By Noel T, Braymer
After much noise about making Amtrak profitable by getting rid of most of their Long Distance Trains, former Amtrak President Anderson was replaced on April 15,2020 by Amtrak’s new President William Flynn. Despite lots of talk, not much progress was made adding more regional services under Anderson. The collapse of travel demand world-wide due to the CORVID-19 epidemic didn’t help. According to Evan Stair; President of Passenger Rail Oklahoma. Anderson and Amtrak Senior Vice President Stephan Gardner talked about getting rid of up to 10 out of the 15 Long Distance or “inter-regional” train routes to “save money”. Inter-regional trains travel more than 750 miles in one direction. Why that is important is because Anderson and Gardner wanted services under 750 miles because local states would be paying Amtrak for the operations of these proposed regional services. So much for turning a “profit” under Mr. Anderson.
Years ago I attended a meeting about rail service in Southern California. An Amtrak Vice President was pitching a deal that the State of California should sign a contract with Amtrak to operate California’s High Speed Trains. What this genius didn’t realize was the contract to operate California’s High Speed Trains would be based on the contractor bidding to get the contract by offering to pay the State for the right to run the State’s High Speed Trains. This is common practice around the world. The bidder would have to bid an attractive price to win the contract, while carrying enough passengers to make money while also paying the State for the franchise to operate the trains. As part of his sales pitch this genius started bragging about how little they would have to charge the State. This was because by law when Amtrak was created the Freight Railroads had to give Amtrak a major discounted price to use the Freight Railroad tracks and right of way. This has long been a major point of contention with the railroads against Amtrak. The railroads want to make money, and they say they don’t make much money letting Amtrak use their infrastructure.
What we have seen under Anderson has been a lot of noise to run corridor trains routes under 750 miles long. Most of what was talked by Amtrak was talk of carrying lots of people between major cities under 750 miles apart with frequent service. Most of the talk for these new trains was between Atlanta-Charlotte. Also being considered was service between Atlanta and Nashville. It seems that Amtrak started talking about service to Nashville without talking first to CSX which owns the tracks to Nashville which is a busy, congested mainline for the CSX. Of course Anderson wasn’t interested in spending money for major capital improvements which would be needed to operate a faster and more frequent rail passenger service. So what was Anderson and Gardner up too?
One thing Amtrak has been interested in was getting the States to pay them money to run passenger trains in their States. How is this working out for them? So far it doesn’t look too good. Back on November 13, 2019 the Executive Director for the San Joaquin Joint Powers Authority, Stacy Mortensen testified before a subcommittee of the U.S House Transportation and Infrastructure Committee. Ms Mortensen oversees both the Amtrak San Joaquin rail service between Bakersfield and Oakland as well as the Altamont Corridor Express (ACE) which is a commuter rail service between Stockton and San Jose . The ACE rail service is managed by a private company, Herzog Transit Services Inc. Ms Mortensen is very satisfied with Herzog. Their operating costs are very reasonable and she has a good relationship dealing with Herzog. That can’t be said about Amtrak. What Amtrak charges the State to operate the San Joaquin trains is much higher than what it costs to run the ACE Trains. She also isn’t pleased with the level of cooperation she gets from Amtrak compared with Herzog. Quoting Ms. Mortensen “Amtrak’s lack of data transparency, resistance to data sharing and collaboration, inability to fairly determine a cost sharing formula and, higher-than-average costs when compared to other public passenger rail services has caused our agency to question the future viability of the service under this structure.”
At the heart of Amtrak’s beginning was the bankruptcy of the PennCentral Railroad. After the PennCentral went bankrupt in June 1970, Amtrak was running by May 1, 1971. While Amtrak wasn’t making money in its early years, it didn’t lose much either at first since Amtrak had very little overhead. Most of that belonged to the PennCentral on the Northeast Corridor. By about 1975 the Federal Railroad Administration in reorganizing the PennCentral into what became Conrail dumped most of the costs of the Northeast Corridor onto Amtrak. This despite the fact that the majority of the costs for rail service on the NEC came from local commuter rail services not Amtrak trains. The FRA knew that Conrail couldn’t become profitable while also paying the whole cost of the Northeast Rail Corridor’s infrastructure. When Amtrak got the NEC, it got involved in creative accounting. Basically Amtrak accounting didn’t count their costs so much as they assumed their “costs”. One example of this is the costs of running Long Distance Amtrak Trains was based on how many miles they traveled. According to Amtrak, “it saved money” when its trains weren’t moving. This made the Long Distance trains very “expensive” the more they were moving. If Amtrak wanted to carry more passengers on a route, it would be “charged” extra for running additional service. This even while additional service would improve Amtrak’s operational efficiency and revenue generation. Over the years in an attempt to save money Amtrak eliminated some trains including some Long Distance Trains.These service cutbacks often instead of saving money usually reduced revenue instead. This did nothing to reduce the high overhead costs of the NEC so no money was saved, but revenue declined with fewer people riding the trains.
Amtrak doesn’t lose money on their Long Distance Trains. The cost of running them are largely dumped on the host railroads. But rather than expand service to increase revenue and productivity. Amtrak instead has been pushing for more contracts to run State funded services. So far it doesn’t look like that ploy is working. This reminds me when Amtrak decided to go after the market to operate regional rail commuter services. Amtrak assumed that it would dominate the market. Amtrak did well at first operating Caltrain and Metrolink services. But with many competitors like Herzog, Amtrak’s high overhead costs left them overpriced with little competitive advantage. The real problem Amtrak has is the cost of the infrastructure of the NEC. Parts of the NEC has many structures that date back over 100 years. To balance Amtrak’s Books, it often puts off maintenance. It seems now on the NEC the back log for a state of good repair has reached $38 Billion dollars.
To become viable, Amtrak needs to run more trains, more frequently more hours in the day on longer distances.They need more markets to fill up their trains. Also much of the cost of the infrastructure of the NEC should be supported by State and Federal Governments. This is something that the NEC States have been fighting against since at least 1970. Amtrak is a minority user of the tracks of the NEC, but is charged the major share of the costs. Revenue for transportation is generally based on passenger miles. This can be increased on Amtrak by running more Long Distance trains with connections to other trains to as many places as possible. But Amtrak seems to think that running trains loses money. So they have often tried to “save money” by reducing service which never worked.