Divorcing Amtrak is Hard to Do

The great Hoosier State privatization experiment is about to end. It started in July 2015 when Iowa Pacific Holdings began “operating” the quad-weekly Chicago-Indianapolis train.

I put the word “operating” in quotation marks because, technically, IP did not “operate” the Hoosier State.

In practice, it was a partnership with Amtrak. IP provided the equipment and marketing support, and was in charge of on-board service.

But the operating crews were Amtrak employees and the nation’s passenger carrier handled the relationships with the host railroads, primarily CSX.

As it turned out, Amtrak has received most of the money paid by INDOT and its partner communities that fund the service.

For a while, Iowa Pacific received many kudos because of what it wasn’t, which is Amtrak.

Under Amtrak auspices, the Hoosier State was a bare-bone operation used to shuttle equipment between Chicago and the Beech Grove Shops in suburban Indianapolis.

By comparison, the IP operation of the Hoosier State was a luxury train, with business class, meals freshly prepared on board, and a full-length dome car for those willing to pay extra fare.

IP head Ed Ellis – who once worked at Amtrak – talked about expanding service and the need to cut the travel time.

He said IP would aggressively market the service, seeking to build markets that Amtrak had ignored.

One marketing gambit IP talked about was running a bus between the Crawfordsville station and Bloomington, the home of Indiana University.

IP correctly recognized the college market is a good source of passengers, but apparently the Bloomington shuttle never got on the road.

Iowa Pacific had a lot of people rooting for it to succeed with the Hoosier State, many of whom believe that a private operator can provide better service than Amtrak.

Some also want to believe that a private operator can make money on passenger service by providing better and more economical service than Amtrak. Ellis and IP apparently believed that, too, but the Hoosier State didn’t yield the expected financial returns for IP.

Ellis always knew the daily service and faster trains he desired hinged upon the willingness of government entities within Indiana to provide the capital funding needed to upgrade the slow meandering route used by the Hoosier State and Amtrak’s tri-weekly Chicago-New York Cardinal.

If IP could demonstrate that the Hoosier State was a success despite its route limitations, then perhaps Indiana officials would be amendable to funding track work in the same manner that the departments of transportation in neighboring Michigan and Illinois have.

But that has always been a long shot. Indiana has never been as supportive of intercity passenger rail as its neighbors.

Amtrak will take back the Hoosier State in Toto on March 1. Although INDOT said it has a verbal agreement that some of IP’s services will be retained, that is not a sure thing.

It remains to be seen if INDOT will seek an operator other than Amtrak and, for that, matter, how much longer the state and on-line communities are willing to pony up money to underwrite the operating losses.

One key take away from the IP Hoosier State experiment is that divorcing Amtrak is more difficult than it might seem.

IP Looking Ahead as Hoosier State Celebrates First Year of Operation Under its Direction

Operation of the Chicago-Indianapolis Hoosier State by Iowa Pacific Holdings has reached the end of the first year of a two-year trial and the results are promising and concerning.

Under IP oversight, the average on-time performance has been 86 percent, which was better than the OT average of Amtrak trains of between 60 to 65 percent.

Ridership, though, has fallen by 11 percent since IP took over the quad-weekly train from Amtrak on Aug. 2, 2015.

The Hoosier State was racking up financial losses that were on track to reach $2 million a year.

On the other hand, ticket revenue has increased by 26 percent and during June the Hoosier State even turned a small profit on the strength of increases in patronage and revenue.

IP head Ed Ellis has attributed that turnaround to growth in business class passengers, who pay a premium to receive food and beverage service while riding in a dome car.

The Chicago-Indianapolis route is different from other intercity corridors in that IP and Amtrak both provide service over it.

Amtrak’s tri-weekly Chicago-New York Cardinal uses the route and the Hoosier State operates on days that the Cardinal does not.

Ellis told West Lafayette radio station WBAA that the improved timekeeping is a result of establishing personal relationships with Amtrak and every freight railroad that hosts the train.

“I think, if nothing else, just that level of daily attention has caused everybody else to pay daily attention to the train and has solved the problem,” Ellis said.

For its part, IP has focused on ensuring that the equipment is ready to go at departure time, thus eliminating late departures that can have a ripple effect.

“ . .  . it’s when trains get out of slot that you get more host-related delays because they need to run freight trains. So leaving on time is important,” Ellis said.

The Hoosier State is not solely an IP train. Amtrak provides under contract the operating employees and does servicing in Chicago and Indianapolis.

IP provides the equipment and handles marketing and promotion although the train is shown on the Amtrak website and Amtrak sells tickets for it.

Funding comes from the Indiana Department of Transportation and five communities along the train’s route.

The Hoosier State costs about $2.7 million annually to operate. Eventually, all of the parties concerned would like to see it become more self-supporting financially. They would also like to see more service.

But Ellis said that will require additional sidings and signal work on the mostly-CSX route that would need to be paid for by the Indiana Department of Transportation.

“I think it’s obvious we need more trains, and the only way to do that is for the state to go to the freight railroads and say, ‘What does it take,’ and for the railroads to give us all a number and for us to decide if we can afford to do that,” Ellis said.

If Ellis had his way, he would create a new route into Chicago and use a different terminal.

What he has in mind is building a connection in Blue Island between the Metra line from Joliet to La Salle Street Station and the former Grand Trunk Western mainline that CSX now operates.

Writing on Train Orders.com, Ellis said that and other improvements could cost $500 million and cut the Chicago-Indianapolis running time to 3 hours, 20 minutes.

Ellis also would like to operate three daily roundtrips between the two cities.

He wants to trade Chicago terminals because Union Station is crowded but La Salle Street is not.

A new Chicago routing would eliminate running on tracks owned by Amtrak, Norfolk Southern, Union Pacific and the Belt Railway of Chicago. In the process, IP would gain a faster route into Chicago and eliminate a congestion- prone junction with the Indiana Harbor Belt in Dolton.

If the money was available today, Ellis figures it would take a year to 18 months to complete the track improvement work. Given the realities of the situation he said it would more likely take until 2020 to get the improvements made and train frequencies increased.

“There is a lot of spade work that has to be done between INDOT, the [Indiana] legislature and CSX on infrastructure improvement,” Ellis wrote on TO.

But he sees progress, noting that revenue in July 2016 was 70 percent more than that of the same month in 2015.

“  . . . so the effects of improved service are beginning to take hold. But there is a long way to go,” he said.

Continued political support for Hoosier State funding appears to be building.

Indiana lawmaker Tim Brown, a Crawfordsville Republican, is chairman of the House Ways and Means Committee, which writes the state’s biennial budget.

He admits to having been skeptical at first about funding intercity rail passenger service, but after riding the Hoosier State he came away with a favorable impression.

“This experience showed me there is a desire, there is interest in continuing it and growing it, and so I’m more convinced now more than two years ago that it’s more appropriate to continue funding,” Brown told WBAA.

Brown said that although it is too early to say how much will be allotted for the Hoosier State when the next budget is hammered out in 2017, he expects legislators to approve a line item for passenger rail in the INDOT budget.

IP Marks 1st Anniversary of Hoosier State Service

Iowa Pacific Holdings operation of the Chicago-Indianapolis Hoosier State celebrated its first anniversary this week.

IP took over the train from Amtrak on Aug. 2, 2015, although Amtrak continues to provide operating employees and handle certain other tasks on IP’s behalf.

During May and June ticket revenue rose 62 percent and 90 percent of the route’s riders indicated in a survey that they were very satisfied with the service.

Since October 2015, on-time performance has averaged 82 percent.

The Hoosier State operates four times a week on days that the Chicago-New York Cardinal does not operate.

The service is funded by the Indiana Department of Transportation and on-line communities.

Hoosier State OT Performance Reaches 86%

Since October 2015, the Chicago-Indianapolis Hoosier State has posted an average on-time performance rating of 86 percent and an increase in ticket revenue of 20 percent.

The figures were announced by the Indiana Department of Transportation. The Hoosier State is operated by Iowa Pacific Holdings, which contracts with Amtrak for operating crew members.

InDOT said the Hoosier State is among the highest-rated Amtrak routes, with 90 percent of riders reporting in a recent survey that they are “very satisfied” with the service.

The Hoosier State operates four days a week on days when the Chicago-New York Cardinal does not operate.

“Instead of being discontinued, the Hoosier State train was improved,” said Iowa Pacific President Ed Ellis. “On-time performance and customer service leading to more riders will be key to future success and improvements.”

Aside from providing operating crews, Amtrak works with host railroads and manages ticketing and reservations.

Iowa Pacific provides the train equipment, train maintenance, marketing and onboard amenities.

Short Line Railroads Get Financial Boost From Fees For Storing Idled Tanks Cars, Coal Hoppers

Some short line railroads are finding there is money to be made as a result of falling traffic on North America’s Class 1 railroads.

Companies need places to store idled freight cars and short lines have track space available.

Class 1 railroads would rather not store those cars on their own sidings because it might mean reducing their network velocity and fluidity of operations.

That is particularly the case with cars that are owned by shippers.

“We are in business to make money and right now the money is in car storage,” Iowa Pacific CEO Ed Ellis told Railway Age.

Ellis estimated that 50,000 coal hoppers and an equal number of tank cars have become temporarily, or permanently, surplus.

“The Class I’s are unhappy they are losing the coal business, and we are unhappy for them; but not so unhappy that we are not going to make a few bucks in our unhappiness,” he said.

A short line can earn $3 to $12 a day, depending on car type, in storage fees. Currently, there are 6,000 cars parked on Iowa Pacific tracks.

Some companies even have “logistics centers” that they use to store out-of-service freight cars.

TNW Corporation in Texas has such facilities with room to store 14,000 cars on its three short-line railroads, including loop tracks for a 110-car unit train.

“For us, it’s not a surge business,” TNW CEO Paul Treangen told Railway Age. “We are a long-term provider of premier rail car storage. We can provide security, we can store loaded or unloaded cars, manage transshipment, and clean and maintain cars.”

Treangen said that some cars are being stored because their owners still think the energy market will rebound.

In other instances, the cars have a few years to go on their lease and must be returned in good condition.

Some older cars are likely to be scrapped, particularly tank cars built to DOT-III standards.

Ellis said there are 65,000 such tank cars and most of them will not be rebuilt because the demand for them is not there. They won’t be scrapped because they are still subject to bank leasing.

He said banks don’t want cars back that are not yet paid off. So, with no cargo to carry, those cars are going into storage.

“I believe well over half of the 65,000 DOT-111s will go into storage,” Ellis said, adding that his company would lay temporary tracks to accommodate them if need be.

Failed Inspection Sidelines Hoosier State

A failed inspection prompted the cancellation of the Chicago-Indianapolis Hoosier State this past week. Passengers were transported by bus.

The cancelations occurred on Wednesday morning after Amtrak inspectors cited the train for having wheel tolerances that failed to comply with federal regulations.

The inspectors ordered the defects on the two Iowa Pacific Holdings locomotives to be repaired.

The Hoosier State operates with Iowa Pacific equipment and an Amtrak operating crew.

Amtrak performed the repairs at its Chicago maintenance facility and the Hoosier State operated as scheduled Wednesday night to Indianapolis.

Trains magazine reported that Iowa Pacific asked for a separate inspection of its locomotives by a Federal Railroad Administration inspector before any work was done on the wheels.

However, Amtrak worker had already made the repairs before a joint FRA-Iowa Pacific-Amtrak inspection took place Wednesday morning.

The Indiana Department of Transportation pays Amtrak to perform needed repairs before the train leaves Chicago.

“At [Indiana’s] request, we have repeatedly made unscheduled repairs to multiple defects in its vendor’s equipment…and disrupted scheduled work on our own equipment in order to make every effort to dispatch these trains on time,” said Amtrak spokesman Marc Magliari.

Website Launched to Promote the Hoosier State

Iowa Pacific has launched a website to promote travel via the Chicago-Indianapolis Hoosier State.

The site, www.hoosierstatetrain.com, enables visitors to view photographs of the interior of the train, check out the dining car menus, and find out information about things to do and places to visit in the online communities served.

The Hoosier State operates with equipment provided by Iowa Pacific Holdings, which owns and operates several short line and tourist train operations around the United States.

Operating crews are furnished by Amtrak, which also provides reservations booking services.

The Indiana Department of Transportation along with several communities served by the train are providing funding for the service.

Amtrak operated the Hoosier State until earlier this year.

Hoosier State Resume Operations

After a week of cancellations, the Hoosier State resumed operating between Chicago and Indianapolis last Monday.

The train was sidelined on Sept. 28 due to mechanical problems with one of its locomotives. The Monday trip also marked the launch of business class service as well as a third coach.

That coach, named the Durant, had defects that had been missed in an inspection conducted two weeks earlier.

Trains magazine reports that the Indiana Department of Transportation canceled the Oct. 2 trips of the Hoosier State after inspectors found the defects on the Durant during a follow-up inspection.

A delay in receiving replacement parts led to the train being replaced by buses until Monday night’s trip from Chicago to Indianapolis.

Business Class Set to Launch on Hoosier State

Business class service will begin on the Hoosier State on Oct. 2. Iowa Pacific, which oversees the service on the Chicago-Indianapolis train, will also add a third coach to the run.

Business class passengers will receive breakfast to Chicago and dinner to Indianapolis.

The service will be provided in the upper level of the great dome car. Coach passengers will continue to be able to purchase food and beverages in the lower level of the dome car.

The Hoosier State operates quad-weekly on the days that Amtrak’s Chicago-New York Cardinal does not operate.

Iowa Pacific’s Hoosier State Has Teething Issues

Iowa Pacific had to cancel its southbound Hoosier State run on Monday evening because it missed a connection earlier in the day with Amtrak’s northbound Cardinal.

As a result, passengers booked aboard the Hoosier State rode a bus that night.

“A process failure resulted in the Cardinal leaving the train behind,” said Iowa Pacific President Ed Ellis. “A subsequent conference call among Amtrak, Iowa Pacific and the Indiana Department of Transportation addressed the issue to prevent a recurrence.”

On Monday mornings, the Iowa Pacific equipment must deadhead to Chicago from Indianapolis on the Cardinal so as to be in position to operate southbound that evening.

Indiana is only paying Iowa Pacific to operate the Hoosier State on the four days a week that the Cardinal does not operate.

Amtrak’s contract with CSX does not include a provision for running a separate Hoosier State over the route on days that the Cardinal operates.

The tri-weekly Chicago-New York train operates to Chicago on Monday morning, but doesn’t depart from Chicago for New York until Tuesday evening.

The Iowa Pacific equipment that arrived in Chicago on Tuesday morning must deadhead to Indianapolis on the rear of the Cardinal on Tuesday evening as well.

During the deadhead moves, no passengers are permitted to ride in the Iowa Pacific equipment.

On Thursdays and Saturdays, the Cardinal operates to and from Chicago from Indianapolis so the IP equipment does not need to deadhead.

On Tuesday morning, the Iowa Pacific-operated Hoosier State departed Indianapolis on time and arrived in Chicago 36 minutes early, largely due to schedule padding.