The Amtrak Board is on the right track   November 1st, 2005

By RailPAC President Noel T. Braymer — There were lots of news stories along with misinformation over the action of the Amtrak Board this late September. (For the full story read the accompanying news report from the Bureau of National Affairs) The Amtrak Board created a new Amtrak subsidiary comprised of the entire North East Corridor. This move is primarily for accounting purposes in order to discover the true costs and revenues of the NEC compared to the rest of the national system. The need for this action can be traced back to research by former RailPAC officers, the late Byron Nordberg and Dr. Adrian Herzog in the 1980′s. They with others discovered substantial evidence that Amtrak’s accounting was spreading the high overhead costs of the NEC to the rest of the national system, particularly the long distance trains. Doing this hides the costs of the NEC while making it look like long distance trains require hundreds of dollars of subsidy per passenger carried. A Federal Railroad Agency study concluded that excluding depreciation and allocated costs the direct cost’s of Amtrak’s long distance trains were only 73.5 million dollars in 2003. Separating the NEC costs from the rest of the national system was one of the recommendations made by the Amtrak Reform Council back in 2002.

The NEC is a busy, aging, expensive and critical rail link for this country. Not only is it a busy Amtrak Corridor, but it is an even busier commuter rail link to several east coast cities as well as a freight carrier. Of the 27 billion dollars Amtrak has received since 1975 from the Federal Government, over 20 billion has gone towards the NEC. Regardless of whether Amtrak or the North Eastern States own the NEC infrastructure in the future, there will continue to be a need for federal money to maintain the NEC. Government pays for the infrastructure of roads, ports and airports too. The question that begs to be asked and answered is how much is needed to be spent for what levels of service? The NEC is not the only major rail line carrying Amtrak, commuter and freight service which will need federal money. Why should California which has spent 3 billion dollars to improve rail passenger service receive almost no federal help, when so much federal spending has been spent between Washington, New York and Boston? The same question could be asked about other states.

A better understanding of the income and expenses of Amtrak can lead to a more efficient and productive rail service. This could translate into some people losing their jobs, which may be why some people fear any changes in the status quo. As of April 2005 Amtrak was down to 19.590 employees. Amtrak has lost employees recently largely because of the cancellation of commuter contracts in Boston and Los Angeles. But Amtrak still has 1,495 executives and 4,211 administrators, over a quarter of the remaining workforce. Amtrak only has 3,427 conductors and train engineers. A large portion of Amtrak’s white collar workers work on the NEC.

A major headache in operating the NEC is the mixture of dense local commuter traffic with faster express trains. Speed is very sexy, but also very expensive. Speed requires more energy was well as higher track and equipment standards. Speed also tears up track and equipment faster creating high maintenance costs. It is also very difficult to operate express trains mixed with slower local traffic. That is why most high speed rail service is run on dedicated trackage separate from local traffic.

Amtrak has spent close to 4 billion dollars on the ACELA. The most recent shut down of ACELA service the spring and summer brought to light that the ACELA was no faster than the Metroliner trains it replaced. But the ACELA operating costs are much higher than the Metroliners. Like most of the NEC trains that Amtrak runs on a rail line they mostly control, the ACELA’s are on-time roughly 75% of the time, well short of the expected 90%. Despite fears that loss of the ACELA’s would be a financial disaster, Amtrak ended the fiscal year with a cash reserve. ACELA may well cost Amtrak more than the revenues it brings in. Loss of ACELA may have saved Amtrak money. This would not be the first time that Amtrak’s accounting predictions came up wrong. Every time Amtrak has cut back Long Distance service to “save money”, Amtrak instead has lost even more.

By discovering the true costs of the NEC a debate can finally begin over the share of the cost’s created by the different users of the NEC, and what they should pay. Should there be more freight to bring in more income? Are the commuter operators paying their fair share of the NEC costs? Are the commuter operators satisfied with the service they get from Amtrak? Is the income from faster express trains enough to cover their higher costs? These questions and answers may upset some people. But good information is the key to any sound policy and an efficient Rail Passenger service.

This entry was posted on Tuesday, November 1st, 2005 at 2:13 PM and is filed under Commentary.