Vol. 8 No. 22
May 29, 2007

Copyright © 2007
NCI Inc., All Rights Reserved

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A weekly North American transportation update

The E-Zine of the National Corridors Initiative Inc.

Publisher - James P. RePass
Editor - Molly McKay
European Correspondent - David Beale
Webmaster - Dennis Kirkpatrick

For transportation advocates and professionals, journalists, and
elected and appointed officials at all levels of government.

IN THIS EDITION...  In this edition...

  News Items…
$10 to Columbus? By air? You betcha…
Amtrak Michigan-Chicago route may get Federal Funds;
   Meanwhile Missouri Amtrak routes are being hurt by UP
  Economic lines…
Infrastructure crisis in the US
U.S. lags the world in infrastructure planning
    Leasing a Turnpike
  Commuter lines…
Georgia Rail foes again delay commuter rail for the Peach State
  Maintenance lines…
Hattiesburg Station reopens following renovations
  Selected rail stocks…
It’s Not Just About Freight
  End notes…

Our thoughts are with our many service men and women currently in the
Armed Forces both here and abroad, as well as those who have given
of themselves in the past.

We hope your Memorial Day weekend was pleasant.

NEWS OF THE WEEK... News Items...

$10 to Columbus? By air? You betcha…

By DF Staff and from Internet Sources

PORTSMOUTH --- Savvy travelers already benefit from a deregulated, highly subsidized air travel system in the United States and Europe. But this week they began seeing a fare even they had a hard time believing: $10 one way between Portsmouth, NH and Columbus OH.

“Skybus is an airline unlike any other—created from scratch by industry movers and shakers who are committed to changing the way you think about air travel,” boasts the website. “The airline veterans who started the Skybus revolution mastered the art and science of controlling costs at respected low-fare carriers like Southwest and Ryanair, Europe’s most successful airline. We know what drives up the price of airfare and what it takes to offer everyday low fares and nonstop flights.”

Ryanair is an innovative European discount airline that sometimes sells seats for 1 penny, and Southwest is known for its hustling flight crews and snappy take offs and landings, as well as low prices and a combative founder, Herb Kelleher who arm-wrestled another CEO for use of a favorite ad slogan, and gave away free turkeys on a special Thanksgiving Day flight --- the frozen kind, and the kind that comes in a bottle labeled “Wild Turkey”. Score another zany graduate first for Wesleyan University.

The secret to these ludicrous fares is that you get what you pay for a seat going somewhere close to where you want to go (these low-cost carriers tend to land at smaller, less convenient airports). If you want to get a seat of your choice, that costs a few bucks. If you want to get on first, that costs a few more. Pillows cost money. Blankets cost $15 (but you can keep it!) Meals are definitely extra, and Coke is $2. It all adds up – but if you want to suffer and fly for $10, you can.

Train riders might want to know why Amtrak fares can’t be lower, too, and there is a reason: in 1998 the Amtrak Reform Act passed by Congress ordered Amtrak to “break even” in five years. While that GOP- run Congress has been replaced by one dominated by the Democrats, the Soviet-style micro-management of Amtrak lives on in prices that are high, despite the fact that Amtrak is the least subsidized travel mode in America, contrary to oil lobby propaganda. (Airlines get the Air Traffic Control System and the FAA. Highways get 95% of all the transportation tax money. Amtrak gets less than a sawbuck, per American, and then it gets to pay for its own police force, among other things).

Skybus operates from its Columbus hub – the largest city in America NOT served by Amtrak, by the way --- to Portsmouth from its Fort Lauderdale, Fla.; Kansas City, Mo.; Burbank (LA) and Oakland, Calif., Richmond; Greensboro, N.C.; and Bellingham, WA (Vancouver BC).

Don’t bother to phone them, though. It’s all done on line.

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Amtrak Michigan-Chicago route may get Federal funds;
Meanwhile Missouri Amtrak routes are being hurt by UP

By DF Staff and from Internet Sources

LANSING – The growing Michigan-to-Chicago Amtrak route, already busy, may become busier still if a proposed $300 million Amtrak infrastructure investment legislation now in Congress foes forward, Amtrak's President Alex Kummant told officials this week, reports the Detroit News.

Alex Kummant, president of Amtrak, said his system's growing Pontiac-to-Chicago line is one of the top three routes in the nation that could be in line to get some of that money, reported the News “Michigan in general and (the) Chicago (route) in particular could be one of the best places to invest that money,” Kummant told a joint gathering of the House Transportation Committee and the transportation appropriations committee.

Kummant also met with Gov. Jennifer Granholm and Kirk Steudle, head of the Michigan Department of Transportation, to discuss the potential of the Pontiac-to-Chicago route, the News reported. By year's end Kummant said according to The News the stretch of the route from Porter, Indiana, to Kalamazoo could become a high-speed rail line, with speeds reaching 110 miles per hour.

Meanwhile on an existing important route Amtrak and the Missouri Department of Transportation (MoDOT) have called on Union Pacific Railroad (UP) “to renew its commitment to passenger rail between Kansas City and St. Louis”, after two weeks of cancellations and delays on the cross-state service.

“This lengthy disruption of the state-sponsored passenger rail service was due to UP’s decision to send heavy traffic volumes over its single track through Sedalia because of flood damage to its normal freight-only route through Boonville,” Amtrak stated.

“Amtrak passengers have been shortchanged this month, having to endure slow service and cancelled trains because Union Pacific is not providing sufficient track access,” said MoDOT Railroads Administrator Rod Massman. “Union Pacific has certainly had a challenging month, but rail passengers have been treated like second-class citizens while UP’s freight schedule has used nearly all available track time.”

“Amtrak and MoDOT strongly encourage better cooperation from Union Pacific in such situations in the future, because passenger trains are legally entitled to preference over UP's freight trains.”

Amtrak trains have been delayed or cancelled since May 8. The trains returned to normal service today, May 23. Amtrak provides two daily round-trips between Kansas City and St. Louis, with eight intermediate stops.”

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ECONOMIC LINES...  Economic lines...

Infrastructure crisis in the U.S:

U.S. lags the world in infrastructure planning

By DF Staff and Internet Sources

On May 9, 2007, the Urban Land Institute, in collaboration with Ernst & Young, released its report “Infrastructure 2007: A Global Perspective.”

(This report was briefly cited in D:F May 14. We will be researching states and cities around the country for examples of the infrastructure crisis and some of the solutions being proposed, starting this week with Pennsylvania and Massachusetts.

Recap of the bigger picture in the U.S:

Low investment in airports, public transit, railway systems, roads and bridges has become an emerging crisis in the United States that will hamper major American cities' in their ability to compete globally,

The report also notes America is ‘is more of a follower and no longer a world leader’ when it comes to infrastructure spending and maintenance.

“Other countries marshal vanguard strategies and provide the contemporary lessons for developing best practices in public/private finance, intermodal transport, congestion pricing and high-speed rail... Too often (in the U.S.), projects focus on restoration rather than rethinking the model and finding possible efficiencies... There is a tendency to invest in the infrastructure we have instead of the infrastructure we will need,” the report notes.

ULI Vice Chairman Dale Ann Reiss, global director of real estate at Ernst & Young in New York, said the private sector is going to play a significant role in a global movement to build and modernize the world's infrastructure.

“One thing in this report that is crystal clear to a Friedmanian economist like me is that the private sector -- by virtue of both the capital it controls and the skill sets it exhibits -- is going to play an increasingly important role in the effective and efficient development of infrastructure here in the U.S. and abroad over the next 50 years,” Reiss said. “Public-private partnerships are here to stay and may well be the only viable way for governments to reach their infrastructure development goals.”

The report said the United States' infrastructure spending for maintenance and repair work through 2010 points to a $1.6 trillion deficit. Right now, the nation spends $112.9 billion on infrastructure.

In America, a “yawning budget gap swallows initiatives to fund maintenance,” the report said. Prevalent sprawl, poor planning and car dependence pose ever greater challenges in meeting future needs. Retrofits and changing public behavior are “wrenchingly” difficult.

Leasing a Turnpike

Source: RideonPa.org

Fact vs Fiction: Fiction: Leasing the Turnpike puts it “in the hands of a private foreign company.”

NOT TRUE: No matter what happens, Pennsylvania retains ownership of the Turnpike.

Fact: Gov. Rendell won’t support a lease that does not protect against unchecked toll increases, sub-standard road repairs, or massive Turnpike layoffs.

Fiction: Leasing the Turnpike threatens Pennsylvania’s security.

NOT TRUE: Under any lease, we own the Turnpike and would continue to control all decisions related to state security.

Other facts: Nearly 6,000 bridges need repair statewide and the number keeps rising. More than 8,500 miles of road must be fixed TODAY.
Public transit provides 400 million rides each year statewide, and without dedicated funding this vital economic lifeline is imperiled.

The total needed for roads, bridges and public transit -- $1.7 billion per year – was identified by the bipartisan Transportation Funding Reform Commission in its report issued in November 2006. As Governor Rendell has said many times, “Delay is not an option. We must act NOW to find a solution to the funding crisis.”

“If we can get an effective solution through the General Assembly, no matter who comes up with the idea, I will support it,” Governor Rendell said.

[ Editor’s note: Late breaking update - SEPTA decision on fare increase delayed by veto.

A proposed average SEPTA fare increase of 11 percent that would have gone into effect July 1 has been vetoed by the two SEPTA board members representing Philadelphia, the transit agency said. The veto occurred at Thursday's monthly board meeting. Board Chairman Pat Deon said he anticipates getting the three-quarters board vote necessary to overturn it at the next meeting June 28.]


Governor Rendell says SEPTA financial woes will wreak havoc on economy

Pennsylvania has a transportation crisis. In order to address a dire shortfall in transit funding, the Southeastern Pennsylvania Transportation Authority is planning a 31-percent fare increase to go into effect July 1, and 20-percent service cuts, if outside money isn’t found to close a $130 million deficit for 2007-2008.

Governor Edward Rendell warned last Wednesday, May 24, that the fare increases combined with service cuts will wreak havoc on businesses and workers.

“This may result in a loss of 40 million rides a year or more than 100,000 rides per day,” the Governor said. “More than half of those rides could be daily commuters, so we're talking about adding 30,000 cars per day on the roads in this region — and that assumes these riders carpool with two-per- vehicle.”

Philadelphia and its five-county surrounding area could face over 14,500 in net job losses and $868 million in loss net earnings.

Statewide, PA needs $670 million more per year for public transit. As a solution, Governor Rendell is asking for a 6.17 percent tax on the gross profits of oil corporations to generate $760 million more a year for public transit across the state. The bipartisan Transportation Funding and Reform Commission identified that figure as the additional need for Pennsylvania's 73 transit systems, which provide more than 400 million rides a year in every county.

“Failure to adequately fund public transit is an economic issue every bit as much as it is a transportation issue,” the Governor said. “A reliable SEPTA system is critically important to the greater Philadelphia economy and, without it, everyone losses, not just those who ride the bus or train. … we need adequate dedicated, state-provided transit funding, and until we get it, SEPTA has no good choices to make.”

In addition, $965 million more is needed to bring the Pennsylvania’s roads and bridges up to a state of good repair. The governor is considering leasing the Pennsylvania Turnpike to raise the funds for this shortfall. Morgan Stanley, the state’s financial advisor, has said that investing a lump sum from the Turnpike lease could generate enough revenue for the roads and bridges and to meet many of the public transit needs as well.



An Unsustainable System
Findings of the Massachusetts Transportation Finance Commission

Virtually every transportation agency in the State is running structural deficits and resorting to short-term quick fixes that hide systemic financial problems. They simply do not have the resources to their jobs properly. Some tasks like grass-cutting are funded through 20-year bonds. The Department of Conservation and Recreation (DCR) is responsible for many of the Boston region’s most critical arteries, yet has little expertise and no funding to care for them properly. Even the Massachusetts Turnpike Authority, which has more control over its revenues than other agencies, operates at a deficit.

The Massachusetts Bay Transportation Authority (MBTA) has a critical structural funding gap and is carrying a crushing debt burden. The budget shortfalls impact MBTA’s ability to achieve a State of Good Repair. Efforts to rein in operating costs and move toward a reliable revenue stream could not make up for the reality of revenue shortfalls, so MBTA was forced to continue to issue increasing amounts of bonds in order to fund its capital needs.

MassHighway, which is responsible for over 2,800 centerline miles of highway in the state (8 percent of the total) and 4,400 bridges, has been forced to reduce staff because of budget cuts over the last 15 years and has resorted to funding operating expenses out of its capital budget.

Due to budgetary constraints at the Federal level, the Commonwealth expects to receive about $50 million a year less for the years 2007 through 2009 compared to the three previous years (2004-2006). In fact, Massachusetts expects to receive less Federal funding in 2009 than it did in 1998.

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COMMUTERLINES...  Commuter lines...

Georgia Rail foes again delay commuter rail
for the Peach State

By DF Staff and from Internet Sources

ATLANTA---Georgia’s highway-oriented Transportation Department continues to delay efforts to relieve the region’s notorious highway congestion, this time by asking for “more studies” of a route that has been studied for more than 20 years.

The Savannah Morning News reported this week that the state DOT committee covering rail issues had decided to wait until fall before acting on a proposed Atlanta-Lovejoy line.

“Several committee members said Wednesday they want to see updated estimates of ridership and cost for the proposed line from Atlanta [3] south to Lovejoy, reported the paper. “The holdup also could affect plans to start a commuter train route between Atlanta and Athens, which for years was expected to be the second route opened.”

The current estimates for the Lovejoy route are six years old because the project has dragged out despite the availability of federal start-up money, reported the News.

The funds have been available, but repeated roadblocks to the project have been voted by state DOT units that must agree on routes and service. For example, the DOT rail board passed a resolution in 2005 not to buy rail cars until local governments along the route signed agreements promising to cover funding shortfalls, reported the News. Observers could not find a single example of similar guarantees being required of communities to be served by new highways.

The host railroad would be CSX, which has growing freight traffic and which needs extra capacity to handle passenger service. CSX has agreed to work with the state, but stressed that freight is its first priority.

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MAINTENANCE LINES...  Maintenance lines...

Hattiesburg Station reopens following renovations

Source: Amtrak Ink

Crescent Train 19 at the newly renovated Intermodal Transportation Facility in Hattiesburg, Miss.

Photo: M.S. (Mick) Nussbaum  

Passengers, local officials and employees welcome the arrival of Crescent Train 19 at the newly renovated Intermodal Transportation Facility in Hattiesburg, Miss.
Following several years of preparation and extensive renovations, the station depot in Hattiesburg, Miss., reopened last month. To celebrate the official opening, rail cars and a locomotive were on display at a black-tie gala held at the station on April 20 and a ribbon-cutting event held the following day.

Amtrak Board Chairman David Laney and Hattiesburg Mayor Johnny L. DuPree, Ph.D., were among the guest speakers at the two-day event that attracted more than 500 attendees, including host railroad representatives, city officials, local residents and employees.

The $10.5 million renovation included the restoration and extension of the platform canopy, making the depot ADA-compliant and installing a new fire sprinkler system. Doors, windows and fixtures were also restored to reflect the original Italian Renaissance-style architecture of the structure. A grand ballroom, separate from the depot, was built to accommodate state affairs as well as local gatherings.

The event included an equipment tour, which allowed attendees to get a first-hand look at a Viewliner Sleeping car, and an Amfleet II Diner Lounge as well as an Amfleet II Coach.

“We hope to increase the ridership on Amtrak with our new facility. We’ve already seen the interest increase just based on the activity going on at the station,” said Mayor DuPree.

The project was funded in part, by the Mississippi Department of Transportation, the U.S. Department of Transportation Transit Administration, the Mississippi Community Heritage Preservation Grant program and the Great American Stations Foundation.

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STOCKS...  Selected Rail Stocks...

Source: www.MarketWatch.com

Burlington Northern & Santa Fe(BNI)91.4394.44
Canadian National (CNI)53.7553.60
Canadian Pacific (CP)71.6471.53
CSX (CSX)44.7346.55
Florida East Coast (FLA)83.7583.40
Genessee & Wyoming (GWR)31.7029.22
Kansas City Southern (KSU)40.2040.10
Norfolk Southern (NSC)57.2358.13
Providence & Worcester (PWX)19.7519.90
Union Pacific (UNP)117.96119.85

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EDITORIAL...  Editorial...

It’s Not Just About Freight

The freight railroads in America, in case you haven’t noticed, are “in play”. The four major US lines, UP, BNSF in the West, and CSX and NS in the East, complemented by CN’s Illinois Central lines and other smaller roads, have been in the news lately because the Sage of Omaha, Warren Buffet, has through his conglomerate Berkshire Hathaway been snapping up shares in several of those flags.

Buffet, one of the wealthiest men in the world, has a history of seeing long-term opportunities before others, and investing based on that judgment. He has been largely right.

In the case of the railroads, while demand for their services is soaring, their ability to raise money in the capital markets to build needed capacity has been relatively weak for so many years that trucking continues to take an ever greater share of the goods shipment business. In good times or bad, railroads don’t make enough money to rebuild themselves, because the cost of track and track maintenance is so high. Indeed, the shares are so undervalued that CSX has been buying its own stock rather than making adequate capacity improvements, because it can earn a better return that way.

So why buy railroad stock if it typically under performs? Because the world is awash in cash.

It may not be in your pocket, but the boom in Asian economies (India, China, South Korea, Malaysia) of the past decade has created a gigantic pool of money looking for places to go; buying up American assets that are depressed is one way to do that. So, look for some private-equity takeovers in the American rail market. But Congress needs to look at that, too, because the existing freight railroads’ treatment of Amtrak trains has been often nothing short of appalling, shunting people to sidings for hours at a time while frozen turkeys, etc., fly by; Amtrak owns only a small portion of its route system, relying on freight railroads for most of those miles.

If the freight railroads go private, let’s hope they can build themselves up into the efficient giants they need to be. But don’t forget the public, and the need for people to travel. 30% of Americans do not drive, and that number is soaring as the baby boomers retire, and airlines and buses serve fewer and fewer smaller cities. Let’s make sure that fact isn’t forgotten. A key component of freedom is mobility; without it, we all are stuck.

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NEWS ITEMS...  End notes...

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