Private ‘Hoosier State’ service dropped when contract terms soured

RELATED TOPICS: MIDWEST | PASSENGER | REGULATION | AMTRAK
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TEH152541
The southbound 'Hoosier State' passes Dyer, Ind., in September 2015.
Randy Olson
LAFAYETTE, Ind. – An oversight in its contract negotiations with the Indiana Department of Transportation led to Iowa Pacific Holdings asking for an early out for the Hoosier State train service, according to media sources.

Amtrak announced on Jan. 30 that it would be replacing Iowa Pacific's equipment with standard rolling stock by March 1. Iowa Pacific's contract would have expired June 30. Amtrak and the state will announce what amenities the train will have at a later date.

Iowa Pacific President Ed Ellis told WBAA, Purdue University's public radio station, said that he didn’t realize the contract would swing the payments so far in Amtrak’s favor. The more often the train ran on time, the less the Iowa Pacific was paid for its services.

WBAA said Iowa Pacific tried to re-negotiate for a minimum $150,000 per month payment, terms that INDOT said was unreasonable. “The way the contracts worked, we ended up getting less money as the train ran more on time,” Ellis said.

Amtrak and Iowa Pacific signed separate contracts with INDOT. Amtrak would bill the state for fixed operating costs plus “estimated third party costs,” that included maintenance of way charges and “performance incentives” paid to CSX for running the train on time.

INDOT paid Iowa Pacific the difference between what it paid Amtrak and a fixed monthly amount, some $254,000, that the state budgeted for the rail service, according to spokesman Will Wingfield.

INDOT data show that between January and December 2016, Amtrak received monthly payments ranging from $288,000 in April to $172,000 in August. In the same months, Iowa Pacific lost $34,000 in April, and earned $82,000 in August.

The costs charged by Amtrak and Iowa Pacific are separate from what the companies earned in passenger coach revenue, onboard meals, or premium business-class fares.

“The one thing that I would want to change going forward is to make sure that we put some kind of a floor under what our monthly revenue would be,” Ellis said, “so that we don’t get into a situation where, at the end, we’re several hundred thousand dollars less than where we thought we would be.”

NEWSWIRETrains News Wire

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