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Has Amtrak placed itself in jeopardy?

AMTRAK was set up in 1971 as a quasi-public corporation to save the US inter-city passenger industry from extinction following two decades of accelerating decline. Many of the surviving medium and long-distance passenger services were incorporated into a new national network which largely survives today.

From the outset, Amtrak has been a political football at the mercy of battles in Congress over its annual funding budget which has brought it close to the brink on a few occasions. Despite its roller-coaster hand-to-mouth existence, Amtrak has survived and nearly 50 years later is on course to breakeven next year.

Amtrak’s survival is due to the strong support it receives from pro-rail Congressmen and women and their voters across the country who benefit from Amtrak services. The fact that Amtrak trains operate in nearly every state of the contiguous United States is vital to its continued existence. Unfortunately, Amtrak’s CEO Mr Richard Anderson does not appear to realise this. He appears determined to eliminate many of the long-distance trains which serve the communities of Amtrak supporters as he believes these trains are too costly to operate.

Shorter distances

Anderson’s objective is to develop shorter services linking city pairs at the expense of the long-distance network. His view, rightly, is that the USA is a very different country today compared with the situation in 1971, and that people want fast and frequent trains running relatively short distances.

While this may be so, the message does not appear to have filtered down from the Amtrak boardroom and is not backed up by Amtrak’s own statistics. In July, the Hoosier State service linking Indianapolis, the university city of Lafayette, and Chicago, which operated on the four days of the week when the long-distance Cardinal train does not run, was axed because neither the state of Indiana nor Amtrak were willing to continue funding it. The 314km route is just the sort of service which Anderson says he wants to develop, and yet it has been allowed to die.

The fact that Amtrak trains operate in nearly every state of the contiguous United States is vital to its continued existence.

Clearly Amtrak does not have the funds or the determination to operate a service like the Hoosier State, let alone maintain the Northeast Corridor – Amtrak’s cash cow – in a state of good repair, or fund the replacement of much of its fleet which is now an average of 33 years old, and yet Anderson says he wants to invest billions in developing short-distance inter-city services.

As four-time Class 1 freight railway CEO Hunter Harrison once said (p24): “Railroads only make money when cars are moving.” This also applies to passenger trains. The longer the trip, the greater the efficiency. Unfortunately for Amtrak, the punctuality of long-distance passenger trains is woeful as they are at the mercy of the increasingly busy freight railways which own most of the tracks over which Amtrak trains run. In theory, the gradual expansion of Precision Scheduled Railroading by the Class 1 freight railways, should be helping to improve passenger train punctuality, although there is little evidence of this so far.

Nevertheless, long-distance trains are often over subscribed while the load factor on shorter distance trains is a lot lower.

Cost cutting

Anderson has been engaged in a cost cutting exercise in his quest to achieve breakeven next year. While laudable, as all businesses should endeavour to minimise their costs, this is sometimes being done at the expense of providing good passenger service, for example by cutting back onboard catering.

Amtrak would do well to concentrate on improving the quality of its services to maximise the yield per passenger. There are plenty of Americans who would be willing to pay a high price for superior service to travel on one of Amtrak’s services crossing the spectacular Rockies for example. Other initiatives could include adding extra coaches to over-subscribed trains to meet demand and increasing frequency where possible.

Asset utilisation is often poor. For example, the morning train from Seattle to Vancouver, BC, sits in Vancouver for six hours before heading south again. The same train could be used for three or even four trips per day instead of two without any additional capital cost.

The development of new services is falling to the private sector rather than Amtrak. Virgin Trains USA is now operating an almost hourly-interval service between Miami, Fort Lauderdale and West Palm Beach, a frequency almost unknown outside of the Northeast Corridor. The company will extend the service north to Orlando and eventually west to Tampa and has taken over the project to build a high-speed line from Victorville, California, to Las Vegas, Nevada.

Meanwhile, Texas Central Railway is pushing ahead with its plans to build a high-speed line connecting Houston and Dallas, a corridor which Amtrak withdrew from a few years ago. Indeed, Houston is the fourth biggest US city but is only served by the thrice-weekly New Orleans – Los Angeles Sunset Limited.

While Amtrak’s ambition to develop inter-city services maybe laudable, it simply does not have access to the sort of funds needed to do so. There is no sign that Congress or president Trump are willing to change the annual funding battle needed simply to keep Amtrak going let alone expand its services. Amtrak must maintain a national network to maintain the political support it needs for its survival.

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