PART 1 of 2
CALIFORNIA:
Amtrak Makes a Big Bet On Service to Las Vegas
LOS
ANGELES -- Amtrak is rolling the dice on Las Vegas, the Wall Street Journal
reported.
Starting in
September, the passenger rail company will revive its Los Angeles to Las Vegas
service after a three-year hiatus. This time the company is spending $28 million
to improve the tracks, build a new station and bring on new trains to make it a
5.5-hour ride to the gambling Mecca.
At that speed --
which shaves two hours off its previous run -- Amtrak hopes to entice some of
the seven million Southern Californians who drive annually to Las Vegas. The
300-mile drive from Los Angeles can take as little as five hours, but traffic
jams on weekends can drag it out to eight hours.
"Las Vegas is
the largest tourist attraction in the United States in many ways," says
Cyndi Darlington, senior director of sales and marketing for Oakland-based
Amtrak West, which oversees service for California. "If we don't serve Las
Vegas, we've got a major hole in our system."
The new route --
Amtrak's first addition in California in more than a decade -- is part of a
larger gamble the railroad is making in the Golden State. With increased funding
from the state and more money of its own, Amtrak is adding a train to the
Sacramento-San Francisco route by the end of the month and unveiling $125
million in new trains and track upgrades in May to improve on-time arrivals in
the Los Angeles-San Diego corridor. The company is also exploring new routes to
add to its 888 miles of rail in California, such as Los Angeles to Palm Springs
and Monterey to San Francisco.
The renewed interest
in California comes at time when National Railroad Passenger Corp. in
Washington, D.C. -- the quasi-public owner of Amtrak that Congress established
in 1971 -- is reorganizing itself to meet a congressional mandate to become
self-sufficient by 2003.
It's tough to know if
California is worth the gamble. While state ticket sales have grown 18% in the
past five years, company data suggest that less than 1% of the state's 34
million residents has ever ridden on an Amtrak train.
Amtrak, however, sees
inroads into car culture. According to the company, one out of five passengers
on Amtrak trains in California is a first-time-ever rider. And company officials
are encouraged by the example of the San Diegan, California's busiest route,
which runs to San Diego from San Luis Obispo via Los Angeles and carries 1.5
million riders annually. (That makes it the second-busiest line nationwide after
the Northeast Corridor from Boston to Washington, D.C., with 7.3 million
passengers annually.)
State funding for
Amtrak -- which has grown nearly 60% in the past three years to $64 million this
year -- also helps. This year the governor's budget is proposing $121 million in
capital upgrades for Amtrak and other local rail lines.
Mr. Davis "is
very focused on improving transportation in California, specifically in the
congested commuter corridors," says Hilary McLean, a spokeswoman for the
governor. "He's very committed to trying to get people moving."
Amtrak is also
spending a lot of its own money. In the past five years, the company has
invested $342 million in the California routes. Now intercity daily train
service is up 38% to 44 trains daily. Passenger-related revenue has soared 49%
to $45.4 million, according to Amtrak figures.
But some
transportation officials say Amtrak's upgrades fall short of the far more
expensive and comprehensive effort needed to significantly change travel habits.
"How good is a
partial system?" says Ken Kevorkian, a former member of the California
Transportation Commission who now sits on the California-Nevada Super Speed
Train Commission, which is studying a route between Anaheim and Las Vegas. Mr.
Kevorkian says that for trains to become a viable alternative to cars, the state
would have to build a completely new system -- to the tune of about $25 billion.
As examples, he points to the services the High Speed Rail Authority and the
California-Nevada commission are studying now.
(While Amtrak wants
to go into the high-speed business, the company defines that as a pickup from
its current maximum speed of 90 miles per hour to a maximum of 150 mph. That is
far slower than the 200 mph and faster promised by technologies -- such as
magnetic levitation, in which train wheels turn so fast they don't even touch
the tracks -- that are being studied by the Super Speed commission.)
For now, however,
Amtrak expects to lure riders from the Los Angeles-Las Vegas market. In the past
few years, Las Vegas has tried to position itself as not just a gambling hub but
a family vacation spot, where Europe meets the desert at new ostentatious
hotels, such as the Bellagio, the Venetian and Paris Las Vegas.
Meanwhile, the main
highway, Interstate 15, that connects Southern California and Los Angeles to Las
Vegas has become increasingly congested. In the past five years, average daily
traffic has grown 10% to 32,150 vehicles in 1998, the latest figures available,
according to the Nevada Department of Transportation. Southern Californians
account for 8.6 million of the 36 million visitors to Las Vegas in 1998, reports
the Las Vegas Convention and Visitors Authority. Of the 8.6 million visitors,
90% drive and 10% arrive by air.
Tom Stephens,
director of the Nevada Department of Transportation, says the rail service could
provide a much-needed relief on the road.
"Amtrak is kind
of like back to the future to us," says Mr. Stephens. "Everyone used
to travel by train. Then we went to highways. Now highways are getting
crowded."
Amtrak will offer one
daily train leaving Union Station in downtown Los Angeles each morning and
arriving in Las Vegas just before 3 p.m.; the train will leave Las Vegas for Los
Angeles at 4 p.m. The train will make at least one stop in Montclair, about 30
miles east of Los Angeles.
Amtrak officials are
considering stops in San Bernardino and Primm, Nev., before arriving in Las
Vegas. The train is likely to make two stops in Las Vegas -- one on the Strip,
the main drag in Las Vegas, and the other in downtown. The round-trip ticket
price is $99.
Amtrak officials say
the Las Vegas train will probably require innovative partnerships to guarantee
revenue. Amtrak will try to sell advertising space that will wrap around the
outside of the train. The company started an advertising program last year on
the San Diegan route, generating $1 million.
For more substantial
revenue, though, Amtrak is talking to a dozen hotels in Las Vegas about buying a
minimum number of seats per train. For example, a hotel could agree to pay $1
million for 10,000 seats a year -- or 27 seats a day.
Jan Jones, a
spokeswoman for Harrah's Entertainment Inc., Las Vegas, which includes Harrah's
and the Rio, says hotels weren't happy with the last Amtrak service to Las Vegas
and want to wait and see how the new one works.
"The hotels want
as many modalities as possible in bringing people in," says Ms. Jones,
herself a former Las Vegas mayor. Hotels "have really worked to bring in
more airline flights. They are a little tepid on Amtrak only because they want
to see if it's different this time."
Up until three years
ago, Amtrak offered Los Angeles and Las Vegas service that took seven hours. The
reason: The service was part of a longer Los Angeles-to-Chicago route, requiring
heavier trains that slowed the Vegas trip.
This time Amtrak is
spending money to lease so-called European-style, Talgo trains, which are more
comfortable and speedier. Amtrak is also laying down double tracks in certain
parts so the passenger train won't be slowed by freight trains using the same
tracks.
To convince car-crazy
Californians to take this train, Amtrak is also trying to sell the experience.
The interior of the trains will be painted red and purple to give it more of a
Vegas style, and dinner and other entertainment will also be available on board.
Still, some Vegas
casino operators worry that there won't be enough frequency for the hotels to
make a commitment.
"We love the
idea of the service," says Alan Feldman, spokesman for Las Vegas-based
Mirage Resorts Inc., which runs the Mirage, Bellagio, Treasure Island and Golden
Nugget. "As for preselling seats [to us], that's pretty doubtful. With only
one train a day, that doesn't give our guests the flexibility they need."
Rob Stillwell, a
spokesman for the Las Vegas-based Boyd Gaming Corp., which owns seven hotels in
Las Vegas, including the Stardust and Main Street Station, says one train trip
daily isn't enough to justify the marketing dollars.
"We're going to
have to wait until it expands," says Mr. Stillwell.
With or without the
hotels, Amtrak officials maintain the Las Vegas train will be a winner among
California drivers.
"The market is
there," says Amtrak West President Gil Mallery. "We hope the initial
service of one train running daily will lead to a second and third train. I'm
pretty sure Amtrak wouldn't make the commitment to this market if we felt the
potential was just 300 seats. It is significantly greater than that."
WASHINGTON: BN rail
merger Santa Fe railroad challenged by Iowa corn processor
WASHINGTON -- Someone
forgot to tell Roquette America Inc. not to step in front of a moving freight
train, the Chicago Tribune reported as well as a company press release.
RAI, a corn processor
with plants in Gurnee and Keokuk, Iowa, filed a petition with the U.S. Surface
Transportation Board on Tuesday to challenge the 1995 merger between the
Burlington Northern Railroad and the Atchinson, Topeka, and Santa Fe Railway Co.
The merger has
stifled rail carrier competition by leaving the Burlington-Santa Fe as the sole
rail provider in its commercial area, Keokuk-based RAI said.
To win approval for
the merger, Burlington Northern and Santa Fe agreed to give their competitor
Southern Pacific (now part of Union Pacific) access to Keokuk through an
interchange in Bushnell, Ill. Intended for competitive purposes, the condition
is viewed differently by RAI.
"The merger has
proven not to be a viable option, and today, UP does not even operate trains at
Bushnell," said Lee Williams, director of logistics for RAI. "BNSF is
obligated to allow competitive access to our traffic, and BNSF must determine an
alternate condition that at least equals premerger competition."
RAI's request for a
reopening of the ICC-approved merger coincides with the STB's consideration of
the largest rail merger proposal to date between the BNSF and the Canadian
National Railway ("CN"). In 1995, the merger of the BN and the ATSF
was the largest at that time.
"Since last
June, we have been trying to resolve this matter through voluntary, private
negotiations with the BNSF," said Lee Williams, Director of Logistics of
RAI. "It is ironic that our petition with the STB is filed at the same time
that the BNSF is preparing another merger application for the STB's
consideration as well. Our petition to the STB should be a warning to the
shipping community that negotiated merger conditions imposed to preserve
competition do not always work out as planned."
Before the merger,
according to the corn processor's complaint, 61 percent of RAI's shipping
traffic was handled by the Santa Fe railroad and 39 percent by Burlington
Northern. The merger handed all the traffic to the merged railroads, a
"monopoly pricing position," Williams said.
"Without
competition, we have no idea whether BNSF's rates or terms of service on this
route are reasonable," Williams said. "From experience, we know that
competition among carriers reduces rates and improves service."
Steve Forsberg, the
railroad's director of public affairs for the states involved, said current rail
rates for the company have decreased by 11 percent since 1994, which was before
the merger.
"We definitely
have seen rates come down across the board," Forsberg said.
While BNSF
"competes vigorously," Union Pacific "certainly has the ability
to carry out service" to Keokuk.
But Union Pacific
hasn't done so, RAI asserts. Requesting the reopening of the Burlington Northern-Santa
Fe merger may hint of a major overhaul.
Prior to its 1995
merger, the BN and the ATSF each competed for rail traffic Keokuk, Iowa, a
center of corn processing in the Midwest. Since then, virtually the only single
line service to Keokuk has been provided by the merged BNSF railroad, although
the ICC's approval of the merger conditioned it on BNSF allowing the Southern
Pacific (now part of the Union pacific) access to Keokuk traffic.
BNSF, as an express
condition of the approval of its merger by the ICC
(the predecessor agency to the STB), agreed to allow SP access to Keokuk
and RAI business through an interchange at Bushnell.
"The condition
imposed by the ICC has proven not to be a viable option, and today, UP does not
even operate trains at Bushnell," said Williams. "BNSF is obligated to
allow competitive access to our traffic and BNSF must determine an alternate
condition that at least equals pre-merger competition. BNSF's steadfast refusal
to acknowledge the scope of competition prior to its merger, and its continued
refusal to recognize the necessity of competition in Keokuk presents us with no
other recourse than to seek STB intervention to reopen the BNSF merger, even as
the STB considers another merger request by BNSF."
According to
Williams, RAI's Director of Logistics, rail costs of moving RAI bulk products
account for up to twenty percent of the delivered price. "Even when we
consider BNSF's monopoly pricing position, we have no cost effective alternative
for shipping beyond 400 miles except by rail," said Williams. "We are
captive to one railroad and the de facto monopoly power of the BNSF prevents RAI
and other area shippers from seeking a competitive price for the shipment of our
products."
As an example, in
1994 prior to the merger, 61% of RAI's traffic to customers in the West was
carried by the ATSF and 39% by BN. Today, the BNSF carries 100% of the traffic.
"Without competition, we have no idea whether the BNSF's rates or terms of
service on this route are reasonable. From experience, we know that competition
among carriers reduces rates and improves service," said Williams.
"All we are
asking is that the STB recognize changed circumstances and restore the existing
level of pre-merger competition to the Keokuk area, " said Williams.
Concluding, Williams
said that the RAI would participate in the STB's public hearings on March 8
& 9 to review the impact of rail consolidations. "As a major shipper on
the merged BNSF lines, we believe that we are in a unique position to testify on
promises made and promises kept. Our experience should be instructive to the STB
as it determines how best to impose, monitor, enforce, and revise conditions
requiring viable competitive alternatives. Let's hope that the future is
brighter than the past."
Roquette America Inc.
is the privately held U.S. subsidiary of Roquette Freres, Lille, France, and is
a worldwide leader in the production of carbohydrate derivatives with plants in
Europe and the United States.
CANADA:
CPR brings back Rocky Mountain elegance
VANCOUVER -- Canadian
Pacific Railway Co. is bringing back its much-lamented Rocky Mountain passenger
trains, 10 years after they were parked on a siding and left to rot.
And this will be a
train with a difference, the Toronto Globe and Mail reported.
For $7,000 a head,
wealthy European and U.S. tourists -- or business executives -- will travel in
style in the same vintage cars that Louis St. Laurent, King George VI and the
just-married Prince Philip and Princess Elizabeth used for their famous
cross-country tours.
"It will be a
very high-end product," said Fred Green, CPR's vice-president of marketing.
"It will be modeled on the Orient Express."
Tourists will be
served elegant railway-style dinners on linen tablecloths, with genuine CPR
china and silverware, the same kind that royalty used 50 years ago.
The cars will be the
genuine article, refurbished from top to bottom. The Killarney car has been
restored to its 1916 splendour, along with the Mount Stephen, the 1926 car that
prime ministers favoured for their cross-country electioneering.
That car seats 12
people in executive splendour on its rear platform, with an all-round view of
the mountains and rivers of Banff National Park.
Don't expect to ride
in the stainless-steel dome cars that CPR made famous around the world. They are
too modern, by about 30 years, for these vintage trips.
And don't expect to
be pulled by a giant Royal Hudson steam locomotive, at least in the first year.
CPR is refurbishing No. 2816 -- the giant 4-6-4 steam engine that pulled King
George VI and Queen Elizabeth in 1939 -- for possible use sometime in the
future.
For now, the Royal
Canadian Pacific will be pulled by three of the famous F-type diesel-electric
locomotives built by General Motors Corp. in the 1950s.
CPR is riding a wave
of nostalgia that has made vintage railroading popular once again, said Malcolm
Andrews, spokesman for Via Rail Inc. "It's a very positive thing that can
only be good for tourism."
Via Rail is jumping
on the bandwagon with its Bras d'Or, a train that will run from Halifax to
Sydney, N.S., this summer, while Great Canadian Railtour Co. Ltd. of Vancouver
has been running its popular mountain excursions for about 10 years.
CPR's premier tour is
appropriately named the Golden Loop. Tourists will travel for six days from
Calgary, past Banff and Lake Louise, and over the Great Divide as far as Golden,
B.C. Then the train will turn south, climb through the Crowsnest Pass to
Lethbridge, Alta., and roll back up to Calgary.
Passengers can stay
an extra day or two in Calgary's Palliser Hotel, one of CPR's grand railway
hotels, and perhaps take a side trip to the Banff Springs Hotel or Chateau Lake
Louise for a walk through the mountains.
"We've already
had quite a lot of interest," Mr. Green said. "The Canadian Pacific
Railway is a well-known brand in Europe."
CPR will be putting
on these grand excursions perhaps once a month this summer while it shakes down
the price and the levels of service. In-between those tours, it will be offering
one- two- or three-day trips for special groups or corporate excursions.
Companies will be
able to book the train for executive retreats, parties or board meetings. Mr.
Green is offering one-way journeys from Calgary to Vancouver, or trips to Banff,
Lake Louise and Golden.
The cost will be
high, $1,500 to $2,000 a person a day, but the service will be the same as that
enjoyed by royalty, prime ministers and presidents from around the world in the
grand days of railroading.
But for those who
would prefer just one evening on a train, CPR is laying on dinner specials -- a
three-hour run down to High River, Alta., as the sun sets over the mountains.