Passenger Trains > Call for Sir Richard Branson!

Amtrak loses millions and millions on the Southwest Chief.  They want it gone. They would like to keep the money but it has been said your can't have your cake and eat it too.  Iowa Pacific showed that it is still possible to have real first class train travel in the US.  Iowa Pacific was always grossly under capitalized.

Richard Branson is a lot of things but under-capitalized is not one of them.  Branson has joined Brightline.  Brightline is now involved in the West.  The monopoly aspect of Amtrak has always been a problem.  Sir Richard show us what made you great.  Bid on privatizing the Southwest Chief in 2020. Get Amtrak to fund you with the huge amount of cash the SWC costs them each year minus the current revenues they are working so hard to suppress.

Agreed. Take the $100,000,000 directly off Amtrak’s subsidy. Amtrak might magically have new financial numbers on the train and not want to drop it.

Branson doesn't believe in throwing money away either. When Virgin America didn't work out as planned revenuewise he sold it to Alaska Airlines and washed his hands of it.

Branson wants something that makes at least a modest operating profit. Even if you look past Amtrak's Fully Allocated Voodoo Accounting stating that train's deficit of $56 million, the actually avoidable cost is still about 60% of that.

The Rocky Mountainer and American Orient Express models in the western US have long since failed. Empire Builder still has a better farebox recovery than VIA's Canadian, which is a hybrid between RMR and Amtrak.

Branson is mostly likely just not looking at the railroad part of it but the commerce being built around it!!!!!  Offices, housing, etc, etc.....

bluesboyst Wrote:
-------------------------------------------------------
> Branson is mostly likely just not looking at the
> railroad part of it but the commerce being built
> around it!!!!!  Offices, housing, etc, etc.....

I don't think he is considered a "real estate magnate" but this might be a good way for him to spread the "Virgin" brand. Besides, Fortress Investment Group (the primary beneficiary if IPO happens) got the real estate angle already covered.

Branson already did the "railroad part" in Great Britain, so that's part of his playbook, whether you consider him a railroader or not. So I'm sure he's looking at that angle. He'll have to understand our mentality (money > real estate > politics > transportation) which will be different from how the British think about their own society.

Does Virgin Rail in the U.K. make a profit? I noted on my last trip, although the East Coast Mainline trains are still lettered LNER they are operated by Virgin. Would Branson have taken on that franchise if it wasn't profitable? 

PHall Wrote:
-------------------------------------------------------
> Branson doesn't believe in throwing money away
> either. When Virgin America didn't work out as
> planned revenuewise he sold it to Alaska Airlines
> and washed his hands of it.

Sir Richard is singing a different tune. 

https://www.cnbc.com/2017/10/18/branson-says-alaska-air-was-foolish-to-absorb-virgin-america.html

"Alaska Air acquired Virgin America in April 2016 in a deal valued at $4 billion. The British entrepreneur says he was very disappointed the takeover happened, saying there was nothing he could do to stop it."

The way the money works is this. Brightline gets what Amtrak says it spends on the Southwest Chief each year not how much it looses.  That's the break even right there or it's better than break even if Amtrak's accounting is screwy.  Then you rebate Amtrak it's 2019 revenues from the Chief.  Unless you believe Amtrak has done the best that any company can do maximizing revenues on this train then Brightline will do better. That's the profit.  It will be the difference between going to sea on a tramp steamer vs. a cruise ship.  I was on the Chief last week.  In  spite of what you read it is a good train with lots of riders.  It could be a great train.  More people know what Carnival Cruise is than know who is buried in Grant's tomb.  There are more people know where Grant sleeps than people who  know the SWC exists. I met 2 couples and 4 singles in the DINER who bungled on to the SWC for reasons none of which had to do with marketing or word of mouth. To a person they liked the experience. 

What you need to understand is how Branson's Virgin Group works. Except for a small number of legacy investments (think Virgin Atlantic for instance, although Virgin Group stake will be down to 20% following approval of the joint venture investment by Air France and KLM in cooperation wtih Delta), Virgin Group is a branding organization. They find business that they want to make a small tactical investment in (such as Brightline), and then as part of the investment the Virgin brand is included. However, to use the Virgin brand very hefty licensing and branding fees are imposed on the invested company. Brand standards (which are all very expensive relative to others) are imposed (think physical appearance, not so much the customer experience).

So, this all sounds sexy and exciting, but in reality it's nothing more than a branding play on the part of Brightline (and a way to grab some incremental short term cash).

andersonb109 Wrote:
-------------------------------------------------------
> although the East Coast
> Mainline trains are still lettered LNER they are
> operated by Virgin. Would Branson have taken on
> that franchise if it wasn't profitable?
 
That's rubbish, Virgin and Stagecoach walked away from the East Coast franchise after betting the farm and losing. LNER is a wholly owned subsidiary of the Department for Transport, created to take over from the Stagecoach / Virgin operation.



Edited 1 time(s). Last edit at 11/21/18 07:06 by 86235.

andersonb109 Wrote:
-------------------------------------------------------
> Does Virgin Rail in the U.K. make a profit? I
> noted on my last trip, although the East Coast
> Mainline trains are still lettered LNER they are
> operated by Virgin. Would Branson have taken on
> that franchise if it wasn't profitable? 

As already noted above, you have it backwards: the LNER lettering is new and any mention of Virgin (such as the embroidered headrests, some of the service trolleys, and some labels inside the trains) is a holdover from the brief tenure of Virgin West Coast, which as a Stagecoach (90%)/Virgin (10%) joint venture that failed. LNER is -- much like Directly Operated Railways, which took over East Coast after National Express failed, but despite broad success was replaced by Virgin -- a wholly-owned subsidiary of the Department for Transport.

And as noted in the other thread on this topic, Virgin has announced that they do not intend to rebid on East Coast either. So "Virgin Trains" in the UK is rapidly swirling the drain...