This Week At Amtrak 2007-02-18
Volume 4 Number 6 — February 18, 2007
- Thanks to all those who enquired about the missing editions of TWA these last two weeks. Due to a pressing need to complete some large projects, it was not possible to produce TWA and meet other deadlines. We hope this has not caused any inconvenience.
- According to the National Association of Railroad Passengers and other groups and some media, the sky is yet again falling, and the Earth continues to rush up to meet it.Yes, it’s that time of year when the reigning administration submits an annual budget to Congress, and, of course, there is never enough money suggested to please those who think government money grows on trees.The Bush administration has suggested a small budget for Amtrak for Fiscal Year 2008 of $900 million. Horrors. Just $100 million shy of a billion dollars in free federal monies, and the fatalists think all of the nation’s passenger trains will grind to a screeching halt any minute, now.When cooler heads look at the budget picture, we know a couple of things to be true, versus the dogmatic rhetoric that comes from all of the usual suspects.
While $900 million is less than previously allotted by Congress in the final budget figures (the only ones that really matter, by the way), Amtrak usually gets $1.2 billion or more each year, lately. For FY 2006 and FY 2007, Amtrak got $1.3 billion each year.
Keep in mind all national operations and NEC operations together, plus continuous upgrades to the Northeast Corridor can be accomplished with this small budget request. So, even if this budget suggestion was ultimately turned into law, Amtrak would not be shut down, nor would passenger trains operations be curtailed.
Now, let’s look at the crux of the problem of budgeting free federal monies for Amtrak every year. Here is what the United States Department of Transportation said regarding the FY 2008 Amtrak budget request. [Begin quote}
Focusing Amtrak's Spending Priorities
The Administration believes that scarce taxpayer dollars must be spent wisely, including the funds provided to Amtrak. Led by its Board of Directors, Amtrak made some progress in 2006 to strengthen its finances by increasing revenues and controlling costs. While Amtrak's recent performance is encouraging, it continues to under perform overall. Amtrak's system-wide on-time performance again dropped in 2006 to 68 percent, and it required $490 million in operating subsidies, mostly for its money-losing long distance trains. When last measured for 2002, the net Federal subsidy per thousand passenger miles traveled was $199.90 for rail, $5.87 for commercial aviation, and -$.95 for highway users according to the Bureau of Transportation Statistics. While Amtrak carried 24 million passengers in 2006, domestic air carriers that year flew 656 million passengers.
Historically, Amtrak has been hampered by a lack of accountability, poor design, and mismanagement. The latest critical review of Amtrak comes from the Government Accountability Office, which concluded, among several findings, that Amtrak's long-distance trains "show limited public benefits for dollars expended," and that "these routes account for 15 percent of riders but 80 percent of financial losses." To turn the enterprise around, the Administration has urged basic reforms that would empower local communities and ultimately customers to determine the most efficient way to run trains. The Administration expects the Board's newly-installed management to make significant changes required to enable the company to succeed without Federal operating subsidies. The Department plans to administer Amtrak's subsidy with this goal in mind.
The 2008 Budget proposes a subsidy that would require that Amtrak make hard choices about its services and commit to running the railroad more like a business. The request is part of a multi-year program to reduce and then eliminate Amtrak's reliance on Federal operating assistance as required by the Amtrak Reform and Accountability Act of 1997 (49 USC 24101). For 2008, the Budget recommends $900 million for intercity passenger rail, but only $800 million for Amtrak directly. This amount includes $300 million for operating costs, compared to the $490 million Amtrak received in 2006, beginning the phasing out of operating subsidies. The Budget continues to fund Amtrak's infrastructure needs with a capital request of $500 million, which is equal to the 2006 enacted level. This level should underwrite Amtrak's ongoing efforts to rehabilitate the Northeast Corridor between Washington, D.C. and Boston, which is by far its most heavily used and important route. In addition, the President's Budget requests $100 million for capital matching grants to States for intercity passenger rail projects. This new program would give local communities resources to direct investment in facilities that reflect their top rail transportation priorities. The Administration believes the Federal Government should help States fund capital projects where there is strong demand for rail service, and help foster managed competition among rail operators to encourage innovation and cost control.
Look at some of the same, often useless and incorrect phrases used in the budget request: "mostly for its money-losing long distance trains. When last measured for 2002, the net Federal subsidy per thousand passenger miles traveled was $199.90 for rail, $5.87 for commercial aviation, and -$.95 for highway users according to the Bureau of Transportation Statistics ... latest critical review of Amtrak comes from the Government Accountability Office, which concluded, among several findings, that Amtrak's long-distance trains 'show limited public benefits for dollars expended,' and that 'these routes account for 15 percent of riders but 80 percent of financial losses.' ... should underwrite Amtrak's ongoing efforts to rehabilitate the Northeast Corridor between Washington, D.C. and Boston, which is by far its most heavily used and important route ..."
We know the long distance trains are not money losers, too many studies have shown that above the rail, the long distance trains at the minimum break even, and most even throw off extra cash to fund other parts of the company and operations.
The most incredible statement comes abstractly from the Government Accountability Office, saying Amtrak's long distance trains show limited public benefit for dollars spent and that routes account of 15% of riders, but 80 percent of financial losses. To Amtrak's credit, in the original GAO report (GAO-07-15) of November 13, 2006, the company responded by reminding the GAO that actually, the long distance trains account for 47% of passenger miles generated system-wide.
The last incredible statement is that the NEC is by far Amtrak's most heavily used and important route. While it may carry the most passenger bodies, it does not generate the most passenger miles, and the importance of the NEC would be debatable to anyone living outside of the NEC area served, particularly if you live in one of the rural areas of America where Amtrak is the only common carrier available for use.
What this boils down to is that the Bush administration is operating from flawed data, simply because that is what it has been fed to use. We know the GAO report is deeply flawed, because it has used bad data supplied by ... Amtrak. We know Amtrak's data is flawed, because its books are still a financial quagmire that is taking months to just begin to untangle. Also, in the past, Amtrak has always incorrectly highlighted the importance of the NEC and its version of high speed rail at the expense of the rest of the national system. Looking at Amtrak past marketing and public relations exercises shows a distinct disdain for anything other than the NEC, and these defective efforts are coming back to haunt Amtrak as it tries to look at itself seriously as a national common carrier. Most importantly, Amtrak itself has continuously, mostly for the benefit of the NEC, used passenger body counts instead of the transportation industry gold standard of revenue passenger miles to measure success. By sheer body counts, the long distance trains do carry less passengers, which is a meaningless statistic. By revenue passenger miles, the long distance trains generate 47% of the system wide passenger miles, a huge amount.
In summary, what we are seeing every year from the White House is a budget decision based on flawed data, that ultimately was generated by Amtrak. Until Amtrak can convince budget decision makers about the real numbers and needs, bad budget requests will continue to flow into the national debate.
The oddest, and funniest news story to come so far from this year's budget discussions? New Mexico Business Weekly, on Tuesday, February 6, 2007 ran a headline saying, "Proposed Bush budget would banish NM's Amtrak service." The story went on to say, in a declaratory fashion with no attribution, "The president's 2008 budget proposal would cut Amtrak's funding from $1.3 billion to $900 million and eliminate the Southwest Chief and Sunset Limited passenger lines."
You can't make this stuff up. Where does such nonsense come from, in what is supposed to be a respected business publication?
- In good news, Amtrak seems to be putting together a new advertising push. The bad news is that the advertising seems to be just for Acela trains on the NEC, and not the whole system.On February 9th, Adweek, a well-respected industry magazine of the advertising and marketing biz, reported that Amtrak is making a multimedia push for the winter and spring travel season. The campaign is based on research that shows travelers are taking less vacation time and are therefore more concerned with the comfort and quality of their leisure-time activities.Adweek says the campaign seems to mostly be aimed towards NEC Acela trains. There is no mention of the much more important national system trains which generate greater amounts of revenue passenger miles and cash for the system.Here's the distressing part: Amtrak spent slightly less than $20 million on ads last year, down 66 percent from the previous year. Why such a drop? Was this due to the Acela trains being out of commission last year, so Amtrak didn't think it was important to advertise the rest of the system?
In terms of advertising spending, $20 million, for a company the size of Amtrak, is, at best, trivial spending for something like advertising.
Now, here's an interesting twist to the whole advertising scenario.
On February 7th, Amtrak announced it has contracted with a multi-cultural marketing communications firm to launch a multi-cultural advertising campaign for both Acela trains and the long distance system. The firm, based in Atlanta, Georgia, will help Amtrak develop promotions, special events, and public relations. These are all things Amtrak desperately needs, and undoubtedly will help Amtrak gain new riders.
A "Welcome On Board" ad will encourage audiences to consider Amtrak long distance trains when planning trips, especially family vacations. An Acela campaign will target business travelers.
Hey, this sounds great. Promoting the long distance system, getting some good public relations going, and special events.
But, the ads will only target multi-cultural audiences via print, online and radio advertising in New York City, Chicago, Los Angeles, Washington, and Miami. Both campaigns will be aired only through African American and Hispanic media outlets.
What about the rest of us? Is Amtrak saying that no one other than minorities ride long distance trains? What about the other thousands of media markets outside of the major centers listed above? Don't people in the other 40+ states want to ride passenger trains, too? Or, will they just have to figure out things the best way they can and discover Amtrak on their own?
These two campaigns are a bare minimum start, but nothing more than that.
- In the last issue of TWA, we read about a meeting held in Illinois regarding expansion of Amtrak service in that state. The following quote appeared:
Oops! What? Did the Quad-City Times reporter correctly quote Mr. Lang, a long time Amtrak public affairs veteran and experienced spokesman, saying "Amtrak is not looking at long-distance rail service. The company's future is servicing corridors 300 to 500 miles."?
Putting two and two together, and hoping it doesn't add up to five, we have last week's offering from Mr. Kummant in the Associated Press article which was printed across the land that long distance train ridership was expected to be flat, and reiterating the belief in state sponsored corridors of 300 to 500 miles in length.
This has a happy ending. Ray Lang was apparently misquoted, as often happens in the press. A sharp-eyed TWA reader, Eliot A. Keller of Iowa City, Iowa sent the following e-mail to TWA:
"He was misquoted.
"I was there in Rock Island.
"He said the biggest growth in ridership was expected in the future on trains serving those routes." [Meaning corridors, and not long distance routes; that the company is still looking at long distance routes.]
That is a great improvement over what was reported in the Quad-City Times. Thank you, Mr. Keller for helping clarify that issue. That puts a much more positive spin on things.
- Two very different weather and train operation reports and statements were made February 13th and February 14th as harsh winter weather rolled across North America.Amtrak issued an internal System Operations Flash Report on February 14th, warning of the coming weather, and made plans to cancel or terminate early 50 trains in the Midwest and Northeast.VIA Rail Canada, on the other hand, on February 13th, warming to the conditions of the same storm, issued this public announcement:
VIA Rail Canada is preparing for major winter storm
Montreal – In light of the major storm that is expected to hit Central Canada and the Maritimes over the next couple of days, VIA would like to remind its passengers that is has taken all the necessary steps to offer safe and reliable travel to those using its intercity and longer distance trains in Ontario, Quebec and the Maritimes. While heavy snow and severe weather can shut down highways and airports, trains are typically not affected to the same degree.
As weather predictions worsen, VIA normally faces increased demand. VIA will add cars to accommodate the demand but urges customers to call ahead to be certain of available space. To book, customers can call 1-888-VIA Rail, (842-7245), TTY 1-800 268-9503 (hearing impaired). Tickets are also available at kiosks in major Corridor stations, online at http://www.viarail.ca, or through travel agents.
VIA offers a stress-free, safe and comfortable winter travel alternative. For a complete listing of train departures, station and on-board services as well as fare plans, visit VIA’s Web site at http://www.viarail.ca ( http://www.viarail.ca/en_index.html )
Our tough Canadian cousins seem to relish winter, not be afraid of it. Come on Amtrak, get with the plan.
