Iowa Pacific will cease operating the quad weekly Chicago-Indianapolis Hoosier State at the end of February with Amtrak taking it over on March 1.
“They were looking for a minimum monthly subsidy that was outside the budget we had,” said INDOT spokesman Will Wingfield said. “Even under the existing contracts, their needs were beyond what we had budgeted.”
IP has operated the Hoosier State since July 2015, taking over it from Amtrak after INDOT advertised for bidders.
INDOT said it has paid Iowa Pacific Holdings $500,000 to date to provide on-board service, marketing and equipment for the Hoosier State and $3.9 million to Amtrak, which provides crews to operate the train.
IP will receive an additional $300,000 to operate the Hoosier State through the end of February.
“It should be said we signed contracts in good faith with Iowa Pacific that was through the end of June, and then they came to us and said they we’re unable to continue under those contracts,” Wingfield said.
IP President Ed Ellis wrote on Facebook that his company is moving to “a different service model.”
There have been discussions on railfan chat lists that IP might be experiencing financial difficulties after it failed earlier this month to issue paychecks to employees in Saratoga Springs, New York.
Some employees of the IP-operated Texas State Railroad were laid off, but IP said in a statement that those layoffs were seasonal.
Ellis said on his Facebook page that IP was “unable to continue providing passenger train equipment and on-board services under the terms of its existing contract for the Hoosier State.”
IP received high marks for instituting business class, upgrading the food service and offering a dome car on the Hoosier State.
Ellis wrote that these service enhancements improved customer satisfaction, revenue and ridership, but the train suffered from poor on-time performance when it reached its destination hours late, if at all, on some occasions.
Amtrak spokesman Marc Magliari said the Hoosier State will operate with Amtrak equipment starting March 1.
INDOT said it’s seeking to continue on-board wi-fi and business-class seating for the train, which operates between Chicago and Indianapolis on days that the Chicago-New York Cardinal does not operate.
It is unclear, though what the long-term future will be for the Hoosier State, including whether INDOT will again put the operation out for bid.
The Hoosier State is funded by INDOT, Lafayette, West Lafayette, Tippecanoe County, Crawfordsville and Rensselaer.