Analysis: Why the 'Hoosier State' will die on June 30

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Trainmen uncouple the Hoosier State’s three car consist from the eastbound Cardinal at Indianapolis on April 23, 2019. The Hoosier trainset deadheads westbound on Mondays and eastbound on Tuesday to position equipment, and earns no revenue on Thursdays and Saturdays.
Bob Johnston
Amtrak operations guru Chris Jagodzinski uses an inspection trip for local leaders on Oct. 1, 2014, to explain the Hoosier State route’s congenital weaknesses. Indiana DOT officials were invited, but they declined to attend. 
Bob Johnston

INDIANAPOLIS — Indiana Gov. Eric Holcomb issued the Chicago-Indianapolis Hoosier State’s official death warrant this week when he signed a $34 billion state budget approved by the state legislature. It fails to include a $3 million operating grant in each of the next two fiscal years that would have maintained daily service on a route also served by Amtrak’s tri-weekly Chicago-New York Cardinal.

The Hoosier’s last runs are set for Sunday, June 30.

The signing effectively ends efforts to keep the train running by a bipartisan group of legislators and local politicians at intermediate Hoosier State stops of Rensselaer, Lafayette, and Crawfordsville. Those communities — but not Indianapolis — have collectively contributed about $500,000 annually to support the service.

The discontinuance will end the train’s complex tale of funding and operational struggles.

In 2013, Indiana initially balked at providing an operating grant under Section 209 of the Passenger Rail Investment and Improvement Act of 2008, which requires states to fund the majority of routes operating under the legislation’s arbitrary 750-mile demarcation.

Amtrak management helped Congress craft the law’s “short distance” versus “long distance” dichotomy. The distinction was based on the political reality that North Carolina was already paying operating support for the 704-mile New York-Charlotte, N.C., Carolinian, but politically conservative South Carolina and Georgia state governments would not agree to fund the 829-mile New York-Savannah, Ga., Palmetto, the only Amtrak long-distance train that doesn’t run overnight.

The goal was to get states with robust corridor service such as Michigan, New York, and Virginia — where Amtrak had historically provided full funding — to pay for trains on the same basis as other states, as well as operating authorities from California to Maine.

However, in no way did the Hoosier State resemble or impose the same kind of cost burden on Amtrak as those multi-frequency corridors. But its board of directors and management under then-President Joe Boardman never fought for an exemption that would have been justified, based on the fact that the Hoosier served two unique functions: It facilitated a daily link from Chicago to the company’s indispensable Beech Grove Heavy Maintenance Facility near Indianapolis, and it strengthened the Cardinal’s role as a meaningful Chicago-Indianapolis corridor service by filling the void on days the long-distance train didn’t operate.

Amtrak also declined to pursue with host railroads a key finding of the legislation’s required Section 210 “Performance Improvement Plan,” which concluded that efficiencies and increased revenue accruing from daily Cardinal operation would be only marginally more expensive than the status quo. The proposal argued that a required third Chicago-New York trainset could be largely assembled from the Hoosier’s equipment, which deadheads with the Cardinal on two trips and is idle on Thursdays and Saturdays.

Instead, Amtrak’s sanctimonious stance to Indiana was, “to be fair to the other states, you have to pay.” Thus, funding was in the hands of a state government that focused on the train’s revenue and expenses, rather than embracing the mobility benefits or transportation value that intercity rail can provide — even if the communities it served did recognize that value.

Passengers on the inaugural run of Iowa Pacific's version of the Hoosier State have finished breakfast in the train’s full-length dome on Aug 2, 2015. Iowa Pacific convinced Indiana authorities that amenities could substitute for speed in the short run, but the company's hopes of adding another round trip ended when unreimbursed costs forced its withdrawal.
Bob Johnston

This sent the train on a tortured path that included:

— A failed attempt to strike a deal in mid-2014 with Corridor Capital, LLC., “America’s first passenger train development company” (as described in its slick brochure at the time) that would use leased passenger cars and locomotive. Indiana apparently didn’t realize it was expected to bankroll new equipment acquisition.

— Interim operation by Amtrak beginning in October, 2014, coupled with efforts by management to explain the route’s inherent weaknesses and opportunities to both the state DOT and communities. It was similar to the effort to stir up support and funding for the Southwest Chief. But unlike officials in Kansas, Colorado, and New Mexico, those in Indiana not only refused to ride the Oct. 1 inspection train and meet with CSX officials on board, but never took applied for external funding. Their attitude: We don’t know and we don’t want to know.

— A deal with Iowa Pacific Holdings, starting Aug. 2, 2015, for marketing and enhanced onboard service upgrades like business class, a dome car, and full dining service, in contrast to the bare-bones, coach-only service Amtrak had provided. However, the contract allowed Amtrak, which supplied operating crews, insurance, and facilitated the state’s right of access, to be paid first. Despite increased patronage, customer satisfaction, and revenues, Iowa Pacific couldn’t cover the increased expense, so it pulled out at the end of February 2017.

— Another try by Amtrak from March 2017 to the present, this time adding business class, Wi-Fi, and a cafe car. But marketing efforts disappeared, hastened by Amtrak management changes that didn’t include efforts to increase revenue in the business plan.

Through all these gyrations, Indiana — with or without Amtrak’s assistance — never made any meaningful attempt to find money for CSX infrastructure improvements. Such upgrades might pave the way for reduced travel times and another round trip, which might coax Indiana residents off of dangerous and congested Interstate 65. The state did commission at least one engineering study that outlined route enhancement options, but current Indiana DOT spokesman Scott Manning told Trains News Wire in January 2019 that he wasn’t aware that the documents ever existed. They certainly were never acted upon.

Officials focused only on passengers actually carried, 27,878 in fiscal 2018, rather than the 60,000 Amtrak determined who traveled on either the Cardinal or Hoosier State. Now, most of that business will be lost to the reality of inconvenience.

“A lack of frequencies on a corridor ripe for development like this one effectively doubles the price,” a former Amtrak operations manager tells Trains News Wire, because revenue derived from an extra round trip with the same equipment would spread fixed and variable costs over more revenue-producing trips. He adds, “I don’t think anyone put a good plan in front of the state.” Unfortunately, Amtrak’s still-opaque allocated-cost formulas for equipment and administrative charges don’t encourage additional frequencies either.

Other ironies:

—  The governor’s axe fell the same week Amtrak touted its 48th anniversary on May 1 by noting in a press release that the company “is heading toward break-even on an operating earnings basis by [fiscal year 2021]” and “has committed to investing billions in modernizing infrastructure, fleet, and facilities to meet the growing needs and ensure a continued, bright future for passenger rail service across the nation.” Except, that is, for the Hoosier State in Indiana.

— The state legislature and Gov. Holcomb’s decision was finalized during the public comment period for the Indiana Department of Transportation’s “Statewide Transportation Improvement Program.” The DOT is soliciting suggestions for surface transportation projects, “in which construction and operating funds can reasonably be expected to be available.” Respondents can offer their opinions here or at one of 11 open-house dates through May 16. The only one scheduled for a community directly on the route of the Hoosier State/Cardinal is May 9, at Oakland High School in Lafayette, Ind., from 5-7 p.m.

Perhaps a number of interested constituents may attend, but it will be too late to save daily service.

NEWSWIRETrains News Wire

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