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Andrew Selden’s vision for the future of Amtrak and high speed rail in America

June 14th, 2007

Where does… where should… Amtrak figure into the development of high speed rail? The automatic answer is it should figure prominently. The realistic answer is, Amtrak, after being the monopoly passenger rail carrier in the United States since 1971, for nearly 40 years, still has not proven it is worthy of the tax dollars which are poured into it year after year.

This brings us to “the vision thing” as the first President George H.W. Bush used to say at the end of the 1980s.

As it stands today, Amtrak and its management lack vision. Amtrak may corporately lust after the pot of money which is being thrown at the development of high speed rail, but it really has not proven itself worthy of the privilege of directing the spending of that money.

Here is what Andrew Selden has to say as a vision for the immediate and long-term future of Amtrak.

A. Amtrak must become relevant.

Its contribution to national mobility today does not justify its cost. The national network is too small – it goes to too few places and interconnects too few city pairs (e.g., it doesn’t go to Las Vegas, Nevada or Columbus, Ohio, and one cannot get from Dallas to Denver or Dallas to Orlando). Even in what its own supporters characterize as its strongest market, the Northeast Corridor, its market share of intercity trips is less than 1%, at a public cost of about three-quarters of a billion dollars a year. Even in the NEC, a complete shut-down would be all but imperceptible as all of its customers (except in the New York-Philadelphia sub-market) could be easily absorbed into existing road and airway capacity.

B. Amtrak must grow.

No business, or social service, succeeds by stagnating. Amtrak’s share of the national intercity travel business has shrunk steadily for three decades. Its carrying capacity has shrunk steadily for two decades. The newest Superliner rail car is more than 10 years old and the average age of the intercity fleet is far older than the cars Amtrak inherited from the private railroads in 1971. At the same time, Boeing builds a new 737 airliner every day, and Airbus builds a new A320 every day. Southwest Airlines adds a dozen or more new aircraft to its fleet every year. Amtrak could not absorb real growth if it were to occur, except in regional corridor markets where even a doubling of transactions would not raise it to a 2% market share.

C. Amtrak must change its vision.

Amtrak views itself as a social service, like a transit agency or a sewer authority, and thus as a ward of government. It measures its performance by the metrics of a public agency, in simple transaction volume. The only function at which it truly excels is extracting money from public sector sponsors. This vision condemns Amtrak to always being irrelevant to the needs of the traveling public. Amtrak must adopt a vision of sustained growth, relevance and minimized dependence upon public agency financing in favor of dependency upon customer selection, of mode and route. Amtrak must position its services and its operational network such that it can become the mode of consumer preference for most intercity travel.

D. Amtrak needs a new business model.

Amtrak has pursued the same business model for its entire history, one based upon the supply-driven model of point-to-point short corridors between urban city-pairs, based on the High Speed Ground Transportation Act of 1966. That model has produced the current state of Amtrak: irrelevancy to the traveling public and financial catastrophe. The model causes the results, the results do not occur despite the model. The new business model must be based on consumer demand, in applications that can be financially remunerative. The new model must focus on the metrics of output, not merely transaction volume, and growth, market share, and maximal return (in output and revenue) on invested capital. The model must create volume and efficiencies of scale on a national basis, by developing a true national network of regional and interregional routes that allow use of rail for most intercity travel demand, and inherently grow with demand and population growth. Capacity must be re-allocated to match consumer demand, and must grow to anticipate and accommodate growth in demand.

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