KINGMAN - Burlington Northern and Santa Fe Railway Company has provided rail-operating services to customers of the Kingman Airport & Industrial Park for more than 30 years.
That changed this week when the Florida-based Patriot Rail Corporation and the Kingman Airport Authority announced that Patriot's newly-formed rail subsidiary, Kingman Terminal Railroad, was awarded a long-term license agreement to provide rail operating services to the park's customers.
Over the 30 years with BNSF, the Airport Authority inherited maintenance costs associated with the rail, which allows cargo to be transported from BNSF's mainline - via 5-miles worth of Airport Authority-owned railroad - to about 20 percent of the park's customers. The Airport Authority budgets for those inherited maintenance costs to the tune of $50,000 a year, said Airport Authority Director of Economic Development Bob Riley.
Now, there are some years where maintenance doesn't touch the $50,000 while in others it exceeds the budgeted amount, Riley said. For instance, if there is a derailment - such as one wheel coming of the tracks - most of that budgeted amount is going to be used to put the train back on the rail, he added.
Under this new agreement, it is Patriot that is responsible for the maintenance, saving the Airport Authority a good chunk of change.
"It's a good thing," Riley said. "We're pretty excited."
Riley explained that BNSF's service has always been outstanding. The change comes about because the Airport Authority wants to improve its position, he added.
This wasn't an arbitrary decision. In fact, the process to get to this point took two years, Riley said. The Airport Authority put the service out for bid and 12-14 organizations were represented at the preliminary bid. When it came down to it, though, the Authority received two official bids.
Patriot's service is good enough that there will be a seamless transition for the Park's customers utilizing the rail service, Riley said.
One thing about this agreement is that it sets nothing in stone, Riley explained. Patriot still needs to work out a deal with BNSF for access to the switch line. It works like this: Cargo comes in on the mainline and is put on the switch line, which is then used to direct cargo to the correct spot using the 5-miles of Airport Authority-owned railroad.
Patriot also needs to get approval as a common carrier through the Surface Transportation Board. Once that is worked out, Patriot is basically allowed to conduct business and bill for its services.
"It's up to Patriot to finish the other agreements," Riley said. "I expect them to get it done within 60-90 days."
The agreement between the Airport Authority and Patriot will allow - once the other matters of business are dealt with - the Kingman Terminal Railroad to operate the system, maintain the tracks and serve rail customers within the park for the next 20 plus years.
"We are pleased to announce our new relationship with Patriot's Kingman Terminal Railroad," said David French, the executive director of the Airport Authority, in a release. "Patriot was chosen unanimously by the selection committee for the rail operation, primarily due to its ability to increase carloads and grow the rail business. This is attractive to both the park and the city of Kingman, as the local economy (will be) invigorated and new jobs should be created."
Riley said he expects Patriot to be aggressive in its recruitment of additional rail users.
"But don't expect huge changes over night," Riley said, adding that it's a process.
President and CEO of Patriot, Gary Marino, said in a release that the company plans to serve existing customers well and add a number of new customers, too.
"Through the cooperative marketing efforts of Patriot and business development activities of (the) Kingman Airport Authority, we expect to significantly increase commercial activity in the Kingman region," Marino said.