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UPDATE: Amtrak angles to keep control of Hoosier State route

October 1, 2014

A little-used, delay-plagued passenger rail line from Indianapolis to Chicago has become a battleground, as Amtrak tries to fend off competition invited by the Indiana Department of Transportation.

Amtrak CEO Joe Boardman was at Indianapolis Union Station Wednesday morning to announce that Wi-Fi would be added that day to the Hoosier State line, which also will get light food and beverage service and business-class seating. Boardman departed Indianapolis on the Hoosier State with plans to meet with officials along the route.

The Hoosier State was in jeopardy of coming to an end last year, but INDOT and communities along the route came up with a subsidy needed to continue it. In the meantime, INDOT sought bids from other rail companies and in June decided to work with Chicago-based Corridor Capital LLC.

Amtrak will continue operating the Hoosier State through Jan. 31 under a four-month extension of its agreement with INDOT. What happens come Feb. 1 is in question.

INDOT has yet to sign a contract with Corridor, and now Amtrak is trying to strengthen its own bid while casting doubt on the competition. Boardman said during his Union Station press conference that he believes INDOT will need to extend its agreement with Amtrak beyond Jan. 31 because Corridor isn't prepared to clear regulatory hurdles. 

Corridor's bid contemplated taking over service on Wednesday. It's unclear why that wasn't possible, but Boardman said, "It didn't happen today because folks did not understand what they didn't understand."

Boardman said Amtrak isn't willing to work as a subcontractor to Corridor, as the firm contemplated in its bid. "On what basis would they propose that without talking to Amtrak?" he asked.

Amtrak will work with the state of Indiana, Boardman said. "The state has standing. They don't."

A small firm founded by attorney and rail advocate James Coston, Corridor calls itself a rail “developer,” which would coordinate the service components and train equipment in exchange for a management fee. While Corridor has experience in equipment financing, it has yet to operate a rail line.

Corridor's pitch to Indiana was for Amtrak to continue providing crews to operate the Hoosier State while Corridor arranged for the lease of a different set of train coaches, which would be refurbished. Corridor would subcontract with other firms for train maintenance, ticketing and marketing.

Coston said a lack of cooperation from Amtrak delayed his plan.

“Since the procurement-award announcement in June, INDOT has been requesting a meeting with Amtrak to formalize and price the INDOT/Corridor plan...” Coston said in an email. “A conference call finally took place Friday morning.”

Coston said a letter of intent between INDOT and Corridor is being drafted.

Amtrak didn't participate in INDOT's bidding process in the spring, but spokesman Marc Magliari said Amtrak submitted a document that expressed interest in renewing the service for another year.

Magliari declined to provide a copy of the renewal document because he said it's still subject to negotiations over price and service details.

Corridor's bid was for $2.8 million, beating out a full-service rail company, Iowa Pacific Holdings, which made a base bid of $2.3 million.

INDOT likened the procurement process to hiring a consultant, so it wasn't required to choose the lowest-cost bidder.

Like Corridor, Iowa Pacific would have relied on Amtrak, which owns and operates Chicago Union Station, for train crews and track access, though Iowa Pacific could provide its own crew if necessary, and it already owns and maintains trains, according to the company's bid.

While ridership is relatively low, both Corridor and Iowa Pacific saw the potential for improvement if notorious delays outside Chicago could be eliminated and more frequent service added. The Hoosier State operates four days a week, alternating with the cross-country Cardinal line.

Iowa Pacific's bid projected that the state's subsidy would drop to $1.4 million, or $10.06 per passenger, if the Hoosier State had stand-alone daily service.

Both Corridor and Iowa Pacific discussed the potential to bring more Chicagoans to Indianapolis for tourism and launching special-event trains.

Iowa Pacific's bid anticipated the possibility that Amtrak would resist cooperation. “It would be best if INDOT, [Iowa Pacific], and Amtrak can all agree on an innovative agreement that utilizes the best of what Amtrak brings to the service, as well as the best of what IPH brings to the service.

“Admittedly, this is challenging, because Amtrak has worked hard to continue providing all the same services it provides today,” while setting costs as provided under the federal Passenger Rail Investment and Improvement Act. “The question is whether Amtrak can step from the past to the future and work collaboratively with third parties such as IPH.”

Last October through February, 12,328 people got on and off the Hoosier State in Chicago; Indianapolis saw 6,321 riders, and Lafayette saw 5,152, according to data INDOT supplied to the bidders. Ridership was down throughout the line, which also passes through Crawfordsville, Rensselaer and Dyer. The harsh winter could have been a factor.

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