Commentary by Russ Jackson
This writing does NOT have anything to do directly with the current national campaign for President of the United States. Instead it has to do with the upcoming departure of Amtrak President/CEO Joe Boardman, expected to happen in late summer or fall, 2016. Boardman has announced his intention to retire after leading Amtrak to its current status for the past eight years. Within the rail advocacy community there is general agreement that it is time, if not past time, for him to go. But, the problem then becomes who will be the replacement and where will Amtrak go from there. Contemplating who might be the next U.S. President is a scary exercise, while the next Amtrak presidency is less so but will have a large impact.
Will the new Amtrak administration be pro-growth or continue the “reduce costs at all costs” that characterizes the Boardman years? Will it be concerned with selling more tickets or just cutting costs? Will the long distance trains survive into the new national and Amtrak administrations? There has been bi-partisan Congressional support for the national service being maintained, and a recent letter to the Amtrak board urged the next Amtrak CEO be one who continues the commitment to the national system. The two primary signers of this letter were U.S. Senators Roger Wicker (R-MS) and Richard Durbin (D-IL). URPA President Andrew Selden remembers that “John Riley (then head of the FRA) described 30 years ago that there was a ‘grand compromise’ in action: fly-over Senators reminding the NEC folks that the political price for ongoing subsidy of the NEC is (token) support for the rest of the system.
“The NEC generates about $1.2 billion in revenue but it costs just under $2 billion in costs to get there,” Selden says, “and we know from Amtrak’s own reports that Boardman has deferred maintenance and delayed capital spending in the NEC in the amount of several hundred million dollars over the last three to four years to manage the company’s reported financial results of operations. The pending crisis over a $100+ million shortfall suggests that they are running out of things to defer and delay.” The new FAST Act says that NEC profits must be spent on the NEC. It’s the below top of rail costs that are eating the NEC alive, but in February Boardman declared that “off-corridor” will have to bail out the sinking NEC’s sagging ticket revenue to the tune of $70 million out of the $100 million shortfall in this year’s budgeting. Do you suppose that is a recognition that the long distance trains are the real money makers? Some $40 to 50 million of that shortfall was due to the week long NEC shutdown from the Philadelphia wreck and a lack of re-bounding thereafter. The expensive Acela was down $4.5 million alone and ridership is flat and not growing. As writer Gene Poon put it, “How many dining cars have to die to bail out the so-called ‘profitable’ Northeast Corridor?”
Some of Joe Boardman’s pet projects are being cancelled following an audit, as they were determined to be too costly and without positive results, and some recent positive revenue enhancing western long distance train initiatives could be in jeopardy. The new order for Viewliner cars for the eastern long distance trains, stalled since the new baggage cars have been running, finds builder CAF unilaterally reducing production so, according to Gene Poon, the Sleeping Cars, the last in line to be built, now will not be done until March 2017, two years later than initially contracted and at an estimated $7 million increase in costs and loss of $3.7 million in revenue Amtrak expected to receive from having the new cars in service. The loss of Superliner cars due to the unfortunate wreck of the Southwest Chief in Kansas temporarily removes some potential revenue that could have been generated.
There have been many suggestions for a new Amtrak CEO. In Trains magazine, editor Jim Wrinn says whoever takes the “thankless” job at Amtrak must have outstanding qualifications. We all agree with that. Wrinn extolled the 1980’s reign of Graham Claytor as the example for a new CEO to be compared with, and says the “new boss will have to modernize the Northeast Corridor, manage the long-distance trains, do so in an ever-more competitive environment, be an inspired and enthusiastic salesman as well as a careful planner, a tireless mediator, and above all, someone who loves trains and will get out on the lines, listen to employees, and talk to the customers.” Is there such a person? Amtrak’s CEOs since Claytor have not shown many of those outstanding credentials. Fred Frailey, writing in Trains, picked some well-known names, all coming from freight railroads: Charles (Wick) Moorman, just retired from Norfolk Southern, Ron Bactory, President of Conrail Shared Assets, John Fenton, who ran Metrolink for two years, and Matt Rose, the Executive Chairman of BNSF. Frailey said, “The temptation will be to look within Amtrak or the bureaucracy. That’s how we got Joe Boardman. This time around Amtrak’s board needs to think big.” Don Phillips, also writing in Trains, also mentioned Wick Moorman as his first choice, but says Moorman is not interested. He then adds former Amtrak executive Bob VanderClute, retired from the Association of American Railroads, but says that he would have to be convinced to do it. His third choice rings many bells in California: Gene Skoropowski, now with the Florida East Coast Industries but who was in charge of the rapid development of the hugely successful Capitol Corridor in California. Phillips says, “These three men are far above Boardman in so many ways,” and California rail advocates would certainly agree about Skoropowski. But, before he left California Gene told some of us that Florida would be his last job before retiring.
Just as there are enormous challenges ahead for whoever becomes U.S. President, the same applies to whoever takes the reins at Amtrak. This writer does not see anyone with the stature of the people mentioned above “wanting” or “willing” to take over running a company like Amtrak. What we can hope for is the Amtrak board of directors does not choose someone wedded to the Boardman philosophy of putting the Northeast Corridor far above the stature of the other two elements of the company: the long distance “national” system and the state-supported “corridor” services. There must be recognition that all three services are dependent upon each other for future success and there must be equality of effort among them in pursuing quality service for the customer. It’s called a “pro-growth” attitude.