Commuter rail operator’s fine money diverted to hire staff

Keolis Commuter Services was criticized for its performance during the disastrous winter.Globe Staff/File 2015

Tuesday was meant to mark a new era for the Massachusetts Bay Transportation Authority, as the new board that is charged with bringing financial stability to the agency finally convened.

But at that first meeting, T officials announced a financial decision that left at least one legislator scratching his head. Though Keolis Commuter Services had been fined about $7.53 million in its first year for subpar service, the MBTA would allow Keolis to use the penalty money to hire more employees.

On Tuesday, Frank DePaola, the interim general manager of the agency, said the money could purchase additional steam-cleaning equipment and allow Keolis to hire new fare collectors and customer service employees.

The move drew criticism from state Senator Jamie Eldridge, an Acton Democrat, who said it was “almost a reward for continued poor service.”

But Leslie Aun, a spokeswoman for Keolis, said the money is being used to improve the customer experience, not fund services Keolis is already contractually obligated to provide.

DePaola also defended the move. “It’s not that we’re returning to them any fee or profit,” he said. “We’re having them hire additional staff and giving them the funds to cover the cost of these staff who will improve the customer experience.”

The most important part of that experience is trains that run on time, and DePaola said Tuesday that Keolis is addressing that and plans to provide passengers with new schedules on Nov. 1.

Extreme weather, management problems, and aging vehicles all contributed to the commuter rail company’s subpar service during its first year since taking over for the Massachusetts Bay Commuter Railroad Company in July. Customers suffered months of delays during rush hour after a series of snowstorms debilitated the region’s transit system.

DePaola provided the new fiscal control board with a review of Keolis Commuter Services’ first year, which showed that about 85 percent of trains arrived on time. That proportion dropped during peak travel: At rush hour, only about 78 percent of trains arrived on time.

Gerald Francis, the general manager of Keolis, said the company was hoping to build on its improvement in recent months.

“We are progressing, and we’ve got to continue that,” Francis said.

DePaola said some of the performance problems stemmed from aging vehicles, the absence of a chief mechanical officer, and insufficient staff.

Though DePaola called the overall delays “unacceptable,” he was generally optimistic about Keolis’s ability to improve.

He pointed out that the company’s performance was trending in the right direction, and the company had already hired a new chief mechanical officer and trained a class of new employees.

About 27 of 40 new locomotives are in service now, after months of delays.

DePaola also mentioned that MBCR’s 10-year average on-time rate was 88.5 percent, not significantly higher than Keolis’s rate in its first year.

The T has asked Keolis to sign a five-month improvement plan that includes a goal of an on-time rate of 92 percent. T officials said they were hoping the improved service could bring riders back to the commuter rail.

DePaola displayed one graph that showed about 2.6 million rides were taken on the commuter rail in May, compared to about 3 million in May 2014 (DePaola acknowledged such numbers should be taken with a grain of salt, since they were represented by conductor estimates).

The penalties that Keolis faced were part of a contractual stipulation for late trains, as well as other shortcomings in service, such as inadequate staffing and dirty trains. According to the T, the company received $297 million in its first year.

The amount Keolis was penalized — $7.53 million — is only a small portion of that. But the contract sets a monthly cap for how much the T can fine Keolis for service.

In the nine months starting last October, when Keolis was fined, it reached the cap of $868,850 six times. The second year of the contract raises the cap to $1.1 million a month.

Transportation Secretary Stephanie Pollack said that Keolis was not getting off easy just because it was being told to spend the penalty money on service.

“It’s still a penalty,” she said. “Keolis does not get that revenue and it affects Keolis’s bottom line, and hopefully it’s their incentive to get their performance better so that they are not fined.”

The five-member fiscal control board reports to Pollack, and will receive frequent updates on the performance of the T and Keolis.

The board was created as part of the state budget bill signed last week by Governor Charlie Baker, who has argued that it is necessary to fix the beleaguered transit system. The board, which also includes members of the state transportation board, will need to file a report to the Legislature within 60 days showing progress made in fixing the T’s structural deficit.