Posts Tagged ‘Ed Ellis’

IP Gave Up Hoosier State for Financial Reasons

February 2, 2017

As the Indiana Department of Transportation frames it, the withdrawal of Iowa Pacific from operating the Hoosier State was due to IP making an unreasonable demand.

But as Iowa Pacific CEO Ed Ellis sees it, it was the result of a quirk in the contract that his company had with INDOT to operate the train.

Iowa PacificThat quirk, Ellis said, was that the compensation IP received declined each time the on-time performance of the Chicago-Indianapolis train improved.

Ellis said he sought to renegotiate the contract to guarantee that IP would receive a guaranteed $150,000 a month. But INDOT turned that down.

The situation is complex because Amtrak was also involved in operating the Hoosier State by providing operating crews and handling relationships with the host railroads.

Iowa Pacific provided the rolling stock (including locomotives) and food service employees, and did the marketing and promotion work.

Ellis told WBAA radio station in West Lafayette, Indiana, that INDOT paid Amtrak before it paid Iowa Pacific whenever there was any profit.

INDOT held separate contracts with Amtrak and Iowa Pacific. Amtrak billed 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 Hoosier State on time.

Iowa Pacific received the difference between what INDOT paid Amtrak and a fixed monthly sum of $254,000, INDOT spokesman Will Wingfield said.

Consequently, Amtrak received $4 million in 2016 while IP got $500,000.

Amtrak received monthly payments of between $288,000 in April to $172,000 in August. IP lost $34,000 in April but earned $82,000 in August.

The costs charged by Amtrak and Iowa Pacific are separate from what those companies earned in coach revenue, food service and business-class fares.

The guarantee that IP sought was more than what the contract specified said Wingfield, who added that it was more than what was reasonable for Iowa Pacific to seek.

Ellis said going into the arrangement to operate the Hoosier State that he didn’t realize how much the payments would favor Amtrak.

“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 from the contract 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,” Ellis said.

The Hoosier State began on Oct. 1, 1980, as an Amtrak train. IP took it over in July 2015.

It operated quad-weekly on days that Amtrak’s Chicago-New York Cardinal did not operate between Chicago and Indianapolis.

Amtrak will begin operating the Hoosier State with its own equipment on March 1. Wingfield said Amtrak has verbally committed to trying to add some of the amenities that Iowa Pacific offered, including Wi-Fi service.

INDOT agreed to let Iowa Pacific out of its contract, which was to expire on June 30.

Amtrak to Take Back the Hoosier State

January 31, 2017

Iowa Pacific will cease operating the quad weekly Chicago-Indianapolis Hoosier State at the end of February with Amtrak taking it over on March 1.

Iowa PacificThe Indiana Department of Transportation, which had contracted with IP to operate the train, said the contract was to have run through June 30, but IP demanded more money than the contractual amount.

“They were looking for a minimum monthly subsidy that was outside the budget we had,” said INDOT spokesman Will Wingfield said. “Even under the existing contracts, their needs were beyond what we had budgeted.”

IP has operated the Hoosier State since July 2015, taking over it from Amtrak after INDOT advertised for bidders.

INDOT said it has paid Iowa Pacific Holdings $500,000 to date to provide on-board service, marketing and equipment for the Hoosier State and $3.9 million to Amtrak, which provides crews to operate the train.

IP will receive an additional $300,000 to operate the Hoosier State through the end of February.

“It should be said we signed contracts in good faith with Iowa Pacific that was through the end of June, and then they came to us and said they we’re unable to continue under those contracts,” Wingfield said.

IP President Ed Ellis wrote on Facebook that his company is moving to “a different service model.”

There have been discussions on railfan chat lists that IP might be experiencing financial difficulties after it failed earlier this month to issue paychecks to employees in Saratoga Springs, New York.

Some employees of the IP-operated Texas State Railroad were laid off, but IP said in a statement that those layoffs were seasonal.

Ellis said on his Facebook page that IP was “unable to continue providing passenger train equipment and on-board services under the terms of its existing contract for the Hoosier State.”

IP received high marks for instituting business class, upgrading the food service and offering a dome car on the Hoosier State.

Ellis wrote that these service enhancements improved customer satisfaction, revenue and ridership, but the train suffered from poor on-time performance when it reached its destination hours late, if at all, on some occasions.

Amtrak spokesman Marc Magliari said the Hoosier State will operate with Amtrak equipment starting March 1.

INDOT said it’s seeking to continue on-board wi-fi and business-class seating for the train, which operates between Chicago and Indianapolis on days that the Chicago-New York Cardinal does not operate.

It is unclear, though what the long-term future will be for the Hoosier State, including whether INDOT will again put the operation out for bid.

The Hoosier State is funded by INDOT, Lafayette, West Lafayette, Tippecanoe County, Crawfordsville and Rensselaer.

IP Looking to the Future as it Celebrates First Year of Operating Chicago-Indy Hoosier State

August 29, 2016

Operation of the Chicago-Indianapolis Hoosier State by Iowa Pacific Holdings has reached the end of the first year of a two-year trial and the results are promising and concerning.

Iowa PacificUnder IP oversight, the average on-time performance has been 86 percent, which was better than the OT average of Amtrak trains of between 60 to 65 percent.

Ridership, though, has fallen by 11 percent since IP took over the quad-weekly train from Amtrak on Aug. 2, 2015.

The Hoosier State was racking up financial losses that were on track to reach $2 million for the year.

On the other hand, ticket revenue has increased by 26 percent and during June the Hoosier State even turned a small profit on the strength of increases in patronage and revenue.

IP head Ed Ellis has attributed that turnaround to growth in business class passengers, who pay a premium to receive food and beverage service while riding in a dome car.

The Chicago-Indianapolis route is different in that IP and Amtrak both provide service.

Amtrak’s tri-weekly Chicago-New York Cardinal uses the route and the Hoosier State operates on days that the Cardinal does not.

Ellis told West Lafayette radio station WBAA that the improved timekeeping is a result of establishing personal relationships with Amtrak and every freight rail that hosts the train.

“I think, if nothing else, just that level of daily attention has caused everybody else to pay daily attention to the train and has solved the problem,” Ellis said.

For its part, IP has focused on ensuring that the equipment is ready to go at departure time, thus eliminating late departures that can have a ripple effect.

“ . .  . it’s when trains get out of slot that you get more host-related delays because they need to run freight trains. So leaving on time is important,” Ellis said.

The Hoosier State is not solely an IP train. Amtrak provides under contract the operating employees and does servicing in Chicago and Indianapolis.

IP provides the equipment and handles marketing and promotion although the train is shown on the Amtrak website and Amtrak sells tickets for it.

Funding comes from the Indiana Department of Transportation and five communities along the route of the train.

The Hoosier State costs about $2.7 million annually to operate. Eventually, all of the parties concerned would like to see it become more self-supporting financially. They would also like to see more service on the route.

But Ellis said that will require additional sidings and signal work on the mostly-CSX route that would need to be paid for by the Indiana Department of Transportation.

“I think it’s obvious we need more trains, and the only way to do that is for the state to go to the freight railroads and say, ‘What does it take,’ and for the railroads to give us all a number and for us to decide if we can afford to do that,’ ” Ellis said.

If Ellis had his way, he would create a new route into Chicago and even use a different terminal.

What he has in mind is building a connection in Blue Island between the Metra line from Joliet to the La Salle Street Station and the former Grand Trunk Western mainline that CSX now operates.

Writing on Train Orders.com, Ellis said that and other improvements could cost $500 million and cut the Chicago-Indianapolis running time to 3 hours, 20 minutes.

Ellis would also like to operate three daily roundtrips between the two cities.

He said he wants to trade Chicago terminals because Union Station is crowded but La Salle Street is not.

A new Chicago routing would eliminate running on tracks owned by Amtrak, Norfolk Southern, Union Pacific and the Belt Railway of Chicago. In the process, IP would gain a faster route into Chicago and eliminate a congestion- prone junction with the Indiana Harbor Belt in Dolton.

If the money was available today Ellis figures it would take a year to 18 months to complete the track improvement work. Given the realities of the situation he said it would more likely take until 2020 to get the improvements made and train frequencies increased.

“There is a lot of spade work that has to be done between INDOT, the [Indiana] legislature and CSX on infrastructure improvement,” Ellis wrote on TO.

But he sees progress, noting that revenue in July 2016 was 70 percent over that of the same month in 2015.

“  . . . so the effects of improved service are beginning to take hold.  But there is a long way to go,” he said.

Continued political support for Hoosier State funding appears to be building.

Indiana lawmaker Tim Brown, a Crawfordsville Republican, is chairman of the House Ways and Means Committee, which writes the state’s biennial budget.

He admits to having been skeptical at first about funding intercity rail passenger service, but after riding the Hoosier State he came away with a favorable impression.

“This experience showed me there is a desire, there is interest in continuing it and growing it, and so I’m more convinced now than two years ago that it’s more appropriate to continue funding,” Brown told WBAA.

Brown said that although it is too early to say how much will be allotted for the Hoosier State when the next budget is hammered out in 2017, he expects legislators to approve a line item for passenger rail in the INDOT budget.

Hoosier State OT Performance Reaches 86%

June 13, 2016

Since October 2015, the Chicago-Indianapolis Hoosier State has posted an average on-time performance rating of 86 percent and an increase in ticket revenue of 20 percent.

InDOTThe figures were announced by the Indiana Department of Transportation. The Hoosier State is operated by Iowa Pacific Holdings, which contracts with Amtrak for operating crew members.

InDOT said the Hoosier State is among the highest-rated Amtrak routes, with 90 percent of riders reporting in a recent survey that they are “very satisfied” with the service.

The Hoosier State operates four days a week on days when the Chicago-New York Cardinal does not operate.

“Instead of being discontinued, the Hoosier State train was improved,” said Iowa Pacific President Ed Ellis. “On-time performance and customer service leading to more riders will be key to future success and improvements.”

Aside from providing operating crews, Amtrak works with host railroads and manages ticketing and reservations.

Iowa Pacific provides the train equipment, train maintenance, marketing and onboard amenities.

Pullman No Longer Operating Cars on CONO

January 5, 2016

Private railcar service on Amtrak’s City of New Orleans as been suspended, but operator Pullman Rail Journeys is optimistic about reaching an agreement with Amtrak to reinstate the service.

Pullman recently notified passengers booked for trips that it would refund their fares because all scheduled trips had been canceled.

“At this point, we are not able to operate Pullman Rail Journeys’ regular service between Chicago and New Orleans, but we are hoping to come to an agreement with Amtrak to resume service,” said Iowa Pacific President Ed Ellis in an interview with Trains magazine.

Amtrak spokesman Marc Magliari told the magazine that the railroad was open to negotiations with IP to operate as part of the City of New Orleans

The service had been operating southbound out of Chicago on Thursdays and northbound out of New Orleans on Sundays.

A scheduled trip on New Year’s Eve was rerouted via the Cardinal and Lake Shore Limited through Washington and Boston after flooding resulted in the City of New Orleans being canceled by flooding between Memphis and Carbondale, Illinois.

Pullman began operating its equipment on the back of the City of New Orleans in November 2012.

The cars, which are painted in a livery similar to that of the Illinois Central, featured fares ranging between $600 to $2,200, depending on the type of accommodation the passenger booked. The fares included meals.

When Pullman operated more than two cars, Amtrak assigned an extra locomotive, which drove up the costs of operating the train.

In recent months, Pullman elected to serve meals in a lounge-observation car rather than in a dining car.

The original operating plan was to operate several times per week with up to five cars, including a full-length dome car.

Trains reported that most trips sold out or had limited availability.

INDOT, Iowa Pacific, Amtrak Reach Agreement on 2-Year Contract for Operating the Hoosier State

August 3, 2015

Terms of the contract between the Indiana Department of Transportation and Iowa Pacific Holdings call for the state to receive 25 percent of any operating profits that the Chicago-Indianapolis Hoosier State earns.

It is one of many details contained in a contract signed last weekend pertaining to the quad-weekly train.

Amtrak, which had operated the Hoosier State through July 31, was also a party to the contract because Amtrak employees will continue to make up the operating crews for the train. Amtrak is also serving working with the host railroads and managing ticket reservations for the train.

Amtrak will be reimbursed by INDOT for its expenses not covered by ticket revenue with Amtrak providing the state with any excess revenue.

INDOT is expected to pay $254,527 per month for the Hoosier State while Crawfordsville, Lafayette, Rensselaer, Tippecanoe County and West Lafayette will pay a combined $21,194 per month for the service.

The contract expires on June 30, 2017, but INDOT has an option to extend it up to four additional years.
Iowa Pacific is furnishing the locomotives and passenger cars while also providing maintenance, food service and marketing.

The first trips on Aug. 2 under Iowa Pacific auspices suffered the same type of delays that often hindered the Amtrak-operated Hoosier State.

Both trips were delayed by freight train congestion at Union Pacific’s Yard Center in Dolton, Illinois.

The outbound trip from Chicago was 9 minutes late leaving Union Station because Amtrak delivered the equipment to the depot 25 minutes late.

CSX held the Indianapolis-bound train at Dyer, Indiana, for a half-hour due to an automobile accident south of town that did not involve the Hoosier State.

Further glitches occurred when Amtrak send patrons on the first runs what Trains magazine described as “ominous email and telephone message warnings to passengers.”

One passenger told the magazine’s passenger travel correspondent that when she called Amtrak back to ask what the email meant she was initially transferred to a closed customer service office. Another Amtrak agent checked with a supervisor and told Hill that she would be riding “a less luxurious train.”

That assertion was laughable on its face. Under Amtrak operation, the Hoosier State offered coaches and nothing else. The train did not offer food service or onboard Wi-Fi service.

However, one of the three Iowa Pacific cars assigned to the Hoosier State is a former Santa Fe full-width dome lounge offering food service.

Eventually, the dome section will be reserved for business-class passengers who will served hot meals and drinks.

For now, though, anyone can sit in dome lounge Summit View. Trains correspondent Bob Johnston reported that the car features white tablecloths and serves breakfast and dinner.

The top prices range between $6 and $8, respectively. The “Blue Plate Special” on the trip to Indianapolis was sautéed chicken breast. Other choices included Chicken Caprese Panini, an entrée salad, a turkey club sandwich, and cheese or pepperoni pizza.

“For the first month, everybody gets to come in here and say, ‘wow, is this cool?’” Iowa Pacific Holdings president Ed Ellis said. “So then when the fare goes up, we hope they’ll say, ‘yeah, I want to be sitting up there.’ ”

He was referring to the launch of business class service at a yet unannounced date.

Iowa Pacific has directed that two tickets on each Hoosier State trip are to be sold for $1 apiece. Normal an adult “saver” ticket between Chicago and Indianapolis is $24 on either the Hoosier State or Amtrak’s Chicago-New York Cardinal.

Ellis described the $1 fares as a conversation starter with college students who might have used competing Megabus service, which similarly offers a handful of fares at the same price.

Iowa Pacific has hired a full-time marketing manager who will be supported by IP’s own Chicago-based tourist train and Pullman Rail Journeys marketing operation.

The Hoosier State marketing efforts are heavily focused on stimulating business from intermediate communities along the route, in particular Purdue University in West Lafayette.

Ellis said Iowa Pacific sees Purdue as a largely untapped market. IP also wants to launch a connecting bus service between Crawfordsville and Bloomington to reach the Indiana University market.

“We’re treating this as one of the world’s nicest excursion trains between two great Midwest destinations,” Ellis said.

Iowa Pacific Makes First Runs of Hoosier State

August 3, 2015

Iowa Pacific began operating the Chicago-Indianapolis Hoosier State on Sunday, Aug. 2, taking over the train from Amtrak.

Trains magazine reported that the only potential snag might be completion of a switch relocation project on CSX in Indianapolis. The switch leads to a Iowa Pacific operated service facility.

Amtrak’s contract to operate the Hoosier State was to expire on July 31. Because the Hoosier State operations on the four days a week that the Chicago-New York Cardinal does not operate, it was not scheduled to run on Saturday, Aug. 1.

The Cardinal operated to and from Chicago from Indianapolis on Saturdays.

Iowa Pacific will furnish motive power and rolling stock for the train as well as marketing and on-board service support.

The operating crews will continue to be Amtrak employees.

Since March, there have been a series of inspections of the GP40FH-2 locomotives and passengers cars that Iowa Pacific plans to use. A test train traveled the route on June 28.

Iowa Pacific plans to offer onboard Wi-Fi service, a dome with café service downstairs, and leg-rest seating in heritage coaches.

Amtrak had coach-only service aside from a three-month period between Oct. 1 and Dec. 31, 2014, when it offered Wi-Fi and business class seating, but no café service.

Trains noted that the Cardinal operates with a “Diner-lite” Amfleet II café car that also serves breakfast and dinner as well as snack bar food.

Full meal table seating preference goes to sleeping car passengers and accommodating those patrons can be a challenge when Nos. 50 and 51 operates with two sleeping cars as it does through the spring, summer and fall months.

The Cardinal does not offer Wi-Fi to coach passengers.

Fares for the Chicago-Indianapolis market have varied widely. On the Cardinal, Amtrak seeks to maximize long-distance revenue over the Chicago-Indianapolis market.

The top-priced “flexible” Indianapolis-Chicago adult coach fare is $48. Most seats aboard for Amtrak’s Hoosier State have sold at the “Saver” price of $24.

For the first month of its operation of the Hoosier State, Iowa Pacific plans to allow passengers to sit in the dome and to pay for meals and beverages served there instead of having food included in the ticket price.

“We want to give people a chance to sample our version of business class,” which will be similar to breakfasts and dinners served on Pullman Rail Journeys excursions from Chicago to New Orleans and other destinations,” said Iowa Pacific President Ed Ellis. “It will be quite different than other Midwest business class service, which only includes a newspaper and a soft drink or coffee.”