This Week in Amtrak

Image by Madbuster75 via Flickr
After a slow August in the world of passenger rail, we return to a busy soon-to-be autumn.

According to Fred Frailey in TRAINS magazine,

Union Pacific has told Amtrak that changing the Sunset Limited‘s frequency from tri-weekly to daily will cost the government-supported company about $750 million in capital improvements.

That’s almost as much as Phoenix spent building an entirely new 20-mile “light rail” system — including two large bridges and a complete modern maintenance facility and fifty computer-controlled trolley cars. We eagerly await U.P.’s wish-list. One wonders, once you spend some millions to restore a missing connection at San Antonio to eliminate back-up moves, add a couple formerly removed station tracks at places like Tucson, add a bridge here and some signals there … how do you come up with three-quarters of a billion dollars to run one train once a day?

Meanwhile, Berkshire’s BNSF issued a two-part $750 million bond, $250 million for a 10-year period at 3.616% and a 30-year $500 million part at 5.074%, both paying a premium over Treasury bonds.

In his annual letter to shareholders, Berkshire chief Warren Buffett wrote: “Overall, we expect this regulated sector to deliver significantly increased earnings over time, albeit at the cost of our investing many tens — yes, tens — of billions of dollars of incremental equity capital…” So the same dollar figure that U.P. wants for one passenger train, it seems, is the same as BNSF’s first installment in sprucing up its entire system. Does one of those numbers seem a bit off?

Next, to Ohio, where Republican gubernatorial candidate John Kasich has “vowed to kill the 3C plan if elected.” This train, which would connect Cincinnati, Dayton, Columbus and Cleveland, is in line for a $25 million for a preliminary study. Kasich and his advisors apparently are fretting over the $400 million starting price tag, and continuing state outlays. One does wonder, where is one penny of income from Ohio’s libraries? From Ohio’s fire departments? From Ohio’s superhighways? Oh, you say they result in increased education, decreased property losses, and increased economic and social activity, right? So why do we not frame trains in the same way? What is the cost of a trip not taken…

Yet we rail advocates find ourselves in a nasty predicament. Every time good work gets done, as in Ohio, toward a new train… or in Boise… or anywhere across the country where cities and states who want better transportation, and the social and economic benefits that stem from trains… Every time new Amtrak service is proposed, the price is so high and the service to be so slim that nothing ever happens. A year ago we looked at Amtrak’s Ohio report, one of three wrong-think reports issued around that time. We saw how “Amtrak really doesn’t want to be in the passenger railroad business” and, although there were some hopeful signs in subsequent months, we seem still stuck in the same doldrums as for the past 40 years.

One correspondent writes,

Amtrak’s complaints are so ingrained in politicians’ and voters’ minds that when some good public relations is needed, the cupboard is not only bare, but snarling back at those seeking relief.

Another writes that Amtrak,

has spent most of the last forty years not only saying, but proving, that passenger rail is a fiscal sinkhole. Needless to say the green eye-shade brigade in state capitals that must produce a balanced state budget every year takes on massive new obligations only with trepidation.

Add to this carriers like Union Pacific pulling massive numbers, some might think out of a hat, but perhaps out of reasonable expectations based on past dismal performance of a government-run passenger railroad, and here we sit, stalled again.

Perhaps the most excellent description of the conundrum is Steve Forbes’ recent commentary on high-speed rail. Forbes, logically unconvinced by what trains might be able to do, looks at projects like the Acela so-called high speed train which have failed to deliver on practically any of their promises, and at the cost of billions including a hidden billion-dollar loan from Canada… and rightly asks, Where is the benefit? Forbes doesn’t see any. And without benefit, what is the point of pouring billions more dollars into it? At some point, there have to be results. Call it return on investment.

To succeed in business, to succeed in the real world, you have to become indispensable. Apple has done that. Google has done that. Some might say Amtrak seems to have concentrated on becoming irrelevant.

Perhaps the renaissance of passenger trains will have to occur from the bottom up. USA Today reports that Denver has broken ground for its commuter train to the International Airport that replaced Stapleton Field. This is to be the long-anticipated first of four commuter lines radiating from Union Station which will complement Denver’s light-rail system. The article continues,

Denver joins a growing list of U.S. airports that are trying to promote public rail transportation. Others that will be connected directly via rail in the coming years include Dallas Love Field, Salt Lake City, Phoenix, Miami, Dallas/Fort Worth, Oakland, Washington Dulles and Los Angeles.

An AP newswire story tells how even Arizona is planning on a commuter and regional train system:

“It will not be possible to accommodate growth and avoid traffic congestion by improving roadways alone, so passenger rail should become a key component of the Sun Corridor transportation system,” the draft plan stated, referring to a planning area that stretches from Prescott on the north to Nogales on the south and includes both Phoenix and Tucson.

Phoenix is seeing results with its Metro trains, with monthly averages up to 44,000 daily riders, far above the projected 26,500, and continuing year-over-year increases. With few exceptions, every city that has built a rail system in the past decades has met or exceeded expectations, and brought new development and a renewed sense of place and community pride. The cost has shown its benefit. Why should there be any different standard for intercity trains?

Finally, as promised, this on first-class accomodations.
AMTRAK SLEEPING CARS ARE THE BEST VALUE AMTRAK OWNS

Commentary by Andrew C. Selden and Randy Schlotthauer, URPA

Note: This item was on (Congressman) Eric Cantor’s list of budget cuts he wants people to vote on. Only 48% of respondents to the poll favored the idea, but on Thursday, July 22, Mr. Cantor and some of his followers appeared on the floor of the U.S. House to extol the desirability of this cut. An amendment to a pending bill was introduced to implement the idea, but was rejected 234-179. We asked Mr. Selden and Mr. Schlotthauer to comment on the reasons this idea was not a good one. – Russ Jackson

Eric Cantor: “Prohibit ‘First-Class’ Subsidies on Amtrak; Potential savings of $1.2 billion over ten years. While only 16 percent of Amtrak long-distance passengers opt for “sleeper class” travel, as opposed to coach class, federal taxpayers provide substantial extra subsidies for this first class travel. Passengers in long-distance first class travel are provided a sleeping room, many with a private toilet and shower, turn-down service, and complimentary entertainment and pre-paid food. Yet, Amtrak loses more than twice as much per passenger (an average of $396) for first class service as compared to coach class service. These losses are made up by taxpayers. This proposal would eliminate subsidies for first-class service and require Amtrak to provide any first class service at cost.”

Andrew C. Selden: The issue is the corrupt Amtrak RPS-based internal MIS/cost accounting system. Large subsidies to western sleepers are an artifact, if not an intentional distortion, caused by the system, not the business activity. We can show (and have often done so) that these sleepers are substantial net contributors of free cash flow to Amtrak, failing only to cover arbitrarily allocated shares of other system, not operating, costs, only some of which are even indirectly related to the operation of these services.

The Superliner sleeping car, measured by business economic factors like return on capital investment, load factor, revenue per dollar invested, etc., is the best thing Amtrak owns. These members of Congress should look closely at actual sleeping car fares out west, where many passengers are paying thousands of dollars for a single trip. There is NO POSSIBILITY that these fares are losing money on a direct cost basis. The catch is always to audit deeply what costs Amtrak is charging against the sleeping car revenues to determine that a loss exists in the first place. That is where the members of Congress were being conned.

The collateral issue is the subsidy that these sleepers provide to the dining cars. FIRST, diners are indispensable to all travelers on LD trains, where the AVERAGE trip runs 15-20 hours in duration (varying by route). These people therefore (including every coach passenger) are on board over two to four meal periods (and of course some for even more). Lose the diner, and you’ll lose ALL the passengers, not just the “fat cat” families and retirees in the sleepers. The sleeper fare transfer to the diner is what keeps the diner on at all—by including meals in the sleeper fare, Amtrak guarantees a predictable base of revenue to the diner. Take away the sleepers and that fare transfer, and with the loss of sleeping car passengers (most of whom wouldn’t be caught dead making a two or three day trip in coach) and their fare transfers to the diner, the diner would have to charge obscene prices that would drive out the remaining coach passengers, and without meals over two to three day trips, no one will ride and the trains would be empty.

If Congress wants to look for subsidies to first class riders, have them divide the Acela first class revenue by its proportionate share of the annual two-thirds of a billion dollars of subsidy “invested” each year into the NEC. Those numbers are real and staggering, even though Amtrak never reports them as such.

Randy Schlotthauer: Were it not for the frightening lack of concern by our government about the concerns of citizens, not to mention their misplacing of the Constitution (I have several copies of my own that I would be happy to donate to them), this entire debate over “first class” subsidies would be so tiresome that I would not be drawn to the laptop to respond to it. Those of us that have been involved with Amtrak since THE BEGINNING (that would be before many supporters and opponents were born) have seen this windmill tilted at every year. I remember when we were desperately phoning and writing politicians, interest groups, and anybody else that would listen over a $246M TOTAL SUBSIDY that promised that the pin would be pulled on October 1, (fill in the year). This was in the good old days when there were just two types of cars: Amfleet and everything else, which wasn’t much. Though few of us at the time would have granted it, Amtrak President Graham Claytor managed to “modernize” the fleet with new equipment which in retrospect probably saved the LD trains, which we were convinced he was conspiring with THEM to eliminate.

Though designed with the promise and physical capability to deliver a high quality LD experience, through active sabotage by some crew members and a benign neglect (read: stupidity) on the part of management. None of the LD trains ever made full use of the features designed into the cars, and did not repair equipment that was damaged or stolen by passengers, crew, and the denizens of 16th St, 8th Street, and other “maintenance facilities”. As a result, even the best attempts by individual route managers to ended up flowering and then all too soon downgraded due to budget cuts that often were the disguised jealousies of other route managers. Despite the efforts of the original RailPAC-URPA group to introduce market economic laws and theories to Amtrak and it’s 485 owners, every year it was a battle for survival, with Amtrak management’s RPS accounting system proving that they could be profitable if not for those nasty LD trains.

Never was enough capacity provided to even approach break even, which was all any serious advocate discussed. If every seat in every car on every train on every day were filled at the highest tariff fare, there would still be a loss. Even Herb Kelleher (Southwest Airlines) couldn’t do anything with one triweekly plane to its largest potential markets. He recognized that planes (and trains too!) make money only if they are moving and filled with people. In fact Herb was one of Amtrak’s greatest opponents, because he knew what a well run passenger railroad could do.

So today we are discussing the proposed elimination of the First Class Subsidy, in order to “save” the railroad. First of all, the last trip I took in a Deluxe Bedroom on #3 and #4 could not be called luxury by any stretch of the imagination. Indeed, Denny’s offers superior food, service, and even entertainment (if you are at the right one at the right time of night). When you kill the sleepers you kill the diner and lounge. When you kill those, you are the Southern Pacific in the 1960′s, although this time there are not enough people that buy the line that America NEEDS Amtrak. I can build you a great case for a quality passenger rail service, including multiple classes of service. I can even build you a case of how you make it break even in 10 years. RailPAC-URPA’s Dr. Adrian Herzog did the math a long time ago, and it still works. What I cannot do is build a case to justify an Amtrak First Class Subsidy for LD trains. There is corporate culture at Amtrak that would fight any attempts to a really make things work.

This Week in Amtrak

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This Week at Amtrak; March 22, 2010


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Amtrak is now saying the right things. Will they start doing the right things, like correcting last year’s flawed route studies as the first step toward a dramatically expanded national system?


But first, a correction on the list of Florida stations in the last issue. Amtrak serves Kissimmee and Lakeland between Tampa and Orlando. The other stations are were on the alternate Jacksonville-Tampa line, which Amtrak no longer uses. I am writing the column from Scottsdale; I have lived in the Phoenix area since 1991, Northern Virginia before that, and Boston for most of my first 23 years. I mistakenly copied the wrong list of stations, probably remembering my trips on the Silver Star and Silver Meteor to St. Petersburg and Clearwater in the 1980s. Mea culpa.

Now, to this week.


In the 1940s, a consortium of companies symbolically led by General Motors drove the privately-owned street railway business to bankruptcy.

Seven decades later, the streetcar returned the favor.

No, that’s not strictly true; but it is a curious reversal of fortune — karma? — suggested by one of three college students who visited the Phoenix Trolley Museum on Saturday afternoon. (The intelligence of the young never ceases to amaze. And signing up some bright new members who have been spending their days and nights devouring everything about trains and buses that the Internet can offer, is a very good thing.)

National City Lines, organized by G.M.’s Alfred P. Sloan to purchase trolley lines and replace them with rubber-tired, fuel-burning buses, was at least a symptom if not one of the myriad causes of the failure of the street railway industry. The trolley was a bellwether for the impending crisis in passenger trains generally.

Conversely, the growth of cities building rail transit in recent years has mirrored a growing dissatisfaction. The postwar suburban consumption-based lifestyle has proven to be an ecological, social, and economic cul-de-sac. Yet in my city of Phoenix, as elsewhere, business along the streetcar — pardon me, “light rail line” — is the bright spot of the local economy; Mesa, which once grudgingly permitted a single rail station to be built just inside its border, has seen the light called “transit means business” and is extending the line to bring shoppers, workers and students to its moribund downtown.

And this reversal of the streetcar’s fortune is proving to be a bellwether for the passenger train generally.

We now turn to two guest columnists. Rob Bohannan attended Amtrak’s Town Hall in Chicago last week; Daniel Carleton wrote in January on why the route studies completed in 2009 exposed fundamental barriers to our much-needed passenger train system expansion. The juxtaposition of these two columns raises the question: If Amtrak is now letting the once-hidden good ideas from inside bubble to the surface, when will we see the potential of a new equipment order resulting in new routes all across the country? Does Amtrak’s new emphasis on long distance trains as fundamental to its mission and future represent the first steps toward correcting the issues Mr. Carleton raises?

I leave you with these reports and those questions, which we shall ponder again next time. — William Lindley

Illinois Report
by Robert H. Bohannan, AICP (March 2010)

Saturday, March 6, Amtrak and Trains Magazine co-sponsored a “Dialog for Progress” Town Hall Meeting at the Merchandise Mart in Chicago. Many of Amtrak’s “top brass” were there, including Board Chairman Tom Carper, President Joe Boardman, and Chief John O’Connor of the Amtrak Police Department. The three main topics of discussion were the Amtrak Photography and Videography Guidelines, Fleet Strategy, and Long Distance Service.

Photography. Chief O’Connor did an excellent job of explaining Amtrak’s photography policy. Essentially, Amtrak would like to be notified in advance if one is going to do extensive photographing on Amtrak property—other than photography taken by boarding and alighting passengers or photos taken onboard trains—of the passing scenery, for example. Given the proven use of photography by terrorists in preparation for attacks on infrastructure, it is not unreasonable to have a few, simple, reasonable rules. [A strong minority points out that we once laughed at the Soviet Union and other totalitarian states for such absurdities as prohibiting photography and requiring citizens to carry identification cards. Nevertheless, railroad stations are in some fashion private property and it is entirely within Amtrak's purview to have some sort of rules. - Editor] Of course, Amtrak struggles to get the word out about the degree of leniency to all the station and other personnel nationwide and concedes that “over-zealous” employees have needlessly chastised rail fans for taking photos. Moreover, the rules only apply to Amtrak property—different rules apply for photos taken on property of other railroads, and so forth. We advocates and our “railfan” friends have a responsibility to assist Amtrak in educating others about their reasonable photography policy.

Fleet Strategy. A significant aspect of the fleet policy for readers of TWA is that Amtrak is using stimulus funds to repair cars and locomotives at Beech Grove. After the meeting Saturday, we were all invited down to Union Station to see a rebuilt train consisting of two sleepers, a diner, and a locomotive—all of which had been wreck damaged. The equipment looked great: The diner was decorated in pleasing shades of navy blue and brown, and looked really classy.

Long Distance Service. Regarding long distance trains, Amtrak made official their intent to restructure the Sunset and Texas Eagle routes by operating a daily Los Angeles-San Antonio-Chicago train with a connecting San Antonio-New Orleans train. The LA-Chicago train would have full dining and lounge services. Amtrak has divided their 15 long-distance trains into three groups of five. The five worst performers — including the Sunset and Eagle—will be addressed this year, the middle five in 2011, and the five best—such as the Empire Builder and Southwest Chief — will be tweaked beginning in 2012. The undesirability of tri-weekly service on any route was noted.

Perhaps more significantly, Amtrak seems to be grasping—and willing to emphasize publicly — the importance of their long distance trains. One of the slides in a presentation devoted to long distance trains was titled “Long Distance Trains are Fundamental to Amtrak’s Mission and Future”. The slide included pie charts that showed that, while long distance trains provided 15 percent of Amtrak’s riders, they accounted for 24 percent of Amtrak’s revenue. Long distance trains account for 39 percent of Amtrak’s train miles but 46 percent of passenger miles. Moreover, long distance ridership and on-time performance has been steadily improving.

Regarding on-time performance, Amtrak is changing the metric to include arrivals at intermediate stops, instead of just end points. Officials commented at the meeting that this change took the passengers’ point of view into consideration as well as the Operating Department’s point of view. The Passenger Rail Investment and Improvement Act of 2008 (PRIIA) provides that, beginning in 2013, there will be an on-time performance tolerance of 15 minutes for intermediate stops.

Overall Impression. As encouraging as these developments are, the most significant aspects of the “Dialog for Progress” were that it was conducted in the first place, and that Amtrak recognized the need to reach out directly to the railfan and advocacy communities—the event was open to anyone who saw the notice in Trains and was one of the first 300 to register—rather than simply report the findings to any particular group.

Tom Carper, Joe Boardman, and the other officials were present throughout the session and at the subsequent equipment display and responded patiently and concisely to all the questions. This was at times no small feat, with an audience so amazed at finally having a chance to speak and hear candid responses that emotions sometimes ran high. Amtrak intends to conduct more of these events and I encourage TWA readers to plan on attending.

The Long Distance studies: Amtrak buy the numbers
by Daniel Carleton (late January 2010)

Amtrak, in the past months, has proffered three studies regarding the re-establishment of service on three lines: The Sunset Limited east of New Orleans, the Pioneer and the North Coast Hiawatha. The Hiawatha was discontinued in October of 1979 as the country reeled from the consequences of the world’s third oil shock. The Pioneer was discontinued in May 1997 as Amtrak banked its future and fortune on a then-yet-to-be-named high speed train in the Northeast. The Sunset was indefinitely suspended east of New Orleans due to track damage sustained in August 2005 and repaired by January of the following year.

Section 224 and 226 of the Passenger Rail Investment and Improvement Act of 2008 (PRIIA) required Amtrak to develop plans for restoring service to these routes. Much has been written and shall continue to be written as to the validity of these studies; the rhetoric is long and facts are questionable. As regards equipment, however, this boilerplate paragraph appears in both studies for the Pioneer and Hiawatha:

“Restoration of daily service on the three long-distance routes Amtrak has been directed to study by PRIIA – the North Coast Hiawatha; the Chicago-Seattle Pioneer; and the Sunset Limited between New Orleans, Louisiana and Sanford/Orlando, Florida – would require approximately 100 additional Superliner cars. That equipment does not exist today. Amtrak has 20 repairable “wreck status” Superliner cars, which it plans to restore to service in order to alleviate equipment shortages on existing Western long distance trains. In addition, if Amtrak is to continue to provide existing services on long distance routes, it must in the very near future replace nearly 100 remaining “Heritage” cars that are now more than half a century old.”

When summing up the hypothesized dollar figures for equipping the expanded services the amount runs between $477-534 million, depending on what options are acted upon. Amtrak appears to be settled on the inflated figure of $4.5 million per Superliner, bringing a 100 car order to $450 million. The balance would purportedly be expended on motive power.

To the uninitiated it would be reasonable to assume that a public carrier would enjoy certain benefits unavailable to a private company. The rolling stock of a common carrier railroad is private property and as such subject to applicable property taxes. Private companies take great pains to justify what assets are kept as well as the spare parts on hand to keep them in a state of operation. Such justification must take into account the ebbs and flows of business. Therefore, during the ‘golden age’ of passenger rail transportation there could be found in or near major rail hubs rows of passenger cars awaiting the call to duty during times of heavy traffic demand. In 1946 the Pullman Company alone operated 5500 cars; by 1956, this was down to just over 2600.

Amtrak is a public corporation and not subject to property taxes. And since Amtrak could be viewed as a work-fare program it is not a stretch to imagine public monies spent for fleets of passenger cars awaiting the call to duty during heavy traffic loads. In 1972, the roster held 1262 cars. If Amtrak’s advertising is to be believed, this was about one-third of the total cars inherited from the private railroads. Currently Amtrak rosters 1367 active passenger cars; exclusive of Acela and Talgo trainsets. Where is all the extra capacity when needed? Where is the work-fare program to sustain the domestic railcar manufacturers? Instead of the rows of passenger cars on standby there is a one-size-fits-all passenger train running 365 days a year. Instead of a robust domestic railcar industry there is silence with the last, the Budd Company, closing its doors in 1987.

Currently, Amtrak stables about 250 active diesel-electric road locomotives, exclusive of the dual-mode locomotives in the Northeast. At the height of the F40 era at Amtrak there were 216 on the roster (plus 25 GE P30CH‘s); please bear in mind there was as yet no electrification east of New Haven, Connecticut. Today, the F40 is extinct on Amtrak. With the exception of Ontario’s GO Transit, Amtrak is the only original owner of the F40 locomotive to completely phase them out. On the private railroads, locomotives could be rebuilt under a Capital Rebuild Program allowing the unit to be depreciated over the anticipated additional life of the unit. As Amtrak is a public entity and not subject to property taxes no value was seen in the F40 fleet, and they were sold to commuter railroads, freight service or for scrap.

The national malaise toward serviceable passenger rolling stock has not gone unnoticed by those states desiring service. California, Washington and North Carolina have acquired cars (and in some cases locomotives) to properly address the needs of their constituents. Soon Wisconsin will join this once exclusive club as they reequip their Milwaukee to Chicago service with new trainsets from Talgo.

The national malaise toward service expansion has not gone unnoticed by the federal government as may be witnessed by the American Recovery and Reinvestment Act grants (ARRA) for High-Speed Rail. In an effort to revitalize America’s passenger rail network the feds have bypassed Amtrak and instead are seeding monies directly to the states. None of these projects tapped for funds will actually attain true high speed (greater than 150 mph) but will improve or expand existing rail services.

Even to the most casual observer the role of Amtrak is being minimized. Attempting to reverse this trend Amtrak’s president recently gave a speech declaring their relevance, “Being a healthier Amtrak helps position itself as THE provider and partner of choice for commuter, intercity passenger rail and high-speed rail service. We currently have partnerships with 15 states accounting for nearly 50 percent of our average weekday departures and we plan to foster more.”

However, when there is a legitimate need for a service to be rendered a way shall always be found. Lately it appears that ‘way’ does not include Amtrak. Is it the fault of the track worker who was given defective concrete ties to install? Is it the fault of the Viewliner car attendant whose car is shaking apart around her? Is it the fault of Pullman-Standard or Budd whose doors closed for good for a lack of orders? Is it the fault of management whose priorities change just a often as the politicos they answer to? Ultimately, it must be recognized that Amtrak does not deliver any of the possible benefits of a public corporation and all of the disadvantages of a welfare program.


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