Version XXIX - This Was The Week That Was - An Amtrak Saga

November 23, 2001

It’s the middle of the longest holiday weekend of the year and Amtrak is still running up and down various railroads. A good sign.

1. Initial consumer reports from the Northeast indicate that Amtrak’s new policy this holiday season of having all-reserved trains operating between Washington, New York and Boston seems to be a success.

   It’s not hard to figure out that passengers paying to ride expect a couple of basics, such as a seat where they can sit down and ride, uncluttered aisles so they can go to and from their seat, and trains not so full of people that they resemble a local mail train in a third world country.

   Airlines require advance reservations, as do bus lines and cruise lines. The only common carrier mode not requiring advance reservations are transit systems and some ferry operations that don’t stray too far from land.

   This is something that isn’t broken, so it doesn’t need fixing. Happy passengers are good passenger, who come back and spend money, again.

2. Amtrak’s chronic problems with its creditor vendors may be creeping up the ladder to the financial institution cash machines that have been keeping Amtrak alive.

   As many know, it takes a lot of guts to have Amtrak for a client. Vendors have to have all types of special insurance to be working on the property, plus Amtrak contracts are heavily weighted in Amtrak’s favor (not a bad thing if you’re Amtrak). On top of that, much decision making at Amtrak is done either by committee or by a process of having to go up an authority chain. Decisions sometimes take weeks and months to be made.

   Then there is the issue of getting paid. Under the very best of circumstances, you get paid in 30 days. Normal circumstances often stretch it out to 45 to 60 days. It’s not unknown to routinely take up to 90 days to get paid. If you’re a new vendor, seldom will you receive a check in less than 60 days. It’s a tough test of your mettle, having a huge new client that doesn’t pay, but keeps saying the check is in the mail.

   So, what appears to be happening now is the large banks that have extended credit to Amtrak are getting nervous about all of those loans they previously thought were government backed loans.

   Oops, turns out that’s not true. Amtrak’s debt is NOT guaranteed by the government of the United States of America. Amtrak’s debt is only guaranteed by Amtrak unless some specific type of arrangement has been made.

   Now that the ARC has pulled Amtrak’s plug, some of the credit watch agencies have either downgraded or are considering downgrading Amtrak’s ability to service its credit needs.

   In other words, the credit agencies are warning that if you loan money to Amtrak, you may not get it back.

   If you’ve been wondering why so much of Amtrak’s debt is to banks in Europe and elsewhere outside of the United States, this may answer your question. To foreigners, any type of what is perceived to by an agency of the federal government must be good debt. One can only hope they have done their homework before they proffered contracts.

   Just as we expect reliability out of our friends, family, and those we do business with, so does Amtrak’s vendors. Of course, at this point, that would be a new concept. More than once an Amtrak locomotive has waited in vain in a small town for a fuel vendor that was a no show because of past due invoices. The fuel vendor could no longer afford to finance Amtrak. The same has very often been true of consultants and many others.

3. We’re all familiar with Benjamin Disraeli and his famous quote, “There are lies, damned lies, and statistics.”

   A respected Central Florida rail historian has developed a theory about where the myths about only corridors can be profitable originated.

   He did some digging and came up with the same source as someone else has about the myth that rail passengers won’t change trains at hub points - The New York Central Railroad, during Alfred Perlman’s stewardship as head of the railroad.

   For decades, many have cited “studies” that have conclusively shown that railroad passengers won’t change trains willingly to get to a destination. They will find other sources of transportation rather than change trains. It turns out this is the result of a 1950s study done for the NYC that Mr. Perlman commissioned to prove some sort of parochial point at the time. Ever since then, passenger railroad managers have been waving this bloody shirt to prove one point or another.

   Now, it seems Mr. Perlman, who was brought into power by Robert Young after he left the C&O and went to the NYC, had another study commissioned that studied the travel habits of Americans and the operation of trains. The study “conclusively” said that only trains running on short distance corridors (as opposed to overnight intercity Pullman trains) really made money, that the other trains were too expensive to operate.

   Again, this myth has taken on a life of its own, and we have seen this canard used time and again by the current Amtrak senior management to try and set national policy against a balanced and realistic national system of corridors and long distance trains.

   Disraeli said it first, and Amtrak senior management took him to heart. Drag out and dust off an old study and make it say anything you want. Just make it do what you want it to do.

   Then, they took another famous phrase from the railroad lexicon and REALLY used it as a policy for eliminating long distance trains: “The public be damned.”

   The sooner the current Amtrak senior management vacates its offices and new leadership can be brought in, the better. These people who have continuously failed Amtrak and the traveling public are not necessary to complete the Congressional mandate of creating a liquidation plan for Amtrak to submit to Congress. Any bureaucrat can do that with sound management and accounting principles.

   The important thing is, to as quickly as possible, get someone in to run the company that is as offended by “The public be damned” as the rest of us are here at the end of 2001.

4. United Rail Passenger Alliance has posted on its Internet Web Site an update of the Selden Plan for the future of passenger rail travel in the United States. Along with that document is an accompanying document which offers some detailed samples of what a Selden administration would do at Amtrak during the first 180 days of stewardship, including placing a new order for at least 1,500 new passenger cars and locomotives to haul them.

   The plans can be seen at www.trainweb.com/urpa

Here’s hoping for 2002 to be a good year for Amtrak, Jr. and the traveling public.