Tags

, ,

By M.E. Singer

In view of the harsh lessons reflecting upon the intentions and promises in creating Amtrak vs. its outcome, and with Congress apparently ignoring the reality of history, I was compelled to address the facts as they are known, when The Hill raised the platitudes and issues over the privatization of the nation’s Air Traffic Control system (ATC) in “Senators Pan Trump’s Air Traffic Control Plan,” 7 June.

As Congress lacks a vibrant institutional memory; expert transportation writers in the media have gone the way of the stick shift in autos; and the public is led like lemmings against their own interest by well-paid lobbyists, a caveat for those now telling us how privatizing Air Traffic Control (ATC) is the best idea since chopped liver. To appreciate what will be in play when privatizing ATC, I suggest benchmarking with the rationale for and history of Amtrak, knowing how it was created and orphaned by the federal government.

Historically, when the Penn Central went bankrupt in 1970, but two years after its creation, its demise crippled rail service throughout the Northeast. Given the fear of how the dynamics of such a significant economic hit could metastasize across the country to negatively impact the remaining railroads, the federal government and railroad industry were concerned over the real potential of complete economic failure leading towards nationalizing the railroads.

The first step to avert this calamity (a narrative vividly pushed by the railroad industry) was for the federal government to offload the passenger services–and debts–from the railroads. Ironically, such costs were accrued over decades of excessive regulations and taxes incurred by the railroads, while competing against a federal bias that fully funded the infrastructure for competitive modes of transportation with their own designated trust funds, i.e., air, highway, inland barges.

The last knife into the network of passenger trains operated by the privately-owned railroads was in 1967, when the U.S. Mail was unilaterally pulled off of these trains, including the railway post offices and bulk mail. In many cases, the mail contracts had allowed for the continuation of passenger services under restrictive federal and state ICC regulations while avoiding a deficit operation, which later required the cross-subsidization from freight revenues to maintain any semblance of passenger services. By moving such lucrative contracts to the competitive modes of air and truck, the federal government ensured the rapid demise of the passenger train leading up to the Railpax legislation by Congress in October, 1970.

Although Congress followed through the initial Railpax legislation structuring Amtrak to become operational in 1971 as a “for profit” quasi-public entity, Congress failed to ensure any potential for Amtrak to be successful in a growing competitive marketplace. Congress denied Amtrak consistent, multi-year funding authorization to facilitate its budgeting, planning, and equipment acquisition/modernization programs to rehabilitate and expand routes and services at the lowest possible cost. Instead, Amtrak became a financial outlier–and political target of think tanks and lobbyists–falling into the annual congressional budgetary process and circus-style hearings.

Unlike other modes, Amtrak was not provided by Congress a dedicated fund, e.g., air, highway, and inland waterways trust funds, siloed from any other distribution. Also, Congress prevented Amtrak from having a dedicated ticket tax; or, even to receive 1¢ from every dollar of the gasoline tax. Alas, contrary to the initial enthusiastic announcements for an energetic future, Amtrak was to be restricted pretty much to the routes it had inherited upon takeover from the private railroads. (Note-the last new long distance route established by Amtrak was the Auto Train in 1983; only due to a persistent railroad experienced CEO, W. Graham Claytor.)

In the regulatory area, Congress failed to protect Amtrak’s operational relationship with the Class 1 freight railroads, whose right-of-way Amtrak depended upon beyond the Northeast Corridor. As these Class 1s successfully merged and eliminated redundant mainlines through the benefit of being de-regulated, they acquired a market savvy to build upon new competitive services, e.g., intermodal (stacked containers traveling faster and cheaper than trucks.) Per the initial Railpax agreement of 1970, Amtrak was to pay actual user fees to these railroads to access their privately-owned infrastructure, with the clear understanding of receiving priority dispatching.

However, as rail traffic increased across the reduced lanes shared with Amtrak, the freight railroads determined they were underpaid for the increased value of track access and slots for dispatching. Consequently, freight was designated the priority for dispatchers, at the expense of the on-time performance of passenger trains. Despite paying increased user fees to the Class 1 freight railroads, as well as (questionable) performance bonuses, on top of excessive schedule padding to appease the Class 1s, Amtrak schedule reliability was stabbed by freight interference; destroying the raisin d’être for Amtrak as a competitive mode, outside the Northeast Corridor. Consequently, any idea of increasing Amtrak frequencies, let alone expansion of new routes to serve market demand, was consistently met by intransigence of the Class 1s towards access restrictions and high financial demands for infrastructure improvements to even contemplate any such increased services.

As a creation of Congress, Amtrak naturally found its comfort zone on the Potomac, focused upon serving the Northeastern political power bloc, at the expense of the national network system. In 1976, the Northeastern politicians secured and foisted upon Amtrak the Northeast Corridor between Boston-New York-Washington (and Philadelphia-Harrisburg), but without the requisite continuous funding to repair and maintain the vastly deferred infrastructure.

However, the clout of the Northeast politicians also extended into the day-to-day management and decision process of Amtrak. To accomplish this goal, the Northeast political cartel positioned influential denizens of the Northeast as a majority bloc on Amtrak’s Board of Directors to do their bidding. In turn, Amtrak’s Board succumbed to their political puppet masters and brought on as CEOs their chums from the Northeast between 2005-2016. Despite having no railroad operational experience, these three CEOs came with the political acumen to divert funds, with the obvious blessings of the Board, from the national network to support the prized Northeast Corridor, hemorrhaging from massive infrastructure requirements.

As well, this Board, through its politicized CEOs, devised a congressional mandate in 2008 that required all state train services under 750 miles to pay according to Amtrak’s own full cost methodology. That is, all but the Northeast Corridor (despite being less than 450 miles between Boston-New York-Washington). The same congressional mandate, the Passenger Rail Investment and Improvement Act of 2008, also required commuter lines using the Northeast Corridor to pay for such operations; yet, Amtrak never pushed to collect payments until ordered by Congress, but not until December, 2015. Of course, these additional funds were not utilized, as derived from, to support state-supported routes, but rather, to be re-directed further fill-in the black hole of the favored Northeast Corridor.

Today, Amtrak’s long distance services languish and are at risk of being de-funded for political purposes with the FY18 budget, despite the fact how these routes directly serve rural and “flyover” towns, linking them to cities across the country. Interestingly, the average passenger rail miles traveled on these long distance trains, 800 miles, is actually equivalent to the airlines.

Indeed, when it comes to Air Traffic Control (ATC), their is much to learn from how Amtrak was envisioned, promised to the public; yet, allowed to wilt away, complying with persistent political interference directing routes and services. As a result, we have a situation today where Amtrak inconsistently consumes a significantly higher level of funds to support the prized Northeast Corridor infrastructure and overhead. This has continued to be at the expense of the national network of long distance, and state-supported routes, in keeping with the influential politics of but one region over the rest of the nation.

The caveat is to learn the lessons of past similar promises by benchmarking to how the federal government previously involved itself in market decisions; opening itself up to the undue parochial influences of particular regions prone to injecting themselves into a better deal, at the expense of everybody else.

Advertisements