Wednesday, March 16, 2011

Making deficit-based passenger rail, including high-speed rail profitable is like squaring a circle.

"Although this conversation is about regular passenger rail in the US today, there are promotional organizations and legislative acts intended to promote it. And, high-speed rail will be the tip of this iceberg.

Please understand that passenger rail operates only with government subsidies whether at the local, regional or inter-city national levels.  There are a number of small independent passenger rail operators, especially in the commuter, regional range of service.  But inter-city pretty much belongs to Amtrak.

So, if you begin with the understanding that passenger rail is not profitable, the following brief article from Progressive Railroading makes little sense.  What competition?  What is there to compete over, who loses the least amount of money?

The US has one primary passenger rail service provider, and that's Amtrak.  They cost Congress (that's us) billions annually. They are not therefore, by definition, profitable.  The Republicans want to cut all their federal funding. 

The Passenger Rail Investment and Improvement Act (PRIIA) wants to introduce "competition" in the bidding for operators to provide the service. However, the states will be expected to bear the costs -- that's tax dollars -- in operation increases.  I'm assuming that in this context, competition does not mean what it means in the private sector.  Are they saying that since it's not actually profitable, and therefore not really competitive, the state will eat all cost increases?  But, the stated aim is to encourage competition for profits.  I'm confused.

The Association of Independent Passenger Rail Operators (AIPRO) does not include Amtrak.  They say that they want the next Transportation budget bill to "maintain the robust investment in the nation's freight-rail network and stimulate cost-effective passenger-rail expansion."   

There's that familiar confusion again. Investing in "the nation's freight-rail network"  is great because we know it's profitable.  On the other hand, I don't know what "cost-effective passenger-rail expansion" means.  I would guess that the ability to carry the largest numbers of riders the most miles for the least per capita costs qualifies.  That, in turn means that the most cost-effective rail is urban and regional public mass transit, including light-rail, subways, and commuter trains, and these are all subsidy dependent. And, in this economy, they are all hurting, deprived of adequate operating funds, as well as maintenance, replacement and upgrade capital funds. So, like Caltrain, they cut services and raise fares.

Let me increase the confusion being discussed here by presenting some words from pro-HSR advocate Congresswoman Corrine Brown of Florida who advocates public-private partnerships for HSR, and complains that it was denied to Florida.  That's because Governor Scott rejected the federal HSR funding that would have made PPP possible, she said.  However, she also said this: 

"I have talked to each of the freight railroads about this program; they oppose it.  The railroads that own the infrastructure over which Amtrak currently operates are free to provide passenger rail service now if they want to; they own the lines.  But they don’t want to. That is why we created Amtrak 40 years ago, because the freight railroads wanted to be relieved of their legal obligation to operate unprofitable passenger rail service." 

So, even as Congresswoman Brown shows that she understands the fly in the profitability ointment for passenger rail, she nonetheless advocates private participation as justification for seeking federal funding.  Which is it, profitability and privatization, or permanent public subsidy funding?

The article introduces other terms the meaning of which, when contextualized into the subsidy dependent world of passenger rail, are strained. "Budget-neutral" suggests that the rail operation does not require operational subsidies; it's self-sustaining.  If that does happen, it happens under extremely limited circumstances and does not include maintenance and replacement costs. What do they mean by "free standing" when they seek to expand and reform their pilot program, which I assume, is not "free-standing."

How do you make passenger rail "a free standing, competitive alternative to current practice?"  With current practice, I assume they're losing money but are inadequately subsidized. So, the problem is solved by placing it under state authority?  Outside of the embracing arms of federal funding for passenger rail, it's cold out there.

And that leads us to their last recommendation, which is to create a passenger rail infrastructure bank. That has now become the Congressional hot-button, creating infrastructure trust funds and banks to handle the money, taking it out of the hands of the Congressmen themselves.  Are you having trouble following this?  So am I.  Ostensibly these funds would include federal funds but could also include private investor funds.  If those were ever available, of course.  And, we conclude with a reference to "competitive bidding." How does that work when there is nothing to compete over?

All of which is to say, that high-speed rail will add to all these problems, not relieve them, but the costs will be ever so much more and fall upon us, the taxpayers.
3/16/2011    Passenger Rail
States should use federal act to foster more passenger-rail competition, AIPRO says
States should embrace the Passenger Rail Investment and Improvement Act (PRIIA) by introducing competition into the bidding for passenger-rail operations, an Association of Independent Passenger Rail Operators (AIPRO) official said in testimony during a recent hearing before the U.S. House Transportation and Infrastructure Committee.

PRIIA required states to bear cost increases in existing operations, while concurrently allowing them to seek contracts with service providers. AIPRO's aim is to encourage competition in the market, association officials said in a prepared statement.

AIPRO, which was formed earlier this year, is calling for the next surface transportation bill to include a provision that would "maintain the robust investment in the nation's freight-rail network and stimulate cost-effective passenger-rail expansion," association officials said.

In testimony at the March 11 hearing, AIPRO Secretary and Treasurer Stan Feinsod presented the association’s recommended approach:

• Provide states with the budget-neutral option of managing passenger-rail corridor service, offering an initiative for the Northeast Corridor to explore high-speed rail;
• Reform and expand PRIIA's alternative passenger-rail pilot program to become a freestanding, competitive alternative to current service and place the intercity state corridor program under state authority; and
• Establish a passenger-rail infrastructure bank that would leverage grants and loans by expanding the Railroad Rehabilitation and Improvement Financing Program.

"In order to create a passenger rail network that is competitive with those being operated in other parts of the world, states must exercise their right to control passenger rail corridors and allow for competitive bidding," AIPRO Executive Director Ray Chambers said. "Model programs have demonstrated success initiating controlled competition for passenger operations in Britain and Germany, among others."