Editor’s Note: Andrew Selden, in his capacity as President of United Rail Passenger Alliance, submitted official comments in response to the Federal Railroad Administration’s solicitation of public input as to how the FRA should spend the $30+ Billion in available federal funding for discretionary use for passenger rail outside of the Northeast Corridor. Mr. Selden strongly emphasizes the difference between the high utility of long distance/inter-regional trains and commuter trains. URPA was founded in the early 1980s as an independent professional organization devoted to research and education regarding passenger rail services and systems. – Corridorrail.com Editor
By Andrew Selden, Guest Commentator; March 8, 2022
FEDERAL RAILROAD ADMINISTRATION
Docket No. FRA-2022-0006
INTERCITY PASSENGER RAIL INVESTMENT STRATEGY
Comments Submitted by United Rail Passenger Alliance
March, 2022
SUMMARY
To achieve the greatest benefit, long term growth, and effective use of federal capital, new federal capital appropriated to develop intercity rail passenger services should:
- Be used on intercity not commuter rail services
- Be prioritized among competing candidate projects to earn the highest rate of return on the capital, based on maximizing the output of new annual passenger miles per dollar invested
- Be evaluated transparently and objectively using relevant metrics
- Consider host railroad insights based on proactive railroad participation.
INVESTMENT OBJECTIVES AND METRICS
Congress authorized $66 billion in new capital for intercity rail passenger development, with a substantial share reserved for discretionary investment outside the Northeast Corridor (NEC).
The stated goal of this investment is to foster development of intercity rail passenger service in corridors (of any length) in the United States. Nothing in the authorizing legislation defines or limits the length of eligible “corridors.”
To accomplish that goal, the Federal Railroad Administration (FRA) should direct the investment of the new capital to projects that (1) actually increase public use of intercity (rather than predominantly commuter) rail passenger services, and (2) maximize the rate of return on investment of the new federal capital by driving the greatest achievable increases in intercity rail output per dollar invested.
To increase usage of intercity rail passenger trains, the new federal capital must increase the annual volume of output of intercity passenger transport, measured in annual revenue passenger miles (RPMs), per federal dollar invested.
“Ridership” does not measure output, but only transactions. The simple number of passengers carried (“ridership”) does not provide a useful measure of the volume of transport produced; rather, the only metric that captures output measures the distances over which passengers are carried, called “passenger miles.” A passenger mile is one passenger carried one mile. One passenger who travels 100 miles is not the same as or equal to one passenger who travels 1000 miles.
INTERCITY PASSENGER RAIL VS. TRANSIT RAIL
The new capital investment under consideration is expressly allocated to and must be devoted to true intercity travel, not to corridors the predominant use of which is by commuter travelers.
Under standard US Bureau of Transportation Statistics classification, “intercity” traffic is defined as “non-recurring trips over 100 miles.” Travel that is recurring in nature, or that is for distances of 100 miles or less, is classified as “commuter.” Because of its recurring nature and short distances, the great majority of Amtrak’s customers on Amtrak’s short corridor and NEC trains (both Acela and Regional) do not fit the “intercity” category. Their passengers’ travel is too repetitive, or over too short a distance, to qualify as “intercity” in nature. About 75% of all Amtrak NEC passengers (apart from those riding longer distances on inter-regional trains that use the NEC) are classified as “commuter” not “intercity.” The same is true of many other regional corridors.
More capital investment into shorter regional corridors therefore even if it were to add riders will not produce substantially more or new intercity rail passenger output. The predominantly commuter traffic carried on Amtrak’s NEC and other shorter corridor trains should continue to be federally supported, but by using established tools for transit services serving commuter passengers. Capital intended for developing intercity services must be directed to markets where intercity travel predominates, particularly the inter-regional corridors.
GROWTH IN OUTPUT
Some corridors are inherently more capable than others of growth in output.
The inter-regional corridors consistently produce far more annual output, at far lower capital cost, than do short corridors. They also consistently experience higher load factors. They achieve these results despite operating in a capital-starved, arbitrarily constrained, skeletal network of routes with limited intra-connectivity, operated with arbitrarily shortened consists that limit capacity and output, and have practically no advertising or promotion.
If the national network were slightly enlarged, by better interconnecting existing routes (including select feeder services) to form a larger and well-integrated network on a national scale, it would produce far more new intercity rail passenger traffic and output than any short corridor simply by serving far more origin-destination city pairs in the enlarged network. Small additive expansions of the national network drive exponential growth in usage, output and earnings, at modest capital cost. Enlarging the national network is far more productive than merely creating new stand-alone corridors.
Capital invested into most existing short corridors will not drive substantial growth in intercity traffic because existing trains in most short corridors rarely achieve even a 50% annual load factor; ample capacity exists in the current operation to handle any hypothetical growth in demand. This was true pre-Covid, and is even more so post-Covid. Investing in new short corridors built on a model of objective underperformance and poor returns on capital investment from most existing short corridors makes no economic sense.
Investment into better integrating the national network and adding carrying capacity to inter-regional trains, however, cannot fail to drive significant organic and scale growth in usage and output, at modest capital cost, thereby maximizing the rate of return on new federal capital investment. This probability of meaningful growth follows from the consistent load factor data for existing inter-regional corridor services.
Because of the very large number of origin-destination city pairs within each inter-regional corridor, seats that are vacant at any given point on each train have already been sold to passengers boarding downline. A load factor for an inter-regional route that approaches 65% reflects solidly sold-out trains. Amtrak’s reported pre-Covid load factors for its inter-regional services frequently reached the 60-65% level. (Load factor is the percent of annual available seat miles that are sold and converted into annual revenue passenger miles.)
Each inter-regional corridor by itself consists of dozens of overlapping shorter, medium and longer distance corridor markets (origin-destination city pairs). Interconnecting these routes promises very large growth in the network, thus usage by passengers who use the longer-distance trains, in exactly the same manner as motorists use Interstate highways, some for short trips, others for medium or very long ones. Each inter-regional corridor does the work of numerous short corridors, at a small fraction of the capital and operational cost.
RETURN ON INVESTMENT
Today’s shorter corridors suffer chronic low utilization and output, and reflect very low—even negative–rates of return on past capital investment. Developing new intrinsically low-output shorter corridors (except as feeders to the national network) amounts to minimizing the return on investment of new capital. If meaningful growth were available in such corridors the trains serving them today would have much higher load factors. Adding capacity to, or replicating, these corridors also makes no sense if the goal is to maximize the return on investment, hence social utility, of the new capital.
At the same time, vast amounts of intercity travel in the United States occur in markets (corridors) accessible via existing mainline railroads but not served by Amtrak trains. Examples include corridors connecting Texas to Colorado to the Pacific Northwest; the Upper Midwest to Atlanta to Florida; Eastern Canada and Florida; anywhere to Las Vegas; or the Upper Midwest to Texas and Arizona. Amtrak’s share of this travel is zero because it does not pursue or serve it.
Capital meant to develop intercity rail passenger usage is best allocated to corridors that expand the national network the most per dollar spent, by adding the greatest annual output of RPMs. Corridors with high load factors are the place to start, followed closely by new corridors that serve high-volume longer distance travel. This uses capital most efficiently to support growth, maximizing the ratio of new annual RPMs to dollars spent.
PRIORITIZING USES OF NEW INTERCITY RAIL CAPITAL
New capital that is directed to under-capitalized and new intercity corridors (where demand most exceeds capacity) should then be prioritized among competing candidate projects based on those projects ranked by the highest number of new annual intercity passenger miles produced per dollar invested. That is the only investment strategy that promises even a positive rate of return on invested capital, and the highest rates of return and social utility.
PROACTIVE HOST RAILROAD PARTICIPATION
The country’s Class 1 freight railroads, who own the great majority of the railroad infrastructure suitable for intercity passenger services, must be proactive participants in the evaluation of competing candidates for passenger investment so that the results of the use of federal capital resources is rational and effective in promoting its intended purposes.
Intercity passenger rail services depend upon smooth fluidity of freight movement through the national rail network; capital investment that directly benefits passenger movements in the same corridors must maintain that fluidity.
The host railroads know their own infrastructure and networks best and are in the best position to advise where capital would be most effective in furthering development of rail passenger services. Host railroads must be treated as partners in the process, not adversaries.
It should also be obvious that inter-regional corridors that can be served adequately with two frequencies a day are far less capital intensive, and far less disruptive to host railroads, than any shorter corridor, where the shorter distance demands higher frequencies and speeds, which in turn need greater infrastructure investment to accommodate the frequencies and speeds. Good returns on investment are elusive in capital-intensive, but low output, investments.
CONCLUSION
The historic pattern of prioritizing federal support of intercity passenger rail to predominantly commuter markets where trains consistently run half to two-thirds empty has left the United States with a woefully under-developed national intercity network. The new federal capital represents an extremely valuable opportunity to re-think those strategies, to allow transit funding mechanisms to support what are essentially commuter services, and direct new intercity capital to support genuinely intercity services where each federal dollar is invested in a manner that maximizes the volume of intercity rail passenger transportation output per dollar invested.
ABOUT UNITED RAIL PASSENGER ALLIANCE (URPA)
URPA is an independent professional organization based in Minneapolis, Minnesota devoted to research and education regarding rail passenger services and systems.