December 2001 - January 2002

Should Passenger Rail Service Survive?

by George F. McClure

Amtrak, the national passenger rail corporation created in 1970, is rolling toward a decision next year that could end its intercity passenger rail service in the United States. In 1997, Congress enacted the Amtrak Reform and Accountability Act of 1997 to support Amtrak operations for five years. According to the plan, Amtrak would have to become operationally self-sufficient — ticket revenues would have to cover operating costs — by the end of 2002 or it would face being shut down and liquidated. At the same time, Congress set up the Amtrak Reform Council to monitor Amtrak's progress. This council was charged with submitting a plan for a restructured national intercity rail passenger system.

Amtrak provides service in 45 states but owns less than 12 percent of the tracks it uses, and these tracks are found mostly in the northeast. It also operates several state-owned commuter rail systems, including Virginia Railway Express and MARC in the Washington, D.C., area. But overall in the United States, commuter rail passengers outnumber Amtrak passengers by more than 18 to one.

Better, But Not Enough

In 2000, Amtrak served 22.5 million passengers; ticket revenues increased by 10 percent, to a record $1.1 billion. A significant portion of these increased revenues came with Amtrak's new all-electric Acela regional service between Boston and New York. This service, with trains capable of traveling at 150 mph over suitable right-of-way, experienced a 77 percent revenue increase, received from 45 percent more passengers than Amtrak served with the Northeast Direct trains it replaced. However, while Amtrak's operating revenues increased to $2 billion in FY 2000, they were still $84 million below plan. To replace revenue lost in 2000 from the delayed express service, Amtrak had to mortgage part of Pennsylvania Station in New York City.

This shortfall may be partly the result of the delay the corporation experienced in introducing its Acela Express service between Washington, New York, and Boston. Amtrak claims slow deliveries of the trainsets, while Bombardier, Inc., which manufactures them, claims that the track upgrades needed for high-speed service were not made, making it necessary to add a year and a half of testing time to the schedule. Amtrak is now being sued by Bombardier for $200 million in damages. For its part, Amtrak claims that the trains don't meet specifications.

Is High Speed Achievable — And Achievable in Time?

The northern portion of Amtrak's Northeast Corridor rail line is now electrified and can accommodate the Acela high-speed service. But early Acela Express riders report that for much of the trip, especially north of New York, the trains travel at lower speeds, making the trip only a little faster than the Metroliner service Acela Express replaced. One IEEE member riding from Washington to Wilmington used a GPS receiver to confirm that his train reached 120-125 mph nearly half the time, but never got to its 150 mph maximum speed. And in reality, of the 457 miles between Washington, D.C., and Boston, Acela Express can reach 150 miles per hour for only 18 miles.

At What Cost?

Amtrak will have to make roadbed, tunnel, and signaling improvements before the new service can realize its full potential. And the speed and frequency of the maximum-level service are needed to lure riders from the competing air shuttle services offered in the northeast.

To make improvement matters even more challenging, Michael Dukakis, an Amtrak director, notes that this year federal funding is $33 billion for highways and $12 billion for airports, but only $521 million on passenger rail, with more than a third of that earmarked for contributions to a railroad industry retirement fund.

The pending High-Speed Rail Investment Act would provide $12 billion in seed money to improve railway infrastructure that would support 11 high-speed rail corridors across the country. An alternative bill, championed by House Transportation Committee chair Don Young (R-AK), would provide $71 billion for high-speed rail corridors throughout the country. This bill would set aside $36 billion in bonding authority for tax-exempt bonds to be issued by the states, and $35 billion in loans and loan guarantees for providers: Amtrak, private companies, or state rail authorities. The tax-exempt bonds will cost the government $12 billion to $18 billion in unpaid income tax on interest earned by bondholders.

Despite Boost After 9-11, Amtrak's Woes Continue

Amtrak experienced a boost in ridership after the 11 September terrorist attacks, when it accepted airline tickets for passage while air travel was shut down. Passengers in the northeast corridor also filled its trains after more stringent airline security measures increased total air travel time, making rail more attractive. But, even with more riders, Amtrak continues to wrangle with financial problems. Infrastructure investment has languished for lack of adequate federal budget. Critics advocate selling Amtrak to private investors, but others note that it has to be a profitable business to interest investors. To illustrate, the British privatized BritRail, selling off the trackage as RailTrack, only to have it fail for lack of private investment.

In November, the Amtrak Reform Council concluded that Amtrak cannot break even on its operations by the end of next year and will recommend a reorganization plan. It has already recommended separating the infrastructure responsibility from train operating responsibility and separating Amtrak's funding requests to Congress for the two functions.

It appears Amtrak must develop a liquidation plan. At the same time, the Bush administration plans to propose a comprehensive passenger rail plan early next year. Experts anticipate that Congress will choose one of these plans or eliminate the self-sufficiency requirement it imposed with the Amtrak Reform and Accountability Act of 1997.

George F. McClure is editor for IEEE-USA's Technology Policy Council.