Thursday, June 10, 2010

This Week in Amtrak

Southeastern "Javelin" unit 395018 a...Image via Wikipedia

Volume 7, Number 16
June 10th, 2010

A weekly digest of events, opinions, and forecasts from

United Rail Passenger Alliance, Inc.

America's foremost passenger rail policy institute

Jacksonville, Florida USA

Telephone 904-636-7739, Electronic Mail .

This week: A brief report from each coast and then we look at some Amtrak finances.

On the right coast, some good news for the passenger rail manufacturing industry, and a lesson in perseverance. Around 1974 when I was in fourth grade my parents took me to a public meeting about Washington Metro.
Even then, I loved studying maps; and one of the "future extensions" was to Dulles Airport. A mere 35 years later, that line may have a chance to finally be built --- which is quite quick, really, compared to Boston's extension of its Red Line past Harvard (proposed in 1912, with the Cambridge segment completed in 1985). In any case, here's is part of WMATA's press release

Metro's Board of Directors approved a contract today (May 27) to
have Kawasaki Rail Car, Inc., manufacture 428 new generation
Metrorail cars known as the Series 7000 cars at a cost of $886
million. The cars will address Metro's number one safety priority to
replace its oldest rail cars (Series 1000).Of the 428 cars, 128 of
the cars will enable the expansion of Metro service on the Dulles
rail corridor and 300 of the cars will be used to replace Metro's
oldest rail cars (Series 1000), which will improve safety and
reliability of Metro's fleet. The Dulles rail cars will be funded by
the Metropolitan Washington Airports Authority...
The delivery schedule calls for the cars to start arriving on Metro
property in 2013, and undergo a rigorous, months-long inspection
process. All 428 cars are scheduled to go into service by 2016....
Kawasaki Rail Car, Inc., will manufacture the new rail cars in
Lincoln, NE...

Kawasaki has built single and double level commuter railcars, as well as NYCTA subway cars, partially at the Lincoln plant with final assembly at Yonkers, New York. At least one factory in America will be busy for awhile.

Now to the left coast, where Democratic Congresswoman Anna Eshoo /ponders in the San Francisco Chronicle/
what will happen to Caltrain's nearly forty thousand daily riders in California's anemic budget, even as plans for high speed trains in the same corridor proceed, threatening Caltrain on a variety of levels:

For many months, the people of the 14th Congressional District have
been worried -- and justifiably so -- about what high-speed rail
could mean to their communities. Now comes word of financial
difficulties that threaten the future of Caltrain, the spine of the
Peninsula transportation system and the little train that could, and
does so much, to serve us...

The High Speed Rail Authority has to hit the reset button, improve
its reputation and assuage Peninsula residents, who have every
reason to fear that this project will be a nightmare... We need to
see what high-speed rail will do for us, not only to us. In other
words, we need high-speed rail on the Peninsula to be a betterment,
not a detriment. One of the betterments we expect is an improved
Caltrain, and that is something that can be done right now...

Perhaps California will look at England's "Javelin" trains, the long-anticipated high-speed commuter trains that only recently replaced a large part of the usual fleet of electric trains between London and the southeast Kent coast. The /Evening Standard/ reports

The 140mph hour Southeastern trains linking Kent to London were
launched with great fanfare [in] December [2009]... [the fleet of]
29 Japanese Javelin trains were expected to be embraced by commuters
as they cut an hour from the London-to-Dover route...

But [train operator] Southeastern has now halved the length of six
of its trains because not enough people are using the services
following complaints they are too expensive and uncomfortable. The
fares cost a third more than those of conventional trains....

Commuters have complained the trains only take them to St Pancras
and they then must cram on to "normal" Victoria or Cannon
Street-bound services, which have been reduced to accommodate the
Javelin trains.

Commuter John Cherry, from Chatham, said the new service had proved
a "disaster" for many.

He said: "Passengers for Victoria lost their peak period services
and now pack on the remaining reduced services or the Cannon Street
services as people do not wish to go to St Pancras."

Another traveller said passengers have "rebelled against being
forced to use an even more expensive service with uncomfortable
trains which terminate in a place no one wants to be..."

This is exactly what could happen in California if new high-speed trains bypass many existing stations and run to a new terminal that does not connect to BART and Muni properly. One could also maintain the same thing has happened with Acela from its inception.

Finally this week we look at the wonderful world of Amtrak-o-nomics.
Bruce Chapman of the Discovery Institute wrote on June 1
of a "Developing scandal at Amtrak" --

I served on the Amtrak Reform Council ten years ago and was
frustrated, ultimately, by the failure of the Bush Administration
and the Republican Congress to press harder for changes to Amtrak
that would have made that entity more transparent in its finances
and more collaborative with the private sector...

The Bush folks knew we needed reform, but couldn't deliver it, and
wouldn't fund the transition to a public-private partnership. The
Obama people are prepared to spend plenty, but not to reform the system.

Now we are seeing the public beginning to a scandal

of unknown proportions at Amtrak. It broke in the /Washington Times/

The scandal could be the grounds for a true new beginning in
passenger rail. America needs rail, not just as an alternative
choice to roads and airplanes in carrying freight, but also in
carrying people on many inter-city corridors.

The article to which he refers is from the /Washington Times/ via Mass Transit Magazine, and titled Amtrak 'Misled' Congress on Finance

When Amtrak assured Congress it was on a "glide path" to free itself
of federal subsidies early last decade [2001], a handful of top
executives secretly had reason to know better. In fact, the rail
service was on the verge of bankruptcy.But Amtrak's public
assurances were based on far more than overly rosy financial
projections... What authorities ultimately unraveled was that two
former Amtrak officials, in fiscal 2001, either booked false or
incorrect accounting entries in Amtrak's monthly financial
statements or failed to report the activities.

Mr. Chapman sees hope in this adversity, and perhaps there may be some; but let us remember that "Amtrak accounting," like "military intelligence," is at best a questionable subject. If you have not recently read Ayn Rand's /Atlas Shrugged/, please hasten to your local library or bookstore for a copy. This tome of over a thousand pages is well worth the reading, or re-reading. Published in 1957, and focusing on American national politics and economic structure, it recounts the tale of a Dagny Taggart who struggles to keep her family's transcontinental railroad afloat against a tide of socialism and nationalization, and a Hank Rearden who invents a revolutionary steel-replacing metal only to encounter the same destructive forces.

In the book, Wesley Mouch's Steel Unification Board is proposed to lift the heavy restrictions previously imposed on Rearden, with a Plan explained by the government representative:

"Our Plan is really very simple," said Tinky Holloway, "...every
company will produce all it can, according to its ability [with all
earnings collected and assembled by the government]; at the end of
the year... [we will] distribute these earnings by totaling the
nation's steel output and dividing it by the number of open-hearth
furnaces in existence... The preservation of its furnaces being the
basic need, every company will be paid according to the number of
furnaces it owns..."

Rearden, who heads the nation's only remaining innovative steel-making plant, retorts:

"Well, let me see," said Rearden. "Orren Boyle's Associated Steel
owns 60 open-hearth furnaces, one-third of them standing idle and
the rest producing an average of 300 tons of steel per furnace per
day. I own 20 open-hearth furnaces, working at capacity, producing
750 tons of Rearden Metal per furnace per day. So we own 80 'pooled'
furnaces with a 'pooled' output of 27,000 tons, which makes an
average of 337.5 tons per furnace. Each day of the year, I,
producing 15,000 tons, will be paid for 6,750 tons. Boyle, producing
12,000 tons, will be paid for 20,250 tons... Now how long do you
expect me to last under your Plan?"

You may recognize here the accounting basis for Amtrak's "Route Profitability System," which derived from the federal Interstate Commerce Commission's formulas for determining passenger train profits and losses. Amtrak, in a 1997 National Association of Railroad Passengers meeting, admitted that revenues were pooled, and expenses were allocated to trains "subjectively" [sic].

In this as in every instance where Karl Marx's "from each according to his ability, to each according to his need" has been applied, the doom of failure is not far off.

Case in point: My apartment complex sends me a water bill each month.
The total number of gallons used by the complex --- for each apartment, plus the pool and irrigation --- is added up, and divided by a formula involving the square footage of each unit and the number of registered occupants. This means that if I do my part and conserve water, I am punished because my parsimony is a microscopic fraction of the total, so I am charged effectively the same amount; yet if I squander water and let it run all day, my bill is again hardly unchanged. Clearly, then, the incentive is to waste water.

The manager of an Amtrak train is faced with the same quandry. Carry more passengers and you are allocated a much larger share of expenses, even though your revenues increase only slightly. Ideally you would carry zero passengers, because then your train would have zero expenses on an allocated basis.

Is it any wonder Amtrak has gone precisely no-where in its almost forty years of existence?

Please do read /Atlas Shrugged,/ for we will be looking at it again quite soon.

Meanwhile: The moment someone says, "Don't worry, I'm from the government, I'm here to help!" is the moment you should look for the exit.

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