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Amtrak Acela Replacement Plan Creates Bombardier Rivalry

By Angela Greiling Keane
December 14, 2012 12:57 PM EST 29 Comments
Amtrak Plans to Replace Acela Trains in U.S. Northeast Corridor
Amtrak Plans to Replace Acela Trains in U.S. Northeast Corridor

Amtrak’s plan to replace its fleet of Acela trains provides an opportunity for Siemens AG (SIE), Mitsubishi Heavy Industries Ltd. (7011), Hitachi Ltd. (6501) and others who want to compete with Bombardier Inc. (BBD/B), the supplier of equipment used since the service’s start.

“There’s not that many companies that build the trains,” said Andy Kunz, president and chief executive officer of the U.S. High Speed Rail Association, a Washington-based group whose members include Bombardier, Alstom SA (ALO), Siemens and Patentes Talgo SA. “But the handful that there are would all be ready to bid.”

Replacing the Acela, which can operate at speeds of as much as 150 miles per hour, may be Amtrak’s biggest equipment purchase since it bought the original trains in a contract valued at $1.2 billion when signed in 1996. Amtrak doesn’t have a cost estimate because it’s at “the very beginning of this process,” Steve Kulm, a railroad spokesman, said.

Montreal-based Bombardier worked with Alstom, based in Levallois-Perret, France, to build the 20 Acela train sets that consist of locomotives integrated with passenger cars. “We would love to work with Amtrak on their next generation of trains,” Maryanne Roberts, a Bombardier spokeswoman, said in an e-mail yesterday.

Bombardier rose 2 cents to C$3.42 as of 12:52 p.m. in Toronto.

Bullet Trains

The 12-year-old Acela, which operates between Washington and Boston, is by far Amtrak’s fastest and most profitable service. It produced about a fourth of the taxpayer-supported railroad’s $2 billion in ticket revenue for the year ended Sept. 30. About 3.4 million passengers rode Acela trains during that period.

Amtrak’s decision to buy new trains comes as it develops long-range plans to offer service as fast as 220 miles per hour (354 kilometers per hour) in the Northeast, an effort it has said will cost $151 billion. The railroad doubled its share of air-rail travel between New York and Washington, to about 75 percent, between 2000 and 2011 after the Acela was introduced and airport security became more time-consuming after the Sept. 11 terrorist attacks.

In announcing the fleet replacement yesterday, Amtrak said it scrapped a plan to buy 40 Acela passenger cars from Bombardier and lengthen each train set by two cars to increase capacity.

“What we really need to do is replace the Acela with new equipment,” Amtrak Chief Executive Officer Joseph Boardman told a congressional committee in Washington. “I told our folks they need to get this done by the time I’m 70, and I’ll be 64 next year.”

Increased Demand

The Washington-based railroad is already buying new equipment for its slower, long-distance train services, replacing cars made as long ago as the 1940s. In July 2010, it announced a $298.1 million contract for 130 passenger cars with the U.S. unit of CAF, based in Gipuzkoa, Spain. Three months later, it said it would spend $466 million on 70 new electric locomotives made by Siemens, based in Munich.

In a fleet plan issued in March, Amtrak estimated the lifespan of Acela trains to be 20 to 25 years.

“By the time they get to be replaced, they’ll be 18 to 20” years old, Kulm, the Amtrak spokesman, said. “It’s not that the equipment is wearing out; it’s that the demand has increased.”

Amtrak gets rid of passenger rail cars too quickly, said Michael Weinman, an operating officer at Amtrak in the 1970s, said in an e-mail. He is managing director of PTSI Transportation, a consultancy based in Rutherford, New Jersey.

Car Retirement

“Only Amtrak insists on retiring cars prematurely, and has gone through 1,000 or 2,000 fine cars, simply scrapping them and never maintaining them,” Weinman said. “This should be considered fiscal imprudence, as they are the stewards of the taxpayer largess which was used to pay for these vehicles.”

Amtrak has continued to work with Bombardier despite a series of mechanical and design failures in the early years of Acela service that embroiled the companies in litigation. Its start was delayed almost a year and twice, in 2002 and 2005, Amtrak parked the entire Acela fleet to fix cracks in brakes and shock absorbers.

Other defects included the passenger cars being four inches too wide to use tilting mechanisms that allow for higher speeds while rounding corners, and restroom doors that “frequently trapped passengers from exiting the toilet,” author Frank Wilner wrote in “Amtrak Past, Present, Future,” published this year.

Wilner has worked as a spokesman for the United Transportation Union and as chief of staff for the U.S. Surface Transportation Board, which regulates rail rates and mergers.

Old Technology

Amtrak abandoned its plan to buy more Acela passenger cars after its inspector general questioned the “high dollar value and Amtrak’s plan to award a sole-source contract,” according to a Dec. 4 report.

“They were too expensive,” Boardman said.

The cost of replacing the Acela will be higher than the fleet’s original cost because of rail safety regulations imposed since 1996, Tom Simpson, president of the Washington-based Railway Supply Institute, said in an interview.

Those include higher standards for crashworthiness of passenger rail cars and a requirement for technology, known as positive train control, that can automatically stop a train before a collision.

The Acela is built with technology that dates back 15 years so it makes sense for Amtrak to look at newer options, David Gunn, Amtrak’s president from 2002 to 2005, said in an interview.

‘Best Face’

The Acela is heavier than bullet trains in Europe because it was built to stringent U.S. crash standards, he said. That’s necessary in part because U.S. passenger and freight trains share tracks, even on the Amtrak-owned Northeast Corridor.

Because just two rail tunnels lead into New York’s Penn Station, the only way to get more passengers on the popular service is to add rail cars, and the Acela was built to operate at one length, Gunn said. Maintenance facilities in New York, Washington and Boston won’t accommodate longer trains, he said.

“You can create a longer Acela, but it would create a bunch of additional problems,” Gunn said. “If you were going for new equipment, you wouldn’t just dust off the Acela.”

While Acela trains can travel as fast as 150 miles per hour (241 kilometers per hour), the limitations of tracks and tunnels along most of the route dictate that they move more slowly. Seventeen are in operation on weekdays with trains leaving Washington and Boston, and New York in both directions, about hourly.

Replacing the Acela rather than making the trains longer could delay getting additional capacity on the popular route, Ross Capon, president of the National Association of Railroad Passengers, a Washington-based advocacy group, said in an interview.

“My concern is, when all is said and done, the additional capacity will be farther in the future,” Capon said. “I just wonder if it’s trying to put the best face on a bad situation.”

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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