AmeriStarRail is a private company that wants to operate passenger trains in Amtrak’s Boston-to-Washington corridor as well as on nearby routes. It proposes to privately pay for construction of 76 new train sets consisting of 152 locomotives and 760 passenger cars, which it would use to replace all non-Acela trains in the corridor as well as extend service beyond the corridor.
Amtrak’s new Acela train, which is scheduled to go into service next year. AmeriStarRail proposes to use trains of the same make and design, but with 12 cars instead of 9 and locomotives with Diesel engines to provide power when operating on rails with no overhead wires. Photo by Simon Brugel.
AmeriStarRail also says it will spend $5 billion improving tracks in the Northeast Corridor in order to reduce the fastest trip times between New York to Washington from more than 2-1/2 hours to under 2 hours, with similar gains in the Boston-New York portion. The company says it has investors interested in paying for all of this but won’t reveal who they are.
AmeriStarRail submitted a proposal for Amtrak to pay it $2 for AmeriStarRail to operate trains using tracks and facilities that would still be owned by Amtrak, MetroNorth, and the MBTA. Amtrak rejected the proposal, saying it would lose more revenue than it would gain in cost savings. Although there is no formal procedure for doing so, AmeriStarRail has written a bid protest accompanied by more than 20 pages of supporting documents. This leads me to ask the following ten questions.
1. Amtrak bought 28 9-car trains to operate in Northeast Corridor Acela service. AmeriStarRail is proposing to buy 76 more trains of the same type, except with 12 cars instead of 9 and using locomotives that can operate as Diesels, with third rails, or with overhead catenary. Based on Amtrak’s cost of $2.45 billion, 76 more trains will cost around $9 billion. Amtrak’s existing Acela trains only lasted about 20 years before being replaced, so sensible lenders would require repayment of loans in 20 years. At 3 percent interest, debt service on such a loan would be more than $600 million a year, which is more than the operating profit Amtrak claimed to have made from all of its Northeast Corridor trains in 2019. In addition, a 30-year loan for the other $5 billion would add more than $250 million in annual debt service. How is AmeriStarRail going to be able to repay these loans? Is AmeriStarRail willing to share ridership and fare analyses and projections?
2. Amtrak says that the Northeast Corridor still has a $42 billion infrastructure backlog. The infrastructure bill now winding its way through Congress will cover less than half of that. Without rebuilding corridor infrastructure, AmeriStarRail’s plans are not going to work. Who does AmeriStarRail think will pay the rest of the cost of this backlog?
3. Although AmeriStarRail says that the trains it proposes to buy will have top speeds of 160 miles per hour, actual speeds will be limited by track design and condition, and Northeast Corridor tracks are currently no more than 150 miles per hour on one stretch and much less elsewhere. The Northeast Corridor Commission estimates that improving the corridor enough to reduce New York-Washington travel times by “nearly 30 minutes” will cost $117 billion. In contrast, AmeriStarRail thinks that it can save more than 30 minutes with just $5 billion (at least some of which will go to pay for a train maintenance center and track geometry train). Even given that the $42 billion in infrastructure backlog is included in the commission’s $117 billion, the commission’s estimate is more than 10 times AmeriStarRail’s. How does AmeriStarRail think that a mere $5 billion can increase speeds by so much?
4. Although Amtrak claims that the Northeast Corridor earned $568 million in net operating revenues in 2019, this didn’t include depreciation. Failure to count depreciation led to the huge infrastructure backlog that now exists in the corridor. Under AmeriStarRail’s proposal, who is going to pay for the wear-and-tear on infrastructure caused by running AmeriStarRail trains? If AmeriStarRail proposes to compensate Amtrak and other owners of the infrastructure it uses, where will the money come from considering that operating costs and debt service appear to be likely to consume all of AmeriStarRail’s revenues?
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5. Part of AmeriStarRail’s proposal is to operate trains on routes connecting with but outside of the Northeast Corridor. To do so, it proposes to buy locomotives that can operate under catenary, with third rails, or with Diesel power. This seems unusually complicated and will add significantly to the weight of the locomotives. Has anyone in the world ever tried such locomotives and were they successful?
6. The routes AmeriStarRail proposes to operate outside the Northeast Corridor include Richmond, Virginia; Long Island, New York; Harrisburg, Pennsylvania; Albany, New York; and Springfield, Massachusetts, among others. The Long Island Railroad loses money, and Amtrak admits that it lost money on the Harrisburg, Albany, and Springfield routes in 2019. While it says the Richmond route made an operating profit, Amtrak numbers not only don’t include depreciation, they count state subsidies as “operating revenues.” What makes AmeriStarRail think it can make these routes profitable? Is AmeriStarRail counting on state subsidies to make these extensions feasible?
7. The pandemic has dramatically transformed American travel patterns. Among other things, the average length of an Amtrak trip was 20 percent greater in July 2021 than in 2019. This increase signals that many people who previously might have taken Amtrak for short trips are now driving. At least some of this loss is likely to be permanent as Americans are not going to relax about their health even after the pandemic is declared over, if that ever happens. How does this change AmeriStarRail’s plans? Does AmeriStarRail have any reliable evidence that it can recover these passengers?
8. Congress has massively added to the national debt in the last two years, and more spending is promised. This appears to have significantly increased inflation. The Federal Reserve may respond by increasing interest rates. How high can interest rates go before the secret investors who are supposedly willing to finance AmeriStarRail’s plans decide that this is a no go?
9. Among the features AmeriStarRail promises for its new service are “integrated cup holders at each seat.” This is apparently considered to be of equal importance to “top operating speed of 160 MPH” and “new route options.” Does AmeriStarRail really think that cup holders will be a make-or-break deal item?
10. AmeriStarRail probably believes that free-market advocates such as myself should be lining up to support their plan. In fact, all I see is another proposal to supposedly use private funds to finance a money-losing operation that will eventually have to be rescued by government bailouts. What kind of guarantee can AmeriStarRail provide that this won’t happen?
If AmeriStarRail responds to these questions, I’ll post it here.
In reality, before this is completed, and certainly before it is paid for, it will be made obsolete by teleportation.
Beam me up Scotty.
There are some dual-use locomotives around. Not sure what would constitute success. As far as I know they’ve worked for MTA / LIRR.
How well? I don’t know. They may be using them because of the dense urban environment to minimize localized pollutants.
The most successful example of a dual mode locomotive was New Haven’s FL9. They were built in the late 1950s/early 1960s and lasted into the 1990s. The P32AC-DMs have not had the same success.