Welcome to The Business Case for Passenger Rail Symposium

1. Welcome to The Business Case for Passenger Rail Symposium

2. Pat & Kris Larkin Proprietors The Lark Inn

3. Chris Larson President & CEO Larson Binkley

4. The Business Case for Passenger Rail Chris Larson, President Larson Binkley, Inc.

5. The Northern Flyer Alliance, Inc. What is it?

7. Kansas City-Fort Worth Intercity Passenger Rail Initiative What is it?

8. Amtrak National Network Over 500 Stops – 46 States – 22,000 Miles Pop. Kansas City 2 Million Service Gap Pop. DFW 6.3 Million

9. SW Chief Connections Newton 3:01 AM 3:25 AM Late Evening - Early Morning through the Gap • 1. Newton –Fort Worth Texas Eagle Connections 2:40 PM 2:20 PM

10. Afternoon through the Gap Afternoon through the Gap 2. Kansas City – Fort Worth

11. Afternoon through the Gap Afternoon through the Gap 3. Kansas City – Fort Worth

12. Kansas City-Fort Worth Intercity Passenger Rail Initiative What can a passenger train do for this region?

13. My Business Travel Story

16. Clearly the advantage goes to rail travel

17. Why Have Rail for Business? • Economic – Energy – Environmental • 3.2:1 - 4.5:1 Economic Benefit • Productive, Safe, Easy, Weather Resistant Travel • New opportunities for construction along rail corridor • More Interstate commerce • Overall transportation fuel consumption reduction keeping fuel prices lower, resulting in more disposable income….

18. Need Passenger Rail be profitable? Myth: Amtrak is unique in operating in the red, at taxpayer’s expense. Fact: All transportation is subsidized by American taxpayers.

19. What about Highways and Airports? Myth: Highways and Airports pay for themselves through user fees. Fact: Generally, highways cover only 51% of total associated costs through user fees. Fact: The past 5 years have seen an alarming increase in general fund support of FAA

20. NEXT Steps Contact your state and federal Representative Tell them they need to support trains!

21. Joe Szabo Administrator Federal Railroad Administration

22. Derrick James Director, Government Affairs – Central Amtrak

23. An Overview of Amtrak Derrick James Director, Government Affairs - Central

24. Amtrak 101 – basic company and system statistics • We operate a 21,200 mile system • More than 300 daily trains • More than 500 stations • More than half our daily trains reach 100mph • 70% of our train-miles are run on track owned by other railroads (mostly large freight railroads) • We carried 30.2 million riders in FY 2011 – a record, the 8th in 9 years • Amtrak generated total of $2.5 billion in revenues in FY 10 (incl. ancillary business) • Covered 85% of operating cost (heavy rail passenger carriers in the U.S. typically fall into the 40-60% range) • Our FY 11 farebox recovery was 79% - one of the highest in North America • Federal funding for Amtrak will total slightly more than $1.418 billion in FY 2012 • Decrease over FY2011 of about $60 million • $466 million for operating expenses • $952 million for capital investment and debt service

25. Major investments over the last three years • ARRA-funded infrastructure improvements • Amtrak ($1.3 billion) • Equipment • Infrastructure • State-supported service (HSIPR grant program) • Fleet replacement • Long Distance Single Level (LDSL) cars • Electric locomotives • Acela coaches 25

26. Setting the stage for the future • New services in 2012 • 110mph service in Michigan, west of Kalamazoo • Downeaster extension from Portland to Brunswick • Northeast Regional service from Richmond to Norfolk • Major line acquisitions • Poughkeepsie to Albany (94 miles) • Kalamazoo to Dearborn (135 miles) • Strategic plan and organizational realignment • Stair steps to high speed rail This has been a foundational period- and the investments we’re making will lay the groundwork for the next generation of passenger rail service 26

27. The ridership picture • Growth is across the board – not just one segment of our business: • Best year for Northeast Regionals, second-best year for Acela • 20 of 27 state-supported routes set ridership records • 4 of 15 long distance routes set ridership records • Capitol Limited • Southwest Chief • Texas Eagle • Auto Train Ridership today is 44% higher than in 2000

28. Federal support helped us invest in our system • American Recovery and Reinvestment Act (ARRA) provided $1.3B for Amtrak • $850M for Amtrak system • $450M for safety and security improvements • Created equivalent of 1,184 jobs at Amtrak • Provided for a range of needs: • Returned stored and wreck-damaged equipment to service • Station accessibility • Safety and security • PTC installation • System capital needs • Maintenance facilities • Stations • Other rail infrastructure

29. Investing in our system • Capital investment • New and refurbished stations • Replaced one drawbridge at Niantic, CT and numerous fixed bridges in the Northeast • Major improvements to enhance all-weather service in Chicago • Major maintenance facility improvements in Chicago, Seattle, Los Angeles, Hialeah, Washington, New York, and Boston • Equipment returned to service: • 15 P-40 locomotives • 21 long distance cars • 60 Amfleet cars • Accessibility improvements • Raised percentage of stations with barrier-free access from 74% to 90% • New wheelchair lifts installed at 176 stations Before After Before After Without ARRA, it would have taken years – if not decades – to finish these projects

30. Fleet replacement strategy • First tranche of procurements will address most pressing needs/opportunities: • Replace 60 year old Heritage cars • Replace 30 year old electric locomotives • Purchase additional cars for Acela (projected financial impact ~$100M) • Proposals received in February, evaluation ongoing • Expect to issue Notice to Proceed in July • Fleet plan provides for future procurements • Third annual update just completed • Envision bi-level fleet replacement in the 2018-2022 timeframe

31. New technologies • Wi-fi • 2010: Acela Express and Cascades • 2011: Eastern and Western corridor services • Planned 2012: Piedmont, Chicago-St. Louis, others as funding available • eTicketing • Downeaster and Auto-Train pilots complete • Last round of pilots have begun • Conductor training underway • City of New Orleans starts March 15 • Capitol Corridor and San Joaquin start April 15 • Nationwide deployment starts late summer Anticipated annual ticket revenue impact should exceed $20M for wi-fi and another $20M for eTicketing

32. The Midwest Regional Rail Initiative • Link Midwestern states to promote growth • Use existing rail rights-of-way • A “hub-and-spoke” system • Introduction of state-of-the-art train equipment operating at speeds up to 110 mph • WiFi access • Food service • Power outlets at each seat • Roll-on bikes • In addition to current routes, provide rail service to Midwest areas not presently served by passenger rail • Modernized stations and facilities 7 of 8 MWRRI States are included in the National HSR Corridor System

33. Chicago-St. Louis corridor • HSIPR program provides $1.142 billion to upgrade line for 110mph service: • Improve tracks, signals, road crossings • Install Positive Train Control • Plan studies for additional service enhancements • Work ongoing between St. Louis and Dwight • First test trains planned for late 2012 • Eventual increase to eight round trip frequencies per day on Chicago-St. Louis corridor

34. Amtrak Lines in Michigan and adjacent states Wolverine service Other Amtrak services Amtrak’s Michigan Line • Amtrak currently owns Porter-Kalamazoo segment • State negotiating to buy NS-owned line • Planned Federal investment in this route (including Chicago-Porter, Indiana and Englewood Flyover) in the vicinity of $600 million • We have a strong partner in the state of Michigan • Since 1990, state has invested about $65M in equipment and infrastructure • This is the opportunity of a lifetime NS-owned Amtrak-owned

35. Improving the Michigan Line • Speeds on Amtrak-owned segment just advanced to 110 mph • State negotiating to acquire 135 mile Kalamazoo-Dearborn segment • Incremental upgrades will eventually raise 77% of route to 110mph, cutting trip times by thirty minutes • Currently 5:30 from Chicago to Detroit • 3:00 Chicago-Battle Creek

36. NextGen HSR 220 MPH MAS NextGen HSR: NYC to BOS NextGen HSR: NYC to WAS NEC-UP (Upgrade Program) 160 MPH MAS NEC Gateway: Newark to NYC NEC 160 mph MAS: NYC to WAS Acela II Fleet Doubles Capacity Acela Capacity Increases 40% A strategy for high speed rail

37. Modernizing our company and our processes • Modernizing our processes and our relationships • Partnering with labor • Implementing modern business processes • High-Performance Organization • Lean Six Sigma • Aligning the business • Reorganizing along business lines • Flattening our structure

38. Some of our very best years lie ahead • These are foundational years – and we’re setting the stage for the next level of development • Infrastructure improvements • Fleet replacement • Facilities upgrades • Service improvements and extensions • Organizational modernization • When we’re done with this current round of investments, we’ll be positioned for • Nationwide corridor development • Major capital investments • Higher speeds in the Northeast and Midwest Through the end of this decade, we will be delivering big projects on an annual basis

39. Dennis Slimmer Bureau Chief of Transportation Planning Kansas Department of Transportation

40. Expanded Passenger Rail Service in Kansas, Oklahoma, and Texas April 6, 2012

41. Recent History of Passenger Rail Initiative • Amtrak Feasibility Study completed in March 2010 • Service Development Plan (SDP) completed in November 2011 • SDP Posted on KDOT’s passenger rail web page • http://www.ksdot.org/PDF_Files/PDF-Passenger-Rail-SDP.pdf

42. Work on the SDP • Report prepared jointly for KDOT and OKDOT • Finances • $250k federal HSIPR grant • KDOT and OKDOT each matched $125k • Parsons Brinckerhoff was consultant • Cooperation and assistance from • Texas DOT • Missouri DOT • BNSF Railway Company • Amtrak • Federal Railroad Administration

43. SDP Contents • Contents of SDP • Discusses purpose and need for the service • Describes operation of the service • Identifies required infrastructure improvements • Estimated costs • Estimated ridership and revenues • Benefit-Cost Analysis using FRA criteria

44. Options Studied • Two options • Heartland Flyer Extension (nighttime service connecting with the Southwest Chief at Newton, KS) • KC-OKC-FW Daytime service (daytime standalone service between Kansas City and Fort Worth via Wichita and Oklahoma City) • 79 mph top speed

45. Service Options

46. Findings • Estimated ridership • HFE: 200,500 (including riders on existing HF service) • KC-OKC-FW: 270,500 • Capital Investment required • HFE: $136.5 million • KC-OKC-FW: $436.2 million

47. Findings (cont.) • Annual operating subsidy required (operating cost minus revenue) • HFE: $4.4 million (incremental over existing HF subsidy) • KC-OKC-FW: $10 million • Benefit/Cost ratio • HFE: 0.88/0.93 (assuming 30% contingency/15% contingency) • KC-OKC-FW: 0.61/0.64

48. Legislative Testimony • Presented findings to Kansas Legislature • House and Senate Transportation Committees • Kansas Rail Caucus • Legislative funding commitment is needed

49. Follow-up Questions and Concerns • Funding sources and timing • Additional benefits from Economic Development and Jobs • What are Kansas’ likely costs?

50. Follow-up Activity • TIGER grant application • Pre application for crossing improvements and signals from Newton to Oklahoma state line • KDOT was advised the work would provide no benefits and result in additional costs • Final application was not submitted • Economic impact calculations • Kansas station stop cities contacted • Existing Heartland Flyer station stop cities contacted