Sunday, July 20, 2008
This Week in Amtrak...
This Week at Amtrak; July 21, 2008
A weekly digest of events, opinions, and forecasts from United Rail Passenger Alliance, Inc.
1526 University Boulevard, West, PMB 203 Jacksonville, Florida 32217-2006 USA Telephone 904-636-7739, Electronic Mail firstname.lastname@example.org http://www.unitedrail.org
Volume 5, Number 21
Founded over three decades ago in 1976, URPA is a nationally known policy institute that focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, and New York. For more detailed information, along with a variety of position papers and other documents, visit the URPA web site at http://www.unitedrail.org.
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1) Thanks to all for an overwhelming positive response to last week’s TWA. Let’s continue on that theme, but this time, with an emphasis on making Congress more aware of Amtrak, and why Congress should take positive control of Amtrak.
Let’s first establish a perspective.
Whoever is the current tenant in the White House at any one time selects the members of Amtrak’s board of directors. The nominees from the White House (often with the input of powerful members of Congress) are sent to the United States Senate for hearings and confirmation.
The Senate Commerce Committee holds nominee hearings, and votes whether or not to send the nominees for a full confirmation vote by the entire Senate.
Depending on the whims of various members of the Senate – everyone from Senate leadership down to the most rookie senator – anything can happen to a nominee.
As has happened during the past eight years, if any senator doesn’t like any nominee for any reason (perhaps the color of the nominee’s socks are not to the senator’s liking), any senator can place a "hold" on a nominee. As long as the "hold" stays in force, nothing happens. The nominee simply goes into limbo.
In some cases, pleasant and productive hearings are held by the Commerce Committee, and a nominee is voted out of committee and sent to the Senate for full confirmation, but someone in the Senate leadership doesn’t like the nominee for whatever reason, and the confirmation is never brought up for a full vote. Again, the nominee simply goes into limbo.
Let’s say the rare thing happens, and a nominee makes it through the vetting process, the committee hearings process, and is finally confirmed by the Senate. Oh, boy! We have a new member of the Amtrak Board of Directors.
However, it’s a pretty good chance under current law, while the nominee does make it onto the board, they are not qualified to hold a position on the board. You see, there are these pesky legal requirements that all members of Amtrak’s board must meet certain requirements, such as every member of the Amtrak board is required to have transport or corporate/financial management expertise [49 U.S.C. 24302(a)(2)(C)(I)].
The White House, lo these many years, has pretty well ignored this requirement, and continued – with the cheering on of the Senate – nominating all sorts of members to the Amtrak board who have more political connections than professional experience. Since no one legally challenges these shenanigans, the board members stay on the board.
As a result of this chicanery by both the White House and Senate, Amtrak’s many unqualified board members (Especially after the departure of David Laney, who will go down in history as Amtrak’s best Chairman of the Board.) have come to rely almost exclusively on Amtrak corporate staff to tell them which end of the train has the locomotive, and which end has the coaches. Therefore, these bearers of a big rubber stamp for all Amtrak business haven’t done much research on their own outside of the company, and don’t necessarily have the background to know where to begin looking for proper research (Although www.unitedrail.org is the logical place to begin looking, as do hundreds of people every day, according to web site visits statistics.)
In short, for there to be real and effective change at Amtrak, Congress needs to take control of the company, and start mandating change. No change? No funds. It’s that simple.
2) "But," you say to yourself, "Smilin’ Jack is my Congressman, and the only way he can find the House Chamber is because it’s in that big building in Washington with the funny round thing on top. How am I supposed to intelligently talk with him about Amtrak?"
Well, you don’t need to talk to Smilin’ Jack. That’s why all members of Congress have staffs, and usually there is a staff member who specializes in transportation issues. There are also excellent staffs for each committee in both the House and Senate, and these fine folks usually are the real experts in what’s going on, especially in matters relating to Amtrak. It’s the staff members you want to target, not directly the sitting members of the House and Senate.
3) Keep in mind, too, how many members of Congress and the Senate have absolutely no interest in Amtrak because it has nothing to do with their state.
Senators from Alaska, Hawai’i, South Dakota, and Wyoming represent states without any Amtrak service. On the House side, URPA had determined there are roughly 100 House districts with no Amtrak service, nor any nearby Amtrak service. Add to that figure the House districts where Amtrak only blows through without any station stops, and you can add dozens of more districts.
Misanthropic Amtrak supporters often boo and hiss at House members who declare their disdain for Amtrak. Well, these representatives usually have absolutely no stake in the success or failure of Amtrak, and because Amtrak represents approximately the same transportation output as motorcycle riders in the United States, there isn’t a huge rush to embrace Amtrak by these members who often don’t even know what an Amtrak train looks like.
Those members who do have Amtrak service in their districts are often underwhelmed by the either one daily train in each direction, or tri-weekly trains in each direction for their cities and towns.
Even though Amtrak correctly issues state fact sheets each year to demonstrate how many Amtrak employees are in each state, and how much Amtrak spends in each state, again, it’s usually a drop in the bucket compared to other federal programs. So you say, "But, wait! That’s the problem! There isn’t enough money for Amtrak." You’re wrong, again. There is enough money for Amtrak, but Amtrak isn’t spending it wisely or doesn’t have a good enough business plan to expand its own services using its own resources.
4) Let’s veer sharply to the right for a moment (If you’re a registered Democrat, feel free to veer sharply to the left.). The common misconception, as started by Amtrak and picked up by its various wholly owned lapdog organizations, is it takes hundreds of thousands of dollars to fix up current static rolling stock to put it back on the road. Nope.
That’s zero-based budget thinking.
Let’s say there is a SuperLiner sleeping car currently bad-ordered, and sitting in the weeds somewhere, unloved, and not generating any revenue.
Perhaps’s it’s something as simple as an out-of-date required FRA inspection, or maybe a malfunctioning air conditioning system.
Just for the purposes of our discussion, Amtrak says it costs $10,000 to put that car back in service, but it doesn’t have $10,000 in the maintenance budget. Oh, really? Let’s break that analysis down a bit further.
Presuming we’re talking about an FRA inspection, we’re talking primarily about labor costs, plus some replacement parts costs. Okay, is Amtrak going to hire a mechanical forces worker just to inspect that car? No, Amtrak will use someone already on the payroll – someone already in a budget somewhere. The replacement parts? Probably on an Amtrak maintenance department shelf somewhere, waiting for a chance to be used.
Okay, so we have the labor already, and we have the replacement parts already. Isn’t it simply a matter of mating the waiting car, the labor, and the parts? Yes, it is.
Now, on someone’s books somewhere, all of this is recorded, and costs assigned, because we would never want to disappoint some bean counter and cause them to have stress headaches. So, costs are assigned and duly recorded. There, the car is completed, ready to be reassigned for service, and ready to create more revenue for the company.
"But," you continue to protest, "where is the cost of the replacement parts coming from, since there always has to be something on the shelf for the next broken car." Right you are. Here’s a shocking discovery: The revenue generated by the SuperLiner sleeping car being back in service will probably pay for the replacement parts before that now-moving SuperLiner makes it to its first station stop after leaving its departing terminal.
That, in the real world, is how things work. Maintenance departments are not given static numbers carved in stone. Funds are made available as a budget year progresses, as money comes in from earned revenue.
In Amtrak’s rather warped world, since it relies hugely on free federal monies each year, whatever paltry money is assigned to national fleet maintenance AFTER the needs of the Northeast Corridor are met, and AFTER the needs of states which are coughing up state monies are met, then the leftovers go to the national mechanical department budget. In other words, money earned by a particular set of equipment isn’t considered when maintenance budgets are set for that equipment. Only priority budgets for the NEC and other corridors are met first, then whatever is left over goes to the real money-making part of the system, the long distance routes and fleets.
5) This brings us back to your favorite member of Congress. You must take the position they know even less than nothing more than Sergeant Shultz knew on Hogan’s Heroes.
Anything they are likely to know, they either learned directly from Amtrak (Always a scary thought.) or from the great unwashed American news media, which often doesn’t know a good Amtrak story when it hits them in the keyboard.
Of late, many members of the news media have started consulting professors at various colleges and universities which offer transportation programs.
Let’s examine that flawed concept for a moment. There are, of course, many good professors at universities, but are often in the minority.
University professors dealing in transportation issues, beyond such distinguished programs at the University of Denver’s Intermodel Transportation Institute, and a few other places, generally deal in transportation theories based on liberal concepts, where the movement of warm bodies is more important than financial performance. Most professors think only in terms of local transit – mostly because that’s all they know – and incorrectly attempt to apply local transit concepts to long distance trains or to Amtrak. Usually, whatever comes from these folks is hogwash, as has been demonstrated time and again in recent newspaper articles about the Amtrak "problem" in America, as related to high gasoline prices.
The other problem with these professors is they usually come from a culture where airline transportation is considered to be the only viable form of public intercity transportation beyond the personal automobile.
These professors would NEVER consider the merits of bus transportation (They have no idea how very successful and comfortable bus transportation is in Canada.), and any transportation related to small towns – the real heart of America – is usually too insignificant to be on their radar screens.
Therefore, Amtrak is mostly a mystery to them, but, since there is no such thing as a professor who doesn’t want to be quoted in the news media as an expert on some subject, they babble something incomprehensible about Amtrak, and the news media, which often knows even less about Amtrak, takes their babbling as gospel.
And, again, another pool of bad information about Amtrak comes into the public’s consciousness.
6) So, here we are. Your congressperson doesn’t have good information available to them about Amtrak. They keep hearing, decade after decade, "just give us the money we need, and we’ll be fine!". They keep reading newspaper clips with stories that inevitably begin, "Cash starved Amtrak today ...". They’ve got hundreds of federal programs staring them in the face, begging for funding. And, practically everyday, someone like Senator John Kerry makes a grab for regional money like he did last week, seeking $1 billion to upgrade the NEC into Boston, while huge cities like Houston and Phoenix and Tulsa either have tri-weekly Amtrak service, or no Amtrak service at all.
Here’s the bottom line: It’s up to you to educate your representatives in Washington. It’s up to you to give them real facts, and demand something beyond "business as usual" takes place. It’s up to you to force Amtrak into becoming a productive and contributing part of our domestic transportation network.
Here are some pointers to begin the education of your representatives.
– Remind official Washington of Amtrak’s mission: to create a viable passenger rail transportation system for ALL Americans, not just denizens of the Right and Left Coasts, and those living near Chicago.
– Jacksonville Representative Corrine Brown, chairwoman of the House subcommittee for railroads, is trying to make sure Amtrak restores the ever-missing Sunset Limited between New Orleans and Florida. She’s put a provision in an Amtrak bill providing (way too much) money that Amtrak must spend to "study" the restoration of the Sunset and then report to her and others in Congress why the Sunset hasn’t returned.
If more representatives took this initiative, it would be difficult for Amtrak to ignore multiple members of Congress, even though Amtrak has successfully achieved that in the past.
– Members representing districts with no Amtrak service or only "blow through" Amtrak service need to demand a plan which will provide service to their districts. This does NOT indicate every streak of rust masquerading as a railroad track should have Amtrak service. But, it does indicate there are many huge gaps in the Amtrak system which need to be rationally filled.
– Rolling stock maintenance, restoration, and new acquisition is an on-going process in all forms of common carrier transportation, unless you’re Amtrak. Congress needs to implement a procurement system, perhaps through the FRA, that determines equipment needs of all sorts, and makes sure equipment is reasonably in place for ALL of Amtrak’s trains, not just the NEC trains. This system would include the delights and wonders of bootstrap equipment procurement and leasing, where the economic value of operating a car takes into account the acquisition and ongoing maintenance costs, and bases decisions on economic terms, not political terms, such as Amtrak uses today. Amtrak passengers in Denmark, South Carolina deserve a train with rolling stock that is as comfortable as an Acela trainset serving Metropark, New Jersey.
– The model for airports used by airlines since Shirley Temple sang "On The Good Ship Lollipop" while dancing down the aisle of a twin prop DC-2 needs to be used by passenger trains.
Amtrak owns and operates many trains stations that instead need to be in local government hands and ownership. Scattered through the country, like in Kissimmee, Florida and Hattiesburg, Mississippi, are locally owned stations which are nicer than any other comparable Amtrak-owned stations in the system.
If local governments (If they even know Amtrak exists.) want Amtrak service for their city or town, they need to provide the station. Amtrak could lease the ticket counter and set certain safety and continuity standards, but local authorities could own and maintain train stations far better than Amtrak, such as in Tampa, Florida.
– Demand Congress force implementation of a better business plan than is used today. Today’s disastrous plan to fleece participating states of money for regional corridor routes does nothing to bolster Amtrak overall, since these programs do not contribute to the overall financial health of Amtrak, but only pay for the specified service. The real financial stability is in Amtrak’s long distance passenger trains (see below), as discussed many times in this space.
– Demand Congress pay better attention to the overall infrastructure needs of Amtrak’s host freight railroads throughout the country. There are rail traffic jams out there to be unsnarled, but there are also a multitude of solutions to those problems which clever people can figure out where everyone is a winner, especially the American train passenger.
In essence, Congress needs to override the wishes of Amtrak’s Board of Directors, since the Amtrak board continually fails to steer the company in the right direction. Think this is unprecedented for Congress to take control of an entity that is under the direction of the executive branch of government? Think again.
Amtrak’s principal stock is held by the United States Secretary of Transportation, on behalf of the American people. Congress, however, is Amtrak’s banker.
More than once, for a company in dire financial straits (And, make no mistake, Amtrak is by definition a financially bankrupt company.), that company’s bankers and lenders have taken control of the company and nursed it back to financial health. This is why Congress needs to exert more fiscal control over Amtrak. Amtrak has proven for decades it is incapable of managing its own finances, nor make prudent business decisions. Amtrak has been enabled in this wretched enterprise by it wholly owned lapdog organizations, which have bleated like sheep year after year Amtrak is a sound organization, and only "needs to be given a chance to succeed."
That time has come and gone. Billions of dollars have been thrown at Amtrak with no appreciable results except a corporately handicapped company that is so dysfunctional it can’t even figure out who its best customers are, and where its true future lies.
7) It’s election season, and this year it’s likely to be a healthy turnover in congressional seats, as well as senate seats. That’s okay, new faces in Washington are new opportunities to get to these people and their staffs before the false indoctrination from Amtrak and its vile minions begins.
What of a new White House administration, and its stewardship of the Amtrak board? Well, not many vacancies will come up anytime soon; most board members are recent appointees and will be around for another three to four years.
Will a new administration be any better at appointing new board members who are legally qualified? If Amtrak’s complete history of the past 37 years proves accurate, some very good board members like Paul Weyrich, Haley Barbour, Ralph Kerchum, Charlie Luna, and David Laney will probably make it onto the board, but, most likely, they will be far outnumbered by the usual political hacks which typically are appointed to the board by both political parties.
What about Amtrak’s president and chief executive officer? Alex Kummant has almost completed his second year of stewardship of Amtrak. His own resume says he’s nearing the average length of time he stays in any one job with one company, plus, other than the late Graham Claytor, Mr.
Kummant is also approaching the average length of time any one individual stays on as Amtrak’s president and chief executive officer.
What most likely won’t change at Amtrak any time soon, unless a new president and CEO makes a clean sweep, is the executive corps that runs Amtrak on a daily basis. While there are many bright gems to be found, such as Vice President Richard Phelps, there are still far too many failures populating departments like strategic planning, which often make a real difference in prosperous companies.
8) Let’s review. It’s time to stop depending on Amtrak’s Board of Directors for any worthwhile direction for the company. Internally, Amtrak is on a completely wrong track and has no realistic business plan.
Congress can – and should – step in and force major changes in the way Amtrak looks at the future, conducts current business, and serves American taxpayers. Only Congress has the clout – and financial pressure – to reform Amtrak and help the company achieve its real potential. Only Congress can force Amtrak to dump its totally wretched current business plan and create a new business plan which focuses on all Americans, not just citizens on the extreme coasts. Only Congress can stand up to Amtrak and say, "No, that’s not the way things are going to be."
You can help make this happen by being correctly informed about Amtrak, and passing your knowledge along to the news media on all levels, and members of Congress and their staffs. It’s no wonder so many members of Congress don’t like Amtrak; they have no reason to like or support Amtrak because Amtrak has absolutely no impact on their districts or states.
Turn these members of Congress into productive forces of change by letting them know Amtrak can become relevant in their districts and to their voters, but that will never happen if Amtrak is left to its own sordid devices.
9) Below is some information repeated from last week’s TWA which is relevant background as you seek to intelligently discuss Amtrak. More information can be found at URPA’s web site, www.unitedrail.org .
There is still a great deal of junk science to overcome when it comes to passenger trains.
– First, there is the silly belief Americans don’t want to ride long distance passenger trains. On Sunday, July 13, a columnist in the Knoxville (Tennessee) News Sentinel opined, "who wants to spent three days on a train to travel to California?". Well, actually, a lot of people already do, and many more would if there was any inkling Amtrak was available to all Americans, and there was enough equipment to handle all of the demand if the secret of Amtrak was every unleashed on the American public.
– Second, there is Amtrak’s constant promotion of short, regional, and very expensive to operate corridors instead of a healthy focus on high-revenue producing long distance trains.
Let’s review the facts, again.
– In Fiscal Year 2007, the Empire Builder, a single daily train in each direction, operating between Chicago and Portland/Seattle on a route of over 2,200 miles, generated total revenue of $53,177,800, and 390,824,000 revenue passenger miles carrying 505,000 passengers an average length of trip of 773.9 miles. The load factor for the Builder was 60.7%, with
13.61 cents of revenue per passenger mile. On average, the Builder carried 206.7 passengers for every mile it traveled.
During that same period of time, Amtrak short corridor Hiawatha service ran an interstate route of 86 miles between Chicago and Milwaukee, Wisconsin with seven daily trains in each direction (six on Sundays). The Hiawathas generated $10,230,000, and 47,619,000 revenue passenger miles carrying 593,300 passengers an average length of trip of 80 miles. The load factor for the Hiawathas was 37.7%, with 21.48 cents of revenue per passenger mile. On average, the Hiawathas carried 110.7 passengers for every mile one of the Hiawathas traveled.
Here’s the bottom line: The single daily train Empire Builder carried 88,300 fewer passengers than the combined seven daily Hiawathas, and generated $42,947,800 MORE in revenue, and generated 8,536,600 MORE revenue passenger miles than all of the combined Hiawathas.
– This same story is true all over America, no matter what comparisons are used. The long distance trains, consisting of the Silver Star, Silver Meteor, Cardinal, Empire Builder, Capitol Limited, California Zephyr, Southwest Chief, City of New Orleans, Texas Eagle, Sunset Limited, Coast Starlight, Lake Shore Limited, Palmetto, Crescent, and Auto Train are the really money makers and passenger haulers of Amtrak.
– When you add up the performance of the regional services outside of the Northeast Corridor, including the Ethan Allen, Vermonter, Albany/Niagara Falls/Toronto, Downeaster, New Haven/Springfield, Keystone, Empire Service, Chicago/St. Louis, Hiawatha, Wolverine, Illini, Illinois Zephyr, Heartland Flyer, Pacific Surfliner, Cascade, Capitol, San Joaquin, Adirondack, Blue Water, Washington/Newport News, Hoosier State, Kansas City/St. Louis, Pennsylvanian, Pere Marquette, Carolinian, Piedmont, and Amtrak Thruway busses, all of these services, many state sponsored, generate $312,192,500 in revenue, based on 1,550,341,000 revenue passenger miles, and ridership of 11,993,200 souls. There is an average load factor of 40.1%, and revenue per passenger mile of 20.14 cents per mile, with an average of 112.8 passengers carried for each mile all of the trains travel.
The long distance fleet generates $377,981,000 in revenue, based on 2,495,482,000 revenue passenger miles, and ridership of 3,818,900 souls.
There is an average load factor of 56.8%, and revenue per passenger mile of 15.15 cents per mile, with an average of 170 passengers carried for each mile of all of the trains travel.
That means, the long distance fleet generates $6,578,850 MORE in revenue than the short distance/corridor trains, and generate 945,141,000 MORE revenue passenger miles, carrying 8,174,300 FEWER passengers than the short distance/corridor trains.
– The discussion becomes the same here as it is in war: body counts.
The empirical evidence is the long distance fleet of few trains is much stronger in actual transportation output than the regional/short distance/corridor trains. In short, fewer trains, costing less to operate, and based on a lower income per passenger mile completely overcomes a much higher number of trains, costing more to operate, with a higher amount of income per passenger mile.
Why is this concept so difficult for Amtrak to grasp, and for the news media to ask Amtrak, "why is your business plan so flawed, that it prefers expensive corridor trains over financially stronger long distance trains?" when the necessity for passenger rail is so prominent?
– Is it more important to carry more people over shorter distances, or carry fewer people over longer distances?
Here’s a better question: Should Amtrak do everything it can to become a stable, growing company, so it will be able to meet the many demands placed on its resources, or should it continue to be a crippled child of government, always waiting for the next financial handout from government?
– Headlines in Illinois the last couple of weeks were rife with speculation the state government would not continue funding on some of Amtrak’s newest state routes, due to budget concerns. The usual hand-wringing stories were written, and this story was presented as high drama by the news media. In the end, a compromise was reached, and the trains will live to travel another budget year.
This is exactly the sort of problem that is inherent on being a child of government, such as Amtrak is today. The "success" of the company is always at the whim of some bureaucrat numbers crunchers, whose only allegiance is to keeping their government jobs.
There was a time, in the glory days of passenger railroading, when both concepts were achieved. How did this work? Passengers work just like freight. The long hauls are where the money is made, and the short hauls are done for customer convenience and as feeders, and paid for by the profits made by the long hauls.
For every San Diegan (the predecessors to today’s Pacific Surfliners) operated by the Santa Fe between Los Angeles and San Diego, there was also a Super Chief, San Francisco Chief, The Grand Canyon, El Capitan, Tulsan, Chicagoan, The Oil Flyer, and Kansas City Chief.
This held true all over America. For every milk run, local train, or mail train, there were streamliners like the Orange Blossom Special, Silver Meteor, Florida Special, City of Los Angeles, North Coast Limited, Twentieth Century Limited, Broadway Limited, and many, many more.
– The Eisenhower Interstate System of highways and the sucker punch of the Boeing 707 jet airliner were too much for the railroads of their day in the 1950s and 1960s. The railroads were not glamorous, or fast enough for a society hooked on speed and the race for space and rockets to the moon.
But, now, the tables have turned, and passenger rail is once again viable. It’s just that America’s sole provider of passenger rail isn’t viable. It’s stuck with a corporate mindset and junk science business plan that dooms it to financial ruin and the inability to serve Americans who want passenger train service.
– Amtrak’s business plan, if put together by rational human beings, should consist of three layers.
The first is a healthy and growing system of long distance trains IN PARTNERSHIP with the host freight railroads. Everyone acknowledges there is a rail capacity problem in this country as more and more freight is leaving expensive highways and jumping on freight trains.
If you believe the Association of American Railroads, of which (even though you would never know it) Amtrak is a full dues-paying member, there isn’t a single mile of railroad in this country which could accommodate additional passenger trains. The translation of that is Amtrak is such a low-paying customer that demands so much attention, it’s difficult for the host freight railroads to accommodate Amtrak trains (Even though by mutual agreement at the beginning of Amtrak the railroads agreed to a federal law being created which REQUIRES freight railroads to give full access to their rails to Amtrak.), so, therefore some type of better agreement needs to be reached between Amtrak and the host freight railroads.
The second layer is a robust system of corridor trains, much like today’s arrangements, but with a different set of criteria. No two state contracts are alike, and Amtrak is getting as much money as possible from each state, with no standardization of costs and contracts.
Short and regional corridor trains can be healthy feeders into a long distance system, and they can help share station, reservations, and infrastructure costs. However, the emphasis must be placed on connectivity and hubbing with long distance trains, and services must complement each other for maximum passenger flow and utilization.
The third layer is providing coordination of commuter services with various local and state operators and competitors. Today, Amtrak still operates some commuter services (such as the Virginia Railway Express) under contract, providing train and engine crews, equipment maintenance in some cases, and other services. Allegedly, these services are provided at a profit because they are purely services for sale to other entities, but one can’t help but wonder what the real return on investment is when providing these services. In other words, does capital Amtrak uses to prop up these services have as high of a rate of return as capital used elsewhere in the company?
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