This Week At Amtrak 2007-02-22
Volume 4 Number 7 — February 22, 2007
- What is your world view of Amtrak? Do you consider it an essential public/social service? Do you consider it mostly a regional commuter service? Do you consider it a provider of long distance transportation as part of our national transportation matrix? Do you consider Amtrak a fascinating part of your hobby world that you hope the federal government will continue to fund endlessly for your enjoyment?People who are interesting in Amtrak make up disparate parts of the national population. While many are indifferent to the fate of Amtrak, others are passionate about its existence. Many who are passionate about Amtrak are also mostly ignorant about the realities of Amtrak, and what it takes to run a passenger railroad. >From the outside, an easy answer to almost all of Amtrak’s problems is to throw more money at the company. Just give it more money and everything will be fine. Well, no, that is probably the worst possible scenario for Amtrak because more money only enables bad corporate behavior and provide no incentive for improvement.On the money front, the current Amtrak board of directors and administration has quickly learned how to play the ongoing Washington game of requesting free federal monies, and getting most of what they want. It’s the Amtrak apologists and mostly politically naive “Amtrak at all costs, right or wrong” supporters who don’t seem to want to understand the process.During the past two federal budget cycles, we have seen Amtrak, with all due respect accorded to its money managers on Capitol Hill, create a budget request process that has been done professionally and with forethought. This year, the Bush administration requested $900 million for Amtrak through its annual budget process. Keep in mind the term “process.” A Republican administration has made a request of a Democrat congress. That means at best, the Republican request is a faint blueprint for what Congress will actually enact in final legislation.
Amtrak has made for FY 2008 a direct request to Congress of $1.53 billion, up from the FY 06 and FY 07 budget of $1.3 billion.
Now, here the comes the part most people don’t seem to want to grasp or understand, and which no one outside of the budget writers at Amtrak will every know the real answer to: How much of Amtrak’s budget request is “blue sky, best case scenario”? Anyone savvy in the ways of negotiation - and Amtrak’s annual Congressional free federal monies are always a product of negotiation - knows that you always start high, and settle for less than you requested. That’s simply the way the process works.
Most people would be hard pressed to name any federal agency which receives 100% of its requested annual budget. Some people in Congress are always likely to say, “Well, we can do X if we cut 1 or 2 % from everyone else’s budget.” That is simply the way things get done in a civilized society.
Those individuals and organizations like the National Association of Railroad Passengers who want to hold their collective breaths until they turn blue because in their view Amtrak isn’t getting every red cent it’s requesting simply aren’t living in the real world.
An amusing aside to the budget debate this year has been NARP’s public disappointment in the new Democrat controlled congress. Apparently, there has been too much wishful thinking that once “our people” were in control, all of Amtrak’s problems would be solved because Democrats would be much more sympathetic to every one of Amtrak’s needs. Whoops! The reality is, those who are in power and show some personal responsibility, do what is best for the commonweal, not always what is best for perceived favorites.
For those of us intimately familiar with politics, we know that once in power, everyone who joined our side to get us into power usually did so for a specific agenda, and then demand their agenda be followed. That’s just not possible. When you are an elected leader, you do what is right either from a moral or ethical basis (hopefully, both) and follow the law. If personal agendas interfere, then you were not the right person to be elected. While Amtrak supporters and apologists may think they are right, they are probably not taking a global vision of everything in the transportation field that must be considered in a budget process. An Amtrak apologist’s “emergency” is not an airline foamer’s “emergency.” It’s up to the budget writers on Capitol Hill to figure out the real emergencies and allocate monies accordingly.
- We continue to hear the same drivel that no passenger railroad system in the world can exist without public monies. Why is this considered a basis for Amtrak funding? We note in the latest Amtrak budget request to Congress the company has announced that despite an increase in operating expenses, it plans to hold the line on its request for an operating subsidy at the same as previous years, $485 million for the entire system. In other words, Amtrak is saying it would rather first help itself, either through internal savings, an improvement in the way it does business, or (gasp!) improved ridership and revenue, than simply ask the federal government for more money.Finally, we have arrived at Valhalla. Amtrak has said, “No, thank you, I can help myself.” This is a red letter year for Amtrak.Real businesspeople, looking at passenger rail from a real business standpoint instead of through the rose colored glasses and soft bigotry of lower expectations, know that passenger rail in a truly competitive environment can not only be self-sufficient in many areas, but it can be profitable, too, in the context of traditional passenger rail, such as long distance trains.Looking at Amtrak as it currently is shaped, the company will never be able to charge enough for tickets on corridor trains as demonstrated on the Northeast Corridor to fully support the cost of those trains and the infrastructure required to operate them. But, in a more mature long distance system, the numbers show those trains throwing off large amounts of excess cash (called “profits” in the real world, which by the way is not an obscene term), and those trains can be more than self-sufficient.
- How do you strike a balance between these two systems? In pre-Amtrak days, many of the private railroads, such as the Pennsylvania, Southern Pacific, Illinois Central, Milwaukee Road, Chicago Northwestern, and others operated commuter businesses in addition to fleets of long distance trains. Some digging through musty archives shows that the commuter operations, which we operated by government direction, the same as public utilities, rarely made money. It was the long distance fleets that covered many of the expenses of the commuter trains.In today’s Amworld, those economics have been nearly reversed. More emphasis has been placed on high cost, low revenue commuter operations as public utilities, and little interest has been paid to low cost, high revenue long distance trains. To make matters worse, anyone from those days of yesteryear that understood the true economics of pre-Amtrak passenger trains are either 25 years into retirement, living in a nursing home, or simply dead.Amtrak has become - as often happens when a private industry passes into public hands - a social tool rather than a fully functioning passenger railroad. Politicians and Amtrak apologists have succeeded in turning Amtrak away from its original mission of providing a robust, national passenger rail system into a series of competing-for-budget-dollars disparate corridors loosely linked by scarce long distance trains.
- We are seeing an emphasis by Amtrak on the development of 100 to 500 mile corridors, hopefully paid for by individual states which have an interest in these trains. To no one’s surprise, in Illinois, which has a whole host of new corridor trains this year, ridership has soared. We have no real reported figures on the success of these trains, because we only know ridership, which is just a count of warm bodies. We don’t know revenue passenger miles, which show real results. But, we do know that ridership has soared.Two other areas are looking at expanded service, both which will be important additions to Amtrak’s national system, but will most likely be supported by state monies. The first is reintroducing the Coast Daylight in California, between the San Francisco Bay area and Southern California. This is about a 500 mile run, and it will nicely connect all of the Southern California corridor services with all of the Northern California corridor services, creating a huge opportunity destination matrix for connecting passengers. Best of all, the train will mostly duplicate the route of the Coast Starlight, which should not only free up a lot of revenue space on the Starlight for passengers traveling outside of California on that high revenue train, but it will also spread out station and other infrastructure costs to two trains, instead of all costs being heaped on the Starlight.In other words, this will be a low cost train to implement, an extra frequency should drive up demand and create greater revenue passenger miles, and more space will be available on the Coast Starlight for passengers traveling long distances and connecting to other trains, which, in turn, will generate even more revenue. There is no downside to the creation of this train.The next good opportunity is coming from residents in Oklahoma and Kansas who want an extension of the state supported Heartland Flyer, which currently runs between Fort Worth, Texas and Oklahoma City. This spunky little train, which currently connects with the Texas Eagle in Forth Worth, has huge potential if it is expanded to its natural endpoints in Kansas City (or, better yet, Chicago) and San Antonio.
A renewed Heartland Flyer running San Antonio; Fort Worth; Oklahoma City; Newton, Kansas (picking up the current route of the Southwest Chief at that junction); Kansas City, or even on to Chicago would be another powerhouse train that would be cheap to operate, have a route over the friendly BNSF Railroad versus the difficult Union Pacific Railroad, and become an important passenger corridor.
Advantages include twice daily service between San Antonio and Fort Worth in a vibrant part of Texas, and twice daily service on the Southwest Chief route between Newton, Kansas and Kansas City. Again, you have the same advantages as found in California, with a sharing of costs between two trains instead of all costs heaped on one train, and the connection matrix possibilities go through the roof, providing huge new opportunities for passenger demand and revenue passenger miles.
- This demonstrates the tricky shoals which must be navigated between a policy of only developing relatively short corridors, or looking globally at what can be accomplished to benefit the entire Amtrak system by being just slightly more creative in thinking in terms of connectivity and passengers who may wish to travel further than what one state may be willing to pay for each budget year.Think something like this won’t work? It already does, in the case of the Carolinian in North Carolina, which runs between Charlotte, North Carolina and New York City. The State of North Carolina, one of the leaders in promoting responsible passenger rail service, shares the cost of the Carolinian with Amtrak, even though the train travels far beyond the borders of North Carolina.This same type of thinking needs to be applied to an expansion of the Heartland Flyer beyond Texas and Oklahoma. As a stand-alone train, the Heartland Flyer is mildly successful, but expensive to operate. As an expanded train between to natural endpoints instead of artificially created endpoints, it has much greater potential to earn more revenue, serve more passengers, and, with proper accounting (not necessarily accounting as we have historically experienced at Amtrak), can cost less and less in state subsidy to operate because it has more and more revenue from a greater pool of sources.How many other examples like this can be found, just waiting to be exploited?
- There are more signs of an improved and enlightened Amtrak management. In the February 20th edition of the employee newsletter Amtrak This Week, the first item says, “Note: We appreciate the hard work put in by all of the employees - from the train crews to those who kept the railroad open and moving - who did their best despite the very tough winter weather conditions we experienced last week. Thank you for your dedication and commitment.”And, the next item speaks volumes, and hopefully will have a huge impact, “Mechanical: Distribution of seatback cards with information about the new Trip Ratings program (passenger survey) is being completed on Acela, Regional, Keystone, Vermonter, and all long-distance trains.”Now, let’s hope somebody reads these survey cards and reacts appropriately. This should be a tremendous tool for improvement.
- During the past year, much has been said and done about Amtrak onboard food service. Extreme measures have been taken to allegedly save money, while overall downgrading the level of dining car service and cutting important employees.There is one area which has been overlooked. Many of the progressive chains of fast food restaurants have found new profits and more loyal customers through longer hours of being open. Many quick service restaurants, which previously closed at 10 P.M. or earlier, have extended their hours to 1 A.M. or later, and some have gone to offering 24 hour service.Amtrak briefly experimented with this on the Sunset Limited in 1999 and 2000 with the 24 hour dining car concept, which was well received by both passengers and onboard employees.Best of all “the numbers” worked, and the participating union thought enough of the idea to allow the successful experiments to take place while temporarily waiving union rules for when onboard crews are supposed to have guaranteed hours of when to sleep (This had nothing to do with the number of hours available for sleep, but rather when those hours would occur.).
Since Amtrak is already running food service cars, no extra infrastructure is required; just one or two more employees, the cost of which are quickly covered by the increased utilization of the dining car.
Amtrak has partially moved to this concept by beginning to offer “all day dining,” from early morning to midnight. This helps tremendously, but still leaves a large gap during nocturnal hours, which many passenger are entraining and detraining, and would like some sustenance.
Amtrak already has the completed studies on this (Of which this writer was paid to do, as well as conducting the onboard test runs), and has the proof positive that this idea is not only a good idea, but a financially rewarding idea, as well.
- The ongoing saga of the missing Sunset Limited east of New Orleans, now missing for 18 months, is getting some strong goosing from the Florida Coalition of Rail Passengers under the leadership of its president, Jackson McQuigg, and several dogged members who have a strong interest in the return of the train.Working professionally, the group has begun to put pressure on members of Florida’s congressional delegation, including both Corrine Brown and Ander Crenshaw of Jacksonville. Congresswoman Brown plays an important role on the House Transportation committee and is keeping this issue alive. Pressure is also being brought to the office of Senator Mel Martinez, Florida’s junior senator. The Sunset also serves the district of Representative John Mica, who has also played important roles on the transportation committee.The best wisdom available is that Amtrak is trying to hold out for the effected states to cough up money to operate this long distance train that has been a part of the long distance system since 1993 east of New Orleans. It will be interesting to see how this continues to play out with new Congressional pressure being brought to bear on Amtrak.The Florida Coalition of Rail Passengers has been doing important work for the restoration of the Sunset. In combination with other pressures being brought to bear on the subject, success can’t be far away.
- The Rail Passenger Association of California & Nevada and NARP are holding a joint membership meeting and conference March 17 in Los Angeles. The keynote speaker for the event will be Amtrak President and CEO Alex Kummant. A number of other speakers will be present, notably URPA Vice President of Law and Policy Andrew Selden. He will participate in a panel discussion regarding “Amtrak and the Future” along with some lesser participants. Further details can be found at http://www.railpac.org.