Business Model
TRAIN
OPERATIONS
NEC
INFRASTRUCTURE
GOVERNMENT
PROGRAM
ADMINISTRATION
AND OVERSIGHT
1
Government Program Administration and Oversight
• Independent oversight group (NRPC) created to:
– Oversee the rail passenger program
• Disburse federal funds
• Plan corridor development
• Manage any franchising of train operations
– Franchise design
– Service provider selection
– Contract administration
• Monitor business plans of Infrastructure and Operating Companies
– Intervene if necessary to keep plans on track
– Hold the statutory franchise to access freight railroad rights-of-way at
incremental cost and with operating priority
– Make available insurance to train operators and limit operators’ liability
– Implement plan to bring NEC infrastructure to state of good repair
– Preserve national reservations system and ensure joint ticketing
2
NEC Infrastructure Company
• Government-owned infrastructure company created to:
– Maintain and manage NEC infrastructure
• Balance/represent the needs of all users
• Coordinate maintenance and capital projects with commuter authorities
and freight railroads
– Authorized to sell or transfer non-NEC physical assets
– Establish a system of fees for all users of the NEC
• Funding sources
– Operating shortfalls covered by track use fees
– Capital funds: A mix of federal and state funds
3
Operating Company Options:
1. National or Regional Monopolies
• Train operations performed by a national carrier or regional
carriers
– Option to create a separate subsidiary for long-haul trains
– As under existing law, states could choose a different operator for
corridor operations but would have to negotiate access with freight
railroads
• Funding sources
– Operating shortfalls on long-haul trains funded by the federal
government; after transition, states responsible for funding losses
on existing and new corridor trains.
– Equipment capital provided on a federal-state matching basis.
4
1. National or Regional Train Operating Companies
NRPC
NRPC
Infrastructure
Company
Train
Operations
Company*
Infrastructure
Company
Train
OperationsNEC*
Train
OperationsWest*
Train
OperationsCentral*
Train
OperationsSoutheast*
5
* Includes mechanical shops for locomotive and car repair
Operating Company Options:
2. Competition for the long-haul market
• Existing and new corridor trains operated by Amtrak; long
distance trains franchised through competitive bidding
– NRPC authorizes franchisees to operate under the national franchise at
incremental cost pursuant to contract (acting on behalf of NRPC)
– As under existing law, states could choose a different operator for corridor
operations but would have to negotiate access with freight railroads
– Labor protection provided by NRPC; Amtrak employees have preferential
hiring status but franchisees may immediately negotiate new labor
contracts.
• Funding sources
– Operating shortfalls on long-haul trains funded by the federal government;
after transition, states responsible for funding losses on existing and new
corridor trains.
– Train operators responsible for privately financing new equipment. If
necessary, federal funding of long-haul equipment and state financing of
corridor equipment.
6
2. Competition for the long-haul market
NRPC
Infrastructure
Company
Corridor
Train
Operations
Franchise
operations
Long-haul
Train
Operations
Mechanical
Shops
7
Operating Company Options:
3. Competition for all intercity passenger markets
• After a transition period (2 - 5 years), all passenger operations
franchised through competitive bidding
– Immediate franchising of one segment of operations (corridors, longhauls, perhaps a single train) to demonstrate commitment to change
– Transition period to give Amtrak the opportunity to become more
efficient and competitive in subsequent franchising
– NRPC authorizes franchisees to operate under the national franchise
at incremental cost pursuant to contract (acting on behalf of NRPC)
– Labor protection provided by NRPC; Amtrak employees have
preferential hiring status but franchisees may immediately negotiate
new labor contracts.
– Mail and Express operations franchised (separately or as part of train
operations)
– Amtrak shops owned and operated by NRPC during transition; then
could be retained, leased or sold.
– Amtrak ultimately privatized.
8
Operating Company Options:
3. Competition for all intercity passenger markets (cont’d)
• Funding sources
– Operating shortfalls on long-haul trains funded by the federal
government; after transition, states responsible for funding losses
on existing and new corridor trains.
– Train operators responsible for privately financing new equipment.
If necessary, federal funding of long-haul equipment and state
financing of corridor equipment.
9
3. Competition for all intercity passenger markets
NRPC
Franchise
operations
Train
Operations
Mail
and
Express
Infrastructure
Company
Mechanical
Shops
10
Operating Company Discussion Issues
• Are there other options that should be put on the table?
• Should competition be introduced? How much
competition? And how fast? Should Amtrak have the
opportunity to “get its house in order” before franchising is
introduced?
• How should labor issues and labor contracts be handled?
• How should the success of train operations be measured?
– Operational self-sufficiency
– Meeting a critical transportation need
– GAAP accounting or other criteria
• What are the appropriate roles - policy, oversight and
funding - for the various Amtrak stakeholders?
11