Subject: RE: lunch
From: "J.Heffner" <[email-masked]>
To: "'Hunter Biden'" <[email-masked]>
Date: Fri, 28 Jan 2011 10:45:58 -0500

A couple of other things that my prior email did not mention.  You have stated that Joe Boardman feels the need to expand service in the Southeast.  He is absolutely correct except that I would rephrase that by saying expand service in the Sunbelt States where, I might add, that Amtrak could not only add significant ridership but attract badly needed political support.  But in all likelihood the only way that Amtrak can accomplish that will be through “national” as opposed to state-supported train service.  While some Sunbelt States are prepared to fund Amtrak trains [Florida, North Carolina, possibly Texas and Georgia], others are in the “dark ages.” Amtrak’s apparent policy that it will only initiate new services on routes over 750 miles in length (outside the NEC) is not only shortsided but it poses an obstacle to initiating new needed services, many of which would be shorter in length.  I should add that the new rail director of Texas DOT, Bill Glavin, is a former client of mine from when he and several others owned a short line railroad holding company named North American RailNet, Inc. [it sold off its portfolio of lines about 4 years ago]. Bill is a great guy and a smart man and he wants to initiate some new short haul service in Texas.  Once again, I emphasize that there is no reason for a Congressman in Nebraska to support high speed service in the Northeast until he or she sees the prospect of service in or near their district.  

Another point a propos of service in states like Wisconsin and Ohio is that a change in administration does not have to mean the death knell for some needed corridor service.  There is no reason why Amtrak could not go to the major cities or even financially responsible private interests along the route and ask them to sponsor service with the cities forming a compact and agreeing to fund or guaranty the nonfederal portion of the operating expense.  Getting the federal match back might be a different issue.  Amtrak has historically made a major mistake on state-funded services by waiting passively for states to approach it and then reacting rather than going out and soliciting state or regionally supported services.  If the Virginia-initiated Lynchburg service can exist without an operating subsidy perhaps a well thought out service in Wisconsin or Ohio could too.  

Regarding train operating expenses, I have long felt that Amtrak trains lose money in part because of poor cost controls, lack of marketing and promotion, and poor train management by those actually on or running the train.  Suppose that Amtrak paid incentive bonuses to the people who actually run the trains, the engineers and conductors, the onboard employees who work in the coaches, sleepers, lounge and dining cars, and the local ticket agents based upon ticket sales and passenger satisfaction.  My son is an assistant manager for Enterprise Rent-A Car and that’s how that company compensates its employees, a base salary plus a bonus based on sales.

For some recommended reading as to how the private railroads operated their passenger service in the years before Amtrak and how they about maintaining it, I’d suggest buying a copy of the Twilight of the Great Trains by Fred Frailey. I bought my copy on line from Broders.com but Amazon has it as well.

That’s it for now. I’m sure other ideas will occur to me.

From: Hunter Biden [mailto:[email-masked]] 
Sent: Thursday, January 27, 2011 8:27 PM
To: J.Heffner
Subject: Re: lunch

John-

Thanks for the thoughtful email. Keep in touch and I look forward to speaking again soon.  Best, Hunter.

R. Hunter Biden

Rosemont Seneca Partners

202-333-1880

On Jan 27, 2011, at 10:40 AM, "J.Heffner" <[email-masked]> wrote:

Hunter once again thank you for lunch and for meeting with me.  I will contact Ed Ellis about our discussion.  I would think he would be very interested in meeting you.  I look forward to a “return lunch” with you as my guest.  Unfortunately, time today does not permit me the leisure of writing up any extended discussion of ideas for your lunch with Joe Boardman.  Please allow me a month for that.  You can tell him that we have met on several occasions.  I was the Washington attorney that he introduced when I spoke at a SCORT meeting in Buffalo a few years ago (I want to say in 2003).

Regarding Amtrak let me just hit a few highlights for now:

·         Amtrak needs to be more aggressive in expanding its network in terms of both frequencies on existing routes, particularly long haul routes, adding several key new markets (notably Southwest Florida, Nashville, Phoenix, and Las Vegas as well as more service for “underserved” existing markets such as Atlanta, Cincinnati, and Minneapolis), and restoring a few key travel corridors (Chicago to Florida for example).  A good start would be to examine the Official Railway Guide in the months just before Amtrak and ask the advice of an industry “expert” such as Fred Frailey or former NS executive and early Amtrak employee Jim McClelland which trains were “winners” and also to study the most heavily travelled airline corridors.  I should add that there is little reason for a politician in Kansas or Nebraska to support high speed rail in the Northeast unless there is some reasonable chance of service to his/her district.

·         Amtrak can never make a profit by cutting service or cutting service quality (i.e. downgrading dining car service or food, substituting disposable plates for china, eliminating sleeping cars).  The easiest way to improve the economics is by adding frequency and capacity and therefore revenues faster than the associated incremental expenses.  Once a route reaches the optimum frequency level (which for a more populous long haul route such as Washington to Atlanta or New York-Buffalo-Chicago would be at least twice daily, one train operating overnight with full sleeping and dining service and a second more basic train running from dawn to dusk or evening along the lines of the famed City of New Orleans the Illinois Central operated.  Come to think of it Amtrak operates a very successful train called the Palmetto that meets this test.

·         Because of higher gas prices and the diminished attractiveness of airline service I believe that the “threshold” of attractive of rail for the average middle and affluent rider (as opposed to those in a lower economic spectrum) has increased from about three to five hours.  The key is that the train must be at least auto competitive and reliable.  Amtrak must be prepared to match discounts of airlines like Southwest and Jet Blue on corridor routes by offering a dual level of service (one more cheaper with a more Spartan service level and one a bit pricier with more attractive amenities, more attractive than Amtrak now offers outside the NEC and the West Coast).

·         Amtrak must vigorously expand Auto-Train type service, starting initially with cars on regular passenger carrying trains; then on dedicated trains once volume justifies.  Initial routes would likely emanate from Chicago to Denver, Tuscon/Pheonix, Florida, and up and down the West Coast.

·         Amtrak must serve “off line” points such as Saginaw, MI, Green Bay, WI, Rockland, ME, and Fort Myers, FL, by partnering with low cost short line railroads in much the same way that commuter airlines have code sharing arrangements with major carriers and short lines have with their class I railroad connections.

Given additional time I could come up with more ideas but this represents a good start.  John

From: Hunter Biden [mailto:[email-masked]] 
Sent: Tuesday, January 11, 2011 5:04 PM
To: [email-masked]
Cc: Anne Marie Person
Subject: lunch

John,

Nice meeting you by phone.  I look forward to our lunch.  Anne Marie in my office is cc'd here and she will provide some possible times for a meeting.  Best, Hunter.

 

Rosemont Seneca Partners

R. Hunter Biden

1010 Wisconsin Av., NW

Suite 705

Washington, D.C. 20007

202-333-1880