The Market and the Math to Make Passenger Rail Work

Amtrak train passing a farm

An Amtrak train passing a farmstead in Michigan. (CC-BY Russell Sekeet)

The Twin Cities region sits at the edge of the populous eastern third of the United States. There aren’t big million-plus metropolitan areas for long distances to the west, so when looking at plans for passenger rail expansion, there aren’t many obvious destinations. However, the lone intercity train to pass through Minnesota, the Empire Builder, is popular enough to suggest that lightly-populated areas can still provide enough ridership to be viable.

That’s something positive to consider as our state looks to improve the transportation system for people who can’t or don’t want to drive everywhere. Development has been proceeding for routes in MnDOT’s passenger rail plan, but the pace has been hampered by weak political backing and limited budgets. But what if there’s a real business case for these routes? Could that accelerate development?

Airlines as a guide

People have a number of different ways of getting from city to city, but today, if they don’t drive, they usually fly. Chicago is one of the first places people think about when contemplating rail projects for Minnesota, but we have fairly frequent and inexpensive flights from Minneapolis–Saint Paul International Airport to both O’Hare and Midway. It’s easy to dismiss the idea of improving rail travel when a flight is only $30 more expensive than today’s Amtrak service, yet gets you there several hours faster.

But if you look beyond Chicago to the other routes being contemplated, there’s a price gap that certainly looks big enough to run a train through. Here’s a table of direct, one-way airfares I found for April 2nd, 2015 (including a $20 to $25 fee for one checked bag):

Flights from MSP to nearby airports

City/AirportMedian priceFlight distancePrice/miAnnual passengers to/from MSPDaily round-tripsAverage pax per flight*
Chicago O'Hare$130334$0.391,644,0002590
Chicago Midway$108349$0.31902,0008154
Des Moines$391232$1.69194,000553
Duluth$331155$2.14152,000542
Fargo$480223$2.15332,000765
Madison$408228$1.79296,000581
Milwaukee$102296$0.34570,0006130
Rochester$25076$3.29104,000271
Sioux Falls$441195$2.26252,000658

(* Average per flight based on number of flights for April 2nd.)

Passengers can get a discount on the expensive legs if they connect to other flights, though that also effectively raises the fare to the cheaper destinations on the list (digging into the relevant data for Q1 2014, the median MSP–O’Hare airfare worked out to be $0.51 per mile because of that). There are a lot of people paying hundreds of dollars to make hops that would have been far less expensive by ground, and maybe just as fast.

Trains are cheaper and more effective

By contrast, a typical Amtrak fare is about 10 to 20 times cheaper than what the airlines charge for the smaller cities listed, and often half that of the larger destinations. For each passenger, the Empire Builder averages ticket revenue of about $0.17 per mile on its long route. Even at that low fare, it covered about half of its operating cost, and it’s a big, expensive train to run. The Empire Builder has sleeping cars and lounge/dining cars that aren’t necessary for short routes that only take a few hours to cover.

Across the Amtrak system, the full cost to operate a train tends to land in the range of $0.30 to $0.70 per passenger-mile, though that number is dependent on a lot of things, perhaps the most important being the number of passengers onboard. Nonetheless, all of Amtrak’s routes are less expensive per passenger-mile than any of the small-market airline routes listed above. (Amtrak’s worst performer by far in 2014 was the Chicago–Indianapolis Hoosier State at $1.14 per passenger-mile).

This shows how much economic benefit there could be from rebuilding proper passenger rail service across the state and country—existing travelers could save money, and new passengers who previously couldn’t afford to fly would now have a cheaper option.

Corridors up to about 150 miles in length are the easiest ones to make competitive with air travel, since regular trains traveling up to the normal limit of 80 mph can cover the distance as fast or faster than flying. Airline passengers get bogged down by TSA security lines, more time spent boarding (airliners have just one door while trains can have many), dealing with luggage (trains allow much larger carry-on bags than airlines do), and getting to the departure point.

Railroad stations are often downtown versus airports that are ten to twenty miles away. Trains can also make stops along the route to serve towns that are too small or too close to larger airports to justify air service of their own. Combine that with fares that can be many times cheaper than flying, and ridership could climb several times higher than what the airlines can do, even on routes that extend significantly further than 150 miles.

Finding the magic combination

Unfortunately, Amtrak has failed to properly tap into the short-haul travel market, partly because they’ve never had great funding. A number of ingredients need to be properly mixed in order to build a train service that can carry people profitably: The train needs to be fast enough and frequent enough to attract passengers—with a price to match—while having low operating and maintenance costs.

I’ll start with the last item first:

No matter how much money you initially put into a train service, operating costs are what can really make or break the rail line. If your fares aren’t enough to cover the cost of the onboard crew or the day-to-day maintenance of a train, then there isn’t really a way to pay off the fixed infrastructure or rolling stock.

I have a recommendation: Run trains with high-capacity passenger cars—as few as you need to carry your passengers.

Long trains don’t help

My reasoning is pretty simple—just look at this plot of commuter train operating cost versus length for different providers around the country (data from the 2013 edition of the National Transit Database):

This really surprised me when I plotted it out. I would have expected operating cost to taper off as trains grow in length (some economy of scale), but the linear trend line on this graph shows that each extra car on a commuter train adds an operating cost of almost $600 per hour. Many costs are included in these values, including overhead like management, insurance, and payments to the railroads, so it’s remarkable that it fits so well.

This makes it easier to think about what it takes to operate a train at a profit—rather than worrying about the train as a whole, we can just think about whether each individual passenger car can cover its costs or not. It doesn’t matter very much whether a train is long or short.

Still, even though the trend is very linear, there’s still a big range across the systems in the database. The lowest outlier turns out to be an Amtrak train, the Boston to Maine Downeaster, which is overseen by a regional rail authority that submits their cost data to the NTD. It costs $1,004 per train hour, or about $219 for each car per hour.

The country’s most expensive commuter train in terms of cost per car hour is our own Northstar commuter service, which clocks in at a massive $4,590 per train hour, or $1,179 per car hour. (This is bad and should be fixed.)

It’s hard to say why these are so different, but it’s safe to assume almost any new train would be less expensive per hour than Northstar. And, with the Downeaster‘s low cost, there’s good reason to believe that new intercity trains would fall somewhere below that graph’s trend line.

Use bigger cars instead

Commuter trains around the country often use bilevel passenger cars with two floors of seating, and Amtrak also runs bilevel trains on many corridors using their Superliner equipment or some of the related spinoff designs. While they don’t double capacity, they do increase the number of seats on a car by 50% or more.

This can help a lot when trying to get enough fare revenue from passengers to cover costs. For instance, a long-distance Amfleet car has 60 seats, compared to 90 or a bit more on Superliner cars. At the Empire Builder fare of $0.17 per mile, an Amfleet car averaging 60 miles per hour would max out at $612 per hour, while the comparable Superliner would bring in $918 if it was fully loaded.

Northstar’s commuter coaches pack riders much more tightly, averaging 145 seats per car. A full car could bring in $1,479 per hour at 60 mph, exceeding even its outlandish costs.

However, it’s impossible to always run fully-occupied trains, and intermediate stops to let passengers on and off can drag down the load factor. Passenger loads in the 50% to 70% range are much more common. A train with Northstar-level costs would need to raise fares to keep ahead, so it’s extremely important to drive down operating expenses as much as possible—if it had Downeaster-level costs, it would manage some major surpluses on the operating budget.

Bilevel trains are probably a bit more expensive than their single-level counterparts, but it’s hard to say how much more. Commuter rail services with single-level passenger cars seem to have lower costs than the ones that run bilevel trains, but they are often used in areas that have electrified trains which need to fit underneath the catenary wires that power them. Electric locomotives are less expensive to operate and maintain than their diesel counterparts, which skews the numbers a bit.

Hopefully the cost per car of a bilevel intercity train could land in the range of about $250 to $500 per revenue hour.

Get them at the right price

Trains do have one great advantage over the airlines—they’re ten times cheaper to buy than an equivalent aircraft.

A Boeing 767 with 350 seats runs about $180 million, more than $500,000 per seat. In contrast, a fairly standard train with four 90-seat Superliner-style bilevel cars (360 seats total) and a new locomotive would probably run $12 to $18 million, up to about $50,000 per seat.

A Northstar train with 145 seats per coach could bring the cost down to a bit over $20,000 per seat—a whopping 25 times cheaper than a jetliner. That’s not quite the right equipment for trips lasting a few hours, though. Some seats would need to be taken out to add space for luggage and a little extra legroom.

Let’s say you have something middle-of-the-road with 120 seats per car at a price of $30,000 per seat. If you want to pay off that piece of train equipment within its first million miles (a point when rail vehicles often go in for a mid-life overhaul), you’ll need to dedicate about $0.06 per passenger-mile to the cause of paying off the train.

Jumping back a second to operating costs, if that 120-seat car cost $375 per hour to operate (halfway between $250 and $500), about $0.09 would be needed per passenger mile to cover expenses. Add that to the $0.06 to pay for the equipment, and you’ve got a narrow surplus of $0.02 per passenger mile.

Run them often enough and fast enough

One thing that helps keep flying popular is the ability to choose from multiple flights each day. Frequency of service is a huge failing of Amtrak’s current system, perhaps only matched by the extremely skeletal nature of their network. It’s rare to find a regularly-scheduled air service that has fewer than four round-trips daily, so it’s remarkable that most of Amtrak’s stations only see one train per direction per day.

Running multiple daily round-trips is key to attracting passengers to the rails. The Northern Lights Express to Duluth is planned with eight daily round-trips, and the Zip Rail service to Rochester may have even more. Only small parts of the country in the Northeast and California have intercity trains running that often today, which has severely limited the attraction of train travel up to now.

Operating expenses found in Amtrak’s statistics and the National Transit Database typically include some payment to the railroad to cover track maintenance and access charges, but that may not be enough to pay for more track capacity. Money is needed upfront to add room for passenger trains, and it often adds up quickly.

The big problem is that it can take tens of millions to hundreds of millions of dollars to build capacity and/or buy the access to run that many trains, with costs climbing to the billions for longer and faster routes. A basic upgrade would include things like signaling upgrades and a few added or expanded sidings for trains to pass each other. That’s something that could be done for $1 to $2 million per mile. Adding extensive amounts of double-tracking would probably raise the cost into the $4 to $5 million per mile range, and entirely new track could run upwards of $10 million.

People shouldn’t immediately be scared off by the cost, though. If we take the hypothetical train car I described in the last section and charge a fare of $0.30 per mile, the first fifteen cents would go to operating costs and paying off the rail vehicle, while the other fifteen could go to paying off track and do it at a decent rate. Relatively modest travel markets with 500,000 to one million annual passengers over the entire distance—probably within shooting distance of several of the cities I listed at the start of the article—could pay off simpler track improvements within about 15 years.

Annual passengers needed to pay capital cost @ $0.15/mi:
price/mi $1 million $2 million $5 million
5 years 1,333,333 2,666,667 6,666,667
15 years 444,444 888,888 2,222,222
30 years 222,222 444,444 1,111,111
70 years 95,238 190,476 476,190

Even when the price climbs beyond what can be paid off in a reasonable timeframe just by passenger fares, it’s important to remember that existing freight operators also benefit from track upgrades. They might split the cost with a passenger operator if it helps them move trains more effectively. Faster trains can pay down their hourly costs more quickly since they cover more distance in that time, but that’s just a slice of a slice of the overall budget—higher speeds attract more riders, though.

Some upgrades can’t really be justified by a profit motive, though—catenary for electrified trains, for example. Unless you’re pushing a huge number of trains down the track and grabbing tons of passengers, it would be a net negative for investment since you just don’t save enough on fuel and maintenance costs. But, electric trains do have great environmental benefits, so government grants should be considered to cover that cost for relatively busy lines.

A case for doing something rather than nothing

Rebuilding the passenger rail network for cities around Minnesota and across the country is important for building a stable platform for the future. Our transportation is out of balance, and far too dependent on automobiles which have completely altered the face of our towns cities over the last century. As our region continues to gain population, new growth should be focused in ways that are better for the environment and the people who live there.

To reconstruct our cities on the scale of the pedestrian and cyclist, we have to turn the dial back against car-dependent development patterns. Transit systems and bikeways work for the city and metro scale, but intercity lines have to be resurrected or built up from scratch to handle travel over longer distances. Trains help restore walkability to the towns and cities they serve, which will help us turn the tide on climate change.

There is a significant slice of the travel market that isn’t well-served by existing options, and I believe the window is large enough for new operators to come in and make money. I’ve focused on what can be done for conventional-speed trains at short distances, but states with larger populations and different distributions have a wider variety of options. Who might take the plunge, though?

Finding the right pocketbook

Whoever funds the next passenger rail line in the region will need to have a lot of funding available, since the initial costs are pretty high no matter how you look at it.

It would be great if Amtrak itself was pushing for new routes, but they’ve usually been hamstrung with just enough funding to pay for their operations and their maintenance backlog. Not much has been available for upgrade or expansion. They’re almost certainly out of the picture unless a state or other partner organization comes along with the money.

The major freight rail companies were collapsing under their own weight at Amtrak’s formation in 1971, but have made remarkable turnarounds. The largest companies now make billions of dollars annually and could easily run passenger service again while barely denting their budgets. They know their lines the best and control the flow of traffic, so they would be in prime position to implement the services as inexpensively as possible.

Unfortunately, they have many employees who only see passenger rail as a drag on their freight business, and would be opposed to any expansion. There are a couple of freight companies bucking that notion, particularly one in Florida. It isn’t clear if any others will change their positions, though.

Foreign passenger rail companies from Europe and Japan have also poked around at a number of markets in the U.S., so there might be a push from outside our borders at some point. But they would need to have strong partnerships with American companies and investors to pull it off.

Airlines would be interesting candidates for entering the passenger rail market. It’s difficult for them to make money at short distances, so it would make sense to build ground-based feeder networks to airports that specialize in long-haul travel. Many corridors would only cost as much as one or two jumbo jets.

In the end, I don’t particularly care who funds and builds any future passenger trains that will be available to me—it’s just clear that our current efforts at expansion are moving way too slow to affect things like climate change or handle our aging population. Any new entrant who has the right formula and the right funding has a pretty wide open field to build something successful.


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31 Responses to The Market and the Math to Make Passenger Rail Work

  1. Ian Bicking March 10, 2015 at 11:44 am #

    Adaptive pricing is another pattern that could help – empty seats don’t earn any money. Airlines use this extensively, of course, as does Megabus. Amtrak should do the same. (Though I’m guessing their fares are currently tied up in regulation so that they might not be allowed to do this.)

    • Mike Hicks March 10, 2015 at 12:14 pm #

      Yeah, I haven’t found the specific laws/rules, but it sounds like Amtrak is limited to discounts of about 15% on their fares when trying to do yield management. Megabus says they sell at least one seat on each bus for $1 for the trip, so they’re allowing discounts in the high 90% range. Airline prices tend to rise as you get closer to departure, and the last few seats on a flight can be extremely pricey.

      • Adam Miller
        Adam Miller March 10, 2015 at 12:45 pm #

        Airline prices rise and fall in comparison to expected loads. If it’s two weeks out and they are under where their formulas say they should be, there will be cheap seats.

        But as you get closer to the flight, you as the purchaser get more likely to be a business traveler on an expense account, and that’s where the tickets get really pricey, whether the plane is full or not.

      • Nathanael March 10, 2015 at 8:25 pm #

        The rule is hidden in the appropriations bill, and reissued with each year’s budget. Amtrak is not allowed to offer a “discount of more than 50% off the regular peak fare”. There is no regular peak fare (sigh), so this has generally been interpreted to mean the highest fare on any given day.

        • Wayne March 11, 2015 at 12:54 pm #

          When was this added? Because I remember they used to have some amazing ‘super saver’ deals (I can’t remember the exact name of the program) where I once got a round-trip ticket from Boston to Chicago for like $66 in college. I wanted to do it again and I couldn’t find those deals anymore. Now it makes sense why.

        • Adam Miller
          Adam Miller March 11, 2015 at 1:14 pm #

          I wonder which industry lobbied for this restriction and/or whether the drafters have any understanding of the concept of marginal cost for a passenger train seat.

          • Nathanael March 21, 2015 at 12:41 am #

            I haven’t been able to find out which Congressman keeps inserting this in the appropriations bills. It seems to be a bit of a secret.

  2. Matthias Leyrer
    Matthias Leyrer March 10, 2015 at 11:53 am #

    So you’re telling me there’s a chance…

  3. Matt Brillhart March 10, 2015 at 12:27 pm #

    33 daily round trips to Chicago, and another 6 to Chicago. So nearly 80 daily flights in and out of MSP to destinations that could be accessed by HSR?

    Yes, I know a bunch (majority?) of those people are simply connecting in Chicago and HSR wouldn’t exactly be an option for them, but damn that’s a lot of flights. As a person who loves Chicago, if I had to make a connecting flight there (on my way to Miami or DC or NYC), I’d seriously think about extending my stay by a day or two and using HSR for the Minneapolis to Chicago leg(s) of the trip so I could stay a night in Chicago. That’s not an option with a connecting flight (it’s considered a separate trip after a certain number of hours).

    • Mike Hicks March 10, 2015 at 1:58 pm #

      Yeah, 33 for Chicago, 6 for Milwaukee. La Crosse also has a few flights, and Rochester and Madison are close enough that they could have rail service using much of the same track as an MSP-CHI route, even if they aren’t directly on the main service’s path.

      I don’t think it’s all that difficult to arrange an extra night when flying, though I suppose you can lose the discount from having a connecting flight — maybe a travel agent would know how to get around that problem?

      Anyway, one of the big problems with the airport is that they’re relatively far from the Loop, compared to Amtrak’s station which is a block away from Willis Tower. Of course, the hotels can be expensive enough that it might be better to shuttle outward some distance instead…

    • fIEtser March 11, 2015 at 6:27 am #

      They could of course do the sensible thing and just directly connect the train station to the airport, thereby getting rid of the connecting issue.

  4. John Charles Wilson March 10, 2015 at 1:20 pm #

    One thought: Intercity buses could be made more attractive by using Amtrak-sized and Amtrak-style seating. This would probably be in 2+1 format rather than the traditional 2+2. I would call it “Lux (for Luxury) Bus”. Fares would be intermediate between Greyhound/Jefferson and Amtrak….

    • Peter Bajurny March 10, 2015 at 1:27 pm #

      Having ridden Greyhound’s slightly luxury offering to Chicago, I can tell you that the problem isn’t the size of the seat. The problem is that you’re on a bus for 9 hours. Maybe it’d be nicer if you had a bit more room to recline, but ultimately there isn’t a lot of reason to get up and wander on a bus like there is on a train, so no matter what you just get stiff and uncomfortable.

      • Nathanael March 10, 2015 at 8:25 pm #

        Buses just *ride* uncomfortably.

        There are a lot of people who get motion-sick on buses but not on trains.

        • Mike Hicks March 10, 2015 at 9:42 pm #

          There’s a wide variation in ride quality for buses, though, both because of the variation in road surfaces and because of the difference in build quality across different makes/models. Freeway-running buses tend to be a bit more comfortable just because freeways tend to be better maintained than city streets. Coach-style buses tend to be more comfortable than your standard 40-foot “transit” bus, which in turn are more comfortable than the paratransit-style minibuses used on some routes, and can also be nicer than school buses.

          I suspect there’s room for a higher-priced bus that’s built to have better ride quality, but I’m not sure how far that could go.

          Of course, there are train routes that have crummy ride quality (Caltrain between San Francisco and San Jose, for example), but that again comes from a lot of deferred maintenance and having to fight for capital dollars. Ideally a new route would start out in good condition and spend the appropriate amount to keep it that way.

          • Nathanael March 21, 2015 at 12:42 am #

            Out here in New York, the freeways are generally maintained worse than the city streets, and oh my god the bus rides are bumpy.

  5. Scott March 10, 2015 at 4:23 pm #

    The best “flight” I could find a year or so ago when I had to get from Albany to Baltimore one evening was via Amtrak. It was just blissful compared to my usual flying method of getting from point A to B. Wide, comfortable seats, a duplex outlet all to myself, nice scenery along the Hudson, and so much space I couldn’t even reach the seat in front of me. I also enjoyed the stroll to the bar car and a free beer (included with my business class ticket).

    We were a little delayed at Penn Station, but even as gross as Penn Station is, I’d take my chances there as compared to LaGuardia (which has been upgraded a lot) or Newark Liberty. Baltimore Penn Station was beautiful, and it was six blocks to my hotel instead of a 25 minute cab ride from BWI.

    I’d LOVE to take the train to Madison, Milwaukee, Chicago, Des Moines, Omaha, Rochester, or Duluth.

  6. Nathanael March 10, 2015 at 8:28 pm #

    The biggest problem here is politics, nothing more.

    You still have a ban on even *studying* Northfield-Minneapolis, which is the best commuter train route in the state of Minnesota.

    Northstar stops halfway to its destination, rather than going to St. Cloud. (It would get a lot more riders if it actually went all the way.)

    Iowa had an awesome plan for a rail line connecting all its major cities to Chicago. Part of it was actually *funded*, mostly by federal money, but the Republicans in the state legislature killed the project.

    There’s a large faction of Republicans who are irrationally hostile to passenger train service, for no sane reason. They have made it very difficult to expand passenger train service.

    You’ll note that the states with the most expansion in rail service have the fewest Republicans. 😛

    • Mike Hicks March 10, 2015 at 10:37 pm #

      That hostility is one reason why I felt the need to point out the travel costs in these smaller markets. The cities themselves still tend to be represented by Democrats at the state level, but they’re surrounded by Republican-leaning areas, and would certainly travel through a lot of Republican-leaning territory — Since trains are able to stop along the way at various locations, they could serve a lot of rural and suburban constituents and provide a cheaper travel option.

      I was trying to hammer that home — it’s cheaper overall to (re)build these lines, both for the individual passengers and for the region. It’s more rational to build them than not to build them. Sure, there are some constraints — it doesn’t make sense to build full-on 220-mph high-speed rail to Yankton, but anything in the 80 to 125 mph range probably makes sense for service to nearby Sioux Falls and Sioux City.

  7. James Warden
    JamesWarden March 11, 2015 at 6:32 am #

    Extended-distance passenger rail is a bad public infrastructure investment in the bulk of the country for a few reason:

    — 1: Because it’s a public infrastructure investment. Although airports are publicly run, private companies and their customers bear the bulk of the costs – and virtually all of the operating costs. If an airline makes a bad bet and goes under, shareholders suffer, not taxpayers. Rail has the added problem in that it requires spending hundreds of millions on infrastructure before we even know if that bet will pay off. I’m not someone who believes in privatization for the sake of privatization, but the public-private system we’ve established for our airports is probably the best example of a financially sound transportation system in the United States. It gets the risk off public books. Why would we want to subsidize a system that aims to undermine that?

    — 2: Because it encourages sprawl. Mid-distance routes like Zip Rail will simply change our development patterns from “drive until you qualify” to “ride until you qualify.” As with highways, we’ll once again wind up subsidizing far-off development and be stuck with bills too big to handle when maintenance obligations come due. It’s fine if people want to commute from Rochester to the Twin Cities for work, but they should be the ones that bear the cost of that decision whether we’re talking roads or rail. Throwing millions into routes like that will only further distort a system that is already woefully distorted.

    — 3: Because it’s in a middle ground where no one wants to be. Planes do a great job carrying people long distances quickly. Cars do a great job with slow, door-to-door transportation. Trains are in this undesirable middle: They’re not as fast as planes, unless we’re talking sprawl-inducing mid-distance routes. They’re not as customized as cars (and in some cases are actually slower). Historically, about 40 percent of air travel has been for business. Most of those people will value speed over whatever amenities a train has to offer. So any rail route has lopped off a huge chunk of its customer base right off the top. Leisure travelers may be more forgiving, but you’re still talking a specific type of customer that values the journey as much as the destination. I mean, I much prefer traveling by train than plane but I’m writing this from MSP airport because I don’t have days of vacation to spend traveling to my sister’s wedding in South Carolina. That’s the kind of logic rail is up against.

    — 4: Because we’d be adding capacity where it’s already greatest. The interstates are actually very good at the purpose for which they were originally envisioned – carrying travelers between key population centers. You can drive to Duluth or Fargo or Albert Lea with nary a pause. There are no worries about too little space or not enough road. We’ve got a pretty good system in that respect. It’s only when we dragged those interstates into population centers and allowed them to subsidize sprawl that we saw problems. Extended-distance rail projects would divert precious transportation dollars from buses, light rail, protected bike ways and sidewalks to help travelers that are already well served. With the massive funding shortfalls we’re facing, why would we want to do that?

    I’m sure there are exceptions to this in a few parts of the country, such as the Northeast. But Minnesota has much bigger needs than rail, particularly the proposed routes to Duluth and Rochester. That money could be put to so much better use redesigning auto-centric streets, installing protected bike ways or improving pedestrian connections.

    • Peter Bajurny March 11, 2015 at 10:33 am #

      I feel like Mike covered 1) pretty well. If his math checks out there’s no reason a private company couldn’t do this. Hell, an airline could do it if they really wanted to, with the potential to save some money or offer cheaper fares on some of their feeder routes.

      I see where you’re coming from on 2) and in the long term I don’t totally agree with you. I think there’s the potential for creating a series of dense nodes at stations, rather than low density sprawl in all directions and the train just happens to be in the middle of it.

      3) and 4) I feel like you’re replying to a similar but different article. We’re already flying 2.5 million people a year to Chicago. Madison & Milwaukee, which would surely be on any line that went from MSP to Chicago, add nearly 900k passengers. Right there we’ve got a market of nearly 3.5 million people traveling between these cities on airplanes. This article isn’t really talking about pulling people off of roads or having people take the train from New York to LA. These are real trips that people are making right now on airplanes, where trains could be competitive.

      • James Warden
        JamesWarden March 11, 2015 at 1:06 pm #

        It’s not about about operational costs. It’s about capital costs. The prelimary estimates being talked about for Zip Rail are $2B to $4B – or at least four times the largest per mile cost offered in the article. So there’s a significant gap right from the get-go that you can’t just wave off by saying freight companies will pay. Private companies may be willing to operate the railroad under some kind of lease, as we’ve see happen with turnpikes. But no company has indicated it wants to actually lay track. Government money will be required to build out the lines. That means taxpayers are bearing the risk. Which brings me back to my original point: What benefit is there for government to take on that risk? We have intercity buses for those who can’t drive or afford to fly. We have planes for those willing to pay a premium. We have lots and lots of highways between these destinations that are under-utilized. Money that would be spent on Zip Rail or similar projects would have a much higher rate of return if invested elsewhere.

        • Peter Bajurny March 11, 2015 at 1:29 pm #

          Well Mike directly addressed the capital costs as well. You could certainly challenge his numbers and the assumptions they’re built on, but if you at least accept the numbers in the article, it is possible for a rail line to finance itself. That would most likely require loans, but it’s not like debt financed capital construction is unheard of, even in the realm of infrastructure.

          More than likely anything that actually happens will involve some kind of government action (I believe even All Aboard Florida is getting some government loans) but it doesn’t /have/ to.

          • James Warden
            JamesWarden March 11, 2015 at 2:12 pm #

            I did challenge his capital assumptions in my previous post. Zip Line is estimated to cost 4 to 8 times the maximum cost per mile he listed. That’s a huge difference.

            • Alex Cecchini
              Alex Cecchini March 11, 2015 at 2:41 pm #

              1) I’m not sure the cost estimates provided are accurate? The 2009 study for Twin Cities to Chicago via Rochester with electrified trains capable of 220 mph was estimated at $6.6bn. A 2003 study put capital costs for an electrified train from Mpls to Rochester (speeds of 180+mph) at $870-933m in $2002 (about $1.2bn in $2015).

              2) Even so, that number might be accurate for true HSR on a bunch of brand new track. The type of upgrades Mike was talking about were for additional sidings here and there to allow passing and upgrades to allow 80-110 mph trains (not 150-220 mph ones). Maybe someone can correct me if I’m mistaken.

              • Mike Hicks March 12, 2015 at 1:23 pm #

                Thanks Alex. Yeah, the Zip Rail line is probably outside the scope of this article, since it involves building a considerable amount of all-new track, and could be built as a true high-speed link. That’s in a whole other cost category, but it’s also important to note how faster trains can pay off more miles of track at the same fare.

                A train averaging 120 mph instead of 60 can bring in twice as much revenue per hour for the same fare. You can double the frequency of service with the same number of trains. Both of those factors would attract many more riders, while paying off the infrastructure more quickly.

                I don’t think Rochester by itself really needs a super-speed train, especially since a relatively conventional 110 mph (max) service could get people to/from the Twin Cities in less than an hour anyway, but it makes sense to make a bigger investment if it eventually becomes a leg on the route to Chicago (MnDOT officially says this currently isn’t the case, but I think there’s a big value in making a nice mesh of service).

  8. fIEtser March 11, 2015 at 6:33 am #

    What about DMU trainsets? They don’t have to be only for commuter service, especially with some of the bigger offerings. Of course, the whole FRA compliance thing is an issue, but maybe Republicans would like to jump at the chance to reduce red tape and regulation on that front.

    • Mike Hicks March 12, 2015 at 1:47 pm #

      I was a bit surprised how expensive the currently-available DMUs are. The Stadler GTW costs about $7.2 million per unit across a little over 100 seats (it’s articulated and longer than a typical 85-foot American intercity passenger car). Close to $70,000 per seat, so the capital cost is potentially harder to pay off.

      I found a couple of other DMUs which seemed pretty expensive. One service apparently paid $4 million per car to rehab some ancient Budd RDCs, which is a surprising cost (though maybe that was for a pair of them…)

      Reduced operational costs may be able to pay off the difference, but it’s not entirely clear. They’re good at reducing fuel consumption (probably 50% compared to conventional locomotive-hauled trains), but it’s not clear if other maintenance/administrative costs also go down or not.

      The existing market for them has been so tiny, though — I would guess that future vehicles in the U.S. will be less expensive. Like overhead catenary, the environmental benefit from consuming so much less fuel would DMUs a good target for government grants — if they can be discounted to the price of a conventionally-hauled train, a rail operator might be more willing to buy them.

      There’s only one manufacturer of bilevel DMUs in the country that I know of — US Railcar (formerly Colorado Railcar). Their vehicles actually seem relatively cheap, though the bilevel units are extremely tall — they could have height clearance issues in a lot of places.

  9. Bill Lindeke
    Bill Lindeke March 11, 2015 at 6:59 am #

    interesting, but your argument all seems pretty speculative, mike. i’d be curious what happened if you crunched some numbers on this.

    haha justkidding, great job.

    one thing that jumped out was when you said, “… and getting to the departure point,” about airline fares. maybe it’s just me, but the idea of having to get to the airport way out on the edge of town can often add a LOT of money to the airfare, especially if you get a budget fare early in the morning or late at night where there are few alternatives to taking an expensive cab.

    i’ve had a few experiences where i’ve spent nearly as much money on the cab ride to and from the airport as i did on the plane ticket itself. rail stations, with their central locations, have a big advantage when it comes to extra costs like this.

  10. Jesse Langanki March 13, 2015 at 10:13 am #

    The math might work out much better on a Hyperloop-based system. It would be best to wait until the full costs of that type of travel become more clear.

    • Mike Hicks March 15, 2015 at 8:58 am #

      Given how long it has been taking for maglev technology to become practical, I’m very doubtful about the prospects for the hyperloop idea. This article is intended to highlight the places where conventional, off-the-shelf technology can be used. Aside from a direct link to Rochester, which was discussed earlier in the comments, these corridors could be built up with passenger service in just a couple of years if the motivation was there.