a private company, but

depending on the agreement, I would think that the company would begin to dismantle the unprofitable

parts of the system. Ticket prices would rise, many of the long distance trains would disappear

and much of the rolling stock would likely be sold. There would be labor strife and we taxpayers

would be responsible for the pension benefits promised to existing employees. There would be NO

savings to the Government for many years (if not forever) and we train customers would be terribly

frustrated with the extend and level of service available.

Any sale would most likely be Government financed, that being the private company would have a long

term installment contract to repay with some Government guarantees in terms of revenues into the future.

This would produce no short term financial relief to the taxpayers and the taxpayers would carry all

of the risk. In short, any private company who would accept this type of deal would probably fail

and we would end up with a very badly broken Amtrak that would either disappear or require far more

Government subsidies than currently provided.

Supposedly, private contractors are more efficient.

The grass is always greener on the other side of the fence.

The main reason that privatizing Amtrak won't work is that virtually all other forms of transportation are heavily subsidized. Think about it. Roads are heavily subsidized. Thus personal automobiles and buses are. (On that level it is amazing that freight railroads can compete with trucking. One of the main reasons for this is because labor and fuel costs are so much less for freight when shipped by rail.) Air travel is heavily subsidized. Public transportation, in all its many forms, is heavily subsidized. Even water traffic is heavily subsidized. Look at the amounts spent by the Army Corps of Engineers and the Coast Guard to facilitate travel on fresh and salt water.

So, while the reasoning sounds good, it is incomplete reasoning. So the question I ask you is: If rail travel should not get government money, why should any other forms?

IMHO the far right has decided that Amtrak is an easy political target and the industries that rely heavily on our current transportation system are afraid the 'masses' will come to the realization that a good rail transportion network would be better than our current system. And I have not even mentioned the environmental, fiscal, social and military costs that go with our current way of getting from "point A" to "point B." That is why there has been so much focus on killing Amtrak.

Air travel is subsidized using user fees and taxes (paid only by air passengers). Highways are subsidized using the gas tax and licensing fees (paid only by car/bus/truck users)(and remember that highway funding helps intercity buses, car travel, AND truck freight).

However, there is no Amtrak-travel tax.

And yet the Fed still tossed in something like $2.5 Billion last year to the FAA because those fees didn't cover everything. Plus there are the hidden indirect subsidies, things like pilots that got their flight training in the military thanks to the taxpayers.

As for those roads, Subsidyscope calculated that in 2009 we drivers actually covered about 51% of the outlays by the Fed for our highways. To say nothing of the subsidies at the state and local levels where most roads are actually paved with property taxes and not gas taxes.

 

[jphjaxfl]

The Freight Railroads that own the track ran passenger service for years. In the first half of the 20th Century when trains were well utilized, Railroads used good passenger train service to attract Corporate Executives whose companies would ship their goods via a particular railroad. If the shippers were impressed with timely efficient passenger trains, good food in the dining cars and other amenities, they felt that the railroad would do well with freight too. As Corporate Executives started flying, there was no need to impress them with good passenger trains. As has been mention mail contracts kept many trains running until the 1960s when trains started to be discontinued, downgraded and combined at a very rapid rate. Some of the railroads like Seaboard Coastline hired private contractors to maintain their passenger equipment, but no private companies stepped in to take over passenger train service. I fact the Pullman Company which was at one time a private contractor operating the Sleeping Cars as well as some dining and parlor cars was dissolved by the railroads that owned it. No private operator will consider operating passenger trains without a substantial government subsidy so you are back to Congress deciding how much Amtrak or any other private contractor should get to operate the trains. Until the US has a designated funding arrangement for passenger trains as it does for Highways and Airways, trains will never be able to provide the kind of service that is offered in some other countries.

 

[henryj]

The Freight Railroads that own the track ran passenger service for years. In the first half of the 20th Century when trains were well utilized, Railroads used good passenger train service to attract Corporate Executives whose companies would ship their goods via a particular railroad. If the shippers were impressed with timely efficient passenger trains, good food in the dining cars and other amenities, they felt that the railroad would do well with freight too.

So now the freight railroads entertain on their own private rail cars with their own private trains and they don't have to put up with the public or Amtrak.

 

[Bob Dylan]

Having read End of the Line, I have to say that Vranich, although extremely biased, makes a considerable case for privatizing Amtrak. My question is, why not?

Lots of reasons for "Why Not"! Privatization of Government Services has been a disaster in most States that tried it, none more so than here in anti-government Texas where they made a mess out of the Prison and Jail Systemms, the Medicad and Food Stamp Program and the Education System! Even mighty IBM wasnt able to get the States Computer systems working and lost their contract due to the mess "consultants" (ie Politicians buddies and brother in laws)had made out of it!

If Amtrak is Sold Off look for the NEC trains to still run at greatly increased fares, parts of the California sysatem and perhps the Missouri/Illinois/Wisconson system.

As for the LD Trains, a few of the "Tourist trains"ike the CS/CZ, the Silver Trains and the Auto Train would run, probably on reduced schedules, (at higher fares for sure!) but the Gvernment would still have to provide tax credits and even grants, its very expensive to run Rail, NO Passenger Transportation System in the World makes money, never has, never will! Hows that for starters!

 

[Shanghai]

Jim,

I think we agree on this one!!

 

[henryj]

NO Passenger Transportation System in the World makes money, never has, never will! Hows that for starters!

Of course they make money Jim. They always have. It's just that government has intervened and started to pick up part of the tab. It's good politically to fund free highways, cheap airfares and in Europe and asia, fast trains. In this country we decided to go with free interstate highways and cheap airfares at the expense of rail. Mainly because we had cheap fuel for so many years. All this is changing now and it will be interesting to see how it all plays out.

 

[George Harris]

Having read End of the Line, I have to say that Vranich, although extremely biased, makes a considerable case for privatizing Amtrak. My question is, why not?

I thought we already had a thread discussing this guy's book and privatization. See no reason to rehash it.

Vranish has become somewhat of a Johnny one note on this subject, and it is more obsession than analysis.

 

[dlagrua]

We can continue to debate the point but privatization won't happen any time soon. On the subject of profitability passenger lines did make money in the 1920's and 1930's but profits were small. The last private RR to make money was the Auto Train Corp that did until they opened up an ill conceived mid western route and the red ink started to flow. The ridership was light ,track conditions ended up being so bad there was a major derailment that destroyed a whole bunch of equipment . With lawsuits and damage the company never recovered but AT was profitable for years.

 

[leemell]

I think if Amtrak were to be privatized, our Government would insist that some form of Governmentoversight would be retained. This action would be most discouraging to a private company, but

depending on the agreement, I would think that the company would begin to dismantle the unprofitable

parts of the system. Ticket prices would rise, many of the long distance trains would disappear

and much of the rolling stock would likely be sold. There would be labor strife and we taxpayers

would be responsible for the pension benefits promised to existing employees. There would be NO

savings to the Government for many years (if not forever) and we train customers would be terribly

frustrated with the extend and level of service available.

Any sale would most likely be Government financed, that being the private company would have a long

term installment contract to repay with some Government guarantees in terms of revenues into the future.

This would produce no short term financial relief to the taxpayers and the taxpayers would carry all

of the risk. In short, any private company who would accept this type of deal would probably fail

and we would end up with a very badly broken Amtrak that would either disappear or require far more

Government subsidies than currently provided.

Supposedly, private contractors are more efficient.

The grass is always greener on the other side of the fence.

The main reason that privatizing Amtrak won't work is that virtually all other forms of transportation are heavily subsidized. Think about it. Roads are heavily subsidized. Thus personal automobiles and buses are. (On that level it is amazing that freight railroads can compete with trucking. One of the main reasons for this is because labor and fuel costs are so much less for freight when shipped by rail.) Air travel is heavily subsidized. Public transportation, in all its many forms, is heavily subsidized. Even water traffic is heavily subsidized. Look at the amounts spent by the Army Corps of Engineers and the Coast Guard to facilitate travel on fresh and salt water.

So, while the reasoning sounds good, it is incomplete reasoning. So the question I ask you is: If rail travel should not get government money, why should any other forms?

IMHO the far right has decided that Amtrak is an easy political target and the industries that rely heavily on our current transportation system are afraid the 'masses' will come to the realization that a good rail transportion network would be better than our current system. And I have not even mentioned the environmental, fiscal, social and military costs that go with our current way of getting from "point A" to "point B." That is why there has been so much focus on killing Amtrak.

Air travel is subsidized using user fees and taxes (paid only by air passengers). Highways are subsidized using the gas tax and licensing fees (paid only by car/bus/truck users)(and remember that highway funding helps intercity buses, car travel, AND truck freight).

However, there is no Amtrak-travel tax.

And yet the Fed still tossed in something like $2.5 Billion last year to the FAA because those fees didn't cover everything. Plus there are the hidden indirect subsidies, things like pilots that got their flight training in the military thanks to the taxpayers.

As for those roads, Subsidyscope calculated that in 2009 we drivers actually covered about 51% of the outlays by the Fed for our highways. To say nothing of the subsidies at the state and local levels where most roads are actually paved with property taxes and not gas taxes.

Let us not forget the Feds paid for 90% of the Interstate Highway System with a total cost in 2006 dollars of $426B.

 

[ButFli]

The interesting thing about the "privatization" of UK trains is that the government spends more money on rail operations now than it ever did under British Rail and rail fares in the UK are much higher than in the rest of Europe. So somebody has benefited, but certainly not the public._

Sorry, but this is very misleading. The Government spends more total money on rail now than it did under BR, but the total number of passengers is much higher now than it was under BR. The per-passenger subsidy is significantly less. It is also worth noting that at the end of BR, the rail system was being allowed to rot. The current level of subsidy more accurately reflects the cost of maintaining the rail system for the future. Ticket prices are roughly equivalent to the prices on the continent if purchased before the day of travel.

Vranich does not advocate selling Amtrak to private investors and expecting it to be run at a profit without government subsidy. Vranich proposes a negative-bid system, where private rail companies bid to run designated services for the lowest subsidy. Amtrak would be free to bid in such a system and could continue to operate services if it could do it for a lower subsidy than the private companies. International experience shows that such a system results in more frequent trains, better customer service, and more passengers riding the rails. In some circumstances total government subsidy can increase, but because of increased ridership the per-passenger subsidy falls considerably.

 

[AlanB]

The interesting thing about the "privatization" of UK trains is that the government spends more money on rail operations now than it ever did under British Rail and rail fares in the UK are much higher than in the rest of Europe. So somebody has benefited, but certainly not the public._

Sorry, but this is very misleading. The Government spends more total money on rail now than it did under BR, but the total number of passengers is much higher now than it was under BR. The per-passenger subsidy is significantly less. It is also worth noting that at the end of BR, the rail system was being allowed to rot. The current level of subsidy more accurately reflects the cost of maintaining the rail system for the future. Ticket prices are roughly equivalent to the prices on the continent if purchased before the day of travel.

Vranich does not advocate selling Amtrak to private investors and expecting it to be run at a profit without government subsidy. Vranich proposes a negative-bid system, where private rail companies bid to run designated services for the lowest subsidy. Amtrak would be free to bid in such a system and could continue to operate services if it could do it for a lower subsidy than the private companies. International experience shows that such a system results in more frequent trains, better customer service, and more passengers riding the rails. In some circumstances total government subsidy can increase, but because of increased ridership the per-passenger subsidy falls considerably.

You are quite correct in what you say Butfli, however the problem here in the US that I see is that most people see & hear the word privatization and think that means zero subsidies. They don't realize that rail is still getting subsidies at all, the fact of whether the subsidy per passenger is lower or not isn't part of the equation.

 

[jis]

The interesting thing about the "privatization" of UK trains is that the government spends more money on rail operations now than it ever did under British Rail and rail fares in the UK are much higher than in the rest of Europe. So somebody has benefited, but certainly not the public._

Sorry, but this is very misleading. The Government spends more total money on rail now than it did under BR, but the total number of passengers is much higher now than it was under BR. The per-passenger subsidy is significantly less. It is also worth noting that at the end of BR, the rail system was being allowed to rot. The current level of subsidy more accurately reflects the cost of maintaining the rail system for the future. Ticket prices are roughly equivalent to the prices on the continent if purchased before the day of travel.

At the point of privatization, to basically run the same system subsidy almost doubled, and still that could not keep Railtrack from crashing and burning. Even now not all TOCs are running in private hands. The ex-GNER TOC is in recievership and under government control. So it is a mixed bag, not as blazing a success as Vranich makes it out to be. To some extent actually Amtrak has achieved on the NEC exactly what the TOCs have achieved in the UK. subsidy per passenger and per passenger mile is now much lower than it was 10 years back. How exactly is setting up three separate bureaucracies to provide the same service going to cost less is hard to understand without some more details.

The other factor to remember is UK is not the US. Even Cameron believes firmly in the need for supporting and financing infrastructure. They are not slashing and burning their rail and other infrastructure budgets to balance their budget. The current breed of latter day legislators in the US do not necessarily believe so. They believe more in tooth fairies and pixie dust when it comes to necessary infrastructure.

Vranich does not advocate selling Amtrak to private investors and expecting it to be run at a profit without government subsidy. Vranich proposes a negative-bid system, where private rail companies bid to run designated services for the lowest subsidy. Amtrak would be free to bid in such a system and could continue to operate services if it could do it for a lower subsidy than the private companies. International experience shows that such a system results in more frequent trains, better customer service, and more passengers riding the rails. In some circumstances total government subsidy can increase, but because of increased ridership the per-passenger subsidy falls considerably.

Vranich is very short on details of what regulatory mechanisms need to be set up to make it work. The Brits at least made an honest attempt to set up the necessary regulatory authorities and quite a bit of it actually works, and a horribly important part did not, causing the collapse of Railtrack after a few horrible self-inflicted accidents. That is what cost an arm and a leg initially, and until the Railtrack issue was settled.

No matter how much Vranich might wish so, there is not the intestinal fortitude in the US at the federal level, to handle that complex problem anytime soon. There is also no illusions about what the total subsidy should be among the aficionados of privatization in the US, the number is zero. This whole notion of subsidy increasing with increasing ridership is utter fantasy in the present political climate. Vranich is a dreamer with an axe to grind. I wish he'd get over his firing from Amtrak many moons ago and actually present his ideas in a more constructive fashion. If he wrote a book without ever putting the term Amtrak or NRPC, just discussing what regulatory structures and logistical challenges must be met for a potential privatization to work, it might be more useful to discuss that.

 

[jis]

You are quite correct in what you say Butfli, however the problem here in the US that I see is that most people see & hear the word privatization and think that means zero subsidies. They don't realize that rail is still getting subsidies at all, the fact of whether the subsidy per passenger is lower or not isn't part of the equation.

Another thing that the folks forget is that much to the chagrin of the privatization enthusiasts, one of the biggest opponents of that idea was none other than the AAR, which basically said they were very happy to deal with a single entity that sets passenger railroad standards, and were not interested in dealing with myriads of entities, which is what would result, if Amtrak were dismantled, as was the desire of the Bushies. There is a hint there of what needs to be in place, but people like Vranich are so obsessed with Amtrak that they could not find their way out of a wet brown paper bag if it had Amtrak written on it.

 

[trainviews]

As for examples of privatization the British one is certainly a mixed one, and it would be sensible to look at some of the experiences in non-English speaking European countries.

State monopolies tend to end up with poor and inefficient service, and competition can be one of the remedies. My personal take is that privatisaton has sometimes made for better and more innovative service, resulting in more and happier passengers. But it does only get marginally cheaper if at all in the long run, and in the instances where the primary goal has been to save money, it has resulted in lousy service.

In Britain privatizing the infrastructure too (Railtrack) was certainly a blunder, and as far as I know no other country has tried this.

British also dismantled British Rail altogether, but most other countries have chosen to privatize bit by bit, often starting with regional services on side lines, and letting the national train company make a bid. This is tricky because it is almost impossible to see if the public company is actually not underbidding and passing the cost to the taxpayers over the remaining service. This has just made a major scandal here in Denmark. But there are also examples of side lines that have benefitted greatly from suddenly getting the full attention from whoever has won the contract instead of being a low prestige appendix to running the main lines. This is part of the passenger succes in Britain.

The most positive example I know is probably Sweden though, which interestingly is a mini-US in terms of geography. The population density is almost the same, with the population just as unevenly distributed. It also runs one of the most efficient freight rail networks in Europe, based a lot on the mining industry, like in the US. But at the same time it runs a very good passenger network with one of the highest intercity market shares. Freight is run on commercial basis even though a state owned company is a player too. As for passengers, most regional services are privatized to the contractor bidding for the lowest subsidy. SJ (Swedish Rail) is subsidized to keep up a long distance network with reasonable frequencies covering the whole country. This has not been up for bid - at least yet - but the network has been opened up for private companies to compete on the most profitable routes and time slots. A few do but even if it is still in its' infancy the effect on the innovation and service of SJ is already feelable. Overall passenger numbers have been soaring, in some areas by as much as 10 percent a year for a number of years now.

However the differencies to the US are substantial. First the state has put in a huge amount of money over the last decade or two to upgrade the network (even if no true high speed lines have been built yet - top speeds are about 165 mph on main lines). Secondly the state owns the infrastructure - in the US this is only true for the NEC and even there regional entities own part of it. This enables the state to set the rules for all opeators, dispatch trains and distribute slots on congested lines.

So privatization in the US has a lot of challenges that have to be adressed first if the hidden agenda is not really to get rid of train service. A major problem is already now that most trains are run on infrastructure owned by companies that have very little interest in passenger rail. As it is now the conflict of interest between Amtrak and the freight companies is bad enough. Finding out who is to blame for delays and poor service between the host railroads, the passenger line with the contract and the public entity paying will require totally new control measures in the contracts. So will the legal framework regulating the railroad business.

Equally important is to get a consensus of how much the services may cost. Going for zero or close to is not possible, and will deteriorate service within a limited number of years.

Third - and this requires more money - privatization will solve nothing if it has to be run over a worn down infrastructure. It has to be possible to run a decent service. A private company can do all it wants to try to attract more passengers with nicer trains, free wifi and frequent service, but if it keeps breaking down because of signalling errors, broken catenarys, conflicts with freight trains or constant slow orders, those passengers will soon be scared off. The winning bidder might as well run the lowest cost, lousiest service possible, run away with as much of the money from the contract as possible, and then leave a totally worn down service to the bidders for the next contract period - if anyone wants to.

 

[Ryan]

Supposedly, private contractors are more efficient.

That sounds great, but at least in theory can't be true if the company is making any money.

Private Industry costs = cost to provide service + Profit

Government costs = cost to provide service

NO Passenger Transportation System in the World makes money, never has, never will! Hows that for starters!

Of course they make money Jim. They always have. It's just that government has intervened and started to pick up part of the tab. It's good politically to fund free highways, cheap airfares and in Europe and asia, fast trains. In this country we decided to go with free interstate highways and cheap airfares at the expense of rail. Mainly because we had cheap fuel for so many years. All this is changing now and it will be interesting to see how it all plays out.

Without subsidies passenger transportation doesn't make money. The government can pay the subsidies to a private concern and have some of it raked off the top as profit, or they can provide the service themselves and have all the money spent actually go towards providing that service. As a taxpayer, I'd rather my tax dollars go towards some private company making a profit.