The best in the West: Gene Skoropowski's trains: looking for an exemplary host freight railroad/tenant passenger railroad relationship? Look no further than California's Capitol Corridor

Railway Age, Oct, 2005 by William C. Vantuono

The United States government created Amtrak in 1971 not (primarily, at least) to preserve passenger train service, but to relieve the freight railroads from the burden of providing that service "for the public convenience and necessity." At the time, the railroads claimed they were losing $500 million a year, on a fully allocated cost basis, in providing passenger service. Taking even a money-losing train out of service was difficult; a successful "train-off" petition at the Interstate Commerce Commission required evidence that patronage of that train had declined below a certain tolerable level.

This led some railroads to go to great lengths, finally, to discourage the public from riding their trains. The Southern Pacific, one of the industry's giants, was particularly aggressive. SP ordered its own employees to quit riding the railroad's trains while on railroad business--it was a slow and inefficient way to travel, contended SP. SP's popular but deficit-ridden Peninsula commuter trains between San Francisco and San Jose drew SP President Benjamin F. Biaggini's scorn; Biaggini suggested replacing the trains with motorized vans.

Today, the object of Ben Biaggini's scorn is the highly successful Capitol Corridor. The 170-mile, 16-station corridor provides intercity passenger rail service between three major metropolitan areas: San Jose, Oakland/San Francisco, and Sacramento/Auburn. The agency responsible for the service is the Capitol Corridor Joint Powers Authority, a partnership of six local transit agencies. A dedicated railroad staff" within the San Francisco Bay Area Rapid Transit District provides administrative management; Amtrak runs the trains under an operating agreement. The trains share the tracks with Union Pacific, which owns and dispatches the infrastructure.

It's a complex arrangement, but it works beautifully. The CCJPA's relationship with UP, and the service and capital investment agreements that have been forged, are considered a model for passenger/freight public/private partnerships.

Take a look at the Capitol Corridor's most recent statistics. It is Amtrak's third-busiest service, after the Boston-New York-Washington Northeast Corridor and the Los Angeles-San Diego Pacific Surfliner. (The New York-Albany Empire Corridor and California's San Joaquins are fourth and fifth, respectively.) Twenty-four weekday trains carry 1.25 million annual riders, who enjoy an average of 85% ontime performance. (UP's ontime performance for dispatching delivery averages 90%). In August 2005, Capitol Corridor trains set ridership and revenue records for the month: 108,225 passengers (up 6.4% from 2004) and $1.24 million in ticket revenues (up 12.9% from last year).

"This year is proving to be a banner year for the Capitol Corridor," says CCJPA Managing Director Eugene K. Skoropowski. "Ridership is up 8% for the past 12 months, and revenue is up 16%. Our revenue-to-cost ratio is 45%, the highest it has ever been (based on the CCJPA/Amtrak fixed-price agreement and CCJPA's actual payment to Amtrak). There has been no change in frequency of service in the past 30 months, so this is pure growth. Ontime performance is not perfect, but looking at all the others, we are the best there is in the West, and we are also the most consistent for the 11-1/2 months of the fiscal year (which ends Sept. 30) by a long shot."

This is taking place in automobile-centric California, and on a host railroad that has been widely perceived as passenger-hostile. No other passenger rail service in the U.S. has gone quite as far in negating the latter perception. Why?

Skoropowski explains it this way: "Our relationship with UP has remained constructive," he says. "Do we have difficult days? Of course, but we try to keep everything on a business-like basis. The CCJPA and UP are each other's valued customer, and we don't fight our battles in the press. There is a mutual level of respect and trust, so if there's a problem, we can talk about it--and not engage in a finger-pointing exercise." This includes a good working relationship with UP Director-Passenger Operations Tom Mulligan. Granted, service issues do come up in the press, but they're brought up by Capitol Corridor riders. When something negative does appear in print, says Skoropowski, "it catches the attention of both parties."

The CCJPA's relationship with UP and Amtrak is based upon an innovative tri-partite incentive agreement struck in late 2003 that fundamentally differentiates the Capitol Corridor from other services involving Amtrak and UP. Skoropowski likes to call it the "carrot approach." "We're growing, but at the same time, UP is under tremendous pressure to add capacity and accommodate freight growth," he says. "The railroads complain that they're not adequately compensated on a train-mile basis for hosting Amtrak trains. So we've extracted the Capitol Corridor from the Amtrak national agreements with host freight railroads and developed a fresh approach."

The formula is straightforward. In addition to the basic train-mile payment, UP receives incentive payments for running Capitol Corridor trains on time. The minimum for UP to earn incentives is 92% OTP, and there is no "take back," meaning that if the numbers aren't there, UP doesn't earn an incentive. However, there is no financial penalty if trains are late and it's UP's fault. In fact, unearned incentive payments are plowed back into track improvements, on top of what the State of California is already investing, so UP, in a sense, benefits anyway. "If they run it right, they get paid," says Skoropowski. "UP is committed to improving ontime performance, because they benefit."