Volume II Number 20 – This Was The Week That Was – An Amtrak Saga

March 13, 2002

The Ides of March are upon us in just another two days. What is likely to happen?

1. It has been a full week after the revelation by Associated Press Washington Correspondent Laurence Arnold that Amtrak President and CEO George Warrington was leaving the beleaguered passenger railroad to go to New Jersey Transit for a new job, and still no clues or announcements as to who the interim Amtrak leader will be for the next few months.

   Here’s a thought: If it was going to be a senior executive from inside of the company, mostly like the choice would be announced by now. There is a possibility that some of the Executive Vice Presidents will bail out, too. Some lines of thinking say that the better of the EVPs know their limitations (read that to mean they won’t touch the top job with a 10 foot pole considering the extremely deteriorated state the company is in right now), and want to stay and shine where they are today.

   So, who’s next? Looks like the possibility of a career government bureaucrat or politico looking for a spot to land for a while. The interim president of Amtrak is going to have huge headaches about money issues, union issues, host railroad issues, and issues about every other topic.

   By the way, don’t forget that some union contracts that have not been renewed for more than two years are still open and awaiting negotiation. But, how do you negotiate with a dying man? Looks like the union folks are going to have to wait a while longer before anything new comes their way.

2. New Amtrak Chairman of the Board John Robert Smith, third term mayor of Meridian, Mississippi has flexed some board muscle.

   One early way he did that was the addition of a local Mississippi brand of cheesecake to the Crescent menu early in his board tenure. The cheesecake has been well received by the Crescent’s onboard staff and passengers.

   Now that the mayor is calling the shots system wide, he has arranged for this same cheesecake to be served on all Amtrak long distance trains.

   Another way the mayor flexed some muscle was through the creation of the Crescent Promotional Office, which was headquartered in Meridian, and contracted to be operated by the mayor’s former personal political consultants and advertising agency.

   While, like the cheesecake, this operation was a great success and has helped the Crescent’s financial performance tremendously, this was a choice that the Amtrak marketing department had little or no say so about whatsoever. The arrangement was terminated about a year ago due to the closure of the advertising agency which operated the office.

3. More and more Washington politicians are stepping up to the microphone and letting their opinions about Amtrak be known.

   Perhaps the most colorful comment came from Alabama Senator Richard Shelby, a high seniority Republican who has had both hot and cold opinions about Amtrak through the past few years.

   The Senator’s statement (among others) in his press release: “Amtrak costs the American taxpayers roughly $100,000 a minute and those costs are only going up as we discover how bad Amtrak’s finances really are.”

   My, goodness! $100,000 a minute? Could this be yet another example of Washington hyperbole? You do the math.

4. The other interesting statement came from Senator Patty Murray of Washington State. She is the chair of the Senate Transportation appropriations Subcommittee. Senator Murray says she wants Amtrak to succeed, but the company must use real financial analysis.

   “Myth: The Northeast Corridor is ‘profitable.’ Fact: it is not. There are NO profitable Amtrak routes. … Amtrak is not on the track to self-sufficiency … Last week, Amtrak testified before the House Appropriations subcommittee that so-called profitable routes were subsidizing other train routes. Well, how can Amtrak make that claim if there are no profitable routes? The answer is that Amtrak ignores the accounting rules that every other company in the United States must live under. … Amtrak owns the Northeast Corridor. The vast majority of federal capital dollars that the railroad has received has gone into the Northeast Corridor. Even so, this corridor is in desperate need of between $3 billion and $5 billion just to maintain the current level of service. Over the next decade, it may require as much as $20 billion. As a member of the Budget Committee and Chairman of this Subcommittee, I don’t see where that kind of money is going to come from. And, if we are not going to make that kind of investment, it is not credible to represent that Amtrak’s Northeast Corridor trains are somehow viable over the long term while other trains are not. “… Amtrak appears to be taking a bunch of trains hostage and telling a majority of Senators — you either boost our funding by 130 percent or we kill your rail service. There is an implicit message that surrounds Amtrak’s budget request. That message is, if we only get a 92 percent funding increase to the level of $1 billion, the states that currently enjoy the best rail service and put up none of their own money will continue to enjoy that service while the rest of the country will have to do without. As Chair of this subcommittee, I intend to have some say in how Amtrak gets funded next year, and I don’t intend to play by those rules. … I don’t intend to subsidize just a regional rial system that protects the status quo or certain states that have put up none of their own funding but throws most of the other states out of the national rail network.” [End Quote]

5. Deputy Transportation Secretary Michael Jackson (who frequently subs for Secretary Norman Mineta at Amtrak board meetings) told Congress last week that big change was necessary for long term success and that it would cost $2.5 to $3 billion annually to fund train service between U.S. cities.

   Deputy Secretary Jackson, according to Reuters news reports, said that the Bush administration was open to spending more than the $521 million budgeted for Amtrak next year, and he also said that possibly states and private industry should kick in for some money, too.

6. One more figure to keep in mind through all of this: Amtrak pays about $300 million a year just in debt service. Most of that debt has been accumulated over the past five years.
7. One Last Set of Figures Department: Andrew Selden put his calculator to work this week and came up with these figures:

   Amtrak said the Northeast Corridor would need $843 million in federal subsidies next year to keep the company running, plus another $200 million in federal monies for the national system.

   The FY 2000 Amtrak annual report says the NEC carried 12.9 million passengers a total of 1,860 million miles, and the national system carried 9.6 million passengers a total of 3,636 million miles.

   Mr. Selden says his calculator indicated that the federal cost per passenger in the NEC, based on the above numbers is $65.35, or 45.3 cents a passenger mile, while the federal cost per passenger in the rest of the country is $20.83, or .0549 cents a passenger mile.

   This begs the question: why would the national system be sacrificed by Amtrak to keep the NEC running at what virtually seems any cost? Has anyone taken a look at reality lately?

8. Don’t Mess With Texas Department: The Houston Chronicle reported yesterday, March 12th, that Amtrak passengers Amos and Ruth Weaver refused to knuckle under to Amtrak’s skeleton station staffing plans.

   The couple is taking a two week trip across the United States, and had stopped in Houston as part of their itinerary. The Weavers, of Pennsylvania, turned their rental car in early and decided to spend their last few hours in Houston waiting in the Amtrak station for the Sunset Limited to arrive.

   When 6 P.M., the station’s new closing hour arrived, the remaining station agent tried to force Mr. and Mrs. Weaver to leave, and wait outside of a locked waiting room for the Sunset to arrive about three hours later.

   The Houston station is located on the edge of that city’s downtown in a mostly industrial area. There are no nearby restaurants or other havens.

   Amtrak said 41 people were ticked to board and about 20 passengers were scheduled to got off the westbound Sunset that day when Mr. Weaver, 70, and his wife refused to leave the safety of the station waiting room.

   Amtrak caved, and called in a recently laid off employee to cover the now-abandoned night shift.

   Mr. and Mrs. Weaver waited in the safety and comfort of the station.

   The good news is that Amtrak took immediate action. The bad news is that this ever happened in the first place.

That’s it for today. Stay tuned. Friday is close at hand.