Business Model

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Business Model
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Government Program Administration and Oversight

• Independent oversight group (NRPC) created to
• Oversee the rail passenger program
• Disburse federal funds
• Plan corridor development
• Manage any franchising of train operations
• Franchise design
• Service provider selection
• Contract administration
• Monitor business plans of Infrastructure and
  Operating Companies
• Intervene if necessary to keep plans on track
• Hold the statutory franchise to access freight
  railroad rights-of-way at incremental cost and
  with operating priority
• Make available insurance to train operators and
  limit operators liability
• Implement plan to bring NEC infrastructure to
  state of good repair
• Preserve national reservations system and ensure
  joint ticketing

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NEC Infrastructure Company

• Government-owned infrastructure company created
  to
• Maintain and manage NEC infrastructure
• Balance/represent the needs of all users
• Coordinate maintenance and capital projects with
  commuter authorities and freight railroads
• Authorized to sell or transfer non-NEC physical
  assets
• Establish a system of fees for all users of the
  NEC
• Funding sources
• Operating shortfalls covered by track use fees
• Capital funds A mix of federal and state funds

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Operating Company Options1. National or
Regional Monopolies

• Train operations performed by a national carrier
  or regional carriers
• Option to create a separate subsidiary for
  long-haul trains
• As under existing law, states could choose a
  different operator for corridor operations but
  would have to negotiate access with freight
  railroads
• Funding sources
• Operating shortfalls on long-haul trains funded
  by the federal government after transition,
  states responsible for funding losses on existing
  and new corridor trains.
• Equipment capital provided on a federal-state
  matching basis.

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1. National or Regional Train Operating Companies
Includes mechanical shops for locomotive and
car repair
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Operating Company Options2. Competition for the
long-haul market

• Existing and new corridor trains operated by
  Amtrak long distance trains franchised through
  competitive bidding
• NRPC authorizes franchisees to operate under the
  national franchise at incremental cost pursuant
  to contract (acting on behalf of NRPC)
• As under existing law, states could choose a
  different operator for corridor operations but
  would have to negotiate access with freight
  railroads
• Labor protection provided by NRPC Amtrak
  employees have preferential hiring status but
  franchisees may immediately negotiate new labor
  contracts.
• Funding sources
• Operating shortfalls on long-haul trains funded
  by the federal government after transition,
  states responsible for funding losses on existing
  and new corridor trains.
• Train operators responsible for privately
  financing new equipment. If necessary, federal
  funding of long-haul equipment and state
  financing of corridor equipment.

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2. Competition for the long-haul market
Long-haul Train Operations
Franchise operations
Infrastructure Company
Corridor Train Operations
Mechanical Shops
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Operating Company Options3. Competition for all
intercity passenger markets

• After a transition period (2 - 5 years), all
  passenger operations franchised through
  competitive bidding
• Immediate franchising of one segment of
  operations (corridors, long-hauls, perhaps a
  single train) to demonstrate commitment to change
• Transition period to give Amtrak the opportunity
  to become more efficient and competitive in
  subsequent franchising
• NRPC authorizes franchisees to operate under the
  national franchise at incremental cost pursuant
  to contract (acting on behalf of NRPC)
• Labor protection provided by NRPC Amtrak
  employees have preferential hiring status but
  franchisees may immediately negotiate new labor
  contracts.
• Mail and Express operations franchised
  (separately or as part of train operations)
• Amtrak shops owned and operated by NRPC during
  transition then could be retained, leased or
  sold.
• Amtrak ultimately privatized.

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Operating Company Options3. Competition for all
intercity passenger markets (contd)

• Funding sources
• Operating shortfalls on long-haul trains funded
  by the federal government after transition,
  states responsible for funding losses on existing
  and new corridor trains.
• Train operators responsible for privately
  financing new equipment. If necessary, federal
  funding of long-haul equipment and state
  financing of corridor equipment.

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3. Competition for all intercity passenger markets
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Operating Company Discussion Issues

• Are there other options that should be put on the
  table?
• Should competition be introduced? How much
  competition? And how fast? Should Amtrak have
  the opportunity to get its house in order
  before franchising is introduced?
• How should labor issues and labor contracts be
  handled?
• How should the success of train operations be
  measured?
• Operational self-sufficiency
• Meeting a critical transportation need
• GAAP accounting or other criteria
• What are the appropriate roles - policy,
  oversight and funding - for the various Amtrak
  stakeholders?