Management & Operations

Is Amtrak Riding Off Into the Sunset?

Posted on April 1, 2005 by Joey Campbell, Managing Editor

The National Passenger Railroad Corp., or Amtrak, as it’s known, has entered a crucial period of its existence. Created by the Rail Passenger Service Act of 1970, Amtrak has always represented a somewhat minor transportation contingent compared with the powerful highway and aviation lobbies. During the past 35 years, this organization, once lauded as an innovative, irreplaceable piece of the nation’s travel infrastructure, has been in constant battle with critics and naysayers, all the while struggling with its own operational and financial challenges. According to Ross Capon, the executive director of the National Association of Rail Passengers (NARP), to understand Amtrak, one must understand that its history is defined by conflict. “A good portion of Amtrak’s existence has been spent not on running the railroad but fighting the Office of Budget Management and various presidential administrations,” he says. Now more than ever, Amtrak’s problems, which have traditionally ranged from funding shortages and worker productivity issues to substandard ridership on various routes, have reached life-or-death proportions. The Bush Administration, led by Transportation Secretary Norman Mineta, has embarked upon a campaign to implement radical changes to Amtrak, including, if necessary, a dissolution of the rail network. What’s the commotion about?
With no money for Amtrak allocated in February’s FY 2006 federal budget proposal, fears of an impending bankruptcy have been ignited. But the Bush plan is still hazy, as public statements have been made to address only portions of the policy, while stopping short of a comprehensive strategy. In essence, the administration seems content to temporarily continue federal funding of the Northeast Corridor (NEC) — a 456-mile stretch from Washington, D.C., to Boston — to the tune of $360 million next year. The indication is that these routes would gradually be opened up to competition by allowing private transportation companies to bid on management contracts from a consortium of state and local agencies. Routes throughout the rest of the nation would be handed over to the states, which could access additional funding through a federal 50-50 match program. Mineta sums up the plan in short: “We’re trying to build a planning and funding model for intercity rail service that we already use in the transit world.” His statements offer only a rough sketch, but they bring to the surface dozens of questions. Even Mineta himself has admitted that he is not surprised that people are reacting with “confusion and apprehension” over the president’s proposal. Chief among concerns is that the Bush proposal is really just a thinly veiled attempt to kill Amtrak and trim its costs from the federal budget. “I don’t think that the bureaucracy at the U.S. Department of Transportation has ever believed in passenger rail and now that there is enough blood on the floor, they think they can finish it off and save some money,” says Capon. “Basically, it is a massive federal dump of costs onto the states, and one that they are not going to be able to take.” Though Mineta has gone on record to deny it, critics say the Bush proposal creates a worst-case scenario that would inexorably lead to a collapse of the entire network. According to Carl Fowler, vice president of the Rail Travel Center, a Vermont-based rail tour operator, there is little chance that states could find the funding to sustain even a skeletal rail system. “It’s the federal government’s responsibility to handle issues that cross state lines,” he says. Without a federal operating subsidy, it would be up to the states “to agree on formulas to split costs and appropriate money that they don’t have.” Also, coupled with widespread cutbacks to intercity bus services, namely by Greyhound, some observers have argued that an Amtrak reduction or break up would severely limit mobility options for the nation as a whole. In the extreme, the Bush plan has been described as coercing American citizens to spend all their travel money on highways and planes. An impetus for change
Various reasons, not the least of which are political, explain why Amtrak reform has become a major issue (once again). Though the initial plan was to establish a self-supporting system, Amtrak detractors cite that the rail system has received nearly $30 billion in federal subsidies, which have grown annually, with its most recent $1.8 billion request the largest-ever subsidy demand. Despite carrying more than 25 million passengers in 2004, an all-time high, there are countless underused, inefficient routes. Critics have pointed out that it would cost the federal government less to buy airline tickets for every passenger than it does to subsidize train rides. “Amtrak is losing so much money it is incredible,” says Joe Vranich, a former Amtrak spokesperson and author of End of the Line: The Failure of Amtrak Reform. “What I think the Bush Administration is trying to do is cause a major restructuring so that we can get rid of the train lines that are truly hopeless and resuscitate the ones that we really need.” The shorter distance routes, such as New York to Washington and Los Angeles to San Diego, are the most vital, he says. (For a review of Vranich’s book, see pg. 11). Looking at the numbers, it’s difficult to say exactly what the truth is regarding Amtrak’s effectiveness in its current model. Both encouraging and disheartening statistics are available. In one foreboding example, the Bureau of Transportation Statistics (BTS) last December published a study on the average federal subsidy per thousand passenger miles for rail, highways, aviation and urban transit. The BTS gathered data on all federal subsidies between 1990 and 2002, subtracted user fee revenues, then divided by the number of passenger miles. Amtrak yielded a cost of $186.35 per thousand passenger miles, compared with $118.26 for urban transit and $6 for airlines. Highway users actually paid the federal government $1.91 for every thousand miles. For more on this report, go to programs and click on “Federal Subsidies to Passenger Transportation.” Proponents of Amtrak change also claim that a high safety and security risk exists on portions of tracks and rail infrastructure, particularly in New York and along the NEC, because much-needed funds are used on the operation of empty trains on little-used corridors. “The Amtrak-owned rail tunnels in Manhattan are a terrorist disaster waiting to happen,” Vranich says. Amtrak’s support movement
The news isn’t completely bleak for Amtrak’s future, however. If nothing else, the federal government continues to claim that its ultimate goal is salvation, not destruction, of intercity passenger rail. Says Steve Kulm, spokesperson for the Federal Railroad Administration, “Amtrak supporters need to look beyond the face of zero funding — the key point here is reform.” Amtrak will kill itself if it continues to operate in its current state, he says. Additionally, through Amtrak’s years of ups and downs, one of its strongest allies has been Congress. In late February, a bipartisan group of 35 senators signed a pro-Amtrak letter, expressing concern that the president’s proposal could “leave millions of riders and thousands of communities without access to essential and convenient transportation.” At press time, more Senate signatures were expected on the letter, which also recommends at least $1.5 billion for Amtrak in FY 2006. Amtrak also holds powerful advocates in the transit industry and with rail and travel associations. One of the most popular defenses for the system is that efficiency has increased in the past three years, allowing Amtrak to avoid taking on any new debt since 2002. When contacted, an Amtrak spokesperson stated that the rail network was declining comment on all funding and reform issues. Yet, what remains clear is that Amtrak President David Gunn and other company officials feel strongly that bankrupting or taking apart the rail system would have disastrous consequences. How will it all play out?
In a positive turn of events, Amtrak Chairman David Laney recently noted that the board objects to significant parts of the Bush/Mineta plan, most notably the prospects of a complicated, bureaucratic reorganization of the rail system. One of the most contentious reorganization issues is the track-train ownership dilemma. Currently, Amtrak owns and operates trains primarily on its own tracks or on tracks owned by freighters. Turning track operator rights over to state transportation departments, public transit agencies or private companies could create a logistical nightmare when it comes to coordination of service, maintenance and track sharing. An Amtrak authority transfer could also result in the loss of the benefits of centralized control, such as cheaper insurance rates and package deals on station rights. Unfortunately, board members, all of whom are Bush Administration appointees, have not come up with an alternative solution for Amtrak and are months behind schedule in submitting a response to the federal budget proposal. Even Amtrak’s staunchest defenders recognize that the railroad needs attention in key areas, including infrastructure repair, security and employee issues. In the unlikely event that Amtrak receives its entire $1.8 billion request for next year, most of these needs would still not be addressed. Thus, it is increasingly clear that major changes are on the horizon. “What we’ve got now is begging annually for just enough to survive,” Laney told the New York Times. “That is not the way to run a business, certainly not the way to run a railroad.” Engaged in an extensive information campaign to spread the word about Amtrak and to dispel what executive director Capon calls “Norm Mineta’s misinformation machine,” even the NARP acknowledges the dire state of affairs. “We had six consecutive zero budget requests from FY ’86 to FY ’91, but I don’t ever remember a secretary of transportation being so engaged in the issue,” Capon says. “I would have to say that presiding over the disappearance of the railroad is a possibility.”

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